Table of Contents

BACKGROUND OF THE PROJECT ................................................................................... 2

QUESTION A ARE THE HAIRLINE CRACKS DEFINED AS DEFECTS UNDER
THE CONTRACT?.................................................................................................................... 4
QUESTION B UNDER WHICH CLAUSE OF THE CONTRACT SHOULD THE
ARCHITECT INSTRUCT THE CONTRACTOR TO RECTIFY THE CRACKS OR
DEFECTS? ............................................................................................................................ 6
QUESTION C CAN THE ARCHITECT ISSUE INSTRUCTION AFTER THE DATE
OF CPC? .................................................................................................................................... 8
QUESTION D WERE THE HAIRLINE CRACKS DUE TO DESIGN PROBLEM AND
NOT DUE TO THE CONTRACTORS WORKMANSHIP OR MATERIALS, HENCE,
THE RECTIFICATION WORKS SHALL BE TREATED AS VARIATIONS TO THE
CONTRACT? ........................................................................................................................... 10
QUESTION E BY ADHERING TO THE CONTRACTORS METHODS OF
RECTIFICATION OF EXMET INSTEAD OF P.U. SEALANT, WILL THE
CONTRACTOR BE LIABLE IF THE CRACKS HAVE RE-OCCURRED? ....................... 12
QUESTION F WAS THE CONTRACTOR RIGHT TO INSIST THAT THE
ARCHITECT CAN NO LONGER ISSUE INSTRUCTIONS TO RECTIFY WORKS
AFTER THE EXPIRY OF THE DLP? .................................................................................. 13
QUESTION G IS THE CONTRACTOR LIABLE TO REPAIR THE RE-APPEARED
CRACKS AFTER HE HAD RECTIFIED THEM? .............................................................. 15
QUESTION H HAS THE ARCHITECT FAILED IN HIS DUTY TO ISSUE THE
SCHEDULE OF DEFECTS? ................................................................................................. 16
CONCLUSION ....................................................................................................................... 18
REFERENCES ....................................................................................................................... 19

Background Of The Project

A contractor had undertaken a 30 storey mixed development project comprising of
shop offices, apartment & facilities in Kuala Lumpur. The Form of Contract used was
the amended PAM 2006 standard form of contract based on quantities, drawings and
specifications.
Hairline cracks were discovered at the joints between the roof beams and walls at the
level 30 apartment units, which prompted the architect to issue an instruction to the
Contractor to rectify the cracks within 14 days of the instruction.
The contractor responded that hairline cracks due to expansion and contraction at the
joints:
i) As a result of the heat from the roof slab, which is exposed to weather, being
transferred to the roof beam;
ii) The brickwall below the r.c. beam is of a different material, therefore the effect of
uneven expansion and contraction had resulted in hairline cracks;
iii) As advised by its specialist/consultants, there was no thermal insulation designed
for the roof slab to minimize such hairline cracks from occurring.
The contractor contended that since the cracks are due to design problem and not due
to faulty workmanship or materials, the rectification works shall be treated as
variations to the contract. Nevertheless, the contractor had rectified one unit with
special P.U. Sealant on a goodwill basis.
The project structural engineer carried investigations and found that the hairline
cracks were not due to design problems but were shrinkage cracks due to the absence
of proper exmet reinforcement. The contractor disagreed with the engineers findings
to but nevertheless carried out the rectification works using exmet reinforcement over
the crack as required by the engineers findings and method of rectification, the
contractor shall not be responsible for any recurrence of the defects at the same
location in future.

One month after the completion of rectification works, the Defects Liability Period
expired, whereupon, the contractor requested from the Architect the Final Schedule of
Defects. One week later, the hairline cracks reappeared at the same areas despite
following the engineers method of rectification. The architect did not issue the Final
Schedule of Defects and the contractor refused to rectify the defects on the grounds
that in accordance to Clause 15.3 of the Conditions of Contract, as the 14 day
deadline for delivery of the Final Schedule has now expired, no further instruction to
rectify defects for the Works shall be issued by you.
The architects replied that, as the Main Contractor for the Works, the contractor is
responsible and liable for the defects and failure of the Works.

Question A Are the hairline cracks defined as Defects under the

contract?
According to PAM 2006, defect means defects, shrinkage or other faults due to
material or workmanship not in accordance with the Contract and Nominated SubContract and due to any faulty design undertaken by the Contractor and Nominated
Sub-Contractor. Objectively a construction defect is a physical problem in the
building whether in the fabric, structure or service, especially one that impairs correct
function.
Defects can be Patent defects and Latent defects apart from the usual defective
construction defects happening at the site. Patent defect is known by testing and
inspection on site by the Architect. For example, leakage appears during the
construction or after testing and inspection. Latent defect is known after a period of
time or hidden defect that exist at the time of sale. For example, roof collapse or
ceiling collapse.
(Sr. Zetty, 2015)
The construction defect can be grouped into four major categories, which are: 1. Design deficiencies
2. Workmanship deficiencies
3. Material deficiencies
4. Specification problems
(Designing Building Wiki Defects in Construction, 2014)
Based on the situation given in the question, from the view of the contractor, the
hairline cracks at the joint between roof beams and walls are due to expansion and
contraction at the joints is of different materials resulted from improper design by the
engineers. He in his opinion the cracks are not due to the faulty of his workmanship or
materials not in accordance to the contract documents. Therefore, the cracks are
called as design deficiencies.

Whilst, from the view of the project structural engineer, the cracks are not due to
design problem after inspection and investigation to the works. From his
investigation, absence of proper exmet reinforcement has resulted in shrinkage in
concrete. Consequently, shrinkage cracks appear in the work. Therefore, the cracks
are called as workmanship deficiencies.
However, one issue that it is not so straightforward can arise in the contract where the
design is not the responsibility of the contractor but of the Architect, and that is the
categorization of a particular defect as either design defect or defect of workmanship.
For instance, the choice between of pitch roof and flat roof is a matter of design, but
the choice between of nail and screw is a matter of workmanship.
Furthermore, the contractor shall always take care in consideration of the implication
of the design even he has no design obligation whatsoever. In some jurisdictions, the
contractor is under a duty to warn the employer of any problems with the design.
(Jeremy Glover, n.d.)
According to Clause 1.1, the contractors obligation is to carry out and complete the
works in a proper and workmanlike manner in accordance with the contract
documents. If defects occur during execution of works, the contractor must rectify
immediately for which he is responsible at his own cost. Moreover, the contractor will
be responsible if rectification works cause delay to the project.
However, the contractor shall be entitled for extra cost and extension of time as if
rectification works are due to the design or specification problems in which are not
the contractors fault.
In addition, the contractor shall always provide a good workmanship for the quality of
works as described in the contract and to the reasonable satisfaction of the Architect.
This typically means that the contractor must carry out the construction works with
skill and care, using quality good and materials.

Question B Under which clause of the contract should the architect

instruct the contractor to rectify the cracks or Defects?
According to the PAM Form 2006 Clauses 1.1 Completion of Works in accordance
with Contract Documents, the contractor shall upon and subject to these Conditions
carry out and complete the Works in accordance with the Contract Documents and in
compliance therewith provide materials, goods and standards of workmanship of the
quality and standard described in the Contract Documents and required by the
Architect in accordance with the provision of the Contract.
Based on clause 6.1 Standard of works, materials, goods and workmanship, all work,
materials, goods and workmanship shall be of the respective quality and standard
described in the Contract Documents and required by the Architect in accordance
with the provisions of the Contract.
Based on clause 6.8 Warranties in respect of material and goods, if the contractor
requires any manufacturer, sub- contractor or supplier to give a warranty or guarantee
in respect of any proprietary systems, materials and goods supplied, the Contractor
shall procure such warranties or guarantees and submit to the Employer. The
provision of such warranties or guarantees shall in no way relieve or release the
contractor from any liabilities under the Contract.
Refer to these 3 clauses above, the contractor shall provide a good workmanship of
the works in accordance to the contract documents and to satisfaction required by the
Architect. Therefore, the architect shall instruct the contractor to rectify any defects
appear in the works during construction.
Based on this situation, the Architect may conduct an inspection to the work to ensure
the materials and goods provided by the contractor are in accordance with the
specification under Clause 6.3. If the Architect find out any work, materials, goods or
workmanship which is not in accordance with the Contract, the Architect shall
instruct the Contractor in writing to rectify such work as instructed by the Architect
with no adjustment to the Contract Sum based on Clauses 6.5(c). The Contractor shall

bear with his own cost to rectify the work. In this matter, the contractor shall not be
entitled to any extension of time nor compensation for any loss and expenses that may
be incurred during the works based on Clauses 6.6 due to the contractors fault.
Based on the Clauses 6.7, if the contractor fails or refuses to comply with the
Architect Instruction, the Employer may employ and pay to other person who can
carry out the works in compliance with such instruction issued by the Architect and
any cost incurred for such works shall be set-off by the Employer based on Clause
30.4.

Question C Can the architect issue instruction after the date of

CPC?
Under Clause 15.1 Practical Completion, in the Architect opinion, the Works is
already finished and the building can be fully used by employer for their intended
purposes but the building still have some minor defects such as cracking or leaking,
and the Contractor has responsible to make all minor defects good. Under Clause
15.2(a), within fourteen (14) days after receipt the written notice given by contractor,
Architect will do inspection. If in the Architect opinion the Works are not Practically
Completed, then Architect will not issue Certificate of Practical Completion. If in
Architect opinion, the Works are Practically Completed, then Architect will issue
Certificate of Practical Completion, which based on clause 15.2(b). The Architect will
issue the Certificate of Practical Completion to the Contractor when the contractor has
achieved practical completion of the works including all authorized variation and the
works have passed any tests of inspections as required.

14 days
The contractor in his
opinion the works are
practically completed
delivered a written
notice to the Architect

Architect carries out

inspection and in his
opinion the works are
practically completed
and issues CPC

Timeline 1

DLP start

Architect can issue

instruction during
DLP

The criteria for practical completion are:

a)

The employer can have full and beneficial use of the works for their intended
purposes.

b)

The contractor has given undertaking to make the defect good and complete the
works.

c)

Other requirements stated in the contract document have been complied with the
contractor.

d)

Upon issue the Certificate of Practical Completion, Contractors liabilities in

respect of his contractual obligation is end. But Contractor still has liability to
make good all defects when during Defect Liability Period.

e)

The date of Practical Completion marks the commencement of the Defect

Liability Period.

f)

One moiety of the retention fund has to be released to the contractor.

g)

The contractors liability to liquidated damages ends.

h)

The Employer takes over the risks.

i)

Contractor cannot occupy the site anymore.

j)

Contractor send all necessary documents for adjustment the Contract Sum to the
Architect.

(Nik Fatma, 2014)

The Architect actually cannot issue instructions after the date of Certificate of
Practical Completion. For example, the variation instruction shall be issue before
issuance of the Certificate of Practical Completion under clause 11.3. If the variation
instruction is issued after Certificate of Practical Completion, the Contractor can
refuse the Architects Instruction. However, if the Local Authority requests the
variation works, then the Architect can issue instruction to contractor after issuance
the Certificate of Practical Completion.
Besides that, the Architect can issue instruction to rectify the urgent defects after
Certificate of Practical Completion based on Clause 15.5. However, the Architect
cannot issue the instruction to the contractor to rectify the defect when the defect is
re-appeared in the same location because the contractor has rectified the same defect
once complied with the method required by the Architect and engineers, therefore the
contractor has no more liability to the same defect.

Question D Were the hairline cracks due to design problem and not
due to the contractors workmanship or materials, hence, the
rectification works shall be treated as variations to the contract?
Referring to Clause 11.1, a variation is defined as any changes, alteration or
modification to the scope of works in a construction contract in the form of design,
quality or quantity of the works.
Variation, sometimes referred as variation order (VO), includes variation works by
referring to Clause 11.1(a) until Clause 11.1(d). Variation can be due to:
1. Clause 11.1(a)

Addition, omission or substitution of any work from original

scope of works
2. Clause 11.1(b)

Changes of the quality or standard of any materials and goods

3. Clause 11.1(c)

Removal of any executed works or materials and goods from

the site
4. Clause 11.1(d)

Any other relevant changes to the provisions in the contract

regarding assessment or utilization of the site or the execution and completion of the
work
Any changes or rectification due to the contractors faults are not entitled as
Variation. Therefore, based on this situation where the hairline cracks is due to
design problem and not due to the contractors poor workmanship or materials not in
accordance to the contract documents, the rectification works shall be treated as
variation to the contract under Clause 11.1. Therefore, the contractor is entitled to
Extension of Time under Clause 23.0 and claim for any loss or expenses incurred in
the work under Clause 24.0.
Since the method of rectification work of using exment reinforcement over the cracks
is as required by the project structural engineer, such rectification work has no
immediate effect to the contractor unless the Architect with an Architect Instruction
confirms such variation work.

For an Architect Instruction to be valid, according to Clause 2.1, the contractor shall
comply with all instructions issued to him by the Architect which the Architect is
expressly empowered by the Condition of Contract to issue instructions. Furthermore,
all instructions issued by the Architect shall be in writing expressly entitled Architect
Instruction.
When such defective work is rectified as a variation, valuation of variation shall be
conducted to the work. According to Clause 11.5, all variations shall be measured and
valued by the Quantity Surveyor. The contractor shall provide assistance to the
Quantity Surveyor as if it is required by the Quantity Surveyor.
Where the variation work is not included in any description of works in the contract
documents, the valuation of the work shall be at a fair market rate and price
determined by the Quantity Surveyor according to Clause 11.6(c).
According to Clause 11.9, the amount of variation work shall be added to the contract
sum once the Architect has ascertained such amount for the variation work, and shall
be included in the interim certificate.

Question E By adhering to the contractors methods of rectification

of exmet instead of P.U. Sealant, will the contractor be liable if the
cracks have re-occurred?
According to Clause 6.1, contractor has executed all works, materials, good and
workmanship as described in the Contract Document and to satisfaction by the
Architect. The contractor has rectified the defect using exmet reinforcement against
the cracks as required by the engineer. However, the crack is reappeared after a
certain period of time. Therefore, the crack can be said not caused by the contractors
workmanship but by the design problem. Therefore, it not the fault by the contractor
so the contractor has the right to refused the works for rectify the reappear occurred.
Architect Instruction (AI) by the Architect is very important because Architect in
charge the project so everyone must to comply with the AI. Based on the Clause 2.1,
contractor shall comply with the AI to carry out all works instructed by the Architect
so the contractor has right to refuse for repair the defect. If the contractor is feeling
compunction and wants to help the Architect to rectify the defect, he can claim the
extra money but he should write a written notice to the Architect and issued the
problem. If the architect approved the issuance by the contractor, the extra money will
add to the contract sum.
It is not always clear what constitutes a defect. For example, if the specification is not
clear, or if the contract does not set out what testing is necessary or what the
consequences will be if a test is failed. It is also always unclear in determining the
causes of defects. For example, it may be a combination of design and workmanship
deficiencies, or an apparent defect in finishes may actually caused by a structural
problem. (Designing Building Wiki Remedial Works in Construction, 2014)
As a conclusion, from this situation, whether the contractor is liable to the cracks
reappeared is depend on the cause of defect. If the crack is due to the design
deficiencies, the contractor has no liable to the crack.

Question F Was the contractor right to insist that the architect can
no longer issue instructions to rectify works after the expiry of the
DLP?
According to the Article in PAM Form 2006, Defect Liability Period (DLP) means
the period stated in the Appendix under Clause 15.4 in which the period is usually
twelve months from the day stated in the Certificate of Practical Completion of the
works unless otherwise stated. DLP is a period whereby the contractor must repair
any defects identified by the Architect after a particular work was duly completed.
DLP is also a guarantee period offered by the contractor to the Employer under the
contract. The contractor still remains having the obligation and liability to rectify any
defects appearing within this time. However, he does not get paid for the rectification
works. (Jeremy Glover, n.d.) Instead of getting paid by the Employer, the contractor
has benefit to rectify the works at his own cost rather than the Employer employs
other person to rectify the defects and the greater cost incurred by the Employer will
then been covered by the contractor which shall be set-off under Clause 30.4.
According to the Clause 15.4, any defects appear within DLP, the Architect shall
specified such defects in a schedule of defects and delivered to the contractor within
fourteen (14) days after the expiry of DLP. Therefore, if the Architect has delivered a
schedule of defect to the Contractor within 14 days after the expiry of DLP, the
Contractor cannot refuse in compliance with the schedule of defects. Whilst the
contractor shall make good defects within twenty-eight (28) days after receipt of the
schedule of defects at his own cost. In the case where the contractor refuses or fails to
rectify the defects, the Employer may employ other person to rectify the defects. All
costs incurred in the works will then been set-off by the Employer under Clause 30.4.
Or, the Architect with the consent of the Employer, may also instruct the contractor to
leave the defects in the work, then a deduction for not made good defects by the
contractor could be set-off by the Employer under Clause 30.4.

On the other hand, if the Architect fails to issue the schedule of defects to the
Contractor within fourteen (14) days after the expired of DLP, the Architect will loss
his right to issue any instruction to the contractor. Therefore, the contractor can refuse
to comply the schedule of defects.

12 months
Issuance of
CPC

DLP start

14 days
DLP end

Architect can issue

instruction to rectify
any urgent defects
appear during DLP

Timeline 2

Architect can issue Architect can no

longer to issue
a schedule of
defects after DLP any instruction to
the contractor

Question G Is the contractor liable to repair the re-appeared cracks

after he had rectified them?
Defects are a very common cause of disputes on construction projects. The natural
reaction to defects is to quickly apportion blame and seek redress to put the works
back in the position they would have been if there had not been a defect. However, it
is generally take time to determine correctly the cause of defect and to assess the
remedial work. Consequently, determining the party who is responsible to bear the
cost of remediation against the defect. (Designing Building Wiki Remedial Works in
Construction, 2014)
The Contractor is responsible to rectify and complete the work. In the case where the
defects is due to the design problem the contractor is not liable to repair the reappeared occurred. However, the contractor shall provide a good workmanship, goods
and materials in accordance with the contract document. In contrast, the contractor is
liable to rectify the work if the contractor provides a poor workmanship.
If the defect is due to the contractors faults, the contractor is liable to rectify the
defects, such as poor workmanship, material not accordance to the contract
documents. If the Architect instructs the contractor to rectify the re-appeared cracks
during the defects liability periods or issue in the schedule of defects, the contractor is
liable to comply the Architect Instruction. However if the Architect failed to instruct
the contractor to rectify such defects during DLP or issue schedule of defects within
14 days after the expired of DLP, the contractor has no liability to rectify such
defects.

Question H Has the architect failed in his duty to issue the

Schedule of Defects?
According to Clause 15.4, the Architect shall issue the schedule of defect within
fourteen (14) days after the expiry of Defect Liability Period (DLP). The Architect
has failed in his duty to issue the schedule of defects in case the Architect did not
issue schedule of defects within that period. There are two cases where the Architect
is likely to be said has failed his duty in issuance of schedule of defects. Firstly, the
Architect has failed in his duty to issue a schedule of defects when a defect such as
crack appears during DLP. Therefore, the contractor can refuse to rectify such defect.
In other case, when a defect is appeared after DLP but within 14 days of the
expiration of the DLP, the Architect did not include such defect in the schedule of
defects to the contractor, the Architect is said to have fail in his duty to issue the
schedule of defect. This is because the Architect has his responsibility to always keep
himself up-to-date on the condition of the works. Therefore, any defects appear
during that period, the Architect is obligated to include it in the schedule so that the
contractor is unable to refuse in compliance with the instruction in any reasonable
ground.
In contrast, the architect has no failed in his duty to issue a schedule of defects
whereby the defect is appeared after fourteen (14) days of the expiration of DLP.
Besides, the liability of the contractor to the Contract is came to an end where there is
no any schedule of defects and Final Certificate shall be issued to the Contractor by
the Architect. Therefore, the Architect has no right to issue any instruction to
contractor to rectify the defects. As a conclusion, from my point of view, the
Architect has no failed in his duty to issue the schedule of defects as the defect is
appeared after DLP.

12 months
DLP start

Architect fails to issue

schedule of defects if the
defects appear within this
period of time

14 days
DLP end

Architect fails to issue

schedule of defects if
the defects appear
within this period of
time
Timeline 3

Architect is no failed to
issue schedule of defects
if the defects appear
after 14 days from the
expiration of DLP

Conclusion
Defects are one of the major causes of dispute and construction litigation. Dealing
with construction failures requires various degrees of familiarity with law, building
technology and practice. There is often disagreement when it comes to identifying
what a construction defect is. This, of course, will be down to the differing viewpoints
and interests of those who are asking the question or making the determination. These
parties typically include the builder, developer, contractor, subcontractor or consultant
team.
There is no short or definite answer to this question. However, there is a big
difference between design deficiencies and workmanship deficiencies. These
construction defects could range from complex foundation and framing issues, which
threaten the structural integrity of buildings, to aesthetic issues such as improperly
painted surfaces and deteriorating wood trim around windows and doors.
(Jeremy Glover, n.d.)

References
Lecture Note:
1. Sr.Zetty (2015) Construction Contract And Law 2, QUS 3204 [Lecture Note]
Materials, Goods and Workmanship. INTI International University. Department of
Quantity Surveying
2. Nik Fatyma (2014) Professional Quantity Surveying Practice, EGK 2122 [Lecture
Note] Completion and Defects Liability. INTI International University. Department of
Quantity Surveying
E-Book:
1. Jeremy Glover (n.d.) Liability for Defects in Construction Contracts Who pays
And How Much [Online] Fenwick Elliott. Available from: www.fenwickelliott.co.uk
[Assessed: 03/04/2015]
Wikis
1. Designing Building Wiki (2014) Defects in Construction [Online] Available from:
http://www.designingbuildings.co.uk/wiki/Defects_in_construction

[Assessed:

03/04/2015]
2. Designing Building Wiki (2014) Remedial Works in Construction [Online]
Available from: http://www.designingbuildings.co.uk/wiki/Defects_in_construction
[Assessed: 03/04/2015]
Statutes
1. Malaysia. Agreement And Conditions Of PAM Contract 2006 (With Quantities)
(2007) Kuala Lumpur: Pertubuhan Akitek Malaysia