1.

0 Introduction

Defect Liability Period (DLP) is a common feature in all the standard form
of construction contract in Malaysia. During the DLP, the Contractor is obliged
and liable to rectify defects that appear between the period the Certificate of
Practical Completion (CPC) is issued and the expiry of the DLP. Before
answering this question, lets define defects or defective works. In general
terms defects or defective works is where the standard and quality of
workmanship and materials as specified in the contract is deficient. The Flow
Chat 1 shows that the Practical Completion & Defects Liability in the
construction.

2.0
3.0
4.0
5.0
6.0
7.0
8.0

The Case study for our assignment is the Hairline cracks were discovered
by the Architect in the joint between the roof beams and walls. The Architect
issue a notice to the Contractor to rectify the cracks. But the Contractor
contended that the hairline cracks are due to the design problems and not the
failure of the workmanship or materials, and the rectification works should be
treated as a variations in the contract.
The Engineer who carried the investigations and found that the hairline
cracks were not due to the design problems, but were due to the absence of
the proper exmet reinforcement. The Contractor disagreed with the Engineers
finding, and Contractor shall not be responsible for any recurrence of the
defects at the same location in the future.
One month after the Contractor completed the rectification of the works,
the Defect Liability Period was expired. Thereafter the Contractor requested
the Final Schedule of Defects from the Architect. But one week later, there is
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the hairline cracks reappeared at the same area. The Architect rejected to
issue the Final Schedule of Defects to the Contractor. The Architect replied
with a written notice that the Contractor has to responsible and liable for the
defects and failure of the works.

But the contractor refused the Architect instruction to rectify the defects on
the grounds that Accordance to the Clause 15.3 of the Conditions of
Contract, as the 14 days deadlines for delivery of the Final Schedule has now
expired, no further instruction to rectify defects for the Works shall be issued
by the Architect. As the cost and contract consultant for the project, we have
to using the appropriate provisions of the contract based on the Agreement
and Conditions, PAM FORM Contract 2006 and liable to prepare a report for
defining the failure of the parties in the Contract.

2.0
(a) Are the hairline cracks defined as defects under the contract?
The term defect is generally defined as a defect in the design, the
construction, and/or in the materials or workmanship used on a project that
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may not be readily observable and results in a building. Defect includes both
design caused by engineer and construction defects caused by contractor that
will result in financial harm to the owner. Defects can also be Patent defects
and Latent defects apart from the usual defective construction defects
happening at the site. Patent defect is known as testing and inspection. Latent
defect is known after a period of time or hidden defect that exist at the time of
sale.
Yes. The hairline cracks can define as defects under the contract. This is
because in the opinion of the Structural Engineer, the hairline cracks were not
due to design problems but were shrinkage cracks due to the absence of
proper exmet reinforcement by the contractor. So, they define as defects,
which is poor workmanship by the contractor, according to Clause 6.5, the
contractor is not work in accordance with the contract.
In the construction industry, construction defects and failures can occur
during the design and construction phases of a project, or after a structure is
substantially completed. A contractors misunderstanding of the design, poor
workmanship, the use of non-conforming materials, and failure to perform the
work in accordance to the contract cause the defects.
No. The hairline cracks are not defined as defects under the contract.
This is because the contractor contended that since the cracks are due to
design problem and not due to faulty workmanship or materials by him. So,
the rectification works shall be treated as variations that caused by design.
The occurrence of this defect also may result from the design professionals
failure to produce an accurate and well-coordinated design that provides
sufficient information to the contractor to construct the building.

3.0
(b) Under which clause of the contract should the architect instruct the
contractor to rectify the cracks/defects?
The contractor should base on clause 1.1 completion of works in accordance
with contract documents to those conditions carry out and complete the work
alignment with the contract document and in compliance with provide
materials, goods and standards of workmanship and the quality are described
in the contract document and require by the Architect. All the works, materials,
goods and workmanship should align with the contract document describe
based on clause 6.1. Quality measure is based on clause 6.3 inspections and
testing, the contractor shall provide sample of materials and goods for testing
before into the works. The Architect may issue Architect Instruction (AI) to
contractor request for open up testing. If the test result shows that the quality
is qualify, the contractor may request the Extension of time, Clause 23.0 and
Loss and expenses, Clause 24.0. If the Architect finds any work, materials,
goods or workmanship which is not accordance with the contract, the architect
will according clause 6.5 to give instruction such as remove material from site,
demolish and reconstruct and so on. Because the contractor results after
inspection is show that the work are not accordance with the contract so that
the contractor have no right to apply Extension of time and loss and expense
based on clause 6.6 no compensation for time and cost. The contractor may
refuse or fails to comply the with the written instruction of the AI under clause
6.5. Employer has right to set off contractor and hire other contractor to carry
out the work based on clause 30.4. The architect can based on Clause 2.2:
Architect Instruction (AI) to instruct the contractor to rectify the defects.
Clause 2.2 AI is the only valid instruction issue by Architect through the
written notice. Other then written instruction such as verbal instruction,
instruction given by site agent all of these instruction is not effective. Based on
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Clause 15.4: schedule of defects any defects that appear within the Defect
Liability Period (DLP) shall be specified by the Architect in the schedule of
defects. The Architect issue schedule of defects to the contractor not later 14
days after the expiration of Defect Liability Period (DLP). The contractor has
to make good all defects within 28days after receive the schedule of defects.
Also based on Clause 15.5: instruction of make good defects, the architect
can issue AI during DPL of the urgent rectification to be made good within a
reasonable time specified by the architect at the contractors cost. If the
contractor fails to fix the defect the employer can set-off contractor and deduct
the cost from contract sum based on clause 30.4: Set off by Employer, and
pay other contractor to rectify defects.

4.0
(c) Can the architect issue instruction after the date of Certificate of
Practical Completion (CPC)?
According to PAM Contract 2006, Clause 15.1 Practical Completion, from the
opinion of the Architect, the Works is already finished and the building can be
fully use by employer for their intended purpose but the building still have
some minor defect such as crack, leaking and the contractor has responsible
to make all minor defect good. Under clause 15.2(a), within 14days after
receive the written notice given by contractor. Architect will do inspection. If
the architect opinions the Works are not practically completed, then Architect
will not issue Certificate of Practical Completion. If in Architect opinion, the
Works are Practically Completed, then Architect will issue Certificate of
Practical Completion which based on clause 15.2(b). The Certificate of
Practical Completion will be issue by the Architect to the Contractor when the
contractor has achieved practical completion of the Works including all
authorized variation and the Works have passed any tests of inspection as
required.

The criteria for practical completion:

a) This employer can have full and beneficial use of the works for their
intended purposes
b) The contractor has given undertaking to makes the defect good and
complete the works
c) Other requirements stated in the contract document have been
completed with the contractor
If YES, the contractor has the responsibility to make the entire minor defect
good. According to clause 15.4, Schedule of Defects. Any defects in the
Works, which appear within the defects liability period, shall be specified by
the Architect in a schedule of defects, which he shall deliver to the Contractor
not later than 14 days after the expiration of the defects liability period. The
contractor must make good the defects specified by architect within 28 days
after receipt the schedule of defects at the contractor cost. If the contractor
fails to repair the defects, client has the right to employ other contractor to
repair the defects.
If NO, according to clauses 11.3, Issue of Variations after Practical
Completion. The architect may issue instructions in writing requiring a
Variation at any time before the issuance of the Certificate of Practical
Completion. Thereafter, any AI requiring a Variation must be necessitated by
obligations or compliance with the requirement of any appropriate authority
and service provider issued before Certificate of Practical Completion, but if
requirement by appropriate after certificate of practical completion, still can
claim extension of time and loss expenses.

5.0
(d) Were the hairline cracks due to design problem and not due to the
contractors workmanship or materials; hence, the rectification works
shall be treated as variations to the contract?
Yes. At the contractors side, the hairline cracks due to design problem
and not due to the contractors workmanship or materials; hence, the
rectification works shall be treated as variations to the contract.
According to the contract, there was no thermal insulation designed for the
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roof slab to minimize such hairline cracks from occurring. So, this is the faulty
of design caused by the structural engineer. Variations mean any changes
made, alteration or modification of the design, quality or quantity of works.
According to Clause 11.1(b): the alteration of the kind or standard of any
materials and goods to be used in the Works. The engineer wants the
contractor to rectify the works by his findings and method of rectification.
Besides, may alter the kind of the rectifications or change the design of the
building or change the standard of the materials. In addition, subject to
Clause 11.6(c), where work is not executed under similar character as set out
in the contract documents. Engineer wants contractor to rectify the work as
add the design of the thermal insulation for the roof slab, which is the work,
not stated down in the contract. Thus, the variation caused by the engineer
incurs additional expenses to the contractor according to Clause 11.7:
Additional expense caused by Variation. The reason is, that is not default
by the contractor and he is not entitled to pay the additional or extra expense
that caused by the engineer. Furthermore, the contractor shall give written
notice to the Architect that he wants to claim for such additional expenses
together with an initial estimate of his claim subject to Clause 11.7(a). In
addition, according to Clause 11.9: Variations and additional expenses
added to contract sum, then the amount of additional expenses claimed by
the contractor refer to clause 11.7, this amount should added to the contract
sum.
Due to the variation and rectification by the engineer, this variation may affect
the flow of the whole construction of the building seriously. Therefore, the
contractor may claim for Extension of Time (EOT) subject to Clause 23.0
because this is not due to his default but is due to the clients representative
fault. Thus, the contractor should give written notice to the architect with some
supported with all particulars of the cause of delay, which is the delay caused
by the variation of works.
In this case, the contractor may claim for Loss And/or Expense (L&E)
according to Clause 24.0. The EOT is the condition precedent, so L&E is
entitled for contractor. L&E will not start unless EOT is started to claim. L&E is
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to reimburse the contractor for L&E, which he has suffered or incurred as the
direct result of certain specified event. Beside, the regular progress of the
Works is likely to be materially affected by the variation, so contractor is likely
to incur L&E and he may claim for such loss and/or expense too.
No. In engineers opinion, contractor should rectify the defects because it
is due to the poor workmanship or materials of the works. Thus, the
rectification works shall not be treated as variations to contract. According to
Clause 6.1: Standards of works, materials, goods and workmanship. All the
works must be follow the standard stated in the contract and make sure that
the quality is there otherwise the architect has the right to open up and
inspection for contractors work subject to Clause 6.3: Inspection and testing.
If the engineer found that there is defects and he may consider that is of
contractor fault that he did not work in accordance to the contract, then ask for
inspection or rectify the work. However, this is the contractors liability to
execute the work and supply materials and goods and maintain the quality
workmanship in accordance with the contract, as the clause stated at Clause
6.4: Contractors obligation and relieved.
Consequently, the contractor may pay Liquidated Ascertained Damages
(LAD) to the client. This is because is his fault caused the delay of the work,
which he did not work in accordance with the contract, and engineer asked for
rectify the defects or remove the work.

6.0
(e) By adhering to the architects methods of rectification of exmet
instead of P.U. Sealant, will the contractor be liable if the cracks have reoccurred?
The contractor is not liable if the crack have re-occurred. According to
Clause 15.3 of the Conditions of Contract (as the 14-day deadline for delivery
of the Final Schedule has now expired, no further instruction to rectify defects
for the works shall be issued by you), those cracks that re-occurred cant
consider as defects as the architect

did not issue the Final Schedule of

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Defects. In addition, following the project structural engineers method of

rectification, the contractor has proved that the hairline cracks were not due to
the absence of proper exmet reinforcement. Therefore, the contractor is NOT
liable to the re-occurred cracks.

7.0
(f) Was the contractor right to insist that the architect can no longer
issue instructions to rectify works after the expiry of the DLP?
The Contractor do not have the right to insist that the Architect can no longer
issue an instructions to rectify the works which after the expiry of the Defect
Liabilities Periods (DLP). It is because based on the PAM 2006 Clause 2.1,
the Contractor should comply with all the Architects Instruction (AI) in regard
to any matter in respect of which the Architect is expressly empowered by
these Conditions.
It is because, under the contract, the Contractor is liable for the defective
works and has the rights and duty to return to the site to remedy the defects
during defect liability Period.
According to clause 15.3, the Contractor shall comply with all his undertaking
to attend to the works and defects of a minor nature under Clause 15.1(a)
within the specified time. In the event if the Contractor fails to comply with his
undertaking, the Employer who may possess under the Contract without the
prejudice to any other rights and remedies with any one of the following:

15.3(a) The Employer grants with the Contractor for additional the ex-gratia
time to be specified by the Architect to enable the Contractor to comply with
his said undertaking.
15.3(b) The Employer may employ and pay third person to execute those
works which may be necessary to give effect to the Contractors said
undertaking. All the cost including in any loss or expenses shall be set-off by
the Employer under Clause 30.4.
15.3(c) Accept the leave all or any such of works and defects of minor nature
in the Works subject to an appropriate set-off under Clause 30.4.
Other that, under Clause 15.6(b), if the Architect who opinion that the Defects
works have not been made good, so the Architect shall written an AI notice to
the Contractor to re-making good all the Defects, otherwise the Architect shall
not issue the Certificate of Making Good Defects to the Contractor.

8.0
(g) Is the contractor liable to repair the re-appeared cracks after he had
rectified them?
Yes. If there were discovered the reappeared of hairline cracks in works, the
Contractor is liable to repair the works. According the Clause 22.1, if the
Contractor fail to complete the Works (the reappeared cracks) which in the
Architect of the opinion, the Architect shall issue a Certificate of NonCompletion to the Contractor. So the Employer shall calculated a sum of the
rate stated in the Appendix as Liquidated Damages and shall pay by the
Contractor. It may recover such sum as a debt or may deduct from the monies
due or to become due to the Contractor under the Contract, or the Employer
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may recover such sum from the Performance Bond.

No. The Contractor disagreed with the Engineers finding report which the
Engineer said that the hairline cracks were not due to design problems but it
was due to the absence of the exmet reinforcement. It is because the
Contractor found that was a designs failure, and all the works are accordance
with the specification in the drawing. According to Clause 6.3, the Architect
and Engineer shall inspection and testing of the samples of materials provided
by the Contractor, so the Contractor said that were approved by Architect and
Engineer for the standard of the Materials, and the Contractor disagreed with
the Engineer that were the Contractor default. If they want the Contractor
come and repair the re-appeared cracks, the Contractor may can apply an
EOT from the Architect based on the clause 23.1. Thereafter, according the
Clause 24.1, the Contractor may notice the Architect for his intention claim for
such loss or/and expense. Such written notice shall be condition precedent to
any entitlement to loss or/and expense that the Contractor may have under
the Contract Sum.

9.0
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(h) Has the architect failed in his duty to issue the Schedule of Defects?
Yes. Under Clause 15.4: The schedule of defects should deliver to the
contractor within 14days after the expiration of defect liability period. If there is
defect appear before the 14days, the architect shall issue the schedule of
defect. If the architect have no issue the schedule of defect within the 14
days, then the contractor can refuse the rectify work because the architect
was fail in his duty to issue the schedule of defect.
No. If the defects are just appear after 14 days of the expiration of defect
liability period but the contractor already end the liability of the contract, thus
he has no right to rectify the defects, the architect have also no right to issue
the schedule of defect to the contractor to fix the defects. Furthermore,
Employer may hire other contractor to rectify the defects. However, the
Architect is not fails on his duty in this situation, because the issuance of
schedule of defect period was over, the Architect have no right to issue any
instruction to contract to instruct contractor to rectify defects.

10.0 Conclusion
Throughout this case study, there is no certain party is right. So, our
answer and suggestion will be in yes or no, which is not necessary the
contractor fault but also not fully correct by the design team.
A contractors obligation is very important and is a must to carry out his
work regularly and work in accordance with the contract. Contractor should
make sure his quality workmanship and quality of the materials used. This is
because, a contractors misunderstanding of the design, poor workmanship,
the use of non-conforming materials, and failure to perform the work in
accordance to the contract cause the defects. In addition, if architect found
that he is not work in accordance with the contract, the architect can ask for
open up or remove his whole work. Furthermore, contractors responsibility to
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carried out defect when there any defects appear.

An architect or an engineer is also very important to the construction site.
The occurrence of this defect also may result from the design professionals
failure to produce an accurate and well-coordinated design that provides
sufficient information to the contractor to construct the building. Due to the
architect or engineer fault, they cause the delay of the project too. In addition,
caused the contractor needed to pay the extra expenses on it.
Finally, every single party is very important in the construction site.
Different position of the parties in the construction will carry out the work
regularly everyday. As a contractor, make sure his work is work in accordance
with the contract. As a consultant QS, make sure they can help out the client
in order to prevent the budget is not over budget. An architect, as a
representative of the client, help client to make the contractors work is work in
accordance and work regularly. In addition, issue every architects instruction
within the reasonably period or day. As an engineer, make sure the design of
the buildings is build in a correct and possible way. As a client, is very
important too to make sure the payment is always claim to the different parties
on time.

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