Cl report final

TCVAN Management and Consultation Sdn. Bhd. Project NO: A8888

Tel: 60-312345678 Email: [email protected] 22nd November 2017

CONTENT

INTRODUCTION

ANALYSIS BASED ON FIDIC RED BOOK 1999

ANALYSIS BASED ON PAM CONTRACT 2006

APPENDIX

REFERENCES

mailto:[email protected]



1.0 INTRODUCTION

The analysis report is done to delivery our professional advices to our client, Smart Builder

Construction Sdn. Bhd. based on FIDIC Red Book 1999 and PAM Contract 2006.

The report outlines a list of important issues and disputes arose in the awarded contract. It goes

without saying that professional advices are suggested to our client who faced some problems

in the post contract stage. Moreover, a separate analysis section compliance with FIDIC Red

Book 1999 and PAM Contract 2006 is prepared.

Important Issues and Assumptions:

The project duration as agreed to be 24 months but the Works on site was delayed for 4

weeks on account of the delay in handling over the site to the client by the Employer.

The project ran into great difficulties after the 13th month. Issues arose comprised of 3

non-payment by the Employer and work behind schedule. The agreed payments not

made were Interim Certificate No. 13, Certificate No. 14 and Certificate No. 15 due to

financial obstacles and led to delay in Works progress. Besides, workmen were pulled

of side, late project administrator’s and work behind schedule contributed to the

project’s delay.

There was conflict in determining the client’s main responsibilities especially in terms

of client’s design portion and the rules underpinning subcontracting. As stated in the

works information, the contractor will oblige some design works. Nevertheless, there

was changes in design after the project is embarked and this directly incurred extra cost

and delay in time.

Disputes also arose due to misunderstanding on testing and defects in terms of

inspection, rectification and uncorrected defects. The Employer suspect that the

constructed roof garden is not compliance with the performance specification.




By and large, advices are made based on the areas stated as below:-

The general principle governing main contractor’s responsibilities

Conditions guiding payment

Contractual standing in terms of conditions governing contractual programme

The principles guiding testing and defects in construction contracts

Dispute resolution methods that can be used to resolve the problem




2.0 ANALYSIS BASED ON FIDIC RED BOOK 1999

2.1 General principle governing main contractor’s responsibilities

Based on FIDIC Red Book 1999, the client is advised to comply with the general princip le

governing client’s obligations as a main contractor of the specific contract, which are stated and

further elaborated in below.

As a designer contractor, you should take note of few responsibilities and duties that had been

clearly stated under Sub-Clause 4.1 which are:-

1. You shall design to the extent specified in the Contract, execute and complete the Works

in accordance with the Contract and with the Engineer’s instructions, and shall remedy

any defects in the Works.

2. You shall submit to the Engineer the Documents of your design part of any Permanent

Works in accordance with the procedures specified in the Contract. Documents shall

include the specification and drawings, shall be written in the language for

communications defined in Sub-Clause 1.4 and additional information required by the

Engineer to add to the Drawings for coordination of each party’s designs.

3. Also, you shall ensure that the completed Works are fit for such purposes as specified

in the Contract.

4. Prior to the commencement of the Tests on Completion, you shall submit to the

Engineer the “as-built” documents and operation and maintenance manuals in

accordance with the Specification and in sufficient detail for the Employer to operate,

maintain, dismantle, reassemble, adjust and repair this part of the Works.

You shall obtain a Performance Security as stated under Sub-Clause 4.2. You shall deliver the

Performance Security to the Employer within 28 days after receiving the Letter of Acceptance

and shall send a copy to the Engineer.

According to Sub-Clause 8.1, you shall commence the execution of the Works as soon as is

reasonably practicable after the Commencement Date and shall then proceed with the Works




with due expedition and without delay. Besides, you shall complete the whole of the Works

within the Time for Completion for the Works comprising of achieving the passing of the Tests

on Completion and completing all work that is stated in the Contact and others as stated and

listed in Sub-Clause 8.2. You shall note that you should not vitiate any terms stated in Sub-

Clause 15.2 as in you have not carried out the works by having adequate labour on site to

execute Works and abandon Works or else the Employer can terminate your employment under

Sub-Clause 15.2.

Moreover, you shall carry out the variations if there is any instruction from the Employer to

change the design of completed works. The reason if this instruction is constituted as a variation

order under Sub-Clause 13.1. It is also clearly stated in that you shall comply with any

Variations issued by the Engineer under Sub-Clause 13.1. If you have opined that you cannot

comply with the relevant issued variation order, you shall submit a written respond to the

Engineer on the description of the proposed work to be performed and a programme for its

execution as stated in Sub-Clause 13.3. However, if additional expenses is incurred by the

issued variations, you have right to claim for additional expenses through the payment of any

such Cost plus reasonable profit which shall be included in the Contract Price. Correct

procedures shall be taken in order to claim and they are stated in Sub-Clause 20.1. Then, you

have right to apply for extension of time under Sub-Clause 8.4. The claiming of additiona l

incurred cost and extension of time are clearly indicated in Sub-Clause 1.9.




2.2 Conditions Guiding Payment

There are two platforms where you as a Contractor can seek for the non-payment.

a) Contractual claim

b) Statutory adjudication

a) Contractual Claim

The procedural conditions for interim payment in FIDIC Red Book are:

Assuming that Contractor follow all the procedural requirements according to the sub-clauses

stated above. The remedies available for the Contractor to deal with the delay payment are

financial charges (sub-clause 14.8), suspend work (sub-clause 16.1) or termination (sub-clause

16.2(c)).

Referring to FIDIC Red Book 1999, sub-clause 14.8, the Contractor shall charge the Employer

interest stated in the particulars conditions without the need of formal notice or certificat ion.

The interest rate shall be considered at the yearly rate of 3% plus the base lending rate of Bank

Negara Malaysia if not stated inside the Contract. In the renowned case of F G Minter Ltd v




Welsh Health Technical Services Organisation (1980) where the court construed that where a

claim is for a debt incurred by a construction contractor to raise the necessary capital which has

interest charges as one of its constituents, the loss suffered as a result of the late payment of

money was recoverable, thus Contractor are definitely entitled to claim interest for the due

amount delay by the Employer.

Furthermore, Contractor’s act of discharging workmen off site is not wrong according to FIDIC

Red Book 1999, sub-clause 16.1. However, Contractor must give notice to the Employer

regarding the intention to reduce the rate of work not less than 21 days before discharging

workmen off site. If the Employer by any chance decided to pay such Payment Certifica te

before notice of termination is given, the Contractor shall resume the work immediately.

Termination of the contract is the last resort if non-payment persist. Based on FIDIC Red Book

1999, sub-clause 16.2 (c), the Contractor may terminate the contract upon 14 days after the

notice of termination is given to the Employer.

b) Statutory Adjudication

In my opinion, I would recommend that the Contractor seek payment through statutory

adjudication under Construction Industry Payment and Adjudication Act 2012 (CIPAA). Since

CIPAA came into effect 15 April 2014, there are many successful claims by the Contractor

regarding non-payment by the Employer. The benefits of adopting adjudication under CIPAA

are:

i. It is a mandatory and statutory process that does not require the agreement of the parties

to commence the process.

ii. It stipulates the procedural and other requirements relating to the conduct of the

adjudications falling within its ambit.

iii. It offers a much faster process compared to arbitration and court litigation because the

timeframe is as prescribed by the Act itself. It is the only form of dispute resolution that

has a statutory time period in which the dispute must be resolved in forty-five (45)

working days from the receipt of the adjudication reply or response.




iv. It provides an interim binding decision on a payment dispute.

v. The parties can choose their own adjudicator or request for the Director of the KLRCA

to choose an adjudicator on their behalf.

Item Section Requirements Time Limit

1 Payment

Claim

5 To state:

a. amount claimed and due date

b. cause of action and provision in

contract relied on

c. description of work or services to

which payment relates

d. that is made under the Act

None

2 Payment

Responds

6 a. May admit or dispute partly or

wholly

b. Attach payment of amount admitted

c. On a failure to respond it is deemed

that the entire claim is disputed

10 working days

from receipt of

Payment Claim

3

Notice of

Adjudication

7(2)

and 8

To state nature and description of

dispute and remedy sought together

with supporting documents

To be served on

respondent after

expiry of time

limited for

Payment

Response

4

Adjudication

Claim

9 To state nature and description of

dispute and remedy sought together

with supporting documents

10 working days

from receipt of

acceptance of

appointment by

adjudicator




5 Adjudication

Response

10 To answer the Adjudication Claim and

include any supporting documents. If

not filed, claimant may proceed with

the adjudication after the time limited

to do so

10 working days

from receipt

Adjudication

Claim

6

Adjudication

Reply

11 To reply to Adjudication Response

and include any supporting document

5 working days

from receipt of

Adjudication

Response




2.3 Contractual Standing Governing Contractual Programme

First and foremost, you are advised to claim for Extension of Time under Sub-Clause 20.1

(Contractor’s Claims) and Sub-Clause 8.4 (Extension of Time for Completion) of FIDIC

Contract 1999 since there was a delay in giving site possession by the Employer to you.

However, in order to claim for EOT, you are required to give a notice to the Engineer,

describing the event or circumstance giving rise to the claim. The notice shall be given to the

Engineer not later than 28 days after the event or circumstance that causes delay arises as

according to Sub-Clause 20.1 of FIDIC Contract 1999, if the Contractor fails to give a notice

of a claim to the Engineer within such period of 28 days, then the Time for Completion shall

not be extended.

On the other hand, regarding the issue of work behind schedule, you are advised to subject to

Sub-Clause 8.3 (Programme) of FIDIC Contract 1999, submit a revised programme to the

Engineer. The revised programme shall include the followings:

a) The order in which the Contractor intends to carry out the Works, including anticipa ted

timing of each stage of design, Contractor’s Documents, procurement, manufacture of

Plant, delivery to Site, construction, erection and testing.

b) Each of these stages for work by each nominated Subcontractor.

c) The sequence and timing of inspections and tests specified in the Contract.

d) A supporting report which includes:

i) A general description of the methods which the Contractor intends to adopt,

and of the major stages, in the execution of the Works.

ii) Details showing the Contractor’s reasonable estimate of the number of each

class of Contractor’s Personnel and of each type of Contractor’s Equipment,

required on the Site for each major stage.




Unless notified by the Engineer, you shall subject to Sub-Clause 8.6 (Rate of Progress) of

FIDIC Contract 1999, adopt the revised methods stated in the revised programme, which may

require increases in the working hours and/or in the numbers of Contractor’s Personnel and/or

Goods, at your own risk and cost. If these revised methods cause the Employer to incur

additional costs, then you shall subject to Sub-Clause 2.5 (Employer’s Claims) of FIDIC

Contract 1999 pay these costs to the Employer.

Apart from submitting revised programme, you shall as well subject to Sub-Clause 8.3 of

FIDIC Contract 1999, promptly give notice to the Engineer of specific probable future events

or circumstances which may adversely affect the work, increase the Contract Price or delay the

execution of the Works.




2.4 Principles of guiding testing and defects

Obligation to test

Figure 4.1 Timeline of Test on Completion

According to clause 9.1, during Test on Completion, it is contractor must test the completed

works according to clause 7.4. The contractor will come to term with the engineer in regards of

the time and venue of the testing of plant, works or material.

The contractor provides the engineer within 21 days’ notice of the date when the contractor is

ready to carry out the Test on Completion. The contractor is limited to only 14 days to perform

the tests on completion.




Remedies to delayed Tests

In Clause 9.2, presumably that contractor has made his delay for Test on Completion

unjustifiably, he will be notified by the engineer to carry out the test within 21 days upon

receiving the notice.

Failure to perform the Test on Completion within 21 days, the Employer’s employees will

proceed with the test at the risk and cost of the contractor. Such test will be deemed to be carried

out in presence of the contractor and result is accepted to be accurate.

Failed or additional Test on Completion

Works found flawed will be rejected under clause 7.5. The engineer or the contractor may need

to repeat, under same conditions, the tests. Should the result of test proven unsuccessful despite

repetition, the engineer have rights to either; order further repetition of the tests, issue a Taking-

Over certificate should the employer desires or reject the works in which employer will have

the remedies similarly provided in clause 11.4 c if the failure robs the employer of his benefit.

This is according to Clause 9.3.

Should there be, under clause 11.6, influence on the performance of work upon remedy of

defected works; the engineer is obliged to perform repetition of Test described in the Contract.

Defects liable

Under Clause 11.1, Contractor will be notified by the Employer on the appearances of defects

during Defects Notification Period. The contractor shall either complete unresolved work on

the date mentioned in the Taking-Over Certificate within time reasonable.

Cost and Time of Remedy

In clause 11.2, Remedy executed shall be contractor’s risk and cost if work is, at any design,

which the contractor is held responsible that are in conflict to the contract, failure to fulfil other

obligation.




Whereas in clause 11.3; when works cannot function as they should due to defects, Employer

holds the rights to extend the Defects Notification Period. If contractor fail to remedy the defect

within speculated time, may fix the date by the employer to which the defects can be remedied.

The contractor, on the other side, must provide reasonable notice of this date.

Failure to correct defects

Aforementioned in clause 11.4, when contractor failed to remedy the work, the employer may

either carry out the work himself or by others at the contractor’s cost in a reasonable method.

The contractor will have no responsibility for this work, have the Engineer to agree for a

reasonable reduction in the contract price or, when works is deprived of benefits, terminate the

contract as a whole.

Advice

Perchance the contractor should maintain his responsibility, along with the engineer to guide

the client the procedure of testing and remedy the defects. It is important for the contractor to

work closer with the employer’s employees in every step so to ensure there are no delays in

testing and remedying the defects.




2.5 Dispute Resolution Method

Dispute Adjudication Board (DAB) is an adjudication process which deal with job dispute on

site. As stated in Sub-Clauses 20.2, the DAB shall comprise either one or three suitably

qualified persons as stated in the Appendix to Tender. For one-person DAB the qualified

persons must be mutually agreed by each party; for three-person DAB each party may propose

one member, the third member must be agreed by each party and shall be appointed to act as

chairman. If the parties fail to agree with the appointment, as stated in Sub-Clauses 20.3, Each

Party shall be responsible for paying one-half of the remuneration of the appointing entity or

official. Generally adjudication is suitable for claim and solving dispute which involved cost,

time and/or workmanship. The advantage of using this method is that it consume less time and

cost as compare to arbitration or litigation

Normally, if there is no Notice of Dissatisfaction (NOD) given by either Party within the 28

days after received the DAB’s decision, the decision shall become final and binding upon both

parties as stated in Sub-Clauses 20.4. If NOD is served within the 28 days; Sub-Clauses 20.5

stated that, both Parties shall attempt to settle the dispute amicably before the commencement

of arbitration: for example, by conciliation, direct negotiation or other forms of alternat ive

dispute resolution. According to Sub-Clauses 20.7, if either party failure to comply with DAB’s

decision without giving NOD within the stated period, other Party may, without prejudice to

any other right it may have, refer the failure itself to arbitration under Sub-Clauses 20.6.

Arbitration

Arbitration is one of the alternative dispute resolution (ADR) to provide an alternative to filing

a lawsuit and going to court. (FindLaw.com, 2017). FIDIC Red Book 1999 Sub-Clauses 20.5

strongly advise that both Parties shall attempt to settle the dispute amicably before the

commencement of arbitration. Sub-Clauses 20.6 stated, unless settle amicably, any dispute in

respect of which DAB’s decision has not become final and binding shall be finally settled by

international arbitration. The arbitrators shall have full power to open up, review and revise any




certificate, determination, instruction, opinion or valuation of the Engineer, and any decision of

DAB, relevant to the dispute. Neither Party shall be limited in the proceedings before the

arbitrators to the evidence nor did arguments previously put before the DAB to obtain its

decision, or to the reasons for dissatisfaction given in its notice of dissatisfaction. Any decision

of the DAB shall be admissible in evidence in the arbitration.

Advice

Based on the FIDIC Red Book 1999, the most advisable approach to resolve the dispute is to

go for DAB and avoid going to arbitration. DAB is often being used to resolve dispute regarding

payment and it consume lesser time and cost as compare to arbitration. It is the most suitable

resolution method for current situation as the project is still in construction stage; it is advisable

to choose the fastest route to resolve the dispute as soon as possible in order to continue the

construction work. The contractor can still appeal to the arbitration if he is dissatisfy with the

DAB’s decision by serving the notice of dissatisfaction within the 28 days after decision is

made. Furthermore, it can ease the cash-flow difficulties that had plague on the contractor as

the due payments can be enforced without waiting for arbitration award because of the quick

turnaround time in the adjudication process.




3.0 ANALYSIS BASED ON PAM CONTRACT 2006


Based on PAM Contract 2006, the client is advised to comply with the general princip le

governing client’s obligations as a main contractor of the specific contract, which are stated and

further elaborated in below.

Under Clause 1.1, the client shall carry out and complete the Works in accordance with the

Contact Documents as stated. Thus, you are advised to ensure that there is adequate workmen

to work on site in order to work regularly and diligently according to Works Programme to

avoid any further delay. As indicated in PAM 2006, you are required to proceed regularly and

diligently with the Works under Clause 25.1(c). The Employer has the right to terminate your

employment according to Clause 25.1(a) if you fail to comply and execute the agreed works in

accordance with the contract.

Also, you shall execute the Works regularly and diligently on the exact agreed date of

commencement provided that you have taken over the site under Clause 21.1. According to

Clause 21.1, you will be granted an extension of time under 23.8(f) in the event there is a delay

by the employer in giving possession of the Site to you. Thus, you have right to seek the

permission to obtain extension of time from the Client. However, you should completed the

agreed Works on or before the Completion Date.

Regarding to the design portion issue, you shall ensure that the proposed alternative design of

yours are fit for its purpose under Clause 1.3. For instance, you had designed a green roof in

order to satisfy the performance specification. Nevertheless, you will be deemed that you had

failed to meet the performance specification if the result of the test on the completed rood

garden is negative. Simply, this had indicated that the roof garden is not “fit for its purpose”.

Besides, as stated under Clause 1.3, you shall not relieve your responsibilities under the contract




upon the acceptance by the Architect or Consultant of your design. This is further illustra ted

under the Clause 1.2, you shall be fully responsible for the adequacy, stability and safety of all

temporary works and of all methods of construction of the Works, irrespective of any approval

by the Architect or Consultant. Thus, you should ensure that the constructed rood garden and

other design Works of yours are complied with the given clauses.

Moreover, you shall carry out the variations if there is any instruction from the Employer to

change the design of completed works. The reason if this instruction is valid as a variation order

under Clause 11.1(a). It is also clearly stated in PAM 2006 that you shall comply with any

Architect’s Instructions issued by the Architect and to carry out the AI under Clause 2.1. Briefly,

you are not advised to seek for determination of your employment as stated in Clause 11.2,

there is no variation order issued by the Architect shall vitiated the Contract. However, if

additional expenses is incurred by the issued variations, you have right to claim for additiona l

expenses. Correct procedures shall be taken in order to claim and they are stated in Clause 11.7.

Then, you have right to apply for extension of time under Clause 23.8(g).

Lastly, as stated in Clause 1.4, you shall give a notice to the Architect in written form within

sufficient time before the commencement of construction of the affected works, specifying the

discrepancy or divergence to enable Architect to issue written instructions within a period

which would not materially delay the progress of the affected works, having regard to the

Completion Date. Bear in mind this is for works which have not been materially affected due

to discrepancy between designs. Also, any discrepancy or divergence shall not vitiated the

contract as indicated in Clause 1.4.





There is a little difference between PAM Contract 2006 and FIDIC Red Book 1999. The

procedural conditions for interim payment in PAM Contract 2006 are:

Assuming that Contractor follow all the procedural requirements according to the sub-clauses

stated above. The remedies available is quite similar to FIDIC Red Book 1999 where Contractor

can claim interest on the unpaid amount (clause 30.17); Contractor can suspend execution of

the works until such time payment is made (clause 30.7); or Contractor may terminate his own

employment if non-payment persists (clause 26.1(a)).

In PAM Contract 2006, the rights to suspend execution of the works, in this case, discharging

workmen off site is allowed if the following three conditions are met:

i) The Employer fails or neglects to pay the certified amount to the Contractor within the

Period of Honouring Certificates stated in Clause 30.1;




ii) The Contractor issues a notice of default of the same to the Employer; and

iii) The Employer continues the default for 14 Days after receipt of the default notice from

the contractor.

Nonetheless, my recommendation to the Contractor is to seek payment through CIPAA. This

is because referring to CIPAA, section 2, regardless of what construction contract being used,

if it is a written contract and the construction work is carried out in Malaysia, then CIPAA is

applicable.





Based on PAM Contract 2006, you may subject to Clause 23.8(f), claim for Extension Of Time

under Clause 23.0 (Extension Of Time) since there was a delay in giving site possession by the

Employer to you. According to Clause 23.1(a) and Clause 23.1(b), you shall give written notice

to the Architect your intention to claim for such EOT with an initial estimate of the EOT

required supported with all particulars of the cause of delay. Such notice must be given within

28 days from the date of the commencement of the delay and you shall within another 28 days

of the end of the cause of delay, submit your final claim for EOT supported with all particula rs

to the Architect.

Regarding the issue of work behind schedule, you shall subject to Clause 3.5 (Work Programme)

of PAM Contract 2006, submit a revised Works Programme to the Architect. You shall without

any charge to the Employer, provide the Architect from time to time with similar number of

copies of any revised Works Programme.





Testing

In clause 6.3, Contractor must provide necessary samples of material and goods for testing

before integration into the works. Architect Instruction may be issued to open up covered up

works for inspection. Cost of such opening are to be added in the contract sum unless the costs

are given in the contract bills, tests shows that work is not according to contract or was required

due to breach of contract by the contractor.

Works conflicting Contract

Under Clause 6.5, When work was found conflicting to the contract, contractor will be

instructed by the architect in writing to;

1. Remove from and not to bring to the site said material and goods

2. Demolish and reconstruct work to comply with the Contract

3. Rectify work instructed by Architect with no alteration to the sum in the Contract

4. Within seven days from receipt of written instruction proposing method of rectificat ion.

5. Upon consent of employer to leave works, material, goods or workmanship in the Works

to an appropriate set-off by the Employer.

Compliance to the written instruction will not entitle contractor to compensation for loss and

expenses or extension of time.

Defects

According to clause 15.4, Fourteen days after defects liability period the contractor will receive

schedule of defects from the Architect. The contractor shall then make good the defects

specified within 28 days after the receipt of the schedule of defects. At any time during Defects

Liability Period, however, the architect may issue AI requiring urgent rectification within

practical time at Contractor’s cost.




Should the contractor fail to attend to the defects, the employer may employ another person to

rectify said defects with cost incurred be set-off. If the contractor was instructed to leave the

defects, the contractor will suffer set-off by the employer for defects not made good.

When completed, the contractor will be awarded with Certificate of Making Good Defects

according to clause 15.6a. In contrast, if the architect finds the defect is not made good, the

architect will write a notice to the Contractor stating reasons of non-issuance of the certifica te

following clause 15.6b.

3.5 Dispute Resolution Methods

Adjudication

Adjudication is a simpler and more efficient method for settling the arise disputes. As stated in

Clause 34.2, where a party requires a dispute to be referred to adjudication, such disputes or

differences shall be referred to an adjudicator to be agreed between the parties. If both parties

fail to agree on the appointment of adjudicator within the 21 days from the date of the written

notice to concur on the appointment of the adjudicator, the party initiating the adjudication shall

apply to the President of PAM to appoint an adjudicator. The advantage of using this method

is that it consume less time and cost as compare to arbitration or litigation. The adjudicator's

decision shall be final and binding if the adjudicator's decision is not referred to arbitration

within six weeks from the date of the adjudicator's decision.

Arbitration

Arbitration is one of the alternative dispute resolutions (ADR) to provide an alternative to filing

a lawsuit and going to court. (FindLaw, 2017). Clauses 34.5 stated that, in the event that any

dispute or difference arises between the Employer and Contractor, either during the progress or

after completion or abandonment of works regarding matter with in Sub-Clauses 33.5(a)~(e)

then such disputes shall be referred to arbitration. If both parties fail to agree on the appointment

of arbitrator within the 21 days from the date of the written notice to concur on the appointment




of the arbitrator, the party initiating the arbitration shall apply to the President of PAM to

appoint an arbitrator. The appointed arbitrator shall initiate the arbitration proceeding in

accordance to the Arbitration Act and Rules as stated in Clauses 34.7. As stated in Clauses

34.11 the award of such arbitrator shall be final and binding on the parties.

Mediation

Mediation is an alternative dispute resolution available, it is essentially a negotiation facilita ted

by a mediator. Unlike arbitration and adjudication, mediation doesn’t involve decision making.

In mediation, the mediator work with the disputing parties to resolve their dispute by facilita tes

the resolution of the parties’ dispute and helps the parties’ finds common ground and deal with

unrealistic expectation to reach the final settlement. As stated in Clauses 35.1, notwithstand ing

Clause 34.0 of these conditions, upon the written agreement of both parties may refer any

dispute to the mediation. Clauses 35.2 stated that, prior reference of the dispute to mediation

under Clause 35.1 shall not be a condition precedent for its reference to adjudication or

arbitration by either party.

Advice

Base on the PAM Contract 2006, the most advisable approach to resolve the dispute is to go for

adjudication. The advantage of adjudication over arbitration is that it is relatively quicker in

process and much simpler and the cost is relatively cheaper. It is the most suitable resolution

method for current situation as the project is still in construction stage; it is advisable to choose

the fastest route to resolve the dispute as soon as possible in order to continue the construction

work. Clauses 34.4 stated that, contractor can appeal to the arbitration if he is dissatisfy with

the adjudicator’s decision by serving a written notice to the other party to refer the dispute

which was subject of the adjudication to arbitration within six weeks from the date of the

adjudicator’s decision. Furthermore, it advisable to the Contractor to refer the adjudication

based on adjudication rules under CIPAA 2012 to seek for compensation as it has higher level




of enforcement and jurisdiction over Contractual Adjudication and it is relatively a better option

for dealing with dispute regarding payments.




4.0 APPENDIX


FIDIC PAM

Contractor's design to the extent specified in the Contract, execute

and complete the Works in accordance with the Contract and with the Engineer’s instructions,

and shall remedy any defects in the Works.

Sub-Clause

4.1

Contactor is required to proceed regularly and diligently with the

Works under

Clause 25.1(c)

Contractor shall ensure that the completed Works are fit for such purposes as specified in the

Contract.

Sub-Clause 4.1

The proposed alternative design of contractor are fit for its purpose

Clause 1.3

Commencement of the Works as

soon as is reasonably practicable after the Commencement Date

Sub-

Clause 8.1

Contractor shall execute the

Works regularly and diligently on the exact agreed date of

commencement once he has possessed the site.

Clause

21.1

Termination by Employer Sub-Clause

15.2

Termination by Employer Clause 25.1

Contractor to carry out the variations issued by Engineer if

there is any instruction from the Employer to change the design of completed works

Sub-Clause

13.1

Contractor to carry out the variations issued by Architect if

there is any instruction from the Employer to change the design of completed works

Clause 11.1(a)

Extension of Time granted if

contactor suffers delay

Sub-

Clause 1.9

Extension of Time granted if

contactor suffers delay

Clause

23.8

Granted payment of any such Cost plus reasonable profit if additiona l

cost is incurred

Sub-Clause

1.9

Claiming for additional expenses is incurred by the issued

variations

Clause 11.7

Procedures to claim for extra cost incurred

Sub-Clause

20.1

Procedures to claim for extra cost incurred

Clause 11.7





FIDIC PAM

The Engineer shall issue an Interim Payment

Certificate within 28 days from the date of the Contractor’s application

Sub-clause 14.3 The Architect shall issue an Interim Certificate to

the Employer with a copy of to the Contractor within 21

days from the date of receipt of the

Contractor’s application.

Clause 30.1

Employer shall make

payment within 56 days after issuance of Interim

Payment Certificate.

Sub-clause 14.7

The Employer shall

honour the interim payment within the

Period of Honouring Certificates stated in Appendix of the

contract if none stated is 21 days from the date of

the Certificate.

Clause 30.1

Contractor must give notice to the Employer

regarding the intention to suspend work/reduce

the rate of work not less than 21 days before reduce the work.

Sub-clause 16.1 Contractor must give notice to the Employer

regarding the intention to suspend work/reduce

the rate of work not less than 14 days before reduce the work.

Clause 30.7

Entitlement to interest

on outstanding amount.

Sub-clause 14.8 Entitlement to interest

on outstanding amount.

Clause 30.17

Contractor’s right to suspend work on non-payment.

Sub-clause 16.1 Contractor’s right to suspend work on non-payment.

Clause 30.7

Contractor’s right to determine his own

employment on non-payment.

Sub-clause 16.2 (c)

Contractor’s right to determine his own

employment on non-payment.

Clause 26.1 (a)





FIDIC PAM

‘Engineer’ acts as

superintending officer.

Sub-

clause 3.3

‘Architect’ acts as

superintending officer.

Clause 2.0

Detailed Time Programme is

submitted by the Contractor to

the Engineer.

Sub-

clause 8.3

Works Programme is submitted

by the Contractor to the

Architect.

Clause 3.5

Detailed Time Programme shall

be submitted within 28 days

after the Contractor receives the

notice of the Commencement

Date of Works from the

Engineer.

Sub-

clause 8.3

Works Programme shall be

submitted within 21 days from

receipt of the Letter of Award

(or within such longer period as

may be agreed in writing by the

Architect).

Clause 3.5

Not clearly stated - Six copies of the Works

Programme (unless a higher

number is stated in the Contract

Documents) shall be submitted.

Clause 3.5

If, at any time, the Engineer

gives notice to the Contractor

that a Programme fails to

comply with the Contract or is

inconsistent with the actual

progress and the Contractor’s

obligations, then the Contractor

shall submit a Revised

Programme to the Engineer.

Sub-

clause 8.3

If the Works or any part of the

Works is delayed for whatever

reason, then the Architect may

instruct the Contractor to

submit a revised Works

Programme.

Clause 3.5

Not clearly stated - The Works Programme shall

not constitute part of the

Contract.

Clause 3.6





FIDIC

PAM

Employer is opt to execute the work himself or by others in a rational methodology and at

contractor’s cost. Contractor are subject to pay employer the

cost incurred in remedying defect

Sub-Clause 11.4a

Failure to attend the defects, employer can opt to employ another Person to rectify the

defects. Cost incurred will be set off by the employer as per Clause

30.4 PAM contract

Clause 15.4

Contractor must submit

engineer as built documents and operation and maintenance

manual following the specification and suffic ient detail for said part of the work.

Sub-

Clause 4.1

Contractor provide sufficient

sample of materials and goods for testing before incorporation into

said part of works.

Clause

6.3

After expiry date of Defects Notification Periods, Enginee r

are to issue Performance certificate within 28 days.

Sub-Clause

11.9

In 14 days after completion, Certificate of Making Good

Defects is issued by the Architect

Clause 15.6




4.5 Dispute Resolution Method

FIDIC PAM

'Engineer' act as 'superintend ing officer'

Sub-clause

3.3

Architect as superintending officer Clause 2.0

If the Parties fail to agree upon the appointment within 42 days, then the

appointing entity or official named in the Appendix to Tender shall upon

the request of either or both of the Parties and after due consultat ion with both Parties appoint this

member of DAB.

Sub-clause

20.3

President of PAM shall appoint an adjudicator, if provided that failure

to agree after the expiration of 21 days from the date of appointment.

(Clauses34.2)

Clauses 34.2

If the DAB has given its decision and no notice of dissatisfaction has been

given by either Party within 28 days after it received the DAB's decision,

the decision shall become final and binding upon both parties

Sub-clause

20.4

The adjudicator's decision shall be final and binding if the adjudicator's

decision is not referred to arbitration within six weeks from the date of the

adjudicator’s decision

Clauses 34.4

The arbitrator shall be finally the

dispute settled under the Rules of Arbitration of the Internationa l

Chamber of Commerce

Sub-

clause 20.6

The arbitrator shall initiate the

arbitration proceedings in accordance with the provisions of

Arbitration Act 2005 or any statutory modification or re-enactment to the Act and the PAM Arbitration Rules

or any modification or revision to such rules.

Clauses

34.7


Business

Cl report final