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Key Changes THE 2009 SIA CONDITIONS OF CONTRACT (8TH EDN) WHATS NEW?

by

Johnny Tan Cheng Hye,


FSIA, FSIArb, FCIArb

PBM

Interim Payments Final Payment Claim Regime Allowance for Defects/Maintenance Certificate Termination by Contractor for Non-Payment of Adjudicated Amount Deletion of Provisions for direct payment by Employer to NSC/DSC Power to suspend work Optional Price Fluctuation
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Interim Payments
For consistency, term progress payment changed to interim payment

Interim Payments

Cl 31(1), 31(2)(a) (i) and (ii)

SOPA: s 6(a)
The amount of a progress payment to which a person is entitled under a contract shall be (a) the amount calculated in accordance with the terms of the contract;

Basis of interim payment claim added to Cl 31(2)


Subject to section 10 of the SOP Act, the basis of Contractors interim payment claim shall comply with the valuation rules of the Works as set out under Sub-Clause 4 hereof.
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Interim Payments
Cl 31 (2)(d)
Paragraphs (a) and (b) hereof on the time for the service of the Contractors payment claim on the Employer shall not apply to the time for the service of the Contractors final payment claim on the Employer under Sub-Clause 11(c) hereof.

Interim Certificate
Cl 31(3) 7th Edn
Within 14 days after receipt of the interim payment claim or the time by or the day by on which the Contractor is required under clause 31(2) to submit his payment claim, whichever is later, the Architect shall (subject to the provision of adequate vouchers and information by the Contractor) issue an Interim Certificate for payment to the Contractor (copy of which shall be forwarded to the Employer) who shall be entitled to payment of any sum stated therein as due to the Contractor.
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Distinguish interim payment claims from final payment claim.


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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Interim Certificate
Cl 31(3) 8th Edn
Within 14 days after receipt of the interim payment claims the Architect shall (subject to the provisions of adequate vouchers and information by the Contractor) issue an Interim Certificate for payment to the Contractor (copy of which shall be forwarded to the Employer)

Interim Certificate
Cl 31(3) Interim Certificate shall be issued
Within 14 days after receipt of the interim payment claim Subject to provision of adequate vouchers and information.

Deleted:
.. or the time by or the day on which the Contractor is required under clause 31(2) to submit his payment claim, whichever is later Premature claims dealt separately under cl 31(2)(c)
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Premature Claims
Cl 31(2)(c)
such early submission shall not require the Architect to issue the Interim Certificate or the Employer his payment response in respect of that payment claim earlier than would have been the case had the Contractor submitted the payment claim in accordance with the Contract.

Final Claim (7th Edition) Pre-Tiong Seng

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Ambit of SOPA Final Payment


It has been argued whether policy consideration which applies to progress payment also apply to final payment.
Non payment less likely to affect delivery and completion of works; QS feel that final payment constitute a definitive statement of final financial position and should not be subject to same pressure of timelines as progress payment; Final payment encountered at end of contract, party should be able to submit for final resolution by court or arbitration.
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Final Payment
Large no. of variations EOT and Liquidated Damages Allowance for Defects under cl 27(4) Final Payment does not affect cash flow.
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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Industrys Views

Ambit of SOPA - Final Payment


AU v AV [2006] SGSOP 10 Adjudicator decided he had jurisdiction; If cash flow is blocked on one project, it will affect a contractors cash flow on other projects; BCA Information Kit final payments are covered under the Act
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Ambit of SOPA - Final Payment


BC v BD [2006] SGSOP 11
Adjudicator decided he had no jurisdiction; On-going dispute on possible variations and final accounts; Requires detail analysis of provisions of the contract, scope of works, and technical review of works carried out which cannot be dealt with under the rigorous timelines under the Act
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Tiong Seng Contractors (Pte) Ltd v Chuan Lim Construction Pte Ltd [2007] SGHC 142
Does a final progress payment come under the purview of the SOPA for the purpose of adjudication? Court considered:
Legislative Origin; Literal Interpretation; Purposive construction; and Policy implications,

Final Payment Claim

Ruled that Final Claims come under the ambit of the SOP Act. Provides determinative pronouncement.
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Final Payment Claim 7th Edn


Cl 31(11) Final Claim Documents Before expiry of Maintenance Period, Contractor to submit final claim; Final claim to contain details of all quantities, rates, and prices and any adjustment to Contract Sum or additional payments or compensation under terms of Contract with explanations and supporting vouchers, documents and calculations (including for NSC/DSC) to enable the Final Account to be prepared by QS and Architect.
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Final Payment Claim (7th Edn)

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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Final Payment Claim 7th Edn


Cl 31(12)(a) Final Certificate Within 3 months of receipt of Final Claim Documents or the issuance of Maintenance Certificate, (whichever is later) Architect shall issue Final Certificate; Final Certificate shall state any final balance due from Employer to Contractor or from Contractor to Employer after allowing for all payments or other expenditure of the Employer or any permitted deductions (including liquidated damages or otherwise)
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Final Payment Claim 7th Edn


Cl 31(12)(b) Direct Payments to NSC/Suppliers Within said 3 months but before issing Final Certificate and after giving 14 days written notice to Contractor, Architect may but not obliged to certify direct payments to NSC/Supplier Any amounts paid may be taken into account by the Architect in the Final Certificate or, if not, may be deducted by Employer from sums certified payable or otherwise recovered from the Contractor.
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Final Account Documents


Cl 31 (11) (a) Contractor submits Final Accounts Documents before the end of Maintenance Period to Architect and copy to QS.

Final Payment Claim (8th Edn)

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Final Account Documents


Cl 31 (11) (a) Contractor submits Final Accounts Documents before the end of Maintenance Period to Architect Documentto QS. Final Account and copy to show:
Final value of all Works Variations All other amounts entitled under the Contract Supporting documents vouchers and other documents (including documents of all NSCs)
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Statement of Final Account


Cl 31(11)(b) Architect to issue Statement of Final Account within 3 months from: Date of receipt of Final Account Doc from Contractor; or Date of issue of the Maintenance Cert (whichever is the later).

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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Statement of Final Account


Cl 31(11)(b) Architect to issue Statement of Final Statement shall show: Account within 3 months from: Final measurement and valuation of all Date of receipt of Final Account Doc from Works Contractor; or All permitted deductions including LD Date of issue of the Maintenance Cert whether or not they have been (whichever is the unless the Employer has deducted later). informed the Architect that he intends to forego or postpone the deductions
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Final Payment Claim


Cl 31(11)(c) Contractor shall serve his final payment claim on the Employer (copy to Architect and QS) within 14 days after:
Issuance of Maintenance Certificate; or Receipt of Statement of Final Accounts (whichever is later). [Note: Will always be after Statement of Final Accounts since Statement of Final Accounts will be issued after Maintenance Certificate]

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Final Payment Claim


Cl 31(11)(c) Contractor shall serve his his final payment If Contractor serves final payment claim the the Employer (copy claim on on Employer earlier, then to Architect and QS) within 14 days Architect not obliged to issue his Final after: Certificate
Issuance of Maintenance Certificate; or payment Employer not obliged to serve his Receipt of Statement of Final Accounts response (whichever is later). the Contractor has served it earlier than if

Final Certificate
Cl 31(12)(a) Architect shall issue Final Certificate to Employer within 14 days of receipt of the final payment claim from the Contractor.

in accordance with this clause.


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Final Certificate
Cl 31(12)(a) Architect shall issue Final Certificate to Employer within 14 days of receiptCl 31(12)(b)payment claim of the final If Contractor. from theContractor does not serve payment claim, Architect shall issue Final Certificate after 21 days from the issue of his Statement of Final Account to the Contractor.
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Final Certificate
Cl 31(12)(c) Final Certificate shall:
Show the final measurement and valuation of all Works in accordance with the terms of the Contract, Allow for all payments or other expenditure of the Employer or any permitted deductions (including liquidated damages or otherwise) State any final balance due from Employer to Contractor or from Contractor to Employer

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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Final Payment Response


Cl 31(15)(b) Subject to the final payment claim being served in accordance with cl 31(11)(c), the Employer shall provide or cause to be provided a final payment response to the Contractor within 21 days after the final payment claim is served on him.

Final Payment
Cl 31(16) Unless otherwise specified in the Appendix, Contractor will be paid on the date immediately on expiry of 35 days after the submission of a Tax Inv (for a taxable person under the GST Act) or the date on which the Payment Response is required.

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Schedule of Defects
Cl 27(2) No later than 14 days after expiry of the Maintenance Period, Architect shall issue a Schedule of Defects specifying all remaining defects, omissions, and other fault apparent at the date of the issuance of the Schedule of Defects. (existing provision no change)
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Maintenance Certificate

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Allowance of Defects
Cl 27(4) previous provision (7th Edn) In lieu of making good defects, Architect may give AD that the defect be not remedied and that there should be a reduction in the Contract Sum to be assessed by the QS representing the reduced value of the work to the Employer or savings in cost to the Contractor, whichever is the greater. Reduction is effected in the release of the 2nd Retention Monies or in the Final Account
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Allowance of Defects
Cl 27(4) previous provision (7th Edn) In lieu of making good defects, Architect Cl 27(4) new provision (8th Edn) may give AD that the defect be notmake good Where the Contractor fails to remedied and that defects withinbe months from the date the there should 3 a reduction in the Contract Sum to beSchedule of Defects (unless of issue of the assessed by the QS representingotherwise in writing), Architect shall agreed the reduced value of the work to the Employer or defects be costremedied and issue AD that savings in not to the Contractor, whichever is the greater. the reduction applied to the Contract Sum. Reduction is effected in the release of the The rest Monies or in the Final Account 2nd Retention of the provision remains. Aim bring closure within a specifed time.
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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Maintenance Certificate
When all defects notified in Schedule of Defects have been made good or dealt with under Cl 27(4), Architect shall issue Maintenance Certificate. Therefore there is a definite timeframe within which all defects must be made good or allowance made in Final Accounts and Maintenance Certificate issued.
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Scenario A
End of Maint Period Cont submits FAD cl 31(11)(a) Cont serves Final Payment Claims cl 31(11)(c) Emp issues Payment Response cl 31(15)(b) 21 days

Maint Cert

3 mths after receipt Of FAD FAD before Expiry of Maintenance Period


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3 mths

14 days

A issues Statement Of Final Account cl 31(11)(b)

A issues Final Payment Cert cl 31(12)(a)


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Scenario B
End of Maint Period Cont submits FAD cl 31(11)(a) Maint Cert Cont serves Final Payment Claims cl 31(11)(c) Emp issues Payment Response cl 31(15)(b) 21 days End of Maint Period Maint Cert

Scenario C
Cont submits FAD cl 31(11)(a) Cont serves Final Payment Claims cl 31(11)(c) Emp issues Payment Response cl 31(15)(b) 21 days

3 mths

3 mths

14 days

3 mths

3 mths

14 days

FAD After Maintenance Period But Before Maintenance Cert.


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A issues Statement Of Final Account cl 31(11)(b)

A issues Final Payment Cert cl 31(12)(a)


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FAD After Maintenance Certificate


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A issues Statement Of Final Account cl 31(11)(b)

A issues Final Payment Cert cl 31(12)(a)


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Ultra Vires?
8th Edn criticized Final Payment Claim dependent on:

Is SIA Contracting Out?

Issuance of Maintenance Certificate; or Receipt of Statement of Final Accounts

Failure by Architect to issue these would shut out Contractor from obtaining his remedies under SOP Act since time for making claim would not have arisen.

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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Ultra Vires?
8th Edn criticized FinalSOPA - No Contracting out S36 Payment Claim dependent on:
(1) The provision of this Act shall have effector Issuance of Maintenance Certificate; notwithstanding any provision to the contrary in any contract or agreement. Receipt of Statement of Final Accounts (2) The following provisions in any contract or agreement Failure by in writing or not)issue these would (whether Architect to shall be void: (a) provision under which the operation of his shutAout Contractor from obtaining this Act or any part thereof under SOP Act. remediesis, or is purported to be, excluded, modified, restricted or in any way prejudiced, or that has the effect of excluding, Time for making claim have not arisen. of this Act or modifying, restricting or prejudicing the operation any part thereof; (b) A provision that may reasonably be construed as an attempt to deter a person from taking action under this Act.
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Ultra Vires?
8th Edn criticized FinalSOPA - No Contracting out S36 Payment Claim dependent on:
(1) The provision of this Act shall have effector Issuance of Maintenance Certificate; notwithstanding any provision to the contrary in any contract or agreement. Receipt of Statement of Final Accounts (2) The following provisions in any contract or agreement Failure by in writing or not)issue these would (whether Architect to shall be void: (a) provision under which the operation of his shutAout Contractor from obtaining this Act or any part thereof under SOP Act. remediesis, or is purported to be, excluded, modified, restricted or in any way prejudiced, or that has the effect of excluding, Time for making claim have not the So is Cl 31(11) contracting out thearisen. of this Act or modifying, restricting or prejudicing of operation any SOPA?part thereof; (b) A provision that may reasonably be construed as an attempt to deter a person from taking action under this Act.
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Ultra Vires?
s 5 Entitlement to progress payments Any person who has carried out any construction work, or supplied any goods or services, under a contract is entitled to a progress payment.

Ultra Vires?
s 5 Entitlement to progress payments Any person who has carried out any s 2 "progress payment" construction work, or supplied any goods means a payment to which entitled to or services, under a contract is a person is entitled payment. a progress for the carrying out of construction work, or the supply of goods or services, under a contract, and includes (a) a single or one-off payment; or (b) a payment that is based on an event or a date;
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Ultra Vires?
s 5 Entitlement to progress payments Any person who has carried out any s 2 "progress payment" construction work, or supplied any goods means a payment to which entitled to or services, under a contract is a person is entitled payment. a progress for the carrying out of construction work, or the supply of goods or services, under a contract, and includes (a) s 2 payment claim a single or one-off payment; or (b) means a claim made by on an event ora a payment that is based a claimant for progress payment under section 10; a date;
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Ultra Vires?
s 10 (2) Payment Claims A payment claim shall be served (a) at such time as specified in or determined in accordance with the terms of the contract; or (b) where the contract does not contain such provision, at such time as may be prescribed.
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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Ultra Vires?
SOPA recognises that parties may in the Contract provide for the time when the service of a payment claim can be served; Progress payment includes payment that is based on an event or a date; Cl 31(11)(c) provides for the service of a Final Claim based on an event; That event being the issue of Maintenance Certificate or receipt of Final Accounts Documents; SIA not only standard form where Final Claim is based on issuance of certificate (see PSSCOC cl 32) PSSCOC Final Payment Claim based on the event of SO issuing Certificate of Substantial Completion

PSSCOC Final Payment


Cl 32.4 within 90 days of last Date of Substantial Completion, Contractor submits Final Payment Claim Cl 32.5 within 21 days of receipt of Final Payment Claim SO provides interim assessment (Interim Final A/c) and issues Payment Cert based on this a/c Cl 32.5 within 30 days of end of DLP SO issues Final A/c making adjustments to Contract Sum and takes account of all amounts that Emp/Cont entitled to under express terms of the Contract.
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PSSCOC Final Payment


Cont may challenge in writing with grds for challenge within 30 days of receipt of Final A/c SO may amend Final A/c within 30 days of receipt of Conts challenge or inform the Cont of rejection Within 30 days thereafter, SO will issue Final A/c Cert which will certify amount due to Cont or Emp Within a further 30 days, SO may amend to account for any errors or accidental inclusion or exclusion in computation SO not obliged to issue Final Account Certificate before Final Completion Cert Note: Final Account Cert not issued pursuant to a payment claim hence would not come under the SOPA.
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Practical Considerations
Architects and QS should deal with variations as the work progresses; Encourage contractors to submit progressive claims for variations; Contractors may continue to claim for interim payments after Completion Cert to deal with variations not yet paid; The above will help avoid accumulation of unmanageable variations in the final claim.
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Optional Clause
Optional Clause and applicable only where Employer expressly opt-in Applicable only if initialed by or on behalf of the Employer or otherwise expressly incorporated in the Contract.

Optional Clause for Price Fluctuation

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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

Specified Materials
Not restricted to steel rebars and concrete as in 7th Edn. Applicable to list of materials specified in Appendix. Apply to materials incorporated into permanent works and during currency of the Contract.

Operation of Clause
Conditions or other Contract Documents to specify a Base Date and list of contracted prices prevailing at the Base Date for the specified materials in the Appendix. Prevailing market price current market price of the material published monthly by Recognised Relevant Authority set out in Appendix. (default authority is BCA)
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Operation of Clause
On delivery of said material for incorporation into the permanent works, Contractor shall be paid or give credit to Employer the difference between the prevailing price and the base price. Once Delay Certificate has been issued, no upward adjustment permitted beyond the prevailing price at Completion Date or extended Completion Date. Fluctuation Price claims may be included in interim progress claims
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Termination by Contractor

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Termination for Non-payment


6th Edn Cl 33(1)(b) provides that Contractor may issue Notice of Termination if Employer fails to pay Contractor amount due on any certificate within period of honouring certificate and default continue for 14 days after receipt of written notice from Contractor.
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Termination for Non-payment


7th Edition Termination for non-payment deleted. Reason
Sufficient remedies available for non-payment SOP Act provides for adjudication Remedies available for non-payment of adjudicated sum

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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

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Termination for Non-payment


Cl 33(3)(a) Termination by Contractor on ground of Non-Payment of Adjudicated Amount Where Contractor has referred payment claim dispute to adjudication, and Employer fails to pay adjudicated sum by the time prescribed by adjudicator, Contractor may serve Written Notice stating Notice of Termination will be issued failing payment within next 14 days after receipt of Written Notice.
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Deleted Clauses

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Deleted Clauses
Cl 30(2) of 7th Edn Early Final Payment for NSC or Suppliers before Final Payment to Contractor Cl 31(12)(b) of 7th Edn Outstanding Balances of NSC and Suppliers

Deleted Clauses
Cl 30(2) of 7th Edn Early Final Payment for NSC or Suppliers before Final Payment Rationale: to Contractor May affect Contractors payment Cl 31(12)(b) of 7th Edn Outstanding claims under NSC and Balances of SOP Act; Suppliers Sub-contractors cash flow assured under the SOP Act; S 24 SOP Act already provides for direct payment by Employer to sub-contractors
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Johnny Tan Cheng Hye, PBM

Thank You
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Johnny is the Managing Partner of LT&T Architects. He has been an active member in the Singapore Institute of Arbitrators, having held appointments as Council Member, Honorary Secretary and VicePresident. He was just recently elected President of the Institute. He is also an active member of the Singapore Institute of Architects having served on the Council and had held appointments as its Honorary Secretary, 2nd Vice-President and 1st Vice-President. Johnny has had several years experience as an arbitrator on construction disputes. He is on the Singapore Institute of Architects and Singapore Institute of Arbitrators Panel of Arbitrators and on various international panel of arbitrators including Singapore International Arbitration Centre (SIAC), Hong Kong International Arbitration Centre (HKIAC), Dubai International Arbitration Centre (DIAC) and Kuala Lumpur Regional Arbitration Centre (KLRAC) He is also an Accredited Adjudicator with the Singapore Mediation Centre under the Building and Construction Industry Security of Payment Act [2004].
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2009 Johnny Tan. These materials are subject to copyright. No part may be reproduced, adapted or communicated without written consent of the copyright owner except as permitted under applicable copyright law.

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