FACULTY OF SCIENCE, TECHNOLOGY, ENGINEERING & MATHEMATICS BSc. (Hons) in Quantity Surveying
Assignment 1 Course code
: QUS 4205
Course Name
: Contract Administration 2
Lecturer
: Mrs Ong Poh Lin
Date
: 26th February 2016
Group members :
Name
Matric number
Mah Ker Yi Yong Shu Teng Yapp Ka Chee Cheung Memtem
I14005119 I14004886 I12001445 I12001276
List and explain the difference and similarity between the following clauses in the PAM standard form of Building Contract 2006 (with quantities) and the JKR Building Contract with Bills of Quantity, Form 203A. a) Contract Document The Contract Documents as aforesaid shall remain in the custody of the S.O. and shall be produced as and when required by the Contractor. Copies of Contract Documents
One certified true copy of the Contract Documents Two copies of the Contract Drawings Two copies of the unpriced Bills of Quantities
S.O. shall have two copies of such further working drawings or details as are reasonably necessary either to explain and amplify the Contract Drawings or the Specification. Contractor shall keep one copy of the Contract Drawings, the Specification (if any), unpriced Bills of Quantities and documents on the Site and the S.O. shall at all reasonable times have access to the same. Return to the S.O. all drawings, details, specifications, unpriced copy of Bills of Quantities and other documents of like nature after completion of work. None of the documents hereinbefore mentioned shall be used by the Contractor for any purpose other than this Contract.
PWD Form 203A Clause 8.0 – Contract Documents Clause 8.1 – Custody of the Contract Documents Clause 8.2 – Sufficiency of Contract Documents Clause 12.0 – Programme of Work Relevant clauses
PAM Contract 2006 Clause 3.0 – Contract Documents, Programme and As-built Drawings Clause 3.1 – Contract Documents Clause 3.2 – Custody of Tender Documents Clause 3.3 – Copies of Documents Clause 3.4 – Further drawings or details Clause 3.5 – Work Programme Clause 3.6 – Programme not part of Contract Clause 3.7 – Architect’s acceptance of Programme Clause 3.8 – Availability of Documents Clause 3.9 – Limitation of use of Documents Clause 3.10 – As-built Drawings
The Similarity between PWD Form 203A and PAM Contract 2006
Contract Documents
PWD Form 203A Form of Tender Letter of Acceptance of Tender Contract Drawings Bills of Quantities Specifications Treasury’s instructions
Documents required in 2 sets, one original with S.O. and contractor. Contractor shall return to S.O. all drawings, details, specification and unpriced / price Bills of Quantities. Custody of Documents
PAM Contract 2006 Letter of Award Articles of Agreement Conditions of Contract Contract Drawings Contract Bills Following descending order, i.e. Letter of Award, etc. Therefore, pay more attention to the drafting of Letter of Award. Original shall remain with consultants. 2 sets of original copy shall signed and kept by S.O. / QS and Contractor. 2 sets copy of Contract Drawings kept by Contractor. 2 sets copy of unpriced Contract Bills give to Contractor. 2 sets copy of Working Drawings, further drawings and details drawing give to Contractor to enable contractor can carry out the works on time. Contractor will keep 1 copy of Contract Drawings, Specification, unpriced Bills of Quantites on the site and S.O. have access to the same.
The Difference between PWD Form 203A and PAM Contract 2006 Sufficiency of Contract Documents Copies of Tender Documents
PWD Form 203A S.O. will issue instruction regarding any discrepancies in the Contract Document
PAM Contract 2006 Not stated.
Not stated.
One original signed copy to Contractor
Not stated.
Further Drawings or details
Works Programme
Programme
Contractor to request in sufficient time to enable the Architect to issue instructions within a period which would not materially delay the progress of the affected works having regard to the Completion date. A programme of works is not provided by Standard time period is 21days from the S.O., the contractor shall within receipt of LA fourteen days after the date of the Letter Standard requirement is six copies, of Acceptance, contractor must submit it unless require more to the S.O. to get his approval for the Shall provide to the Architect for his work in such forms and details as the S.O. information from time to time reasonably determined. Not stated. Not constitute part of contract even
not part of Contract Architect’s acceptance or programme
Not stated.
Not stated. Availability of document
Not stated. Limitation of use of documents Not stated. As-built drawings and operation and maintenance manuals
physically incorporated into Contract Documents. The acceptance by the Architect does not relieve the Contractor from responsibilities under the Contract Contractor must keep a copy of Contract Drawings and the unpriced Contract bills on the site to make sure Architect and Consultant and their authorised representatives at all reasonable times. According to Clause 3.1, the contractor shall use the contract document all the time other than use contract. Except for the purpose of the Contract, all parties shall not disclose any of rates and price in the Contract Bills Contractor must supply As-built drawings and operation and maintenance manuals to any Nominated Sub-Contractor as specified in the Contract Document. When these are not specified, contractor shall supply and ensure that the nominated sub contractor supplies four copies of the above items before the completion date.
b) Performance Bond A performance bond, also known as a contract bond, is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. A job requiring a payment and performance bond will usually require a bid bond, to bid the job. When the job is awarded to the winning bid, a payment and performance bond will then be required as a security to the job completion. For example, a contractor may cause a performance bond to be issued in favor of a client for whom the contractor is constructing a building. If the contractor fails to construct the building according to the specifications laid out by the contract (most often due to the bankruptcy of the contractor), the client is guaranteed compensation for any monetary loss up to the amount of the performance bond. Performance bonds are commonly used in the construction and development of real property, where an owner or investor may require the developer to assure that contractors or project managers procure such bonds in order to guarantee that the value of the work will not be lost in the case of an unfortunate event (such as insolvency of the contractor). In other cases, a performance bond may be requested to be issued in other large contracts besides civil construction projects. Another example of this use is in commodity contracts where the seller is asked to provide a Bond to reassure the buyer that if the commodity being sold is not in fact delivered (for whatever reason) the buyer will at least receive compensation for his lost costs. One of the performance bonds is Performance Bond/Performance Guarantee Sum in PWD Form 203A and Performance Bond in PAM Contract 2006. PWD Form 203A Clause 13.0 – Performance Bond/Performance Guarantee Sum Clause 22.2 – Design Guarantee Bond Clause 42.1(f) – Performance Bond Not Affected
PAM Contract 2006 Clause 37.0 – Performance Bond Clause 37.1 – Submission of Performance Bond Clause 37.2 – Form of Performance Bond Clause 37.3 – Validity of the Performance Bond Clause 37.4 – Failure of the Performance Bond Clause 37.5 – Payments from the Performance Bond Clause 37.6 – Return of Performance Bond
The Similarity between PWD Form 203A and PAM Contract 2006 Similarity Documents
PWD Form 203A The Performance Bond is the compulsory document which must be submitted by the Contractor under clause 13.1(a).
PAM Contract 2006 The Performance Bond is the compulsory document that the Contractor require submit to the Employer under clause 37.1.
Amount function
The sum of Performance Bond shall be equivalent to five percent of the
The sum of Performance Bond shall equivalent to the percentage stated in the
and of
Performance Bond
total Contract Sum as specified in Appendix to secure the due performance of the obligation under this Contract by the Contractor under clause 13.1(a).
Appendix (if not stated is 5% of the Contract Sum) as a security for performance and observance by the Contractor of his obligation under Contract up to Practical Completion of the Work under 37.1.
Extend validity
The Contractor shall extend the valid period of the Performance Bond due the delayed Defect Liability Period or the issuance of the Certificate of Completion of Making Goods Defects
The Contractor shall before the expiry of the Performance Bond, extend the duration of the Performance Bond to expire three Months after the projected Practical Completion of Works under clause 37.3.
The Difference between PWD Form 203A and PAM Contract 2006 Difference Submission of Performance Bond
PWD Form 203A The Contractor shall provide the Performance Bond on the date of the possession of Site under clause 13.1(a).
PAM Contract 2006 The Contractor shall submit the Performance Bond to the Employer before the Date of Commencement under clause 37.1.
Form of Performance Bond
Performance Bond shall be in the form as in Appendix issued by an approved licensed band or financial institution incorporated in Malaysia according to the Clause 13.1(a).
Performance Bond shall be in the form as specified unless approved by Employer under Clause 37.2.
Validity of Performance Bond
The Performance Bond shall remain valid and effective until twelve months after the expiry of the Defect Liability Period or the issuance of the Certificate of Completion of Making Goods Defect under clause 13.1(a).
The Performance Bond shall be remaining valid until three months after the Completion Date. Contractor has the duty to extend the duration to expire after the projected Practical Completion of the Works under clause 37.3.
Failure to extend validity
If the Contractor fail to submit the Performance Bond on the date of possession of Site, will deduction of ten percent shall be make for the first interim payments and subsequent interim payment until the total amount deducted aggregate to sum equivalent to five percent of the Contract Sum under clause 13.2. According to the Clause 13.3, the Government shall be entitled at any time to call upon the Performance Bond, the contractor fails to perform their obligations under the Contract and such failure is not remedied in accordance with this Contract.
If the contractor fails to submit or maintain the validity of Performance Bond, Employer shall be entitled to withhold or deduct an amount equal from Contractor’s progress payments under Clause 37.4
Under the Clause 13.4, if the
Not stated.
Not stated.
payment is made to the Government pursuant to any claim under the Performance Bond, the contractor shall issue a further security in the form of additional performance bond or bonds for an amount not less than the amount so paid to Government on or prior to the date of such payment so that the total sum of the Performance Bond shall be maintained at all times.
Difference PWD Form 203A Payment from According the Clause 13.6, in the Performance event that this Contract is terminated Bond under Clause 51 (Event and consequences of default by the contractor) hereof the said Performance Bond or any balance thereof shall be forfeited.
PAM Contract 2006 Based on the Clause 37.5, in the event the Employer determines the employment of the Contractor, the Employer may call on the Performance Bond and utilize such amount to complete the Works and recover his loss and/or expenses and refund only the balance to Contractor upon completion of Work.
Return of Performance Bond
It is divides the portion of money retained into half and refund back to contractor one during the issuance of certificate of Practical Completion and the other one during the issuance of certificate of Making Good Defects. In the event the Contractor determines his own employment, the Employer shall within 28 days return the Performance Bond to Contractor for cancellation.
After the completion of making good of defect and giving of the Certificate of Completion of Making Good Defects, the Performance Bond may be released or refunded to the Contractor under Clause 13.5.
For the PWD Form 203A Clause 22.2 and 42.1 (f) didn’t mention in the PAM Contract 2006, it is the difference between this two forms of contract for performance bond. Clause 22.2 – Design Guarantee Bond The Contractor shall provide a design guarantee bond issued by the licensed bank or financial institution before the issuance of Certificate of Practical Completion, the amount of design guarantee bond still be 5% of the value of the said part of the works as stated in the appendix. The design guarantee bond still remain valid for 5 years from the date of practical completion of works. If the defect or damage occur to that particular part of works as the result of any defect, fault, insufficiency or inadequacy in the design including workmanship, materials and equipment which has become defective due to design default. The government have the right to claim the design guarantee
bond according to the amount losses by the government. If the design guarantee bond is not provided, the government have the right to claim on the performance bond which is equal to the 5% of the value of the said part of Works that provided by the contractor. Clause 42.1 (f) – Performance Bond Not Affected The Performance Bond or balance will safety released or refunded to contractor on the completion of Making Good Defect. It will more similar with the Clause 13.5.
Work Programme Work programme is a document for showing how the work will be carry out and showing the duration of different task. Thought this work programme, the Main Contractor will plan the labour force for different period, when to bring in the machinery and when the suppliers require to supply the materials. Furthermore, the Quantity surveyor can plan the schedule of percentage work done and schedule of issue interim certificate based on work programme.
PWD Form 203A Clause 12 – Programme of Work
PAM Contract 2006 Clause 3.5 – Works Programme Clause 3.6 – Programme not part of Contract Clause 3.7 – Architect’s acceptance of programme
The Similarity between PWD Form 203A and PAM Contract 2006
Similarity Documents
PWD Form 203A Programme of Work is a compulsory document which must be issued and approved by S.O., after the Contractor receive the Letter of Acceptance.
PAM Contract 2006 Work Programme is the compulsory document which must be issue to Architect after Contractor receive the Letter of Award.
Purpose
It is the document for S.O. to monitoring the progress of work, it is also the basis for assess the extension of time and effect of delay to the progress of work.
It is the document for Architect to monitoring the progress of work, and Architect can use it as a basis for assessment the extension of time and the effect of the delay to work progress.
Revised of Work Programme
If the actual work progress and programme of work are different, the Contractor shall provide a revised programme of work showing necessary ratification to ensure the project is complete within date of completion or any extended time.
If the Works or any part of the Works is delayed for whatever reasons, the Architect may instruct the Contractor to revise the Work Programme.
The Difference between PWD Form 203A and PAM Contract 2006 Difference Date of Submission
PWD Form 203A If the programme of work is not provide by the S.O., the contractor shall provide within 14 days after receive letter of acceptance and submit to S.O. for approval for execute the work.
PAM Contract 2006 The contractor shall provide at least 6 copies of work programme to Architect within 21 days after receive letter of award.
Consideration for Part of Contract
Not stated.
The Work Programme shall not be constitute part of the Contract, whether physically or not into the Contract Drawings.
Fees of Extra Document for Client
Not stated.
If the Architect require the Contractor to provide a revised work programme due to the work is delayed in whatever reasons, the Contractor shall provide the work programme to the Architect from time to time without charging the client.
c) Insurance Work/Insurance of new building/work by the contractor Insurance Works is a common requirement and is a must in a building contracts. The purpose of this insurance is to cover the building works in progress, should loss or damage occur during construction. It is necessary for the public sector project or private project. It also guarantee for the client in case the contractor default in insuring. Insurance can be arranged specifically for each project or as an annual policy covering all projects undertaken with the insurance premium paid on works turnover.
Relevant clauses
PWD Form 203A Clause 18.0 – Insurance of Works Clause 18.1 – Taking of Insurance Clause 18.2 – Default in Insuring Clause 18.3 – Payment of Insurance in the event of any Loss/Damage Clause 18.4 – Cancellation of Insurance Clause 42.1(e) – Insurance of Works
PAM Contract 2006 Clause 20.A – Insurance of New Buildings/Works – by the Contractor Clause 20.A.1 – Contractor’s riks – new buildings/works Clause 20.A.2 – Additioinal riks to be covered under the insurance Clause 20.A.3 – Placing of insurance with licensed insurance companies Clause 2.A.4 – Application of insurance claim proceeds
The Similarity between PWD Form 203A and PAM Contract 2006 Payment Insurance
of
Default Insuring
in
Risk Covered
PWD Form 203A If any occurrences of loss or damage to Work prior to the completion of the Works, the Contractor shall restore the damaged work even before the pay out by the insurance company has been made. All monies received from the insurance shall be paid to the Government first and then be released to the Contractor by installments on the certificate for payment issued by S.O. under Clause 18.3.
PAM Contract 2006 Contractor start to restore loss / damage work while waiting for insurance payment so long as all necessary investigation have been completed. Insurance money paid to Employer who retain portion meant for professional fees and pay a balance to Contractor based on progress of satisfactory restored works certified by Architect up to limit paid by insurance company under Clause 20.A.4.
If contractor failed to renew such insurance, the Government or S.O. may renew such insurance and pay the premium by decuting the amount from any monies due to the contractor. The Government also may extent the insurances on behalf of the contractor, the cost of on-cost charges under Clause 18.2. The Contractor shall in the joint names of the Government and Contractor insure against loss and damage by fire, lightning, explosion, storm, flood, ground subsidence and others, including materials and goods so insured until the completion of the whole Works but exclude temporary buildings, plant, tools and equipment owned or hired by contractor under Clause 18.1.
If contractor failed to insure or extend the insurance coverage period, Employer may insure against any risk and set-off from money to contractor in next payment certificate under Clause 20.A.3.
Contractor take out Contractor All Risk (CAR) Insurance, in the joints name of the Employer, Contractor, subcontractors and all interested parties and the insurance shall have endorsements to cover against loss and/or damagae by fire, lightning , explosion, earthquake, ground subsidence and others and exclude cover for construciton plant, tools and equipment owned or hired by the contractor unless otherwise stated under Clause 20.A.1.
The Difference between PWD Form 203A and PAM Contract 2006 Placing Insurance
Validation period Insurance
PWD Form 203A PAM Contract 2006 of The said insurance with or without an According to Clause 20.A.3, the excess clause shall be effected with an licensed insurance company should be insurance company that approved by the approved by Employer. S.O. according to Clause 18.1(b). Cancellation of insurance is made 30 days of after receipt of notice by the government. Where claims exceed insured amount, the
According to Clause 20.A.1, insurance will be valid after the defect. Insurance be extended accordingly when
surplus shall be borne by contractor. It stipulates a notification procedure and obligation the contractor to ensure a mandatory procedure is followed any cancellation process under clause 18.4. Value of According to Clause 18.1(a), full value insured sum thereof plus any amount which maybe specifically stated in appendix or elsewhere in the contract documents. Extension of Not stated. Insurance
Additional risks to be covered under the insurance
Insurance Works
Not stated.
of According to Clause 42.1(e), Insurance of the Works. Contractor should give a notice to the insurer that the part of the building is partial occupation/taking over by the government.
Extension of Time has been granted. On the other hand, Partial Completion or early Certificate of Completion require proportionate reduction of insurance coverage. CAR insurances policy for a value not less than the contract sum, plus the sum to cover professional fees under Clasue 20.A.1. Under Clause 20.A.1, the notification for renew the insurnace should be given one(1) month before the expiry date of insurance. Other than risks covered under Clause 20.A.1, additional risks required e.g. “vibration cover” for piling need be specified in Contract Bills. Besides, the design of the building may take as a risk because there might be problem to the drawing in one day. Thus, contractor can cover for additional risks. Not stated.
Validation Period of Insurance; Defect Liability Period
Contract period
Date of Commencement
Date of Completion
3 months of Insurance
OR,
Contract period
Date of Commencement
Defect Liability Period
3 months of Insurance
NEW Date of Completion Date of Completion
Reference 1. Impacts On The Building And Construction Industry | Law Teacher. 2016. Impacts On The Building And Construction Industry | Law Teacher. [ONLINE] Available at: http://www.lawteacher.net/free-law-essays/contract-law/impacts-on-the-building-andconstruction-industry-contract-law-essay.php. [Accessed 28 January 2016]. 2. Lawteacher.net, (2016). Impacts On The Building And Construction Industry | Law Teacher. [online] Available at: http://www.lawteacher.net/free-law-essays/contractlaw/impacts-on-thebuilding-and-construction-industry-contract-law-essay.php [Accessed 2 Feb. 2016].
3. . 2016. . [ONLINE] Available at: https://www.masterbuilders.asn.au/__data/assets/pdf_file/0014/73103/Construction-WorksInsurance-fact-sheet-07-12.pdf. [Accessed 3 February 2016].
