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Assignment

MBG 1243 –Construction Contract Studies 1

Lecture : En Norazam Othman

Comparative analysis on clauses concerning payment and


obligations:
1. PWD Form 203A
2. PWD Form DB (Rev. 2007)
3. PAM Contract 2006 (With Quantities)

NAZIB FAIZAL (MB101105)

Faculty of Build Environment

Course : MSc- Construction Contract Management

MB101105-Nazib Faizal 1
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

1 General view in payment obligation


Clauses that related to the payment obligation are in Table 1. PAM 2006 governs the payment
in clause 30. PWD 203A governs the payment in clause 28, and PWD DB governs payment in
clause 31, 36, 53, 55, and 57.

Table 1 Clauses that related to the payment obligation

No Standard Form Clause Description


1 PAM 2006 25 Determination of contractor’s employment by employer
26 Determination of own employment by contractor
30 Certificates and payment
37 Performance bond
2 PWD 203A 28 Payment to contractor and interim certificates
31 Final account and payment certificate
54 Payments upon termination
60 Payment to nominated sub-contractor or supplier
3 PWD DB 31 Default in payment of wages
36 Direct payments to contractor’s consultants
53 Interim payments
55 Effect of PD’s certificates and payment by government
57 Advance payment
63 Payments upon termination

In this assignment, I would like to compare base on:

1. Parties who involves in payment obligation


2. Type of payment
3. Interim payment stages statement
4. Advance payment
5. Procedure of Interim Payment
6. Schedule of issuing interim certificates
7. Requirement upon issuing interim certificates
8. Contractor’s obligation in applying payment
9. Procedure of payment upon completion
10. Wages of workmen affects the final payment
11. Retention fund/performance bond
12. Payment for liquidated damages
13. Payments upon termination
14. Performance bond
15. Direct payment to the third party
16. Late payment by government/employer

MB101105-Nazib Faizal 2
2 Comparison
No Item PAM 2006 PWD 203A PWD DB
1 Parties who involves parties involves: parties involves parties involves:
in payment 1. Contractor 1. Contractor 1. Contractor
obligation: 2. Architect 2. Superintending Officer(SO), 2. Project Director (PD)
3. Quantity Surveyor or SO’s representatives 3. Employer
4. Employer 3. Employer
2 Type of payments Stages Stages Advance payment and stages
3 Interim payment Stated in appendix Stated in appendix Stated in appendix
stages statement
4 Advance payment No advance payment No advance payment 25% of the value of the contract
sum
5 Procedure of interim Procedure: Procedure: Procedure:
payment 1. Contractor submit a payment 1. Contractor shall complete the 1. Contractor shall submit
application at the interim work as in Appendix interim payment application
claim interval as stated in the 2. Regarding to the complete 2. PD consider and ascertain
Appendix work, SO shall make the amount in 28 days
2. Architect and Quantity valuation of the complete 3. PD issuing the interim
consider and ascertain the work in 14 days payment certificates
amount in 21 days 3. SO issuing interim certificates 4. Government pays the
3. Architect issues the interim 4. Government pays the contractor base on interim
certificates base on contractor base on interim certificates
consideration and certain certificates
amount
4. Employer pay the contractor
base on interim certificates
issued by architect
6 Schedule of issuing 21 days 14 days 28 days
interim certificates
7 Schedule of interim Within the period of honouring Stated in appendix, if it not stated Stated in appendix, if it not
certificates payment certificates = 30 days stated = 30 days
8 Contractor’s Complete details and particulars To make a works is done and SP 1. The value of works done and
obligation in applying as required by the Architect and can make a valuation properly executed
payment Quantity Surveyor 2. The amount on any valuation

MB101105-Nazib Faizal 1
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No Item PAM 2006 PWD 203A PWD DB


of variations or the
instructions by the PD
(clause 24
3. The amount in regard to the
expenditure of provisional
sums executed or expended
(clause 25)
4. The value of any goods or
unfixed materials delivered
to or adjacent to the site
intended for use or to be
incorporated into the works
5. The upervision reports as
required by the PD under
clause 13.1
9 Procedure of 1. After six month after practical 1. Within 3 month after the 1. Within 3 month after
payment upon completion of the works, the issuance of the certificate of issuance of the certificate of
completion contractor shall send all practical completion, the completion of making good
documents necessary for contractor shall submit defects or the certificate of
preparing the final count to application to enable the final completion of maintenance
Architect and Quantity account prepared by the SO. (if any), Contractor shall
Surveyor If contractor failed, SO shall submit to PD a statement of
2. If the parties are agree in forthwith make the the final account showing in
final account, then architect assessment based on detail the value
shall issues penultimate available document for the 2. PD proceed to verify the final
certificate for the release of final account account based on the
the retention sums and any 2. Within 3 months after the document which is given by
other outstanding sum expiry of the defects liability contractor
3. Within 21 days after the period for the whole of the 3. If final account is verified, PD
period oh honouring works or 3 month after the shall issues Final certificate
certificates for the payment of issue of the certificate of which consists of balance
the penultimate certificate completion of making good sum
and within 21 days after the defects under clause 48 4. Final payment is paid by the
certificate of making good hereof, SO shall issue the government to the
defects has been issued, in final certificate that consists contractor. Final payment will

MB101105-Nazib Faizal 2
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No Item PAM 2006 PWD 203A PWD DB


the event no penultimate of supported documents, full not be paid unless the
certificate has been issued; particulars complete with contractor satisfied the SO in
the final certificate shall be receipt, vouchers, final his obligation due to the
issued by architect valuation, any amount workmen
4. Final certificate are issued determined in clause 31.1
which consists of final 3. Final payment is paid by the
account and the total sums government to the contractor.
certified in previous payment Final payment will not be paid
certificates unless the contractor satisfied
5. If any difference between the SO in his obligation due
balance due to contractor to the workmen
and employer, the balance
shall be payable by the
employer to the contractor
within the period of
honouring certificates
10 Wages of workmen Final payment is not affected by Wages of all the workmen has to Wages of all the workmen has to
affects the final wages matter between the be paid and all contributions be paid and all contributions
payment workmen that have been under the Employment Act 1955, under the Employment Act 1955,
employed by the contractor, The Employee;s Social Security The Employee;s Social Security
workmen employed by sub act 1969, The Employee’s act 1969, The Employee’s
contractor, labor, and etc provident Fund Act 1991 and any provident Fund Act 1991 and
other laws relevant to the any other laws relevant to the
employment of workmen have employment of workmen have
been paid. been paid.
11 Retention fund Retention fund will release after No retention fund is applied in No retention fund is applied in
Architect issued Pnultimate government standard form. government standard form.
Certificate. Performance bond
shall be refunded to the
contractor without interest on the
completion of works.
12 Payment for If the contractor fails to complete If the contractor fails to complete If the contractor fails to complete
liquidated damages the works by the completion the works by the date for the works by the date for
date, Architect shall issue a completion or within any completion or within any
certificate on non-completion. extended time granted pursuant extended time granted pursuant

MB101105-Nazib Faizal 3
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No Item PAM 2006 PWD 203A PWD DB


Upon the issuance of the to clause 43, the SO shall issues to clause 49, the PD shall issues
certificate of non completion , a certificate of non completion to a certificate of non completion to
the contractor shall pay or allow the contractor and notice the the contractor and notice the
to the employer a sum intention of the Government to intention of the Government to
calculated at the rate stated in impose liquidated and impose liquidated and
appendix ascertained damages that stated ascertained damages that stated
in appendix. in appendix.
13 Payment upon Base on reasonable valuation Base on reasonable valuation. If Base on reasonable valuation. If
termination and put in the final account. contract is terminated under contract is terminated under
clause 50 and 52, the amount to clause 50 and 52, the amount to
be paid (in so far as such be paid (in so far as such
amounts or items have not amounts or items have not
already been covered by already been covered by
payments on account made to payments on account made to
the contractor) shall be the the contractor) shall be the
following: following:
a. The value of all work carried a. The value of all work carried
out up to the date of out up to the date of
termination termination
b. The amounts payable in b. The amounts payable in
respect of any preliminary respect of any preliminary
items so far as the work of items so far as the work of
service comprised therein has service comprised therein
been carried out or performed has been carried out or
and a proper proportion of performed and a proper
any such items which have proportion of any such items
been partially carried out or which have been partially
performed carried out or performed
c. The cost of materials or c. The cost of materials or
goods reasonably ordered for goods reasonably ordered
the works which have been for the works which have
delivered to the contractor or been delivered to the
of which the contractor is contractor or of which the
legally liable to accept contractor is legally liable to
delivery accept delivery

MB101105-Nazib Faizal 4
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No Item PAM 2006 PWD 203A PWD DB


d. A sum being the amount of d. A sum being the amount of
any expenditure reasonably any expenditure reasonably
incurred by the contractor in incurred by the contractor in
the expectation of completing the expectation of
the whole of the works in so completing the whole of the
far such expenditure has not works in so far such
been recovered by any other expenditure has not been
payments recovered by any other
e. The reasonable cost of any payments
protection works and removal e. The reasonable cost of any
of equipment and site protection works and
facilities pursuant to removal of equipment and
termination as provided under site facilities pursuant to
the contract. termination as provided
under the contract.
14 Performance bond In the event, If the employer If the contractor fails to performs If the contractor fails to performs
determine the employment of the any of his obligations under the any of his obligations under the
contractor, or if there is any contract and such failure is non contract and such failure is non
breach of contract, the employer remedied in accordance with this remedied in accordance with this
may call on the performance contract, the government shall be contract, the government shall
bond and utilize and make entitled to call upon the be entitled to call upon the
payments out of or deduction performance bond, wholly or performance bond, wholly or
from the performance bond for partially. partially.
the completion of and/or The performance bond may be The performance bond may be
rectification of the works and released or refunded to the released or refunded to the
reimbursement of loss, and contractor upon the completion of contractor upon the completion
or/expense suffered by the works. of works.
employer.
In the event, if the contractor
determines his own employment,
the employer shall return the
performance bond to the
contractor for cancellation.
15 Direct Payment to the No provision for direct payment Government shall paid the Applied in direct payment to the
third party to the subcontractor/consultants nominated sub contractor’s consultants. For the

MB101105-Nazib Faizal 5
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No Item PAM 2006 PWD 203A PWD DB


contractor/suppliers according to purpose of payment to the
interim certificates/final consultant, the contractor and
certificates the consultant shall enter an
irrevocable Deed of Assignment
for the assignment of any money
due to the consultant to be paid
directly by the government.
16 Late payment by Employer shall pay interest No provision No provision
employer/government basen on the Maybank Lending
Tate plus one percent

MB101105-Nazib Faizal 6
MB101105-Nazib Faizal 1