Professional Documents
Culture Documents
Abstract
1. Introduction
A contract is a legally binding agreement between the parties identified in the
agreement to fulfill all the terms and conditions outlined in the agreement. A
prerequisite requirement for the execution of a contract, amongst other things, is the
condition that all the parties to the contract accept the terms of the claimed contract.
Construction contracts are basically different from major service contracts. There are
various types of construction contract. The choice of contract depends on the basis of
pricing and the contract strategy that best meets the project objectives. The various
types offer different ways of handling pricing, risk transfer, responsibility for
performance, cost certainty, and complexity.
(http://www.ogc.gov.uk/documents/Contract_Management.pdf)
The purpose of standard forms of contract is to facilitate the contractual
arrangements between actors in a project. Standard forms of contract are readymade
terms and conditions when making a contract (Kwakye 1997). The standards vary
from country to country and from one type of project to another. These standards are
generally used and accepted by different contracting parties. It would be practically
impossible to devise a standard form of contract that would take account of all
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Table 1 illustrates a comparison between PWD DB and PWD 203A form of contract
which is imposed on a wide variety of participants encountered, showing how they may differ.
Architect, contract
administrator,
Administration supervising officer,
- planning
supervisor, project
administration
Site inspector - Clerk of work
Consultant(Architect), Builder, main
Overall main contractor, joint contractor,
responsibility venture contractor, principal
design-build project contractor,
manager executive director
Contractor Contract manager,
Constructor’s project engineers, Project manager,
staff supervision team, site supervisor,
builders builders
Architect, C&S sub- C&S sub-
Partial contractor, M&E sub- contractor, M&E
responsibility contractor, supplier sub-contractor,
quantity surveyor,
supplier
client. The site supervisor manages all works, workers, daily reports (site dairy) and the
quality of work. Arranging the masonries, material maintenance and all machines’ installation
are the site supervisor’s responsibilities. In occurrence of a problem, they refer to the project
manager for handling.
The different method of organizing and maintaining the project is used in PWD 203A
which is project management. The project manager controls and monitors the work through
schedule of planning during constructing. The important aspect in PWD 203A is bills of
quantities. Therefore the contractor has the responsibility to complete the work according to
the requested quantities referred to the contract documents. In PWD 203A the government is
entitled to deduct such costs, expenses and on-cost charges or any part from any monies due
to the contractor or to recover it from performance bond as debt due from the contractor. That
is the reason of being popular for this type of contract for government sector in Malaysia.
4. Discussion
The main differences in construction contracts are the extent to which the client is responsible
for the management of the project, risk allocation and the internal responsibilities of project
members (Kodeda 1992; Söderberg 1993). According to Murdoch & Hughes (2000) it is not
only the commercial risk that is most significant when defining the characteristics of projects
and project strategies, but also the involvement of people.
According to the comparison which is given above, the roles link are depended on the
type of contract and it would lead the liabilities and risk to the parties. In PWD DB,
contractor’s responsibilities vary from PWD 203A. The contractor’s responsibilities in PWD
DB are the design leadership, design management, administration team and site inspection
roles. For instance Animal House (Rumah Haiwan) reasons for delay were EOT (Extension
Of Time), third party (the different contractor) and firefighting authority at final stage. The
two constraints of this project were the client own liability and only for last one, client could
claim for delay. The on time completion is the result of this project, it was supposed to be
finished within 127 days as it is. Actually it was started at February 2009 signifies Extension
Of Time was requested by client for possession of site since 2008 when the contract was
signed by parties. Therefore in this project, the management part carried out strongly to make
the completion on time. However the contractor was changed, but it could continue
performing of the works constructively. The contract manager controls, monitors and
maintains the project since the earliest stage of a project according to PWD DB’s method in
use.
Whereas the contractor has the responsibility to complete the work according to the
requested quantities referred to the contract documents (Bills of Quantities) in PWD 203A.
For example, Langkawi Research Center Building (Kompleks Pusat Penyelidikan Langkawi)
delay was the land approval by client. The date of site possession was on April 2009. The
completion duration was 18 months in August 2010, but it is still under construction due to
delays. The last revised schedule is illustrating the completion on December 2010 which
means 4 months more than the planned schedule. In this form of contract due to separation of
design and build, the contractor faces lack of details’ drawing and the constructed part may
differ from plans. In PWD 203A, the project manager controls and monitors the work through
schedule of planning during constructing.
Therefore the client is not so active during the project, because most of the
responsibility of the project is allocated to the contractor in terms of PWD DB, but In PWD
203A the government is entitled to deduct such costs, expenses and on-cost charges or any
part from any monies due to the contractor or to recover it from performance bond as debt due
from the contractor.
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5. Conclusion
The traditional contractual arrangement sets out the legal relationship the parties wish to
establish and the rights, obligations and procedures for resolving contractual disputes (Kodeda
1992; Kwakye 1997). There are several factors that affect what type of contract is suitable for
a certain project, e.g. the amount of involvement from the client, the location of the project,
technical complexity. In an initial stage of the design phase, the client has to adopt a suitable
contractual arrangement for the project and a corresponding standard form of contract.
Acknowledgement
The authors would like to thank construction management department (JPP) in national
university Malaysia (UKM) and Izinria Company for providing the author copy of projects’
documents.
References
[1] Darus.Z.M, Mohammad.N and Yusof.M.A, 2007. A Study on the Excusable and
Compensable Delays in The Construction of Building Projects in Malaysia., J. IEM
[2] Murdoch,J & Hughes,W. 2000. Construction Contracts – Low and Management. 3rd
Ed. Great Britain: Spon Press. London.
[3] Kodeda, F. 1992. The Project Supervisor of Elections Genomforandeform For
Construction Projects. Gothenburg: Department of construction economics and
construction organization. Chalmers University of Technology. Sweden
[4] Kwakye, A.A. 1997. Construction Project Administration in practice. Longman.
London.
[5] Söderberg. J. (1993). To Procure Construction Projects. Studentlitteratur. Lund.
[6] Ashworth. A. (1991). Contractual procedures in the construction industry. 2 nd ed,
Longman, London.
[7] Andersson,C & Gunnarsson,Ph. 2002. Contract Management: A Way of Increasing
Profit in Construction Projects?. Learning from NCC International’s highway
construction project in Nicaragua. Chalmers University of Technology. Goteborg,
Sweden.
[8] Office of Government Commerce (OGC). Contract Management Guidelines;
principles for service contracts. The UK Office of Government Commerce. Norwich.
Available from: http://www.ogc.gov.uk/documents/Contract_Management.pdf
[9] Public Work Department Malaysia. 2007. PWD DB Form of Contract Revised 2007.
PWD 203A Form of Contract Revised 2007. Standard Design and Build Contract.
Malaysia. Available from:
http://www.moa.gov.my/html/themes/moa2_new/document/StandardForm_of_Design
_and_BuildContractPWDFormDB_Rev2007.pdf
[10] Public Work Department Malaysia. 2007. PWD 203A Form of Contract Revised 2007.
Standard Conventional Contract. Malaysia. Available from:
http://www.moa.gov.my/html/themes/moa2_new/document/StandardFormContractTo
UsedWhereBills_of_QuantitiesFormPart_of_the_ContractP.W.D.Form203A_Rev2007
.pdf
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