Assignment

MBG 1243 –Construction Contract Studies 1

Lecture : En Norazam Othman

Comparative analysis on clauses concerning payment and

obligations:
1. PWD Form 203A
2. PWD Form DB (Rev. 2007)
3. PAM Contract 2006 (With Quantities)

NAZIB FAIZAL (MB101105)

Faculty of Build Environment

Course : MSc- Construction Contract Management

MB101105-Nazib Faizal 1
 Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

1 General view in payment obligation

Clauses that related to the payment obligation are in Table 1. PAM 2006 governs the payment
in clause 30. PWD 203A governs the payment in clause 28, and PWD DB governs payment in
clause 31, 36, 53, 55, and 57.

Table 1 Clauses that related to the payment obligation

No Standard Form Clause Description

1 PAM 2006 25 Determination of contractor’s employment by employer
26 Determination of own employment by contractor
30 Certificates and payment
37 Performance bond
2 PWD 203A 28 Payment to contractor and interim certificates
31 Final account and payment certificate
54 Payments upon termination
60 Payment to nominated sub-contractor or supplier
3 PWD DB 31 Default in payment of wages
36 Direct payments to contractor’s consultants
53 Interim payments
55 Effect of PD’s certificates and payment by government
57 Advance payment
63 Payments upon termination

In this assignment, I would like to compare base on:

1. Parties who involves in payment obligation

2. Type of payment
3. Interim payment stages statement
4. Advance payment
5. Procedure of Interim Payment
6. Schedule of issuing interim certificates
7. Requirement upon issuing interim certificates
8. Contractor’s obligation in applying payment
9. Procedure of payment upon completion
10. Wages of workmen affects the final payment
11. Retention fund/performance bond
12. Payment for liquidated damages
13. Payments upon termination
14. Performance bond
15. Direct payment to the third party
16. Late payment by government/employer

MB101105-Nazib Faizal 2
2 Comparison
No Item PAM 2006
1 Parties who involves parties involves:
in payment 1. Contractor
obligation: 2. Architect
3. Quantity Surveyor
4. Employer
2 Type of payments Stages
3 Interim payment Stated in appendix
stages statement
4 Advance payment No advance payment
5 Procedure of interim Procedure:
payment 1. Contractor submit a payment
application at the interim
claim interval as stated in the
Appendix
2. Architect and Quantity
consider and ascertain the
amount in 21 days
3. Architect issues the interim
certificates base on
consideration and certain
amount
4. Employer pay the contractor
base on interim certificates
issued by architect
6 Schedule of issuing 21 days
interim certificates
7 Schedule of interim Within the period of honouring
certificates payment certificates
8 Contractor’s Complete details and particulars
obligation in applying as required by the Architect and
payment Quantity Surveyor
MB101105-Nazib Faizal
PWD 203A PWD DB
parties involves parties involves:
1. Contractor 1. Contractor
2. Superintending Officer(SO), 2. Project Director (PD)
or SO’s representatives 3. Employer
3. Employer
Stages Advance payment and stages
Stated in appendix Stated in appendix
No advance payment 25% of the value of the contract
sum
Procedure: Procedure:
1. Contractor shall complete the 1. Contractor shall submit
work as in Appendix interim payment application
2. Regarding to the complete 2. PD consider and ascertain
work, SO shall make the amount in 28 days
valuation of the complete 3. PD issuing the interim
work in 14 days payment certificates
3. SO issuing interim certificates 4. Government pays the
4. Government pays the contractor base on interim
contractor base on interim certificates
certificates
14 days 28 days
Stated in appendix, if it not stated Stated in appendix, if it not
= 30 days stated = 30 days
To make a works is done and SP 1. The value of works done and
can make a valuation properly executed
2. The amount on any valuation
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No Item PAM 2006
9 Procedure of 1. After six month after practical 1. Within 3 month after the
payment upon completion of the works, the
completion contractor shall send all
documents necessary for
preparing the final count to
Architect and Quantity
Surveyor
2. If the parties are agree in
final account, then architect
shall issues penultimate
certificate for the release of
the retention sums and any
other outstanding sum
3. Within 21 days after the
period oh honouring
certificates for the payment of
the penultimate certificate
and within 21 days after the
certificate of making good
defects has been issued, in
MB101105-Nazib Faizal
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law
PWD 203A
issuance of the certificate of
practical completion, the
contractor shall submit
application to enable the final
account prepared by the SO.
If contractor failed, SO shall
forthwith make the
assessment based on
available document for the
final account
2. Within 3 months after the
expiry of the defects liability
period for the whole of the
works or 3 month after the
issue of the certificate of
completion of making good
defects under clause 48
hereof, SO shall issue the
final certificate that consists
PWD DB
of variations or the
instructions by the PD
(clause 24
3. The amount in regard to the
expenditure of provisional
sums executed or expended
(clause 25)
4. The value of any goods or
unfixed materials delivered
to or adjacent to the site
intended for use or to be
incorporated into the works
5. The upervision reports as
required by the PD under
clause 13.1
1. Within 3 month after
issuance of the certificate of
completion of making good
defects or the certificate of
completion of maintenance
(if any), Contractor shall
submit to PD a statement of
the final account showing in
detail the value
2. PD proceed to verify the final
account based on the
document which is given by
contractor
3. If final account is verified, PD
shall issues Final certificate
which consists of balance
sum
4. Final payment is paid by the
government to the
contractor. Final payment will
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No Item PAM 2006
the event no penultimate
certificate has been issued;
the final certificate shall be
issued by architect
4. Final certificate are issued
which consists of final
account and the total sums
certified in previous payment
certificates
5. If any difference between
balance due to contractor
and employer, the balance
shall be payable by the
employer to the contractor
within the period of
honouring certificates
10 Wages of workmen Final payment is not affected by
affects the final wages matter between the
payment workmen that have been
employed by the contractor,
workmen employed by sub
contractor, labor, and etc
11 Retention fund Retention fund will release after
Architect issued Pnultimate
Certificate. Performance bond
shall be refunded to the
contractor without interest on the
completion of works.
12 Payment for If the contractor fails to complete
liquidated damages the works by the completion
date, Architect shall issue a
certificate on non-completion.
MB101105-Nazib Faizal
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law
PWD 203A
of supported documents, full
particulars complete with
receipt, vouchers, final
valuation, any amount
determined in clause 31.1
3. Final payment is paid by the
government to the contractor.
Final payment will not be paid
unless the contractor satisfied
the SO in his obligation due
to the workmen
Wages of all the workmen has to
be paid and all contributions
under the Employment Act 1955,
The Employee;s Social Security
act 1969, The Employee’s
provident Fund Act 1991 and any
other laws relevant to the
employment of workmen have
been paid.
No retention fund is applied in
government standard form.
If the contractor fails to complete
the works by the date for
completion or within any
extended time granted pursuant
PWD DB
not be paid unless the
contractor satisfied the SO in
his obligation due to the
workmen
Wages of all the workmen has to
be paid and all contributions
under the Employment Act 1955,
The Employee;s Social Security
act 1969, The Employee’s
provident Fund Act 1991 and
any other laws relevant to the
employment of workmen have
been paid.
No retention fund is applied in
government standard form.
If the contractor fails to complete
the works by the date for
completion or within any
extended time granted pursuant
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No Item PAM 2006
Upon the issuance of the
certificate of non completion ,
the contractor shall pay or allow
to the employer a sum
calculated at the rate stated in
appendix
13 Payment upon Base on reasonable valuation
termination and put in the final account.
MB101105-Nazib Faizal
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law
PWD 203A
to clause 43, the SO shall issues
a certificate of non completion to
the contractor and notice the
intention of the Government to
impose liquidated and
ascertained damages that stated
in appendix.
Base on reasonable valuation. If
contract is terminated under
clause 50 and 52, the amount to
be paid (in so far as such
amounts or items have not
already been covered by
payments on account made to
the contractor) shall be the
following:
a. The value of all work carried
out up to the date of
termination
b. The amounts payable in
respect of any preliminary
items so far as the work of
service comprised therein has
been carried out or performed
and a proper proportion of
any such items which have
been partially carried out or
performed
c. The cost of materials or
goods reasonably ordered for
the works which have been
delivered to the contractor or
of which the contractor is
legally liable to accept
delivery
PWD DB
to clause 49, the PD shall issues
a certificate of non completion to
the contractor and notice the
intention of the Government to
impose liquidated and
ascertained damages that stated
in appendix.
Base on reasonable valuation. If
contract is terminated under
clause 50 and 52, the amount to
be paid (in so far as such
amounts or items have not
already been covered by
payments on account made to
the contractor) shall be the
following:
a. The value of all work carried
out up to the date of
termination
b. The amounts payable in
respect of any preliminary
items so far as the work of
service comprised therein
has been carried out or
performed and a proper
proportion of any such items
which have been partially
carried out or performed
c. The cost of materials or
goods reasonably ordered
for the works which have
been delivered to the
contractor or of which the
contractor is legally liable to
accept delivery
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No Item PAM 2006
14 Performance bond In the event, If the employer
determine the employment of the
contractor, or if there is any
breach of contract, the employer
may call on the performance
bond and utilize and make
payments out of or deduction
from the performance bond for
the completion of and/or
rectification of the works and
reimbursement of loss, and
or/expense suffered by the
employer.
In the event, if the contractor
determines his own employment,
the employer shall return the
performance bond to the
contractor for cancellation.
15 Direct Payment to the No provision for direct payment
third party to the subcontractor/consultants
MB101105-Nazib Faizal
Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law
PWD 203A
d. A sum being the amount of
any expenditure reasonably
incurred by the contractor in
the expectation of completing
the whole of the works in so
far such expenditure has not
been recovered by any other
payments
e. The reasonable cost of any
protection works and removal
of equipment and site
facilities pursuant to
termination as provided under
the contract.
If the contractor fails to performs
any of his obligations under the
contract and such failure is non
remedied in accordance with this
contract, the government shall be
entitled to call upon the
performance bond, wholly or
partially.
The performance bond may be
released or refunded to the
contractor upon the completion of
works.
Government shall paid the
nominated sub
PWD DB
d. A sum being the amount of
any expenditure reasonably
incurred by the contractor in
the expectation of
completing the whole of the
works in so far such
expenditure has not been
recovered by any other
payments
e. The reasonable cost of any
protection works and
removal of equipment and
site facilities pursuant to
termination as provided
under the contract.
If the contractor fails to performs
any of his obligations under the
contract and such failure is non
remedied in accordance with this
contract, the government shall
be entitled to call upon the
performance bond, wholly or
partially.
The performance bond may be
released or refunded to the
contractor upon the completion
of works.
Applied in direct payment to the
contractor’s consultants. For the
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 Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

No Item PAM 2006 PWD 203A PWD DB

contractor/suppliers according to purpose of payment to the
interim certificates/final consultant, the contractor and
certificates the consultant shall enter an
irrevocable Deed of Assignment
for the assignment of any money
due to the consultant to be paid
directly by the government.
16 Late payment by Employer shall pay interest No provision No provision
employer/government basen on the Maybank Lending
Tate plus one percent

MB101105-Nazib Faizal 6
MB101105-Nazib Faizal 1