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engineering & law

Suspension
Water ResourcesOfManagement
Work: In
Malaysia
An – The Way Forward
Overview
By Ir. Harbans Singh K.S., BE (Mec) S’pore, P.E., C. Eng,
LLB (Hons) London, CLP, DiplCArb

S
uspension represents a contingency that can be Drawing upon the above definitions, it can be concluded
made available to both parties to the contract in that the word ‘suspension’ entails the following meanings
certain defined situations whereby the progress and consequences within its ambit:
of the work can be temporarily halted. The
reasons for such freezing of rights and obligations under ● By suspending the works under the contract, the parties
the contract are many and are furthermore dependent upon merely stop or cease all work related activities on a
the identity of the particular party invoking the said temporary basis. The contract, inclusive of all rights
mechanism. In practice, the common grounds giving rise and obligations thereunder, however subsists during
to suspension vary from issues connected with financial the period of suspension;
matters 2 at one end of the spectrum to the vagaries of the
weather at the other end. Despite its importance in the ● In a similar vein, by suspending the contract itself there
implementation of a typical contract, little or no emphasis is a moratorium on all facets, rights and obligations
has been placed by local drafters of conditions of contract under the contract inclusive of the performance of all
3
to expressly empower the parties to exercise the right of work related activities. In essence, the ‘suspension of
suspension. Even where prudent draftspersons have the contract’ is, prima facie, wider in scope and effect
envisaged its application, such rights are usually one- than the limited ‘suspension of works’ under the
sided i.e. permitting only the employer and not the contract only; and
contractor to invoke such a remedy. Perhaps it is timely
for the engineering/construction industry to give due ● The alternative description of ‘postponing’ works or
recognition to the above-mentioned contingency by the contract has fundamentally a similar meaning and
incorporating express stipulations vis-à-vis the subject effect as suspension. It involves either the ‘works’ or
at hand; a move that definitely will not stultify but on the rights and obligations of the respective parties being
the contrary will auger well for the balancing of the rights held in abeyance for the period of suspension.
between the parties. In Malaysia, such a shift in thinking
is reflected in some standard forms, such as the CIDB
Standard Form of Building Contract (2000 Edition) 4, the SUSPENSION: PRINCIPAL TYPES
Putrajaya Conditions of Main Contract 5 and the IEM.ME
1/94 Forms 6. However, it is necessary to take the exercise Logically, both the parties to the contract should be
one step further by affording all parties to the contract able to exercise the power of suspension, if and when
reciprocal rights to the like effect. necessary. This is subject to the express terms of the
agreement that they have entered into. Hence, in the
engineering/construction industry, the parties who may
MEANING OF SUSPENSION be vested with such powers include the employers, main
contractors, sub-contractors, suppliers and the like.
Synonymous with the term ‘postponement’, suspension
has been variously defined in different texts; some
common dictionary examples are listed hereunder:

7
● The Longman Dictionary of Contemporary English
1. Director, HSH Consult Sdn. Bhd.
holds the word ‘suspension’ to mean:
2. See Channel Tunnel Group Ltd. v Balfour Beatty Con-
struction Ltd. & Others [1992] 2 All ER 609, [1993] 32
‘…. the act of officially stopping something from Con LR1.
continuing for a period of time ….’ 3. Including the standard forms
4. Clause 19
● Mozley and Whiteley’s Law Dictionary ascribes a rather 5. Clause 58.0
concise meaning 8 as reflected herebelow: 6. Clause 29
7. At P 1453
‘…. a temporary stop or cessation of a ……. right’ 8. 9th Edn. by J.B. Saunders at P 332.

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In the context of an ‘employer-main contractor’ The consequences of the abovementioned general rule
agreement the main types of suspension that can be include, inter alia, the following:
encountered in practice include, inter alia, the following:
● The employer does not have a power to order the
A. Employer Ordered Suspension contractor to suspend work under the contract unless
there is an express term in the contract empowering
This species of suspension represents the bulk of him so to do 12;
the suspensions effected in the industry as express
provisions permitting their realization are not only ● Likewise, a contractor cannot suspend work under
included in standard forms of conditions of contract the contract if he so desires in the absence of an
but also enshrined in the many ‘bespoke’ forms used. express provision permitting him to do so. The
Channel Tunnel Group Ltd. v Balfour Beatty
B. Contractor Invoked Suspension Construction Ltd. & Others 13;

In the local context, though rarely practiced in ● Should the contractor proceed with the suspension
agreements employing the standard forms of conditions of work, this may constitute a breach of contract on
of contract, its usage in projects involving larger his part e.g. in failing to proceed ‘regularly and
institutional employers utilising ‘bespoke’ forms of diligently’ with the work: Canterbury Pipelines Ltd. v
conditions of contract is slowly increasing in frequency. Christchurch Drainage Board 14. Such a breach may
further entitle the employer to determine the
C. Contractor Requested Suspension contractor’s employment provided there is an express
term making provision for the same and the said
More commonly seen in agreements where only ground is one of the default’s stipulated therein e.g.
the employer is given the power to suspend works e.g. clause 25.1(i) and (ii) PAM ‘98 Forms (With and
‘package deal’ types of contracts, nominated sub- Without Quantities) Editions;
contracts, etc., under this species of suspension, either
the contract provisions expressly permit the contractor ● There must be actual and not just a virtual suspension
to request the contract administrator to allow works of work: JM Hill & Sons Ltd. v Camden LBC 15.
to be suspended on particular grounds e.g. need to Furthermore, a mere threat to suspend work has been
reassess the design, adverse weather affecting quality/ held on the facts not to constitute a repudiatory breach
safety of work, etc. or the contractor persuades the of contract: F. Treveling & Co. Ltd. v Simplex Time
contract administrator to order suspension ‘for the Record Co. (UK) Ltd. 16; and
proper construction and completion of the works’ 9.
● In situations, where the contractor desires to respond
D. Constructive Suspension appropriately to the employer’s alleged defaults e.g.
failure to pay on interim certificates, etc. in the
Strictly, this applies where any act or omission of absence of express provisions permitting him to
the employer has the effect of impliedly halting the suspend works, other than arbitration and/or
contractor from undertaking his obligations or litigation, the only option he may have is to determine
suspending the works for an unreasonable time 10. A his employment under the contract: DR. Bradley (Cable
local example of this is clause 29.1 of the IEM.ME 1/ Jointing) Ltd. v Jefco Mechanical Services 17. This
94 Form where the contractor is deemed to be instructed matter was further explored in the New Zealand case
to suspend work if he is prevented by the engineer
from delivering or erecting Plant in accordance with
the programme.
9. See ‘The ICE Design and Construct Contract: A Commentary’
GENERAL RULE ON SUSPENSION by. B. Eggleston at P 235.
10. See ‘Law and Practice of Construction Contract Claims’ by
Chow Kok Fong at P 170.
It is trite law that unless there is an express term
11. See also ‘100 Contractual Problems and Their Solutions’ by
permitting suspension enshrined in the contract, parties do R. Knowles at P 87. See also Kah Seng Construction Sdn.
not have a right to either: Bhd. v Selsin Development Sdn. Bhd. [1997] 1 CLJ Supp. 448.
12. See ‘An Engineering Contract Dictionary’ by Vincent
● Suspend work under the contract, or Powell-Smith at P 546.
13. [1992] 2 All ER 609, [1993] 32 Con LR 1.
● Order work to be so suspended 14. [1979] 16 BLR 76.
15. [1980] 18 BLR 31
Hence, in essence, there is no right at common law to 16. [1981] Unreported.
effect the above 11. The only other permissible way to effect 17. [1989] Unreported. See also Kah Seng Construction Sdn.
suspension is by the variation of the contract through Bhd. v Selsin Development Sdn. Bhd. [1997] 1 CLJ Supp.
mutual consent. 448.

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of Canterbury Pipelines Ltd. v The Christchurch suspension of the works. The contractor has no similar
Drainage Board where the court of appeal stated: 18 rights although under sub-clause 29.1 of the IEM.ME
1/94 Form, the contractor has a limited avenue of
‘In such cases, if the contractor cannot or does not suspension under the so called ‘deemed’ or
wish to rescind and cannot prove impossibility or its ‘constructive’ suspension provision. However, even
equivalent, he will be left with whatever remedies the latter is of very restricted nature and application;
regarding the recovery progress payment may be
available to him under the contract’. ● The common express provisions as listed hereabove
essentially encompass the following facets of the
In view of the above judicial pronouncements spelling suspension mechanism:
out the court’s approach to this matter, the issue of
suspension must be handled with due circumspect and 1. The power of the contract administrator to order
vigilance. suspension;

EXPRESS CONTRACTUAL PROVISIONS 2. The circumstances or situations in which such


power can be exercised;
General
3. The formalities pertaining to the ordering of the
From the foregoing discussion it is apparent that most suspensions;
standard forms of conditions of contract make no provision
whatsoever for the eventuality of suspension, 4. The procedural requirements vis-à-vis issues
concentrating instead on determination or termination of consequent to the suspension such as
employment. Only as of recent have the newer standard responsibilities of the contractor, cost and time
forms attempted to specifically incorporate suitably drafted implications, effect of prolonged suspension and
clauses to cater for the suspension of works; notable resumption of work following suspension.
examples of which are as listed herebelow.
5. Miscellaneous formalities and procedural
● CIDB Standard Form of Contract For Building Works requirements.
(2000 Edition): The main provision is clause 19 entitled
‘Suspension’. ● Prima facie, the said express provisions give the
contract administrator an apparently wide or
● IEM.ME 1/94 Form for Mechanical and Electrical unfettered power to order suspension of work in terms
Works: The applicable express provision is clause 29: of scope, timing and manner.
Suspension of Works, Delivery or Erection.
● The duty of compliance to a properly issued or
● PUTRAJAYA Conditions of Main Contract: Under the contractually valid suspension order is on the
instant form, the issue of suspension is dealt with contractor; and
vide clause 58.0 19.
● The form of the suspension order is envisaged to be
Comments on the Provisions in an express mode i.e. through a formal instruction
issued by the contract administrator. However, the
Cognisance should be taken of the following matters IEM.ME 1/94 Form vide sub-clause 29.1 makes
pertaining to the express contractual provisions: provision for the so called ‘deemed’ suspension order
in the limited circumstances spelt out in that sub-
● Except for clause 19 CIDB Form (2000 Edition), clause clause. However, such a mode is unique only to the
29 IEM.ME 1/94 Form and clause 58.0 Putrajaya said IEM Form.
Conditions of Main Contract, the rest of the common
local standard forms of conditions of contract e.g.
the JKR Forms, the PAM ‘98 Forms, the IEM.CE 1/89 PRINCIPAL PURPOSES FOR SUSPENSION
and CES 1/90 Forms, the Putrajaya Conditions of
Nominated Sub-Contracts, etc. have no express General
contractual provisions covering the issue of
suspension. Hence, for the latter forms neither the Contrary to popular belief, suspension is, and remains
employer has an express power to order suspension a convenient mechanism at the disposal of the contracting
nor the contractor the right to suspend works under parties to address specific issues during the currency of
the contract; the contract without incurring liability for breaching the
contract in any way. In most instances, suspension affords
● Even where express stipulations have been enshrined
in the conditions of contract, it is obvious that these
are blatantly one-sided i.e. they are intended to 18. [1979] 16 BLR 78.
empower only the employer to suspend or order 19. Entitled ‘Suspension of Works’.

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the parties the necessary opportunity to take a ‘breather’ ● Site safety considerations;
i.e. freeze the contract or hold it in abeyance whilst
reflecting upon or reassessing particular issues before ● Unforeseen conditions encountered;
resuming or restarting the contract with the benefit
obtained therefrom. ● Unexpected restrictions imposed on the works;

The necessity for such an eventuality arises in most ● Pre-planned closures; and
contracts either by chance or by design. Specific
problems occurring during the progress of the works ● Changes in authority requirements and/or legislative
e.g. the breakdown of the contractor’s quality assurance requirements.
system, the reassessment of the design by the
consultants, etc. may compel a suspension to be A more compelling reason of late is the financial
effected. Factors beyond the parties’ control e.g. difficulty faced by employers in terms of temporary lack
governmental policy changes, legislative amendments, of funds or cash flow problems. Though prima facie, a
etc. may on other occasions trigger a requirement for seemingly valid reason prompting the justification of
an appropriate postponement of rights and obligations suspension, it has been dismissed as an abuse of the said
under the contract inclusive of the progress of work. provision by many authorities. As an example, Eggleston
opines 23:
Be that as it may, in the final analysis, there are in
most contracts compelling grounds or reasons for both ‘From the clause ………. and its wording it is clearly
the employer and the contractor 20 at one time or another intended principally for practical matters relating to
to initiate or resort to the suspension of works. when and how the works are constructed and not to
Although there are in specific instances common financial matters’
reasons or grounds for effecting the same, in general
the principal purposes show marked variance between Despite the above-mentioned position, it has not
the different parties. Owing to this distinct difference, prevented employers from expressly listing temporary lack
each of the principal parties will be dealt with of funds as one of the relevant suspension events. In
separately. tandem with contractual stipulations of the like of
‘Determination by Convenience’, suspension on financial
Employer’s Purpose grounds is beginning to feature commonly in ‘bespoke’
forms on the local scene.
A review of the common express contractual
provisions 21 reveals the fact that though such Contractor’s Purpose
stipulations give the contract administrator an
apparently absolute discretion to suspend works under It is obvious that none of the common local standard
the contract as he deems necessary, the rationale behind forms of conditions of contract makes any provision
such exercise of power is not specified. Prima facie, whatsoever for the contractor to suspend works under
such clauses therefore appear one-sided and on the face the contract no matter how valid a ground he may have.
value inequitable. However, if one were to delve deeper However, this does not mean that the said deficiency
into the matter, it is apparent that there may be valid should, and has been overlooked by fair-minded
grounds for the employer to resort to suspension in practitioners inclusive of the contractors themselves. A
any particular situation. Various reasons have been good proportion of ‘bespoke’ forms afford the contractor
proffered by leading authorities 22 in the engineering/ a commensurate right to suspend works; these being
construction field to justify the employer’s invoking premised on the following principal grounds:
the instant mechanism; a summary of which is appended
herebelow: ● Failure of the employer to pay on interim certificates;

● Reassessment of the design of the works; ● Reassessment of design of works where the design
element is included in the contractor’s scope of
● Change in the employer’s requirements; work 24;

● Adverse weather conditions affecting the safety


and/or quality of the works or people engaged
thereon;
20. And the sub-contractor.
21. See hereabove.
● Breakdown of the contractor’s quality assurance 22. See ‘The ICE Design and Construct Contract: A
system; Commentary’ by B. Eggleston at P 235.
23. Ibid. Whilst dealing with clause 40 of the ICE Design and
● Contractor’s default or unsatisfactory performance; Construct Contract Conditions.
24. E.g. for works under P.C. Sum or ‘Package Deal’ types of
● Access and possession of site problems; contracts.

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engineering & law
● Adverse weather conditions affecting the safety and/ other forms. Presumably the suspension instruction
or quality of the works or people engaged thereon; must comply with the relevant formalities and
procedural requirements applicable to a typical
● Specific defaults of the employer or the contract instruction under the particular form of contract;
administrator 25;
● By virtue of the instruction, the contract administrator
● Site safety considerations; and is permitted to order suspension of the execution of:

● Unforeseen conditions encountered; 1. Part of the works; or


2. The whole of the works
Of the many grounds listed hereabove, failure of the
employer to effect payment remains the main reason where The above includes the suspension of the delivery of
contractors feel entitled to suspend works until the plant or equipment to site and the erection of such
employer remedies the default. This is especially so where items already delivered to site 27.
the conditions of contract do not make failure to pay a
ground for permitting the contractor to determine his ● The contract administrator may issue such instruction
employment. as and when he so desires and for such time or times
and in such manner as in his absolute discretion is
considered necessary. He does not need to give any
PROCEDURAL REQUIREMENTS reason/justification to the contractor for the exercise
of the same. Hence, the contract administrator’s power
General to order suspension appears indeterminate and
unfettered. This is subject to an implied obligation
For the suspension to be tenable at law not only must to exercise the absolute discretion bestowed on him
it comply with the substantive matters but also the on objective grounds although, prima facie, appearing
procedural requirements expressly stipulated in the purely subjective. Should the discretion be abused
contract. Otherwise it may constitute a breach of contract i.e. ordering of suspension on purely financial grounds
on the part of the party initiating the suspension with its where such grounds are not enshrined in the contract,
dire consequences. With the said proposition in mind, it the contractor has a right to mount a challenge on
is necessary to examine the procedural requirements vis- the basis of mal-administration of the contract;
à-vis the issue of suspension from the employer’s point
of view since such a remedy seems to be available only to ● The instruction to suspend work must stipulate
the latter in the applicable standard forms 26. essential matters such as the extent and nature of the
work involved and the timing for the commencement
Suspension Procedure of the suspension. In emergency situations e.g. where
safety issues are concerned, such suspension orders
Under the CIDB Form, IEM.ME 1/94 Form and may be of immediate effect. For others e.g. need to
Putrajaya Conditions of Contract, the following principal reassess design, change in employer’s requirements,
procedural requirements can be noted: etc. a reasonable notification period is usually given
28
; and
● The respective conditions of contract empower only
the contract administrator to order a suspension of ● Cognisance should be taken of the fact that the
the works. Hence, such a body would include: instruction to suspend work may not necessitate the
issue of a formal instruction at all under certain
1. The ‘Superintending Officer (S.O.)’: CIDB Form conditions of contract or in the case of ‘constructive’
suspension. As an illustration, by virtue of clause
2. The ‘Engineer’: IEM.ME 1/94 Form; and 29.1 of the IEM.ME 1/94 Form, should the engineer
prevent the contractor from delivering or erecting
3. The ‘Employer’s Representative (E.R.)’: Putrajaya Plant in accordance with his approved programme,
Conditions of Main Contract this is deemed to be considered to be an instruction
to suspend. Therefore, one should be mindful of the
It should be appreciated that none of these forms precise wording of the applicable clause and the
bestow a commensurate power on the employer
himself. Hence, he must act through the contract
administrator;
25. A good example would be the specified events in the CIDB
● The contract administrator may suspend work only Form (2000 Edition).
by means of an instruction issued formally to the 26. Furthermore, it is the most common form of suspension in
contractor. Although clause 58.01 of the Putrajaya practice.
Conditions uses the terminology of a ‘written order’, 27. See clause 29.1 IEM.ME 1/94 Form.
it essentially refers to an instruction in line with the 28. E.g. between 7 to 14 days as appropriate.

BULETIN INGENIEUR 29
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implied effects of the parties’ acts or omissions in duration of the suspension. Human resources, plant,
relation to their rights and obligations under the equipment can be reassigned, if possible, as necessary,
contract. in an attempt to mitigate the full rigours of the
suspension. A skeleton staff essential to undertake
Contractor’s Duties Following Suspension the remaining duties during the suspension period
e.g. security and maintenance of site, preparation of
Upon receipt of the order to suspend works from the claims, other administrative duties, etc. should be
contract administrator, the contractor has forthwith to maintained as these may be eventually paid for by
adopt certain measures consequent to the said order. These the employer.
measures must be in line with the relevant contract
stipulation e.g. clause 19.1 (a) of the CIDB Form (2000 3. Contractor to Secure and Protect the Works
Edition) which reads:
The contractor’s duty to secure and protect the
‘The contractor shall on an instruction of the works so far as is necessary in the opinion of the
Superintending Officer, suspend the execution of the contract administrator during the period of suspension
works or any part of the works …… and shall during is not only an implied requirement but in addition
such suspension, properly protect and secure the works expressly stipulated in most standard forms of
or such part of the works so far as is necessary or in conditions of contract 30. Furthermore, there is often
accordance with the instruction of the Superintending either an implied or express necessity for the
Officer’. contractor to maintain the works in question for the
said period.
Since the contractual provisions are never complete
and exhaustive, the bulk of the required measures have In assigning this responsibility to the contractor,
to be established by necessary implication. The essential the consequent risks during the suspension period
procedural arrangements would generally include 29: are accordingly passed on to him. He then remains
primarily liable for the security of the works,
1. Contractor to Suspend Works protection against the elements and deterioration from
foreseeable causes, etc. In discharging this duty, the
The initial response of the contractor should be to contractor is expected to implement only reasonable
comply with the suspension order effective on the steps within the context of the contract and no more.
date named in such order by discontinuing all works Should measures over and above the norm be
under the contract. This would entail basically: necessary, he must seek the consent and direction of
the contract administrator as at the end of the day
a) Halting all construction, erection, installation, etc. the employer has to ultimately reimburse the
related activities; contractor for the same.

b) Suspending the ordering, fabrication off-site, Position Post Expiry of Suspension Period
delivery to site, etc. of all material, plant and
equipment; and Suspension, being essentially of a temporary nature,
can be of a limited period only. This fact is supported by
c) Ceasing to undertake all other activities or the various express provisions which stipulate a definite
operations in relation to the works under the duration for any one suspension order; examples of such
contract e.g. design work, appointment of sub- life spans being:
contractors, etc.
1. IEM.ME 1/94 Form: Maximum 84 days 31
Since most contractors would have farmed out the
bulk of the elements under the contract to a host of sub- 2. Putrajaya Conditions of Main Contract: Maximum
contractors/suppliers, it would be incumbent for the former 150 days 32
to accordingly initiate the commensurate suspension
downstream. This exercise should not pose any problem 3. CIDB Form (2000 Edition): Maximum of 3 months 33
as most contractors normally tie their sub-contractors/
suppliers on a ‘back-to-back’ basis.
29. See ‘Law and Practice of Construction Contract Claims’ by
2. Contractor to Demobilise
Chow Kok Fong at P 170 & 171.
30. See Clause 19.1 CIDB Form (2000 Edition), Clause 58.01
In tandem with the cessation of the activities Putrajaya Conditions of Main Contract, etc.
related both to site work and ‘off-site’ disciplines, it 31. Clause 29.4
would be prudent for the contractor to undertake a 32. Clause 58.03
demobilization of resources for the anticipated 33. Clause 19.2 and Appendix to Conditions

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Following the issue of a typical suspension order to Unless the suspension is due to the following
the contractor, the situations as listed hereunder can reasons, the contractor has a right to invoke the
occasion: consequential steps to deal with the prolonged
suspension 35:
1. The contract administrator lifts the suspension by
instructing the contractor to resume work before ● Expressly provided for in the contract e.g. clause
the suspension period is over; or 19.2 CIDB Form (2000 Edition), clause 58.03
Putrajaya Conditions of Main Contract, etc.; or
2. The contract administrator instructs the contractor
to resume work upon the lapse of the suspension ● Necessary by reason of the contractor’s default
period; or e.g. clause 29.4 IEM.ME 1/94 Form, etc.

3. The contract administrator expressly extends the 3. Contractor to Notify Contract Administrator for
suspension period by a definite time either before Permission to Proceed With Works
the original suspension period is over or upon its
lapse; or Should the reasons for the prolonged suspension
be neither expressly provided for in the contract nor
4. The suspension period lapses and the contract attributable to the contractor’s default, the contractor
administrator gives no instruction whatsoever to may serve a written notice to the contract
the contractor. administrator for permission to recommence or resume
with the suspended works in whole or part (as
The 1st and 2nd situations have clear implications as applicable) within a stipulated period of receipt by
these are usually contractually valid and have the the latter of the said notice.
consequential effects well spelt-out. The contractor
under such scenario would adopt a series of measures The period stipulated in the above notice is usually
i.e.: prescribed in the applicable contractual provision;
common examples include:
1. Resume with the works i.e. recommence with all
work related activities such as construction, ● 14 Days: Clause 19.2 CIDB Form (2000
erection, installation, ordering, delivery of materials Edition); and
to site, etc.;
● 28 Days: Clause 29.4 IEM.ME 1/94 Form and
2. Remobilise all necessary resources to resume with Clause 58.03 Putrajaya Conditions of Main
the works under the contract.; and Contract

3. Proceed with his relevant claims for additional Where no such period is expressly indicated, by
costs, extension of time, etc. to cover the suspension necessary implication it is to be taken as a reasonable
period. time under the particular circumstances.

In contrast, the 3rd and 4th situations are problematic 4. The Contract Administrator To Make Decision and
as under such scenarios the contractor’s position is less Respond Accordingly
well defined; being vague and nebulous. Labeled as
‘Prolonged Suspension’ is most standard forms 34, the Upon receipt of the contractor’s notice, the contract
general procedure for the contractor to follow under administrator has to make a considered decision and
these circumstances can be reduced to the steps as listed respond appropriately within the period stipulated in
herebelow: the notice 36. Should the said decision be in line with
the contractor’s application, the suspension is
1. The Contractor to Determine Whether the accordingly lifted and the contractor can resume with
Suspension Period Had Lapsed the works in question. However, if permission to
proceed with the works is not granted, the contractor
is entitled to initiate the next step in the procedural
Before the contractor can initiate any action,
chain as listed hereunder.
he must establish that the suspension falls under
the contractual definition of ‘Prolonged
Suspension’. Hence, he must establish whether the
suspension has actually exceeded the period
permitted under the contract i.e. 84 days, 150 days, 34. E.g. Clause 19.2 CIDB Form (2000 Edition).
35. See ‘The ICE Design and Construct Contract: A Commentary’
3 months, etc. as applicable.
by B. Eggleston at P 239.
36. See Clause 19.3 CIDB Form (2000 Edition), Clause 29.4
2. The Contractor to Establish Reasons for the IEM.ME 1/94 Form, Clause 58.03 Putrajaya Conditions of
Prolonged Suspension Main Contract.

BULETIN INGENIEUR 31
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5. Contractor to Exercise Right of Election to the contractor’s application in a prolonged suspension


scenario. However, since it has been stipulated in one of
If permission is not granted by the contract the standard local forms, its availability and ambit should
administrator within the time prescribed in the be taken cognizance of.
contractor’s notice of application, the contractor has
to decide on the next course of action to be adopted.
The option to be exercised is dictated both by the CONTRACTOR’S ENTITLEMENTS
extent of work affected by the suspension and the
remedies permitted contractually. These include: General

● In the case where the suspension affects the whole Unless the reason for the suspension ordered by the
or substantially the whole of the works, the contract administrator is primarily due to the contractor’s
contractor is entitled to: default or otherwise provided for in the contract, the latter
is generally entitled to the following entitlements
1. Determine his own employment i.e. if his consequent to the suspension of works 40:
contract contains a clause to this effect:
Clause 19.3 and 45.1 CIDB Form (2000 ● A commensurate extension of time to the contract to
Edition); or cater for the suspension period; and/or

2. Terminate the contract i.e. if the contract ● Reimbursement for the extra cost incurred in giving
expressly permits: Clause 29.4 and 37.1 effect to the suspension ordered.
IEM.ME 1/94 Form; or
The above listed broad categories of entitlements are
3. Treat the suspension as a Termination for primarily meant to compensate the contractor for the usual
Convenience of the Contract by the Employer consequences of the disruption to the progress of his works.
where the contract prescribes this remedy: Most contracts have express stipulations or formulae to
Clause 58.03 and 60.0 Putrajaya Conditions cater for these eventualities; notable examples of such
of Main Contract. provisions encompassing financial reimbursements include:

● In the case where the suspension affects only a ● Clause 19.1(b) CIDB Form (2000 Edition);
part or section of the works, the contractor may
treat such suspended part as an omission 37 under ● Clause 29.2, 29.3 and 29.5 IEM.ME 1/94 Form; and
the relevant clause of the contract e.g.
● Clause 58.02 Putrajaya Conditions of Main Contract.
1. Clause 28: CIDB Form (2000 Edition)
Such express stipulations, where provided for, prescribe
2. Clause 19: IEM.ME 1/94 Form in addition to the valuation methodology, also the
procedural requirements e.g. notification, etc. for the
3. Clause 41: Putrajaya Conditions of Main contractor to pursue in seeking the necessary
Contract. reimbursements. It should be noted that in the absence
of express contractual stipulations governing the
Whatever option is adopted by the contractor it must contractor’s entitlement, the common law principles would
be communicated forthwith to the contract administrator. have to be accordingly applied.
Though only the Putrajaya Conditions of Contract 38
prescribe the form of the said notice, it is advisable for Extension of Time Entitlement
the contractor to effect the same through a written notice.
The general rule is that the contractor is entitled to an
A further point to note is as to the unique third option extension of time to the contract for any disruption to his
afforded to the contractor by the IEM.ME 1/94 Form 39 i.e. progress of works i.e. if it affects the whole of the works.
where the contractor decides to treat the prolonged Should the suspension be limited to a part or section of
suspension as neither a termination nor an omission. In the works only, extension can be considered if the affected
such an eventuality the contractor can request the part or section of the works lies on the critical path 41 and
employer to take over the responsibility for protection, any float, if allotted, does not belong to the employer.
storage, security and insurance of the suspended works
and the risk of loss or damage shall thereupon pass on to
37. or a variation.
the Employer. Whilst this option has been expressly 38. See Clause 58.03 stipulating the ‘written’ mode.
prescribed under the conditions of contract, its validity 39. See Clause 29.5.
and practicality in actual practice is uncertain since it 40. See ‘The ICE Design and Construct Contract: A Commentary’
has been hardly adopted. It is a moot point as to whether by. B. Eggleston at P 236.
such an option can in reality result in a viable option in 41. See ‘Law and Practice of Construction Contract Claims’ by
the event of the contract administrator’s failure to respond Chow Kok Fong at P 170.

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In establishing the contractor’s entitlement to any 1. The Heads/Components of the Costs Claimable
extension of time to his contract, the principles and
procedures in relation to this subject have to be strictly Here again, the different forms approach this subject
complied. Of particular concern are the following pre- in varying fashions. The CIDB Form 43 does not define
conditions: the components of the cost entitlement but vide clause
19.1(b) merely labels these as ‘Loss and Expense’. In
● There must be enshrined in the contract a clause a similar vein clause 58.02 of the Putrajaya Conditions
permitting extension of time in the first place; and of Main Contract underlines the contractor’s right to
additional expenditure by reason of a suspension order
● One of the relevant grounds or events stipulated given by the Employer’s Representative without
therein should cover the instant eventuality i.e. of delving into further details or classification. The
suspension of works. IEM.ME 1/94 Form on the other hand whilst
maintaining the ‘broad brush’ approach of the two
previously mentioned forms, however, is a bit more
Examining the various standard forms of conditions
generous with the description and classification of
of contract permitting suspension, it is apparent that they
the contractor’s entitlement; these being reflected in
satisfy the above pre-conditions to the following effect:
clause 19.2 44 and 19.3 45 respectively.
● CIDB Form (2000 Edition) 42 In the absence of and notwithstanding any express
stipulations as previously considered, the cost
1. 1st pre-condition: Clause 24 Delay and Extension entitlements of the contractor 46 can be basically
Of Time broken down into a number of principal heads or
components as listed hereunder 47.
2. 2nd pre-condition: Sub-clause 24.1 (k)
● Additional costs incurred in protecting, securing
● IEM.ME 1/94 Form and maintaining the works for the period of
suspension;
1. 1st pre-condition: Clause 31.2 Extension Of Time
for Completion ● Reasonable costs involved in the demobilization
process following the suspension order and
2. 2nd pre-condition: Sub-clause 31.2 (g) remobilization upon the resumption of the works;

Interestingly, the Putrajaya Conditions of Main ● Additional costs, charges and/or premiums in
Contract do not contain an express ground to extend time extending the various insurances, performance
to the contract due to suspension of work. Hence, under bonds, guarantees, warranties, etc. incurred due
such circumstances, the only option available to the to the suspension;
Employer’s Representative would be to instruct the
contractor to accelerate works pursuant to clause 43.06 ● Reasonable expenses incurred due to the
in order to recover the period of delay occasioned by the suspension of sub-contracts and purchase orders,
suspension. Where such recovery is wholly or partly not cancellation charges (if incurred), storage and
capable of being practically achieved, the employer may warehousing charges, etc. during the period of
inevitably compromise his rights pertaining to liquidated suspension;
damages.
● Compensation for the contractor’s maintenance
of its organization, plant and equipments, etc.
Cost Entitlements
which have been committed to the project or part
of it affected by the suspension 48;
The applicable formula governing the contractor’s
entitlement to the various additional costs entitlement
consequent to the suspension are usually stipulated in
the respective conditions of contract. Such express
provisions in general spell out the relevant matters
pertaining to this issue including, inter alia: 42. See also Clause 19.1(b).
43. Form of Contract for Building Works [2000 Edition].
● The heads or components of the costs available; 44. Entitled ‘Cost of Suspension’.
45. Labeled ‘Payment in Event of Suspension’.
● The exceptions to the contractor’s right of recovery; 46. Whether described as ‘Loss and Expense’ or ‘Cost of Suspen-
and sion’, etc.
47. See also ‘Law and Practice of Construction Contract Claims’
● The procedural requirements inclusive of any special by Chow Kok Fong at P 171.
pre-conditions 48. Ibid.

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engineering & law

● Additional costs incurred by the contractor owing e) Where the suspension is necessary for the safety
to the adverse effect of the suspension process of the works;
on the contractor’s performance of the remainder
of the work following the lifting of the suspension f) Where the suspension is necessary by reason of
e.g. loss of productivity, inefficient sequencing direction/order of any statutory/governmental
of the work, abortive work, etc.; and authorities

● Other miscellaneous additional costs, charges As a general rule, unless the contractor can show
and/or expenses which can be proven attributable that either the stipulated exceptions are inapplicable
to the suspension. or are not relevant on the facts, his right of recovery
of additional costs or loss and expense by reason of
2. The Exceptions To The Right of Recovery the suspension will be likely to be compromised.

The contractor’s entitlement to the right of 3. The Procedural Requirements


recovery is curtailed by any exceptions agreed to by
the parties and as expressly enshrined in the contract. In seeking a commensurate compensation to the
Once more, the number and types of such exceptions loss and expense suffered or additional costs incurred
differ according to the particular conditions of by reason of compliance with the suspension order,
contract employed. Hence, these stipulations must the contractor must follow any procedural requirements
be strictly construed and adhered to. expressly spelt out in the conditions of contract in
force. The common standard forms have express
A. IEM.ME 1/94 Form stipulations to this effect; compliance with which is a
necessary pre-requisite to the contractor’s satisfactory
By virtue of clause 29.2 the contractor is not entitled recovery. The following pertinent points need to be
to be paid any additional cost if the suspension is taken note of in relation to some of the salient features
necessary by reason of a default on the part of the pertaining to the procedure to be adopted:
contractor.
● The contractor is required to notify the contract
B. CIDB Form (2000 Edition) administrator of his intention to make a claim 50;

Clause 19.1(b) lists out the exceptions as: ● The notice must be in writing and must be made
within a stipulated period after the receipt of the
a) Express provisions in the contract denying the order to suspend works. This period is normally:
recovery of additional costs 49; or
a) 28 days: Clause 29.2 IEM.ME 1/94 Form and
b) Where the suspension is necessary because of the Clause 58.02 Putrajaya Conditions of Main
contractor’s default or breach of contract; or Contract; or

c) Where the suspension is necessary for the proper b) 30 days: Clause 32.1 CIDB Form (2000
execution of the works; or Edition) 51

d) Where the suspension is necessary for the safety ● The contents of the notice should specify:
of whole or any part of the works.
a) The event giving rise to the claim and its
C. PUTRAJAYA Conditions of Main Contract consequences 52;

The exceptions stipulated under clause 58.02 include: b) An estimate of the likely daily cost 53 or the
value of the loss and expense 54; and
a) Express provisions in the contract denying the
recovery of additional costs; c) Any other relevant information e.g. the
appropriate contract reference, etc. 55
b) Where the suspension is necessary because of the
default of the contractor, his sub-contractors /
suppliers, etc.; 49. Or as labeled ‘Loss and Expense’.
See Clause 29.2 IEM.ME 1/94 Form, Clause 58.03
c) Where the suspension is necessary by reason of Putrajaya Conditions of Main Contract.
adverse weather conditions; 51. Entitled ‘Notice of Claims’.
52. Clause 32.1(a)(i) CIDB Form.
d) Where the suspension is necessary for the proper 53. Clause 58.03 Putrajaya Conditions of Main Contract.
execution of the works; 54. Clause 32(a)(ii) CIDB Form.
55. Clause 32(a)(ii) CIDB Form.

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engineering & law
● Within a reasonable period 56 of the issue of the of the other. Coupled with repudiation and frustration,
notice by the contractor or at such times as both suspension and determination serve as the common
mutually agreed to by the parties, the contractor mechanisms for stopping the works under the contract;
must submit to the contract administrator all whether these be on a temporary or permanent basis.
records and documents to substantiate the claim;
Suspension is seldom encountered in everyday
● Upon receipt of the contractor’s claim together practice; a fact evidenced by the dearth of corresponding
with the supporting documents, the contract express provisions in the common forms of conditions
administrator must check these for sufficiency of contract being employed in this country. However,
and accuracy. Should there be a necessity to this apparent lack of emphasis does not negate the fact
request for further and better particulars, the that suspension is, and does, represent an important
contract administrator must initiate the mechanism for the parties to temporarily stop or freeze
appropriate procedural steps to effect the same; the works and/or their rights and obligations under their
contract due to various reasons. More importantly, it
● If upon the receipt of all relevant information, does serve a secondary purpose of allowing the parties
the contract administrator is of the opinion that to address specific areas of concern e.g. reassessment of
the contractor is contractually entitled to design, review of safety measures, etc. without having
additional expenditure by reason of the to breach the contract and thereby incur the
suspension order issued, he shall ascertain the consequences of perhaps repudiating the contract. Hence,
extra costs incurred and add it to the Contract it is timely for practitioners to appreciate the legal and
price; and procedural intricacies of this important but often ignored
area of contract implementation by according it due
● The amount due shall be included in any consideration in practice. BEM
payment certified by the contract administrator
and disbursed within a reasonable period of the
contractor’s submission of all the relevant REFERENCES
documents and/or records.
1. Bockrath, J. ‘Contracts and the Legal Environment
Most standard forms of contract are worded to the for Engineers and Architects’ [5th Edn.], McGraw Hill.
effect that the condition precedent to the contractor’s
right to recover the additional costs being the issue of 2. Chappel, D. ‘Parris’s Standard Form of Building
the notice of intention to claim within the stipulated Contract’ [3rd Edn.], Blackwell.
period e.g. clause 29.3 IEM.ME 1/94 Form, Clause 58.02
Putrajaya Conditions of Contract and Clause 32.1 CIDB 3. Chow Kok Fong ‘Law and Practice of Construction
Form (2000 Edition). As to whether non-compliance Contract Claims’ [2nd Edn], Longman.
with such a condition precedent is fatal to the contractor’s
claim is a moot point depending as to whether such a 4. Eggleston, B. ‘The ICE Design and Construct Contract:
provision is construed as a mandatory requirement. To A Commentary’, Blackwell.
obviate the possibility of a claim being rendered invalid
by reason of the breach of such a provision, it is advisable 5. Gajria, K. ‘GT Gajria’s Law Relating to Building and
for contractors to comply as far as is reasonably Engineering Contracts In India’ [4 th Edn.],
practicable to its stipulations unless extenuating Butterworths.
circumstances or reasons beyond the contractor’s control
render such compliance impossible. 6. Harbans Singh K.S. ‘Engineering and Construction
Contracts Management: Post-Commencement
Practice’, Lexis Nexis/Butterworths.
CONCLUSION
7. Knowles, R. ‘100 Contractual Problems and Their
Suspension and determination are two disparate Solutions’, Blackwell Science.
topics that arise quite frequently in engineering/
construction contracts. Though appearing at first blush 8. Murdoch, J. & Hughes, W. ‘Construction Contracts’
to be distinct, they do however have a nexus in that [3rd Edn.], Spon Press.
under certain conditions of contract they share common
grounds for disrupting the flow of the work under a
contract. In particular circumstances, suspension and
determination represent alternative remedies for the
parties in the event of any default and/or breach on part 56. 30 days in the CIDB Form: Clause 32.3

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