COURSE ON

CONTRACT

ADMINISTRATION 101

DATE: 8th SEPTEMBER 2012

VENUE: PAM NORTHERN CHAPTER

PRESENTED BY: AR. DAVID CHEAH MING YEW

CONTENTS

1.0 CONSTRUCTION CONTRACTS: INTRODUCTION

2.0 COMMENCEMENT OF CONTRACT AT SITE

3.0 MONITORING OF WORK PROGRESS

4.0 SUPERVISION OF WORKS

5.0 CONTRACT ADMINISTRATION (GENERAL)

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CONSTRUCTION

CONTRACTS:

INTRODUCTION

1.0 CONSTRUCTION CONTRACTS: INTRODUCTION

TYPES OF CONTRACTS

1. GENERAL CONTRACTS 2. CONSTRUCTION CONTRACTS

TYPES OF BUILDING CONTRACTS BASED ON PRICING

COMMON CONTRACT PROCUREMENT METHODS

1. TRADITIONAL GENERAL CONTRACTS 2. MANAGEMENT TYPES 3. PACKAGE DEAL TYPES 4. MISCELLANEOUS METHODS

HSKS

BASIC CONTRACT PRINCIPLES

1. CONTRACT DEFINITIONS 2. ELEMENTS OF CONTRACT 3. STANDARD FORMS OF CONTRACT 4. BREACH OF CONTRACT: REMEDIES

MISCELLANEOUS ISSUES

HSKS

FIG. 1-1: GENERAL CONTRACTS - TYPES

SIMPLE

CONTRACTS

SPECIALITY

CONTRACTS

(DEED)

MATERIAL

& LABOUR

CONTRACTS

SUB-SUB

CONTRACTS

INDEPENDENT

CONTRACTS

MATERIAL SUPPLY

CONTRACT

LABOUR

CONTRACT

COLLATERAL

CONTRACTS

ORAL

CONTRACTS

EXPRESS

CONTRACTS

EMPLOYMENT

CONTRACTS

MAIN CONTRACTS

SUB-CONTRACTS

GENERAL

CONTRACTS:

TYPES

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CONSTRUCTION CONTRACTS:

TYPES

PERIODIC

CONTRACT

LUMP SUM

CONTRACT

PARTNERING

PROJECT

MANAGEMENT

CONTRACTS

MANAGEMENT

CONTRACTING

CONSTRUCTION

MANAGEMENT

FAST-TRACK CONTRACT

TERM

CONTRACT

MEASURE &

VALUE CONTRACTS

TARGET COST

CONTRACT

FEE

CONTRACTING

PACKAGE DEAL

CONTRACT

SERIAL

CONTRACT

VALUE COST

CONTRACT

B.O.T.

CONTRACT

COST REIMBURSEMENT

CONTRACTS

FIG. 1-2 : CONSTRUCTION CONTRACTS - TYPES

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FIG. 1-3 : TYPES OF CONTRACTS BASED ON PRICING

TYPE OF CONTRACT

LUMP SUM

CONTRACTS

COST REIMBURSEMENT

CONTRACTS

LUMP SUM

WITH PLAN AND

SPECIFICATION

LUMP SUM

WITH BILLS

OF QUANTITIES

COST PLUS

FIXED FEE

COST PLUS

PERCENTAGE

COST PLUS

FLUCTUATING FEE

TARGET COST

VALUE COST

MESUREMENT

CONTRACTS

BASED ON

APPROXIMATE

QUANTITIES

BASED ON A

SCHEDULE

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TRADITIONAL

GENERAL

CONTRACTTING

MANAGEMENT

TYPE

TURNKEY

ENGINEERING, PROCUREMENT,

CONSTRUCTION &

COMMISSIONING

DESIGN & BUILD/ DESIGN &

CONSTRUCT

FAST TRACKING

CONSTRUCTION

MANAGEMENT

MANAGEMENT

CONTRACTING

MISCELLANEOUS

METHODS

PACKAGE

DEAL TYPE

BUILD, OPERATE

& TRANSFER

PARTNERING

COMMON CONTRACT PROCUREMENT METHODS

FIG. 1-4 : COMMON CONTRACT PROCUREMENT METHODS IN USE

FIG. 1-5: TRADITIONAL GENERAL CONTRACTING (TGC) - CONTRACTUAL RELATIONSHIPS

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EMPLOYER

PROFESSIONAL

TEAM - DESIGN AND

CONTRACT ADMINISTRATION

SUPPLIERS

MAIN CONTRACTOR

(MC)

SUB-SUB

CONTRACTORS

1. Architect

2. Engineers - C&S, M&E

3. Quantity Surveyor

4. Other Specialist

SUB-SUB

CONTRACTORS

SUPPLIERS

NOMINATED SUB-

CONTRACTOR (NSC)

DOMESTIC SUB-

CONTRACTOR (DSC)

Key

_______ :

Contractual Link

_ _ _ _ _ :

Responsibility

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EMPLOYER

PROFESSIONAL

ADVISORS

SUPPLIERS

D & C CONTRACTOR

SUB-SUB

CONTRACTORS

SUB-SUB

CONTRACTORS

SUPPLIERS

SUB-

CONTRACTOR

SUB-

CONTRACTOR

PROFESSIONAL

TEAM

1. Architect

2. Engineers - C&S, M&E

3. Quantity Surveyor

4. Other Specialist

1. Setting up Employers

Requirements

2. Auditing role during

construction

FIG. 1.6: TURNKEY CONTRACTS/DESIGN & CONSTRUCT (D&C) CONTRACTUAL RELATIONSHIPS

1. Architect

2. Engineers - C&S, M&E

3. Quantity Surveyor

4. Other Specialist 1. Detailed Design

2. Construction supervision

Key

_______ : Contractual Link

_ _ _ _ _ : Responsibility

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FIG. 1.7: MANAGEMENT CONTRACTING (MC) - CONTRACTUAL RELATIONSHIPS

EMPLOYER

PROFESSIONAL

TEAM

TRADE

CONTRACTOR

MANAGEMENT

CONTRACTOR (MC)

TRADE

CONTRACTOR

1. Architect

2. Engineers - C&S, M&E

3. Quantity Surveyor

4. Other Specialist

TRADE

CONTRACTOR

Key

_______ :

Contractual Link _ _ _ _ _ :

Responsibility

FIG. 1-8: CONSTRUCTION MANAGEMENT (CM) - CONTRACTUAL RELATIONSHIPS

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EMPLOYER

PROFESSIONAL

TEAM

TRADE

CONTRACTORS

CONSTRUCTION

MANAGER (CM)

TRADE

CONTRACTORS

1. Architect

2. Engineers - C&S, M&E

3. Quantity Surveyor

4. Other Specialist

Key

_______ : Contractual Link _ _ _ _ _ _ : Responsibility

* CONTRACT - DEFINATIONS

1.0 PER ANSON

* Legally binding agreement

* Between two or more parties

* By which rights are acquired by one or more

* To acts or forbearances on the part of the other or others

2.0 PER SECTION 2(h) MALAYSIAN CONTRACTS ACT 1950 (REV. 1974)

* An agreement

* Enforceable by Law

** CONTRACT - BASIC ELEMENTS

CLEAR + UNQUALIFIED + CONSIDERATION = CONTRACT

OFFER ACCEPTANCE (LEGAL AGREEMENT)

FIG. 1-9: CONTRACT DEFINITIONS

HSKS

+

+

FIG. 1-10: ELEMENTS OF A VALID / ENFORCEABLE AGREEMENT

FIRM OFFER /

PROPOSAL

UNQUALIFIED

ACCEPTANCE

CONSIDERATION

INTENTION TO CREATE

LEGAL RELATIONS

CERTAINTY OF TERMS

LEGAL CAPACI TY TO

CONTRACT

FREE CONSENT

LAWFUL OBJECT AND

CONSIDERATION

PHYSICAL/LEGAL

POSSIBILITY

VALID / ENFORCEABLE

AGREEMENT

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GOVERNMENT/

PUBLIC SECTOR

STANDARD FORMS OF CONTRACT

PRIVATE SECTOR

INTERNATIONAL

CONTRACTS

BUILDING WORKS

1. 203 (2007) - without

quantities

2. 203A (2007) - with quantities

3. 203N (2007) - For NSC

4. 203P (2007) - For Nominated

Suppliers

5. JKR Form For DB (2007

Edn.) For Design&Build

Contracts

1. IEM Conditions

IEM.CE 1/89

IEM.CES 1/90

JKR / PWD

MISCELLANEOUS

1. CIDB Form for Building

Contracts 2000 Edn.

2. Modified JKR/PWD

Forms e.g. LPK, MHA,

etc.

1. FIDIC Conditions

2. ICE Conditions

3. IEEE Conditions

4. IMechE Conditions

5. JCT Conditions

CIVIL ENGINEERING

WORKS

1. PAM 2006 - with quantities

2. PAM 2006 - without quantities

3. PAM NSC 2006

M & E WORKS

1. IEM Conditions

- IEM.ME

1/94

2. TNB Conditions, etc.

FIG. 1-11 : STANDARD FORMS OF CONTRACT

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DAMAGES

BREACH OF CONTRACT: REMEDIES

SPECIFIC

PERFORMANCE

INJUNCTIONS

NATURE

STATUTORY

PROVISIONS

Equitable/

Discretionary remedy

Sections 74

and 76 of

Contracts Act

1950

Prohibitory

Mandatory

Interlocutory

Quia-Timet

Mareva

Anton Pillar

APPLICATION

MODE

STATUTORY

PROVISIONS

TYPES

DUTY TO

MITIGATE

General damages

Special damages

Nominal damages

Exemplary damages

Liquidated damages

Unliquidated

damages

Express duty

Kabatasan Timber

Extraction v Chong

Fah Shing

Ex-Parte

Inter-Partes

WHERE REFUSED

WHERE GRANTED

Land transactions

Executionary Contracts

Where actual damage

cannot be ascertained.

Where contract terms uncertain

Delay in bringing action

Evidence of fraud

Where constant court

supervision required

TYPES

Equitable remedy

Principles:

following

American Cyanide

v Ethican

NATURE

Sections 20 and 21 Specific

Relief Act 1950 (Rev. 1974)

FIG. 1-12 : BREACH OF CONTRACT : REMEDIES

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COMMENCEMENT OF

CONTRACT AT SITE

2.0 COMMENCEMENT OF CONTRACT AT SITE

APPROACHES IN :

1. TRADITIONAL GENERAL CONTRACTS 2. DESIGN & BUILD / TURNKEY CONTRACTS FORMALITIES

1. CONDITIONS PRECEDENT 2. INSURANCES, PERFORMANCE BONDS, ETC. SITE POSSESSION : MEANING AND EFFECT

SUBMITTALS :

1. CONSTRUCTION DRAWINGS 2. SHOP DRAWINGS 3. SAMPLES 4. QA AND QC DOCUMENTS 5. HEALTH AND SAFETY DOCUMENTS 6. METHOD STATEMENTS TEMPORARY WORKS

ISSUES FOR ATTENDANCE OF NOMINATED SUB-CONTRACTORS

MISCELLANEOUS ISSUES

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RELEVANT CASES

1. THE RADIO & GENERAL TRADING CO. SDN. BHD. V WYASS & FREYTAG (M) SDN. BHD. [1998] 1 MLJ 346

2. LEC CONTRACTORS (M) SDN. BHD. V CASTLE INN SDN. BHD. & ANOR

[2000] 3 MLJ 339 3. KLEINWORT BENSON LTD. V MALAYSIA MINING CORP. BHD [1989] 1

WLR 379 4. NANYANG INSURANCE CO. LTD. V SALBIAH & ANOR [1967] 1 MLJ 94 5. SURREY HEALTH BOROUGH COUNCIL V LOVELL CONSTRUCTION

[1988] 42 BLR 25 6. FREEMAN V HENSLER [1981] 20 BLR 78 7. TAN HOCK CHAN V KHO TECK SENG [1980] 1 MLJ 308 8. PUTRA PERDANA CONSTRUCTION SDN. BHD. V AMI INSURANCE

BHD & ORS [2005] 2 MLJ 123 HC 9. YIP SHOU SHAN V SIN HEAP LEE MARUBENI SDN. BHD. [2002] 5

MLJ 43, HC`

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FIG. 2-1: PROTECTION AGAINST CONTRACTORS FAILURES COMMON MECHANISMS

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PARENT COMPANY GUARANTEE

LETTER OF AWARENESS

INSURANCE PERFORMANCE BOND

STANDBY LETTER OF CREDIT LETTER OF COMFORT

PROTECTION AGAINST CONTRACTORS

FAILURES: COMMON MECHANISMS

FIG. 2-2 : CONTRACTORS INSURANCE POLICIES COMMON TYPES

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PUBLIC LIABILITY

INSURANCE

CONTRACTORS/ SUPPLIERS YARD/ WORKSHOP AND

TRANSIT

INSURANCES

ERECTION

ALL RISK

POLICY

WORKMENS COMPENSATION

INSURANCE

MISCELLANEOUS

/SPECIFIC

INSURANCES

CONTRACTORS INSURANCE

POLICIES:

COMMON TYPES

CONTRACTORS ALL RISK

POLICY

FIG. 2-3 : SITE POSSESSION MEETINGS

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TIMING

SITE POSSESSION MEETINGS

EXPLANATION

OF CONTRACT

REQUIREMENTS

PURPOSE

MATTERS

DEALT

MINUTES

PARTICIPANTS

On Date of

Commencement of

Contract

Date of Site Possession

INTRODUCTION

OF PROJECT

MEMBERS

HANDOVER

OF VARIOUS

DOCUMENTS

1. All Project

Team Member

LETTER OF

DELEGATION

OF POWERS

SET OUT

PROCEDURES

COVERING

COPY OF

CONTRACT

DOCUMENTS

PRICED COPY

OF B.Q.

SET OF

CONSTRUCTION

DRAWINGS

To officially handover

Possession of Site to the

Contractor

DISTRIBUTION/

CIRCULATION

WHO

PREPARES?

Document Submittals and

Approvals

Sample Submittals and

Approvals

Inspection of Work

Interim Valuations

Claim Procedures

Contract

Administrator

To all parties

FIG. 2-4 : SITE POSSESSION AN OVERVIEW

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PROVISIONS

FOR

SITE POSSESSION: AN OVERVIEW

EXCEPTIONS

TO GENERAL

PRINCIPLE

MEANING

DEGREE

POSTPONEMENT

FAILURE TO GIVE

POSSESSION

In Letter of

Acceptance

Or in

Contract

LATEST LEGAL

POSITION

POSSESSION

ON PIECEMEAL

BASIS?

No

GENERAL

PRINCIPLE

EXPRESS

IMPLIED

If not expressed,

by Law

Freeman & Son v Hensler

Licence revocable by

Employer at any time

Licence to be free

from any encumbrances

Contractor entitled

to Sole/exclusive

possession

Express Stipulations

Case Law

Sufficient degree

of possession/

access

To execute work

unimpeded

To be able to

perform work

Express contract

stipulations permitting

postponement

GENERAL

LEGAL POSITION

EXCEPTIONS

GENERAL

LEGAL POSITION

EFFECT

Breach of Contract

Entitles Contractor

to rescind Contract.

Contractor entitled

to loss occasioned

Contractor entitled

to EOT if expressly

permitted

contractually

Otherwise, LAD

cannot be imposed

General Position: No

Exceptions:

a) Express

stipulations to

contrary

b) Where Common

Law applies

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WORK PROGRAMME

WORKS UNDER CONTRACT: TYPICAL SUBMITTALS

BY CONTRACTOR

HEALTH AND SAFETY

DOCUMENTS

DESIGN AND CALCULATIONS

FOR WORKS UNDER P.C. SUM,

PACKAGE DEAL TYPE CONTRACTS, ETC.

DRAWINGS I.E. SHOP, FABRICATION,

SETTING OUT, ETC.

MISCELLANOUES REPORTS AND

DOCUMENTS METHOD STATEMENTS

DESIGN AND CALCULATIONS

FOR TEMPORARY WORKS QA/QC DOCUMENTS

FIG. 2-5: WORKS UNDER CONTRACT TYPICAL SUBMITTALS BY CONTRACTOR

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MONITORING OF

WORK PROGRESS

3.0 MONITORING OF WORK PROGRESS

PROGRAMMING OF WORKS

PARTIES RESPONSIBLE:

1. EMPLOYER

2. MAIN CONTRACTOR

3. CONTRACT ADMINISTRATOR

PROGRESS REPORTS

SITE RECORDS

MEETINGS:

1. SITE POSSESSION

2. PROGRESS/SITE

3. NSC COORDINATION

4. AD-HOC

MISCELLANEOUS ISSUES

HSKS

RELEVANT CASES

1. GLENLION CONSTRUCTION LTD. V THE GUINESS TRUST [1987] 39 BLR 89

2. YORKSHIRE WATER AUTHORITY V SIR ALFRED MCALPINE & SON (NORTHERN) LTD. [1986] 32 BLR 114

3. GREATER LONDON COUNCIL V CLEVELAND BRIDGE & ENGINEERING CO. LTD. [1986] 8 Con LR 30

4. KITSONS SHEET METAL LTD. V MATTHEW HALL MECHANICAL & ELECTRICAL ENGINEERS LTD. [1989] 47 BLR 82

5. WEST FAULKNER ASSOCIATES V LONDON BOROUGH OF NEWHAM [1994] 71 BLR 1

6. EQUITABLE DEBENTURES ASSETS CORP. LTD. V MORGAN BRANCH ROBERTS & ORS [1984] 2-CLD-10-01

HSKS

WORK

PROGRAMME:

TYPICAL

FORMS

FIG. 3-1 : WORK PROGRAMME - TYPICAL FORMS

HSKS

MICROSOFT PROJECT

PROGRAMME SIMPLE BAR

CHART

PROJECT

ACTIVITY

FLOW CHART

WORK

BREAKDOWN

STRUCTURE

GANNT CHART

PROJECT

EVALUATION

REVIEW

TECHNIQUE

PROJECT

NETWORK

CHART

MULTI-LEVEL

PROJECT

SCHEDULING

PRIMIVERA PROGRAMME

CRITICAL PATH

ANALYSIS

HSKS

PRINCIPAL ACTIVITIES

IDENTIFICATION OF CRITICAL

ACTIVITIES AND CRITICAL PATH

IMPORTANT MILESTONES

FOR EMPLOYER TO MEET SEQUENCE OF ACTIVITIES

IMPORTANT MILESTONES

FOR CONTRACTOR TO MEET TIMING OF ACTIVITIES

WORK PROGRAMME:

PRINCIPAL CONTENTS

FIG. 3-2 : WORK PROGRAMME PRINCIPAL CONTENTS

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FIG. 3-3 : WORK PROGRAMME AN OVERVIEW

RESPONSIBILITY

WORK PROGRAMME: AN OVERVIEW

OPTIONS ON

SUBMISSION

METHOD OF

WORKING

SEQUENCE OF

WORKING

MEANING

FORM

CONTENTS

PURPOSE

PART OF

CONTRACT?

ALTERATION/

REVISION

Express

Provisions

By Implication

Sequence and

Timing of

Activities

Critical

Milestones

FOR CONTRACT

ADMINISTRATOR

FOR

CONTRACTOR

Approval

Rejection

Withholding

of Approval

SUBMITTED AFTER

TENDER AWARD

PART OF TENDER

SUBMISSION?

General

Policies

Mode of

Alternatives /

Revision

Effect of

Alternatives/

Revision

BAR

CHARTS

CRITICAL PATH

ANALYSIS

PERT

PRIMIVERA/

MICROSOFT

PROJECT

MISCELLANEOUS

FIG. 3-4 : PROGRESS MONITORING EMPLOYERS PURPOSES

HSKS

TO LEVY CONTROL OVER

PROGRESS OF THE WORKS

TO TAKE NECESSARY REMEDIAL

MEASURES IF DELAY OCCURS OR IF

EMPLOYER IS AT FAULT

MISCELLANEOUS PURPOSES

TO ENSURE CONTRACT IS

COMPLETED ACCORDING

TO SCHEDULE

TO PLAN AND STREAMLINE

FINANCIAL ARRANGEMENTS

TO OBVIATE DEFAULT

TO WARN CONTRACTOR

TO TAKE REMEDIAL

MEASURES IN CASE

DELAY OCCURS

PROGRESS MONITORING: EMPLOYERS PURPOSES

HSKS

FIG. 3-5 : PROGRESS MONITORING AN OVERVIEW

DURATION

PROGRESS MONITORING: AN OVERVIEW

SITE

PROGRESS

MEETINGS

PURPOSE

METHODS

BASIS

FREQUENCY/

NATURE OF

CHECKS

SUB-

CONTRACTORS

MEETING

COORDINATION/

PROJECT

MANAGEMENT

MEETINGS

DURATION

SITE

DIARY

OFFICIAL WORK

RECORDS

OFFICIAL

PROGRESS

REPORTS

PROGRESS

MEETINGS

SITE

RECORDS

SITE

POSSESSION

MEETINGS

AD-HOC

MEETINGS

PURPOSE

METHODS

EVIDENTIAL VALUE

PARTIES

RESPONSIBLE

From Site

Possession

To Issue of Final

Certificate

Normally up to

Practical

Completion only

Use of

Contractors Work Programme

Primary Purposes

Secondary Purposes

Employer/

contract

administrator

Contractor

On regular basis

Normally monthly

Maybe

i. Weekly

ii. Fortnightly

iii. Quarterly, etc.

FIG. 3-6 : POST CONTRACT AWARD STAGE PRINCIPAL TYPES OF MEETINGS

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POST CONTRACT AWARD STAGE:

PRINCIPAL TYPES OF MEETINGS

SITE POSSESSION MEETINGS

MISCELLANEOUS MEETINGS

SUB-CONTRACTORS MEETINGS

COORDINATION/ PROJECT

MANAGEMENT MEETINGS

SITE PROGRESS MEETINGS

AD-HOC MEETINGS

FIG. 3-7 : SITE PROGRESS MEETINGS AN OVERVIEW

HSKS

TIMING

SITE PROGRESS MEETINGS: AN OVERVIEW

ENABLE

CONTRACTOR TO

PURPOSE

ISSUES/

MATTERS DEALT

MINUTES

PARTICIPANTS

PERMIT WORK PROGRESS TO

MISCELLANEOUS

S.O./ Contract Administrator

DISTRIBUTION/ CIRCULATION

WHO PREPARES?

Officially present progress report

Present problems encountered

Be reviewed on regular basis

Identify areas and causes of delay

Enable Employer/ C.A. to redress delay caused by him/them

Keep track of financial progress/allocation

CONTRACT

ADMINISTRATOR

MAIN

CONTRACTOR

CONSULTANTS

NSCs

EMPLOYER

Chairs Meeting

Main participant

Observers Only

Participants if contract administrator's assistants/

representatives

By invitation only

Observer only

To all parties/ attendees

Main participant

ONLY SITE ISSUES

FINANCIAL ISSUES

3RD PARTY ISSUES AFFECTING

CONTRACT

MISCELLANEOUS ISSUES

FIG. 3-8 : SUB-CONTRACTORS MEETINGS AN OVERVIEW

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TIMING

SUB-CONTRACTORS MEETINGS: AN OVERVIEW

TO ENABLE SUB-

CONTRACTOR TO

PURPOSE

ISSUES/

MATTERS DEALT

MINUTES

TO PERMIT

CONTRACTOR TO Main

Contractor

DISTRIBUTION/ CIRCULATION

WHO

PREPARES?

Officially present progress report to Contractor

Present problems encountered

Review NSCs progress, areas of delay, etc.

Identify and sort coordination problems

CONTRACTOR

(MAIN)

NOMINATED SUB-

CONTRACTORS

DOMESTIC SUB-

CONTRACTORS

OTHERS (BY

INVITATION)

Chairs Meeting Employer

Third Parties

Contract Administrator

To all parties/ attendees

PARTICIPANTS

Usually monthly prior to site meetings

If necessary more frequently

COORDINATION

MATTERS

SITE PROBLEMS

FINANCIAL ISSUES

3RD PARTY ISSUES

MISCELLANEOUS ISSUES

Design

Site Work

Possession

Access

Security

Payments

V.O.s

Claims

Authorities

Utilities Providers

Others

FIG. 3-9 : AD-HOC MEETINGS AN OVERVIEW

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AD-HOC MEETINGS: AN OVERVIEW

AS AND WHEN

NECESSARY FROM TIME TO TIME

TIMING

PURPOSE

USUALLY

DICTATED BY CIRCUMSTANCES

TO DISCUSS

SPECIFIC ISSUES / MATTERS

EMERGENCY

ISSUES

FINANCIAL

ISSUES

TECHNICAL

ISSUES

ADMINISTRATIVE

MATTERS

Site Issues

Design/ Work Issues

3rd Party Issues

Training

Maintenance

As-Built Records

Payments

V.O.s

Claims

Design

Construction/Installation

Testing and Commissioning

Defects

CONVENORS (AS APPLICABLE)

The Employer

The Contract Administrator

The Contractor

The Sub-Contractors

MISCELLANEOUS

ISSUES

FIG. 3-10 : SITE RECORDS AN OVERVIEW

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DURATION

SITE RECORDS: AN OVERVIEW

PURPOSE

METHODS

EVIDENTIAL VALUE

From Date of Commencement

/Site Possession to

Completion of works

Normally up to Practical Completion only

OFFICIAL

PROGRESS REPORT

OFFICIAL WORK

RECORDS

Contractors Scope

NSCs/DSCs Scope

Extension of Time

Additional Work

Direct loss and/or expense

Miscellaneous matters

REVIEW WORK

PROGRESS

EVALUATE

CONTRACTORS CLAIMS TO

PERMIT

DECISION MAKING

PROVIDE NECESSARY

INFORMATION/ EVIDENCE TO

SITE DIARY

DULY SIGNED/

ENDORSED RECORDS

ACKNOWLEDGEMENT OF RECEIPT RECORDS

Best evidential value

Some evidential value

FIG. 3-11 : OFFICIAL WORK RECORDS AN OVERVIEW

HSKS

TIMING OF

SUBMISSION

OFFICIAL WORK RECORDS: AN OVERVIEW

RECORD OF

SITE INFORMATION

PURPOSE

CONTENTS

PROCEDURAL

MATTERS

FOR CONTRACT

ADMINISTRATION

SIGNING OR

ENDORSEMENT

TIME OF ENTRY

FOR BASIS OF OFFICIAL

PROGRESS REPORT

Planned Undertaken

SAFE KEEPING

DAILY

WEEKLY

FORTNIGHTLY

USE OF DESIGNATED

STAFF FOR

SITE WORK/ ACTIVITIES

RECORD

OF WORKERS

RECORD OF

PLANT/MACHINERY

WEATHER

CONDITIONS

PROBLEMS

ENCOUNTERED

INSTRUCTIONS

MISCELLANEOUS

Skilled Unskilled

Design

Site

Coordination

Due to 3rd Parties

Received

Carried Out

Outstanding

Site/ Factory Visits

Inspections

Preparing Maintaining

Submitting

Daily

By authorized Person(s)

S.O/ Contract Administrator

On site

By S.O./Contract administrator

Up to lapse of period of limitation

Affecting work

Delaying site operations

FIG. 3-12 : SITE DIARY AN OVERVIEW

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NATURE

SITE DIARY: AN OVERVIEW

CONTENTS

PROCEDURAL

MATTERS

Undertaken

PRESENTATION ON REQUEST/ DEMAND

CHECKING /

ENDORSEMENT

SAFE KEEPING/

CUSTODY

ENTRIES ON DAILY BASIS

SITE WORK/ ACTIVITIES

PROBLEMS

ENCOUNTERED

INSTRUCTIONS

RECORD OF

MISCELLANEOUS

ATTACHMENTS

As to Site Work Coordination

Site/ factory visits

Weather conditions

Disruption to site activities

As-Built sketches, drawings, diagrams, etc.

As-erected/ As-Installed Work/ plant, etc.

By Employers Representative/ Designated person

Accuracy of entries

By S.O./ contract administrator

Up to lapse of

period of limitation

Preferably kept by each and every site personnel

Personal record of site activities

Otherwise by designated site supervision team member

Issued to Contractors

Carried out by Contractor

Contractors defaults /omissions

DURATION

From commencement of work on site until completion

If necessary until the end of the contract

By designated person

By Employer/ S.O./ any interested party

HSKS

SUPERVISION

OF WORKS

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4.0 SUPERVISION OF WORKS

PURPOSE FOR:

1. EMPLOYER/CONTRACT ADMINISTRATOR

2. MAIN CONTRACTOR

PARTIES RESPONSIBLE:

1. EMPLOYER

2. CONTRACT ADMINISTRATOR

3. MAIN CONTRACTOR

4. SUB-CONTRACTOR

5. 3RD PARTIES

METHODS

RESPONSIBILITY AND LIABILITY

ROLE OF RESIDENT SITE STAFF (RSS)

MISCELLANEOUS ISSUES

RELEVANT CASES

1. EQUITABLE DEBENTURES ASSETS CORP. LTD. V WILLIAM MOSS GROUP & ORS [1984] 3 CONSTR. LR 1

2. WILLIAM TOMKINSON & SONS V ST. MICHAEL IN THE HAMLET [1991] Chartered Surveyor Weekly 4 July

3. JAMESON V SIMON [1899] 1 F (Ct. of Sess) 1211: 7 SLT 133

4. SAUNDERS & COLLARD V BROADSTAIRS LOCAL BOARD [1890] HBC (4th edn) Vol 2, p 164 (DC)

5. EAST HAM CORP. V BERNARD SUNLEY [1965] 3 All ER 619

HSKS

FIG. 4-1 : CONTRACT ADMINISTRATORS COMMON DESIGNATIONS

HSKS

CONTRACT

ADMINISTRATORS:

COMMON

DESIGNATIONS

SUPERINTENDING

OFFICER/ S.O. CONSTRUCTION

MANAGER

EMPLOYERS REPRESENTATIVE

ENGINEER

ARCHITECT PROJECT

DIRECTOR

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FIG. 4-2 : CONTRACT ADMINISTRATORS REPRESENTATIVES/ASSISTANTS - TYPICAL EXAMPLES

CONTRACT ADMINISTRATORS REPRESENTATIVES/

ASSISTANTS: TYPICAL EXAMPLES

ARCHITECT

ELECTRICAL ENGINEER

PROJECT MANAGER STRUCTURAL ENGINEER

SPECIALIST CONSULTANT CIVIL ENGINEER

QUANTITY SURVEYOR MECHANICAL ENGINEER

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FIG. 4-3 : FORMS OF SUPERVISION COMMON LABELS

FORMS OF SUPERVISION:

COMMON LABELS

FULL-TIME SUPERVISION

PART-TIME SUPERVISION

NOMINAL SUPERVISION STANDING SUPERVISION

PERIODIC SUPERVISION CONSTANT SUPERVISION

FIG. 4-4 : SUPERVISION/INSPECTIONS OVERVIEW (PART I)

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TYPICAL

CLAUSES IN

AGREEMENTS

SUPERVISION/INSPECTIONS: OVERVIEW (PART I)

NATURE

AND MEANING

PURPOSES

TYPICAL

PROVISIONS IN

BY-LAWS

Terms used synonymously

See Newey Js definition

Distinction: Inspection

imposes a lesser duty:

William Tompkinson v St.

Michael in the Hamlet.

In absence of express

provisions to contrary courts

imply a duty of supervision:

Alexander Corfield v David

Grant.

Malaysia: Statutory

provisions necessitate

supervision

Building (Federal Territory

of Kuala Lumpur) By-Laws

1985:

1. By-Law 6: Supervision

of Works

2. By-Law 23(1):

Certificate For

Occupation

By-Law 5(1) City of Kuala

Lumpur (Earthworks) By-

Laws 1975

Engineers Agreement:

1. Clause 8.1 and 8.7 BEM

Form (1999)

Architects Agreement

1. Clause 5(4)(iv) Part II:

Architects (Scale of

Minimum Fees)

(Amendment) Rules

1992

2. Clause 9 Conditions of

Engagement of

Architect

See Keatings definition in Building Contracts

Three fold purpose:

1. To ensure contractor

carries out work in

accordance with

contract.

2. To enable contract

administrator to

discharge his

obligations to

employer.

3. To enable contract

administrator to meet

his statutory

obligations

FIG. 4-5 : SUPERVISION/INSPECTIONS OVERVIEW (PART II)

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DURATION

SUPERVISION/INSPECTIONS: OVERVIEW (PART II)

RESIDENT

SITE STAFF

LIABILITIES

LEVEL OF SUPERVISION

REQUIRED

Necessity for Resident Site Staff (RSS)

Typical examples:

1. Resident architect/engineer

2. Clerk-of-works. 3. Other relevant staff

Engagement:

1. By employer; or 2. By contract

administrator

Powers and duties determined by engineering/construction contract being administered and/or letter of delegation of power.

Responsibilities of:

1. RSS 2. Contract Administrator

Determined by:

1. Conditions of engagement

2. Applicable statutory provisions e.g. By-Laws

Prevailing Forms:

1. Category I: Full-time/Standing/ Constant supervision

2. Category II: Part-Time/Periodic Supervision

3. Category III: Nominal Supervision

Legal Position:

1. Must be reasonable for works involved

2. Must be sufficient to check the important elements

3. Adequate to meet statutory requirements

4. Sufficient to meet obligations of engagement

Determining factors:

1. Nature of works under contract

2. Conditions of engagement

Normal periods:

1. Up to issue of Practical Completion; or

2. Up to application of certificate for occupation; or

3. Up to issue of Certificate of Making Good Defects

Common practice is up to issue of Certificate of Making Good Defects

Primary responsibility for supervision: contractors. See East Ham Corp. v Bernard Sunley.

Heads of liabilities of contract administrator for defaults/ breaches:

1. Contractual 2. In tort 3. Statutory

Position of contract administrators who are professional engineers, architects, etc.

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CONTRACT

ADMINISTRATION

(GENERAL)

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5.0 CONTRACT ADMINISTRATION: GENERAL

DEFINITION PURPOSES

PRINCIPAL DUTIES:

1. FOR TRADITIONAL GENERAL CONTRACTS 2. FOR DESIGN & BUILD/TURNKEY

INFORMATION TO THE CONTRACTOR

ADVICE TO EMPLOYER INSTRUCTIONS TO CONTRACTOR

DECISION MAKING FUNCTIONS

LIABILITIES

MISCELLANEOUS ISSUES

RELEVANT CASES

1. CHUAH NGAH CHIN V NG KIE EN [1968] 1 MLJ 267 2. PACIFIC ASSOCIATES INC. V BAXTER [1989] 2 ALL ER 159

3. GUNUNG BAYU SDN. BHD. V SYARIKAT PEMBINAAN PERLIS SDN. BHD. [1987] 2 MLJ 332

4. ALEXANDER CORFIELD V DAVID GRANT [1992] 59 BLR 102 5. PEARSON V DUBLIN CORPORATION [1907] AC 351 6. DAY V OST [1972] 2 NZLR 385 7. PRATT V GEORGE J HILL ASSOCIATES [1987] 38 BLR 25 8. NYE SAUNDERS & PARTNERS V BRISTOW [1987] 37 BLR 92 9. EMS BOWE (M) SDN. BHD. V KFC HOLDINGS (M) BHD & ANOR [1999] 6

CLJ 513 10. SWEE PTE. LTD. V LIM KIAN CHAI [1983] 1 MLJ 353 11. SUTCLIFFE V THACKRAH [1974] 727 (HC) 12. TOKEN CONSTRUCTION CO. LTD. V CHARLTON ESTATES LTD. [1973] 1

BLR 50 13. H. FAIRWEATHER LTD. V ADEN SECURITIES LTD. [1979] 12 BLR 40 14. DR. ABDUL HAMID ABDUL RASHID V JURUSAN MALAYSIA

CONSULTANTS & 4 ORS [1997] 3 MLJ 546 15. STEVEN PHOA CHENG LOON & 72 ORS V HIGHLAND PROPERTIES SDN.

BHD. & 9 ORS [2000] 3 AMR 3567 16. SAMI MOUSAWI-UTAMA SDN. BHD. V KERAJAAN NEGERI SARAWAK

[2004] 2 MLJ 414, CA

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CONTRACT ADMINISTRATION:

PRIMARY PURPOSES

FIG. 5-1 : CONTRACT ADMINISTRATION PRIMARY PURPOSES

ENSURE THAT CONTRACTOR

FULFILLS HIS OBLIGATIONS

UNDER THE CONTRACT

ENSURE THAT EMPLOYERS POSITION ADEQUATELY PROTECTED

AGAINST VARIOUS CLAIMS

ENSURE WORKS SATISFACTORILY

COMPLETED WITHIN ORIGINAL

CONTRACT PERIOD AND PRICE

ENSURE THAT EMPLOYER

FULFILLS HIS OBLIGATIONS

UNDER THE CONTRACT

ENSURE THAT NEEDS/OBLIGATIONS

OF CONTRACT ADMINISTRATOR

UNDER CONTRACT/STATUTE

ADEQUATELY FULFILLED

ENSURE THAT EMPLOYER

FULFILS HIS

STATUTORY/LOCAL

AUTHORITY REQUIREMENTS

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CONTRACT ADMINISTRATOR: RANGE OF ROLES

PERFORMED

WITH EXPRESS

AUTHORITY

AS AN AGENT OF THE EMPLOYER

AS AN ADVISOR TO THE EMPLOYER

AS AN INDEPENDENT CONTRACTOR

AS AN INDEPENDENT/ IMPARTIAL

ADJUDICATOR

WITH IMPLIED/

OSTENSIBLE

AUTHORITY

WHERE SUCH WORK

IS REQUIRED POST-

CONTRACT

FOR MAINLY DESIGN/

DETAILING WORK

AS TO

MATTERS OF COST

AS TO

OTHER MATTERS

AS TO

RIGHTS/ DUTIES UNDER

THE CONTRACT

AS TO DISPUTE

RESOLUTION

AS TO

CERTIFICATION

FIG. 5-2 : CONTRACT ADMINISTRATOR RANGE OF ROLES PERFORMED

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CONTRACT ADMINISTRATOR: SOURCES OF DUTIES AND POWERS

TERMS OF REFERENCE

OF APPOINTMENT

EXTERNAL BODY/ PERSON

IN-HOUSE EMPLOYEE

CONDITIONS OF CONTRACT

BEING ADMINISTERED

CONDITIONS OF ENGAGEMENT/

SERVICES AGREEMENT

CONDITIONS OF CONTRACT

BEING ADMINISTERED

FIG. 5-3 : CONTRACT ADMINISTRATOR SOURCES OF DUTIES AND POWERS

FIG. 5-4 : CONTRACT ADMINISTRATORS PRINCIPAL DUTIES FOR TRADITIONAL GENERAL CONTRACTS

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CONTRACT ADMINISTRATORS PRINCIPAL DUTIES FOR TRADITIONAL

GENERAL CONTRACTS

OVERSEEING TRAINING OF EMPLOYERS O & M PERSONNEL

PROGRESS MONITORING

ADVISING EMPLOYER

ORDERING VARIATIONS

PARTICIPATING IN PREPARATION OF MIGRATION/ FACILITIES MANAGEMENT PLANS

CLOSING-OFF CONTRACT

PARTICIPATING IN TESTING AND COMMISSIONING

ISSUING INFORMATION, DRAWINGS, DETAILS, ETC.

ADMINISTRATION OF PAYMENTS

OVERALL SUPERVISION

GRANTING APPROVALS, CONSENTS, ETC.

NOMINATING SUB-CONTRACTORS, ETC.

ISSUING RELEVANT INSTRUCTIONS

INSPECTIONS OF WORKS

MONITORING RECTIFICATION OF DEFECTS

OVERSEEING COMPLETION & HANDING OVER OF WORKS

PREPARING FINAL ACCOUNT

CHECKING AND APPROVING O & M MANUALS & AS-BUILT DRAWINGS

ISSUING NECESSARY REPORTS

MONITORING SERVICING AND MAINTENANCE

THANK YOU

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