- Example of bank guarantee : bank guarantee, AIA, takaful
- The responsibility of the bank guarantee is terminated upon the repayment of the advance payment by main contractor to the GOvernment
- PLus EIT entties, the balance of advance repayable to the GOvernment shall be recovered from advance guarantee
-
Discuss what is advance payment and the contractor need to fullfill in order to be eligible for it
- the main purpose of advance payment is to award contract an initial sum of money to support the contractor financial capability
- Also serve as purpose for contractor to start work on time , to prevent delay of work
- Main Contrtactor is entitles to advance payment on contract ( as stated in Teasury Instruction of the Contract Document under clause 1.1 (b), which is 25% of the pure contract sum ( contract sum less provisional sum), but to the limit of RM10m on complianc with fllowing condition :
(a) On the return letter of acceptance duly sign by the main contractor together with the Performance Bond, insurance policies such as Contractor All Risk Insurance (CAR), workmen;s compensation (WC), etc, confirimation from SoCSO authroties stated that local workmen on site with salaryy below RM 3000 are eligible and entitles for the SOCSO insurance and receipts of premium paid .
(c) Production of Banker/ Insurance/ Finance Company GUarantee e.g. Maybank, Bank Rakyat etc. (Company Listed Government) in the approved format by paying premium to aforesaid company to secure the advance payment paid by government
(C) Before 3 months starting from the date of possession, submit the Banke's Guarantee / Insurance Guarantee, Financancial company guarantee
- the main purpose of the advance payment is to award contract an initial sum of money to support the contractor financial capability
- also for contractor to start the work on time, and prevent delay of work
- Main Contractor is entitles to advance payment on contractor (as stated in the treasury Intrustion of Contract Document under clause 1.1(b) which is 25% of the pure contract sum ( contract sum less provisional sum), but to limit of RM 10m on compliance with the following condition:
(a) On return letter of acceptance duly sign by main contractor toegether with the performance bond, insurance policies, such as COntractor all Risk Insurance (CAR), workmen compensation (WC) etc, confirimation from SOCSO authority local workmen with salary below RM 3000 is entitles for SOCSO insurance and receipt of premium paid
(b) Production of Banker guarantee, insurance guarantee, financial company guarantee E.g. Bank rakyat , takaful, etc to secure the advance payment paid by Government
(C) Before 3 months from the site possession , submit the Banker/ Insurance/ Financial compnay guarantee.
The main purpose of advance payment is award the contractor an initial sum of money to support the financial incapability
- it also for contractor start work on time, and prevent delay of work
- the main contractor is entitiles for the advance payment as stated in the tresury insturction under clause 1.1(b) which is 25% of the contract sum but on the limit of 10m, with the following condition :
(a) Contractor must return the Letter of Acceptance duly sign together with the Performance Bond, Contractor All risk Insurance, Workmen Compensation (WC) and premium paid of SOCSO for locak worken salary which below RM3000
(b) Bank Guarantee/ Insurance Company Guarantee/ E.g. Takaful, Bank Rayat with approved format with premium paid to secure the advance payment paid by the Governnment
(c) before 3 months from the date of possession, submit the Banker's Gurantee/ Insurance/ Financial \
Discuss the action avaialble to S.O when Nominated Sub Contractor does not give the Govenment the indemnity as proceed in the standard Letter of Indemnity
- It means they do not want to undertake the indemnity to the Government for their breaches.
As provided under clause 60.2(c) , S.O not to nominate those NSC that will not give the required indemnity to the Government in the letter of indemniuty
As pursuant to clause 60.3, if S.O cannot proceed to nominate , he have following options :
- clause 60.3(a) Nominate another NSC
- Clause 60.3(b) Change works or material from provisional or PC sums so that the work can be awarded to government direct sub-contractor
- Clause 60.3 Award such work to contractor
- It means the NSC do not undertake to indemnity to the Government for their breaches
As provided under clause 60.2(c) S.O not to nominate the NSC that will not give the require idemnity in the Letter o idemnity to the Government .
- As pursuant to Clause 60.3 , s.o cannot nominate the NSC , he have the following options :
60.3 (a) Nominate another NSC
60.3 (b) Change the works or material frm provisional or PC sums that such works can be awarded to government sub-contractor directly
60.3 (c) Award such work to contractor
Clause 60. Nominated sub-contractor / supplier
c) Nominated sub-contractor would not sign the sub-contract with the contract
- It means the NSC rejected the Nomination
- As pursuant to clause 60.2 S.O cannot (c) S.O cannot nominate the NSC that didn't give the require indemnity to the Government
- As pursuant to Clause 60.3 , S.O cannot proceed the nomination, he have following option:
60.3(a) Nominate another NSC
60.2 (b) Change the works, materials or omit from the provisional sum or Prime Cost Sum so that work can be awarded to the Government direct Sub-Contractor
Discuss Fluctuation of Price of material
- There are certain material which commonly subject to fluctuation of price
- For example : steel, cement
- Under JKR form, fluctuation of price is allow under clause 30
- Material entitles for fluctuation of price will be written under clause 1.1(b)
- Tresury Instruction as pecial provision
- Material will be inserted by CQS in contract document , tenderer only insert prices in tender documents
- Those materials, fluactuate during constuction, contractor is entitled to be paid according to the market price, contract sum be adjusted accrodingly.
There are certain commonly material subject to fluctuation of price
E.g. steel, cement
- Under JKR form fluctuation of material price is allow under clause 30
- Tresury instruction as special provision
- Material will be inserted by the CQS, and the contractor only inserted the price in tender documents
- Those materials, fluctuation during construction, contractor is entitles for the market price, contrac sum will be adjusted accordingly
Clause 30
Cement has been provided as special provision for fluctuation of price in the contract . S.O certified payment of RM 50,000 fr concrete w roks, but thr Government pays only RM 40,0000 to the Contractor based on the confirmation reduction in market price of cement at the time. The Contractor insist that Govenment pay thecertified by S.O. Advise the Contractor enttilement and exlplain the mechanism of the Fluctuation of Price in clause in the contract ( 13m)
- Contractor wrong
- Clause 30 allow government to increase or decrease the flctuatuion price at the time of usage
- The rate of cement will be inserted under treasury instruction in special provision under clause 1.1(b) in tender document
- The rate will be inserted and specified by CQS in tender documents, which becaome contract document
- therefore, government can adjust it , he pauys lesser/ higher than the certified amount which according to the current market price
- it is advisable for contractor to aware on the price of those material which entitles to fluction , then highlight the material price while preparing his interim payment claim
- this would help himself to avoid delays as it may take time for government to find out the current market price of those material
Identify 5 uncertain situation under contract administatrion which usually result in construction disputes
Comon ground of disputes
Whehther work done is to specification
- Contrator did not know how to interpret the spec/ drawing or interpreted wrongly
Whether works is variation and its pricing
- Employer isntruyct contractor to do something, variation is not paid in this case if Contractor direclty comply
Whethere instruction, variation oders and certificates are adequate or late
- Instruction ifven is either no clear or late
- Instruction fiven is clear but issued late
Whether completion is likely to be delayed
- Delay not cause by contractor but NSC/ NS / Employer or Force Majeure
-
Ascertain of Loss & Expenser
- Direct Losses or other losses such as "Incidental cost"
Identify 5 uncertain situation under contract administation which usually results in construction disputes
common of disputes
Whether the works is variation and its pricing
- Employer instruct contractor to do something, Variation is not paid if Contractor directly comply
WHether Work done is to specification
- Contractor did not know how to interpret the spec/ drawing or interpreted wrongly
Identify 5 uncertain situation under contract administration which usually result in construction disputes
Common dispute
Whether work done to specification
- CContractor did not know how to interpret the spec/ drawing or interpreted wrongly
Whether work is variation and its pricing
- Employer instruct contractor to do something, variation is not paid in this case if contractor direct comply
Common Ground of Disputes
Whether the work done to specification
- Contractor did not know how to interpret the spec/ drawing or interpret wrongly
Whether works is variations and its pricing
- Employer instruct contractor to do soemthing, variationm is not paid in this case if contractor direct compley
- Whether instruction, variation order, and certificate are adequate or late
- Instruction given is either no clear or late
- instreuction given is clear but issued late
whether instruction, variation order, and certificates are adequate or late
- Instruction given is either no clear or late
- Instruction given is clear but late
Whether completion is likely to be delay
- Delay not cause by contractor but cause by NSC/ NS or employer
Ascertained of Loss or Expenses
Direct losses or other losses such as Incidental costs
5 common ground of disputes
whether work done to specification
whether works is variation and its pricing
whether instruction, variation, and certificate are adequate or late
wehther completion si likely to be delayed
Ascertained loss/or expenses
5 rules that can generally hhelpt to reduce claims or additional payment
- employer have sufficient capital
- Appoint consultant with right experience
- Allow sufficient design
- Award contract to experience and competent contractor
- Engage experience and competent field staff
- Realistic construction period
Timeout recview of claims/ variation
- Avoid confrontation, prepare to negotiate
Engage the rights dispute resolution team
4 simple rules to avoid claims
- Complete alld rawing for tender preparation
- BQ full complete for tender
- Variations dealt with promptly
-concise and complete Final Account Properly
4 simple rules
- Complete full BQ for tender
- Complete all drawing for tender preparation
- variation deals with promptly
- concise and complete all final account properly
THe purpose of Tender Documents
For tenderer to view and decide whether to purcahse tender focument or not whether to tender this project or not
For tenderer to view and decide whether to purchase tender ddocument or not whether to tender this project or not
* For double checking against pourchased tender documents against errors. To check through and make sure no error like msising pages, no error, no blank page, correct specificaiton, correct page numbers, correct drawing, no discrepancy and etc.
* For double checking against purchased tender documents against errors. To check through and make sure no error like missing pages
* To check the tender's capability to do the project
* To check the location of the project
*
Purpose of the Tender Table DOcuments
- For tenderer to view and decide whether to purchase the tender document or not whether to tender this project or not
- For tender to double checking against purchased tender documents against errors, check through and make sure no error like missing pages, blank pages, correct specification, no discrepancy , etrc
- To check the tender's capability to do the project
- To ehck how long is the contract period
- Tender table documents are 100% corrected, thje relavant stgaff/ government officer will check through the tender table documents before making it avaialb eon the counter.
Supplement Agreement
- For purcahse of complete building
- Sign in conjunction with standard SPA
Supplement Agreement
- For Purchase complete Building
- Sign in conjunction with Standard SPA
Supplement Agreement
- For Purchase Completed Building
- Sign in conjunctiuon with standard SPA
Supplement Aggremeent
- For Purchase Completed Building
-Sign in COnjunction With SPA
Supplement Agreeemtn
- For Purchase Completed Building
- Sign in conjunction with SPA
Arise from 5P which disputes generally arise from building contract
i) Payment i.e. non or partial payment
ii) poor Contract/ Documentation
iii) Performance - attributes from consultant to sub-contractors
iv) Personality clashes
v) Politics
5P
Politics
Payment e.g. non payment
Poor Contract
Performance
Personality Clashes
Poor Contract
Payment
Performance
politics
Personal Clashes
