Professional Documents
Culture Documents
rticle
Standard Forms of
Construction Contract
Many standard forms of construction
contract in Malaysia provide for
payment application and certification
clauses. The relevant payment clauses
in respect of the various conditions
of contract in use in Malaysia are: PAM 1998 and PAM 2006 Clause
30 Certificate and Payment (refer to
Flow Chart 1 for PAM 1998 and Flow
Chart 2 for PAM 2006)
IEM/JKR Clause 47 Payment to
Contractor and Interim Certificates
(refer to Flow Chart 3 for IEM and
Flow Chart 4 for JKR)
CIDB Clause 42 Payment (refer
to Flow Chart 5)
JKR PWD Form DB/T (2002
Edition) Clause 50 Interim Payment
(refer to Flow Chart 6)
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START
Yes
Architect corrects or
modifies previous
certificate in next
certificate
No
Architect ascertains:
(a) the total value of works
properly executed
including those executed
by sub-contractors
(b) the total value of materials
and goods including:(i) delivered to or
adjacent to the Works
(ii) delivered up to and
not more than 7 days
before the date of
certificate
(iii) reasonably, properly
and not prematurely
brought to or adjacent
to the Works
(iv) adequately protected
against weather or
other casualties
No
Architect
issues
Interim
Certificate
with a
copy to the
Employer
Employer stops
default in 7 days
No
Yes
Yes
Notice of determination
by contractor
END
Flow Chart 1: PAM 1998 Form Of Building Contract Clause 30 - Interim Payment Process
START
Yes
Architect corrects or
modifies previous
certificate in next
certificate
No
Architect ascertains:
(a) the total value of works
properly executed
including those executed
by sub-contractors
(b) the total value of materials
and goods including:(i) delivered to or
adjacent to the Works
(ii) delivered up to and
not more than 7 days
before the date of
certificate
(iii) reasonably, properly
and not prematurely
brought to or
adjacent to the Works
(iv) adequately protected
against weather or
other casualties
No
Architect
issues
Interim
Certificate
with a
copy to the
Employer
within 21
days from
receipt
Contractors
Application
Employer stops
default in 14 days
Yes
Yes
Flow Chart 2: PAM 2006 Form Of Building Contract Clause 30 - Interim Payment Process
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No
Notice of determination
by contractor
within 10 days
Carry out provisions of
Clause 26.4 & 26.6
END
rticle
For CIDB Form of Contract, the SubClause 42.1 requires the Contractor
to submit a Statement of Work Done
(SoWD), which would incorporate the
work properly executed (subject to
any agreement as to stage payment
stipulated in the Appendix), any
items priced in the contract including
Construction Plant, Temporary Works,
percentage (as stated in the appendix)
of value of equipment, material or
goods delivered for incorporation in
the Works and any amount due to the
Contractor under an Option Module.
START
Contractor submits claims to Engineer when the value of
executed work including delivery of materials had reached
the sum referred to in the Appendix
YES
Contractor proceeds
with the Works
NO
Contractor gives notice of
default under Clause 52 (a)
Contractor terminates the
Contract under Clause 52
Flow Chart 3: IEM Form Of Building Contract Clause 47 - Interim Payment Process
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No
No
No Interim Certificate
shall be issued
Yes
No
No
Dispute or differences
arise
Yes
Refer Settlement of
Dispute Clause 54.0
Flow Chart 4: JKR Form Of Building Contract Clause 47 Interim Payment Process
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Contractor lifts
suspension
NO
Employers
failure to pay
subsequently
Add to Contract
sum
S.O. evaluates
claims
Contractor
submits Loss
and
Expense/EoT
claims
Contractor
entitled to Loss
and Expense
YES
Refer Settlement of
Disputes Clause 47
Contractor
entitled to
Extension of
Time
Determination
subject to
Clause 45.1 (b)
Contractor
protect and
secure the
Works during
suspension
Refer Notice of
default Clause
45.1 (a)
Contractor suspends
wholly / partly / reduces
the fate of the Work
progress
YES
YES
Total amount
Contractor stated in
Statement of Work
Done greater than
the minimum amount
specified in the
Appendix
NO
Employers
failure to make
payment after
further 14 days
YES
Contractor
gives
notice
of his
intention
to
suspend
work
Total amount
which the S.O.
considers Contractor
to be entitled to
greater than the
minimum amount
specified in the
Appendix
NO
Flow Chart 5: CIDB Form Of Building Contract Clause 42 Interim Payment Process
START
Contractor submits to
the S.O. at the intervals
specified in Appendix
as Statement of Work
Done
NO
NO
Employers failure
to pay for further
14 days
YES
YES
Employers
pays certificate
and interest
NO
Contractor is
entitled to some
remedy where the
Employer is liable.
Clause 42.12
YES
Interest in
respect of the
unpaid amount
accrued
Contractor recovers
the unpaid amount
from the Bond
YES
Option Module E
/ Payment Bond
applicable
END
Contractor proceeds
the Works
YES
After issuance of
Certificate of Practical
Completion, Interim
Certificate shall be
issued as and when
further amounts are
ascertained by the S.O
A
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START
Contractor executed works including
delivery of materials
Contractor submit
payment application
No
Yes
No
No
Yes
PD do valuation of
the executed Works (including
materials delivered) on monthly basis
and the total value shall be more than
the sum referred to in Appendix 1
Yes
PD shall issue Interim Certificate within 28 days
from the Contractors payment application
stating the amount due to the Contractor
No
Dispute or
differences arise
END
Contract Clauses
PAM
2006
PAM 1998
30.1
30.2
30.2
within 21
days
CIDB
2000
FIDIC 4th
Edition
47 (a)
42.1
50.2
Architect
discretion
14 days after
Valuation
42.2(a)
within
21 days
50.3 (a)
14 days after
application
30.2
30.3
47 (d)
42.9 (a)
50.3 (c)
30.17
42.9 (b)
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JKR
203A
IEM
1989
rticle
1
Ir. Harbans Singh K.S., Engineering and Construction Contracts Management PostCommencement Practice, Chapter 3 Payments, LexisNexis (Singapore) Pte. Ltd., 2003.
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REFERENCE/BIBLIOGRAPHY
Payment calculations
1. Malaysian standard forms of contract: i. PAM Form of Building Contract (1998 & 2006)
ii. JKR/PWD Form of Contract (203A - Rev 10/83)
iii. IEM Conditions of Contract for Works Mainly of Civil Engineering
Construction (1st Edition 1989)
iv. CIDB Form of Contract for Building Works (2000 Edition)
v. JKR PWD/ Standard Form of Design & Build/Turnkey Contract (PWD
Form DB/T) (2002 Edition)
2. Sr. Ong Hock Tek, Payment Claims, Valuations, Certification and Final
Account, one day seminar organised by Entrusty Management Sdn. Bhd.
and B.K. Burns & Ong Sdn. Bhd., 2 November 2004.
3. Ir. Harbans Singh K.S., Engineering and Construction Contracts Management
Post-Commencement Practice, Chapter 3 Payments, LexisNexis
(Singapore) Pte. Ltd., 2003.
4. Vincent Powell Smith, The Malaysian Standard Form of Building Contract,
Clause 30 Interim Certificate and Valuation, Malaysia Law Journal Sdn.
Bhd., 1990.
5. Ling Tek Lee, Natural Justice in Adjudication, Chapter 2 The Dilemma in
the Construction Industry, University Technology Malaysia, March 2006.
In the next issue of the MBAM journal the article will answer the
question on Is determination of employment and termination of
contract the same in meaning and implications?
Quarter
2008