1
CHAPTER 1
INTRODUCTION
1.1
Background of the Problems
Dispute in construction industry always occur and can be attested by many court
cases reported in court proceedings, various law journals and law reports. For example
The Building Law Reports which start in 1976, now running to 57 volumes and
Construction Law Reports began in 1985 has now 27 volumes containing thousands of
cases.
Construction issues and disputes grow from variety of causes as reported in the
cases. A survey of more than 300 relatively recent major disputes leads to the conclusion
that the causes of dispute are attributed to five sources (Hohns H.Murray, 1979).
They are, errors, defects, or omission which exist in the contract document, the
failure of someone to accurately estimate the costs of the undertaking in its beginning, the
changed condition of the site or location, the consumer and the people involved.
2
The main objective of project management and contract management is to ensure
that the project in successful, completed on time, within cost at the described quality
given the fragmented and complex nature of the construction. It is most appropriate to
adopt anticipate approach of management. For example to anticipate problems before it
actually occur and to handle necessary measure actions where one of the main function of
Project Manager or Contract manager is to act as arbitrator or dispute handler.
1.2
Problem Statement
A study of the causes has been carried out such as errors, defects, or omission in
the contract document, the failure of someone to accurately estimate the costs, the
changed condition of the site or location, the consumer and the people involved.
But these are the general findings and some others elements have to be
determined. This because construction is a complex process involving of many activities,
myriads of individual, different company or firms, different size, part of country with
different skills and capabilities and always subject to changing environment.
Construction disputes can have serious implication in construction project. The project
may suffer cost and time overrun, the owner may suffer significant loss and profit and
worst still the project may be abandoned or failed. As a client in any construction project,
they are also trying to avoid any disputes during the construction and they don’t want any
lengthy litigation process in resolving disputes.
3
The issues are which elements is actually the common subject matter of the
disputes? What is the nature of the disputes? Who are the parties involved? What type of
the project? When do the disputes occur? And what kind of standard form of the project?
It is essential in construction contract management to adopt an anticipative
approach to management. Since disputes have been one of the major factors affecting
cost and time, it is necessary to determine the nature or the general back ground or the
profile of the disputes. By having thorough knowledge and information, it will definitely
help the project manager and contract manager to anticipate problems at an early stage of
the project.
Therefore, profile which can be defined as a “brief description of a person,
publication, broadcast station, or group in terms of a number of relevant parameters” is
important to be developing in construction industry which it is to describe the common
features of construction disputes.
1.3
Previous Study
One of the significant previous study is by Hohns, H. Murray (1979) which
highlight the recent major disputes leads to the conclusion that their causes can be largely
traced to five sources which are errors, defects, or omission in the contract document, the
failure of someone to accurately estimate the costs of the undertaking in its beginning, the
changed condition of the site or location, the consumer and the people involved.
4
1.4
Objective of Studies
The objective of this study is:
To develop profile of construction disputes feature or characteristic of the dispute where
consists of the nature of the disputes, the parties involved, type of the project, when do
the disputes occurred, and standard form of contract for the project.
1.5
Scope of Studies
This research is limited to the following:-
a) To construction disputes reported by Malayan Law Journal between 1997-2007
b) Cases in Malaysia only
c) Cases related to Building Contract only.
1.6
Significant of Studies
This profile will applicable as a tool in construction industry where all people will
get information and it is important in construction contract management to anticipative
the disputes at an early stage of project in order to prevent and minimized the disputes
From this profile, people in this industry will be more clarified with background
of the disputes, and influenced them to be more aware before they involved in
construction field.
5
The parties such as employer, an architect, project manager, main contractor, sub
contractor or supplier will be more responsible in carrying out their duty with more
regularly and diligently without make the same mistakes by learning from the previous
disputes.
Or maybe by this research, the clients of public and private project were in health
competitive environment to prevent any dispute from occurred in their project besides
ensuring their project to be successful.
1.7
Research Methodology
Briefly, the research process will be divided into five stages:
Identifying the research issue
Literature review
Data and information collection
Research analysis
Conclusion and recommendations
6
1.7.1 Stage 1: Identifying Research Issue
Identifying the research issue is the initial stage of the whole research. To identify
the issue, firstly, it involves discussion with lecturer and reading on variety sources of
published materials, such as journals, articles, seminar papers, previous research papers
or other related research papers, newspapers, magazines, and electronic resources as well
through the World Wide Web and online e-databases from University of Technology
Malaysia, UTM library’s website.
1.7.2 Stage 2: Literature Review
Literature review is the second stage of the research. Literature review will be
involved the collection of documents which from secondary data for the research, such as
books, journals, newspapers. Indeed, published resources like books, journals, varies
standard form of contract, and related statutory are the most helpful in this literature
review stage. Besides this, reported court cases from different sources like Malaysian
Law Journal and Building Law Reports will be referred.
1.7.3 Stage 3: Data and Information Collection
This stage is data and information collection stage. This is an important stage
towards achieving the objectives of this research. In this stage, the further action is to
collect the relevant information based on the secondary data from the published
resources. Lexis-Nexis database which provides cases of Malayan Law Journal is the
main sources in getting the related cases.
7
1.7.4 Stage 4: Research Analysis
In this stage, it is able to determine whether the stated objectives have been
achieved or vice versa. Different types of analysis will be carried out according to the
requirements of the objectives.
1.7.5 Stage 5: Conclusion and Recommendations
Conclusion and recommendations is the final stage of the research. In this stage
the findings will be able to show the result of the research. A conclusion needs to be
drawn in-line with the objectives of the research. At the same time, some appropriate
recommendations related to the problems may be made for a better solution in relation to
the said problem.
8
1.7.6 Research Flow Chart
IDENTIFY THE INTERESTED
FIELD
READING
DISCUSSION
~ Books
~ Statutory
~ Cases
~ Previous Thesis
~ UTM library
electronic database
~ Lecturer
Determination of issues
Determination of research title
Determination of objectives and scope of the
research
Preparation of research methodology and
research design.
STAGE 1
9
LITERATURE REVIEW
SECONDARY DATA
1) ~ Books
~ Statutory
~ Cases Related
~ Previous Thesis
2) UTM library electronic
database: ‘Lexis-Nexis
Legal Database’
e.g. Malayan Law Journal
Building Law Report
STAGE : 2
10
DATA AND INFORMATION
COLLECTION
1.
2.
3.
4.
5.
THE NATURE OF DISPUTE
THE PARTIES INVOLVED
TYPE OF CONSTRUCTION
TIME OF DISPUTE
STANDARD FORM OF THE CONTRACT
DATA ANALYSIS
MANUAL
COMPUTER
DATA ARRANGEMENT
STAGE : 3
1
CHAPTER 1
INTRODUCTION
1.1
Background of the Problems
Dispute in construction industry always occur and can be attested by many court
cases reported in court proceedings, various law journals and law reports. For example
The Building Law Reports which start in 1976, now running to 57 volumes and
Construction Law Reports began in 1985 has now 27 volumes containing thousands of
cases.
Construction issues and disputes grow from variety of causes as reported in the
cases. A survey of more than 300 relatively recent major disputes leads to the conclusion
that the causes of dispute are attributed to five sources (Hohns H.Murray, 1979).
They are, errors, defects, or omission which exist in the contract document, the
failure of someone to accurately estimate the costs of the undertaking in its beginning, the
changed condition of the site or location, the consumer and the people involved.
2
The main objective of project management and contract management is to ensure
that the project in successful, completed on time, within cost at the described quality
given the fragmented and complex nature of the construction. It is most appropriate to
adopt anticipate approach of management. For example to anticipate problems before it
actually occur and to handle necessary measure actions where one of the main function of
Project Manager or Contract manager is to act as arbitrator or dispute handler.
1.2
Problem Statement
A study of the causes has been carried out such as errors, defects, or omission in
the contract document, the failure of someone to accurately estimate the costs, the
changed condition of the site or location, the consumer and the people involved.
But these are the general findings and some others elements have to be
determined. This because construction is a complex process involving of many activities,
myriads of individual, different company or firms, different size, part of country with
different skills and capabilities and always subject to changing environment.
Construction disputes can have serious implication in construction project. The project
may suffer cost and time overrun, the owner may suffer significant loss and profit and
worst still the project may be abandoned or failed. As a client in any construction project,
they are also trying to avoid any disputes during the construction and they don’t want any
lengthy litigation process in resolving disputes.
3
The issues are which elements is actually the common subject matter of the
disputes? What is the nature of the disputes? Who are the parties involved? What type of
the project? When do the disputes occur? And what kind of standard form of the project?
It is essential in construction contract management to adopt an anticipative
approach to management. Since disputes have been one of the major factors affecting
cost and time, it is necessary to determine the nature or the general back ground or the
profile of the disputes. By having thorough knowledge and information, it will definitely
help the project manager and contract manager to anticipate problems at an early stage of
the project.
Therefore, profile which can be defined as a “brief description of a person,
publication, broadcast station, or group in terms of a number of relevant parameters” is
important to be developing in construction industry which it is to describe the common
features of construction disputes.
1.3
Previous Study
One of the significant previous study is by Hohns, H. Murray (1979) which
highlight the recent major disputes leads to the conclusion that their causes can be largely
traced to five sources which are errors, defects, or omission in the contract document, the
failure of someone to accurately estimate the costs of the undertaking in its beginning, the
changed condition of the site or location, the consumer and the people involved.
4
1.4
Objective of Studies
The objective of this study is:
To develop profile of construction disputes feature or characteristic of the dispute where
consists of the nature of the disputes, the parties involved, type of the project, when do
the disputes occurred, and standard form of contract for the project.
1.5
Scope of Studies
This research is limited to the following:-
a) To construction disputes reported by Malayan Law Journal between 1997-2007
b) Cases in Malaysia only
c) Cases related to Building Contract only.
1.6
Significant of Studies
This profile will applicable as a tool in construction industry where all people will
get information and it is important in construction contract management to anticipative
the disputes at an early stage of project in order to prevent and minimized the disputes
From this profile, people in this industry will be more clarified with background
of the disputes, and influenced them to be more aware before they involved in
construction field.
5
The parties such as employer, an architect, project manager, main contractor, sub
contractor or supplier will be more responsible in carrying out their duty with more
regularly and diligently without make the same mistakes by learning from the previous
disputes.
Or maybe by this research, the clients of public and private project were in health
competitive environment to prevent any dispute from occurred in their project besides
ensuring their project to be successful.
1.7
Research Methodology
Briefly, the research process will be divided into five stages:
Identifying the research issue
Literature review
Data and information collection
Research analysis
Conclusion and recommendations
6
1.7.1 Stage 1: Identifying Research Issue
Identifying the research issue is the initial stage of the whole research. To identify
the issue, firstly, it involves discussion with lecturer and reading on variety sources of
published materials, such as journals, articles, seminar papers, previous research papers
or other related research papers, newspapers, magazines, and electronic resources as well
through the World Wide Web and online e-databases from University of Technology
Malaysia, UTM library’s website.
1.7.2 Stage 2: Literature Review
Literature review is the second stage of the research. Literature review will be
involved the collection of documents which from secondary data for the research, such as
books, journals, newspapers. Indeed, published resources like books, journals, varies
standard form of contract, and related statutory are the most helpful in this literature
review stage. Besides this, reported court cases from different sources like Malaysian
Law Journal and Building Law Reports will be referred.
1.7.3 Stage 3: Data and Information Collection
This stage is data and information collection stage. This is an important stage
towards achieving the objectives of this research. In this stage, the further action is to
collect the relevant information based on the secondary data from the published
resources. Lexis-Nexis database which provides cases of Malayan Law Journal is the
main sources in getting the related cases.
7
1.7.4 Stage 4: Research Analysis
In this stage, it is able to determine whether the stated objectives have been
achieved or vice versa. Different types of analysis will be carried out according to the
requirements of the objectives.
1.7.5 Stage 5: Conclusion and Recommendations
Conclusion and recommendations is the final stage of the research. In this stage
the findings will be able to show the result of the research. A conclusion needs to be
drawn in-line with the objectives of the research. At the same time, some appropriate
recommendations related to the problems may be made for a better solution in relation to
the said problem.
8
1.7.6 Research Flow Chart
IDENTIFY THE INTERESTED
FIELD
READING
DISCUSSION
~ Books
~ Statutory
~ Cases
~ Previous Thesis
~ UTM library
electronic database
~ Lecturer
Determination of issues
Determination of research title
Determination of objectives and scope of the
research
Preparation of research methodology and
research design.
STAGE 1
9
LITERATURE REVIEW
SECONDARY DATA
1) ~ Books
~ Statutory
~ Cases Related
~ Previous Thesis
2) UTM library electronic
database: ‘Lexis-Nexis
Legal Database’
e.g. Malayan Law Journal
Building Law Report
STAGE : 2
10
DATA AND INFORMATION
COLLECTION
1.
2.
3.
4.
5.
THE NATURE OF DISPUTE
THE PARTIES INVOLVED
TYPE OF CONSTRUCTION
TIME OF DISPUTE
STANDARD FORM OF THE CONTRACT
DATA ANALYSIS
MANUAL
COMPUTER
DATA ARRANGEMENT
STAGE : 3
11
RESEARCH ANALYSIS
Determine whether the
research achieved the
stated objective or vice
versa.
STAGE : 4
CONCLUSION AND RECOMMENDATION
STAGE : 5
12
1.8
Organisation of Thesis Chapter
1.8.1 Chapter 1: Introduction
This chapter is the proposal for the study. It contains the background of the
problem, problem statement, the objectives of the research, scope of study, significant,
methodology and the organization of thesis chapter
1.8.2 Chapter 2: The Nature and Characteristic of Construction.
This chapter will discuss the nature construction industry, the construction such as
the technical aspects where include various of parties and activities involved in
construction and also will discuss a part of legal aspect which discuss the terms and
conditions of the contract where both aspects have probability resulting disputes in our
construction.
It will also discuss disputes in construction industry include the causes of the
disputes and the effects.
1.8.3 Chapter 3: Profiling
This chapter will discuss the concept or theoretically of profiling such as the
meaning, and the importance to construction.
13
This chapter will further discuss the elements of profiling such as nature of
dispute for example, payment, variations, delay and disruption, defect, negligent, etc, the
parties involved such as the employer, architect, quantity surveyor, engineering, etc, type
of the project like building construction, engineering construction or residential
construction, time of dispute which consists of five phases in construction such as
inception phase, design phase, construction phase, occupation phase and demolition
phase. and the standard form of contract such as PWD203, PAM98, FIDIC, DSC, IEM
and CIDB form of contract.
1.8.4 Chapter 4: The Profile of Construction Disputes.
This chapter will presents the data and analysis to address the objectives which
have been formulated. Here, analysis will determine the most causes/nature of disputes
occur, the parties involved, types of construction, time of the dispute, type of client, and
the standard form of the contract.
1.8.5 Chapter 5: Conclusion and Recommendation
This chapter presents the recommendations and conclusions and suggest further
research that is needed in the profile of construction disputes. It also addresses some
implications of the research recommendations to the construction industry.
14
CHAPTER 2
THE NATURE AND CHARACTERISTIC OF CONSTRUCTION
2.1
Introduction
The construction industry plays an important role in any county’s development
process. The nature and characteristics of construction that is prone, susceptible to
differences, dispute and failure such as delay, cost overrun and low quality.
Therefore, this chapter will described the characteristic of construction which
involved of technical and legal aspects, the nature of construction disputes, the causes of
the disputes and the effects.
2.2
Definition of Construction
Construction can be defined as:
“The activity of erecting buildings and other structures including commercial,
industrial, and residential work (James H. Maclean and John S. Scott. 1993).
15
“Construction is the building or assembly of any infrastructure on a site or sites.
Although this may be thought of as a single activity, in fact construction is a feat of
multitasking. Normally the job is managed by the construction manager, supervised by
the project manager, design engineer or project architect. While these people work in
offices, every construction project requires a large number of laborers, carpenters, and
other skilled tradesmen to complete the physical task of construction”(Wikipedia Article,
16 May 2007).
‘…constructing, altering, repairing and demolishing building; constructing,
altering and repairing highways and streets and bridges,; viaducts; culverts,
sewers, and water, gas and electricity mains; railways roadbeds, subways and
harbour and water ways; piers, airports and parking areas; dams, drainage,
irrigation, flood control and water power projects and hydroelectric plants; pipe
lines; water wells; athletic fields….specialist trade contractor’s activities.’
‘ The assembly and installation of site of prefabricated, integral parts into bridges,
water tanks, storage and warehouse facilities, railroad and elevated right-of-way,
lift and escalator, plumbing, sprinkler, central heating, ventilating and airconditioning, lighting and electrical wiring, etc. systems of buildings and all kinds
of structure…Department or other units of the manufacturers of the prefabricated
parts and equipment which specialize in this work and which it is feasible to treat
as separate establishments, as well as business primarily engaged in the activity,
are classified in this group’(Fadhlin Abdullah, 2004)
16
2.3
Characteristic of Construction
The nature and characteristic of construction can be described as follows:
2.3.1 Involved of Construction Design Principles and Procedures
Forster, G. (1986) identified construction design principles and procedures
include as following:
a)
Outline plan of work by the architect
i)
Briefing Stage
On the appointment of architect, he should next obtain as much further
information about the client’s proposal (the brief) in addition to those obtained
during the enquiry stage. Full consultations through additionally arranged
meetings will result in the architect formulating the client’s exact requirements.
The following are the minimum particulars required by an architect; time limit for
the project, preliminary details of the building type, size, solicitor’s information
regarding boundaries, covenants and other restrictions and easement, finance
available, extent of the land or property, with levels if possible, whether the land
is owned by the client or is the process of purchase underway, whether outline
planning consent has been or still requires to be obtained, whether there are any
agents involved, or will the architect be the sole agent?
Finally,
having
been
given
approval
to
use
the
services
of
consultants/specialist the client should be advised to write to them confirming
their appointment, after the architect has made personal approaches to see if they
are available.
17
ii)
Feasibility Study
This process is an extension of the ‘brief’ and when necessary, in the light
of new ideas developing or a change of mind by the clients result, modification
should be made to the brief to arrive at the client’s exact requirements, It is the
architect’s responsibility to study all aspects of the proposed project to see if the
client’s suggestion are feasible at this stage, and to make recommendations
concerning the projects in its present form.
b)
Sketch Plans
The procedure concerning sketch plans are as follows:
i)
Outline Proposals
The architect now prepares, with the assistance of all the consultants, his
proposals for the approval of the client on such matters as the design and
construction. The general layout of the proposed building should be decided
taking into consideration the fact that the specialist consultants would be assisting
in making decisions to enable the quantity surveyor to estimate approximate costs
for the work. Also the decision will be influenced by the structural method
proposed and the method of erection.
The services recommended would normally take into account the capital
outlay, running costs and efficiency, in addition to the ease with which the
appliances and ancillary equipment fits and blends into the structure. The
structural engineer would normally be consulted to check the structural design or
suggest alternatives to support heavy components of the services.
18
The estimated costs of the proposed structure is usually prepared by the
professional quantity surveyor after consultations with the other members of the
design team and bearing in mind the recommendations put forward by them. This
would then produce a firm estimate which can only be finalized after comparing
the recommendation with past project of similar design and nature. Sketch design
would be in advanced stage by this time as the architect would have correlated all
the consultant’s proposals.
ii)
Scheme Design
It now remains for the architect and his team to prepare proper design
drawings, and if necessary, a model can be prepared by the architect’s model
maker.
Provided that the client is still in approval with the recommended scheme
the architect maintains and coordinates action on the design. Detailed Planning
approval is now the aim to save on possible delays in commencing work on-site
later.
The full scheme design with brief specifications is prepared and further
comparative costs are calculated by the quantity surveyor. Quality and quantity of
the products and other units included in the drawings by the architects and
engineer (structural, mechanical, and electrical)would be noted by the quantity
surveyors. The cost control function of the quantity surveyor ensures that
throughout the design stage of a project the cost can be monitored by the
architect, so that if the design is becoming too expensive, action can be taken to
keep within the limits laid down by the client in his ‘brief’.
19
c)
Working Drawings
i)
Detail design
The architect must now ensure that there are no more client’s requirements
so that proposals to date are finalized regarding all particulars relating to the
design and associated costs. Detail drawings are next prepared and all members of
the design team will, during this stage of the work, progress towards compiling
their own detail drawings and collaborate with the architect and the other
consultants where necessary. The structural engineer completes his drawings with
calculations to justify the sizes of the structural components, while the service
engineer prepare their drawings regarding layout of lighting circuits, heating and
ventilating routes and other essential internal environmental installations. The
consultants’ information would be incorporated finally into the architect’s detail
drawings.
In coordinating the work of the design team the architect ensures that
sufficient information is fed back to the quantity surveyor who continuously
checks the costs against the budgeted amount.
The client should be shown the final detail drawings before they are
submitted to the building controls officer for approval under the Building
Regulations 1976; the minimum number of sets of drawings being two, which
includes the following :
1)
Key plan – scale 1 : 2500
2)
Block plan – scale 1 : 1250
3)
Each elevation – scale 1 : 100 or 1 : 200
4)
Plan of each floor level – scale 1 : 100
5)
Plan of roof – scale 1 : 100
6)
Vertical sections – scale 1 : 100
20
ii)
Production Information
This entails the preparation of production drawings, specification and
contract particulars.
When the detail drawings have been approved by the local authority
representatives production drawing are prepared by agreement with the design
team to supplement the detail drawings. Details need to be drawn larger to enable
nominated suppliers and subcontractors to price their respective work easier and
to produce special components which are necessary.
The additional drawings are prepared to accurately convey to the
contractor the architect’s requirements, and would therefore allow the main
contractor to price the work more easily with the added advantages later of
enabling the contractor to work without too many delays in querying details
which are illustrated to a very small scale.
During the preparation of the production drawings, the architect and his
team of consultant should be preparing brief notes on the various methods of
constructions, components, and material, which can then be elaborated on later by
the quantity surveyors when the specifications are written (assuming the architect
does not prepare the specification himself).
The reason for the preparation of specification is to help convey to the
contractor additional information about such subject as: special problems
regarding the work, standard of workmanship expected, preparations to surfaces
and components, standard of material to be used, design mixes of mortar or
concrete, and to refer the contractor to the relevant BSS and BS Codes of Practice.
The specifications therefore deals with the total ‘quality assurance’ of the project.
21
Contract particular should be prepared by the architect after consulting the
client, and then by agreement with the quantity surveyor and other consultants. In
preparing the particulars such as names and addresses of the client, architect, and
quantity surveyor, description of site, description of works, and particulars
regarding type of contract.
iii)
Bills of Quantities
The professional quantity surveyors should be furnished with the
production drawings, schedules, specifications, contract particulars, nominated
subcontractor’s and supplier’s quotations and other relevant information to enable
him/her to prepare the Bills.
All items of work and quantities are calculated from the production
drawings, in conjunction with the other documents, by the quantity surveyor and
are listed in the bills of quantities so that the invited tenderers, in the ‘selective
tendering’ situation, can price the work from the same information which shows
exactly the extend of the work to be undertaken. The Bills when prepared, also
serves as a control document during the course of the contract, particularly when
they have been priced.
iii)
Tender Action
If contractors are to be selected a list is prepared and invitations to tender
are sent out, and subject to favourable replies being received some of the tender
documents are posted to the individual contractors whiles the others remain
available in the architect’s office for inspection by the contractors if they so wish.
The contractor, on receipt of the contract documents, would begin the
complex process of estimating the costs to do the construction work. Then by
22
adding an additional percentage for overheads and profits would arrive at tender
figure. This is submitted to the architect as a bid for the work in competition with
other contractors. The contractor who submits the lowest bid is generally awarded
the contract.
d)
Site Preparation
i)
Operation on Site
Regular project meetings should be arranged by the architect to ensure
control of the operations and progress by the contractor on site. It is also
responsibility of the architect, preferably through a clerk or works, to supervise
each stage of the work and to ensure quality is maintained.
At each stage of site work, it is generally duty of the architect to see that
the professional quantity surveyor carries out valuations of each completed stage
of the work, whereupon interim certificates are prepared so that stage of payments
may be made to the contractor and subcontractor to pay for work done to date,
usually with a percentage retention to pay for faulty work which may develop or
be subsequently discovered later.
ii)
Completion
The architect should prepare for the ‘practical completion’ inspection of
the work done by the contractor, two or three weeks before completion of the
project work takes place. After the inspection a practical completion certificates
should be issued to the contractor, and there should be a handover meeting,
always assuming that the client had been advised to take out insurance for the
structure in time for taking possession.
23
2.3.2 Involved of Many Organizations and Supervisions
Project Management Body of Knowledge (2004), stated that projects are typically
part of an organization that is larger than project. Examples of organizations include
corporations, government agencies, healthcare institutions, international bodies,
professional associations, and others. Even when the project is external (joint ventures,
partnering), the project will still be influenced by the organization or organizations that
initiated it.
Project-based organizations are those whose operations consist primarily of
projects. These organizations fall into two categories:
a)
Organizations that derive their revenue primarily from performing projects for
others under contract – architectural firms, engineering firms, consultants,
construction contractors, and government contractors.
b)
Organizations that have adopted management by projects. These organizations
tend to have management systems in place to facilitate project management.
Forster, G. (1986), states that the organization structure of some contractors is
quite sophisticated principally while building and civil engineering firms or companies
can be divided into small, medium, large and very large concerns. An example of
organization structure in construction industry would be similar to that shown in Figure
2.1 and Figure 2.2.
24
Figure 2.1: Organisation Structure of Small/Medium-Sized Company
Shareholders
Board of Director
Managing Director
Company Secretary
Contracts Manager
Legal Section
Site Manager
Account Section
Small works
supervisor
Insurance tax and
finance section
Wages and salaries
section
General Office Manager
Surveying Manager
Purchasing Subcontractors
section
Planning and control
section
Personnel and industrial
relations section
Joinery works
foreman
Plant and transport
ii
General administration
section
Estimating and
valuation section
Incentives and bonus
section
25
Figure 2.2: Major Construction Group’s Organization Structure
Research
&
geotechnic
company
General
building
company
Industrialize
/manufactur
er’s
company
Aggregate
production
company
Brick
manufact
uring
company
Joinery
production
company
Holding
or parent
company
Plant hire
company
Design
services
company
Overseas
developm
ent
company
Concrete
products
company
House
building
company
Civil
Engineeri
ng
Company
26
2.4
The Nature of Construction Disputes
The nature of the construction and the complexity of the project, causes a dispute in
our construction industry. There a few description of the construction nature such as
follows:
“…Not only does it cover a very wide range of end products but the people working
within it come from a broad range of crafts and professions. With architects and almost all
branches engineering and surveying represented, there can be twenty or more disciplines on
a complex project. The projects tackled by this diffuse industry are not only wide ranging
and varied in their end use but also within their types. Each major project is unique. It is a
prototype, a one off. This means that for every project undertaken a learning curve is
inevitable. It is a rare industry indeed that produces so many varied products without
significant repetition”(Jeff Whitfield, 1994)
Glenn A. Sears and S. Keoki Sear, (2005) also state, each construction project is
unique, and no two are ever quite alike. In its specifics, each structure is tailored to suit its
environment, arranged to perform its own particular function, and design to reflect personal
tastes and preferences. The vagaries of the construction site and the infinite possibilities for
creative and utilitarian variation of even the most standardized building product combine to
make each construction project a new and different experienced. The construction process
is subject to the influence of highly variable and often unpredictable factors. The
construction team which includes various combinations of contractors, owners, architect,
engineers, workers, sureties, lending agencies, governmental bodies, insurance companies,
material dealers and other, changes from one job to the next. All of the complexities
inherent in different construction sites, such as subsoil conditions, surface topography,
weather, transportation, material supplies, utilities and services, local subcontractors, and
labor condition, are innate part of the construction industry
27
Gidado K.I (1996) see a complex project as follows; having a large number of
different systems that need to be put together and/or that with a large number of interfaces
between elements, when a project involves construction work on a confined site with
access difficulty and requiring many trades to work in close proximity and at the
same time, with a great deal of intricacy which is difficult to specify clearly how to achieve
a desired goal or how long it would take, which requires a lot of details about how it should
be executed, which requires efficient coordinating, control and monitoring from start to
finish, which requires a logical link because a complex project usually encounters a series
of revisions during construction and without interrelationships between activities it
becomes very difficult to successfully update the programme in the most effective manner.
Jeff Whitfield (1994) stated that the industry where enriched by the presence of
other parties with an interest in the end result, such as the funder, the developer, the
planning authority, the construction regulators and the public at large whose built
environment is important to them economically and aesthetically. Add to these divergent
interests the contractor who builds the edifice, and his sub-contractors and suppliers who
contribute specialist skills and materials and there are relatively few people in our society
without an interest in the construction process. All of this variety of interest and the
complexity of the projects, provides the catalyst for conflict in the industry.
Most disputes in commerce generally and in construction particularly arise from
some form of uncertainty. The disputes may well be disguised but all will involve either a
conflict of ideas, of beliefs or of interests and as we have already observed conflicts of
ideas and beliefs are most likely to arise where there is some uncertainty. Unfortunately the
construction industry is, by its very nature, beset with uncertainty for the following reason:
a)
Prototype
28
Every new project is essentially a prototype. It is unique in its own way. It may
have similarities to another project but many things will inevitable be different, including
the team who build it.
Because each new project is arguably a prototype, many of the lessons that must be
learned during the actual construction process
b)
Changes
Everyone who has ever been involved in a construction project will know that
change is inevitable. In many, if not most, instances the work on site commences well
before the design is finalized. This acceptance of change is widely accepted in the industry
and fast tract projects are often deliberately planned to allow design on the later elements to
continue as the earlier elements are constructed. This causes uncertainty as to what finished
project will include and confusion as to what the various contractors were supposed to
include in their prices.
c)
Delays
Most engineering and construction contract anticipate failure. There are written in
the expectation of one party’s inability to comply with their bargain. Clauses are included
which allow the architect to provide late information, allow engineers to issue changes to
the contracted works, and permit contractors to complete their works late owing to their
own shortcomings. Given all of these expectations, is it at all surprising that the parties
involved often live up to them and bring in a project late and over budget?
29
What greater uncertainty could we build into a contract for a new project? If
uncertainty is the main criteria for determining fertile ground then it is indeed true to say
that construction is a fertile ground for conflict.
However, Jeff Whitfield (1994) states that dispute in construction are common and
range from a minor difference over the meaning of a contract clause. John Murdoch and
Will Hughes (2000) stated that, the first factor defining the nature of a construction dispute
is the terms of the contract.
It is sometimes clear that parties have entered into a binding contract but not clear
what the exact terms of the contract are. This may be either because there is some doubt
about what the terms were which were comprised in the contract or that being settled,
because there is doubt about what the meaning is of the terms used (Robb G.G.G and
Brookes John P., 1970)
Hohsn H. Murray stated that, contract are typically drawn by architects or engineers
hired by the purchaser or owner. These design professionals rely on standard preprinted
clauses and forms, most of which found in or are the product of much study by committees
appointed
from
leading
members
of
associations,
government
representatives,
specifications writers, attorneys; indeed, a whole host of sources contribute to the
documents that comprise
a construction contract including, and far from least
important…..unfortunately the ultimate interpreter of the contract is not the one who
studied, wrote, or read it, but the court or board whose interpretation today tends to follow
that which seems reasonable. Thus, in a dispute today, the special contract clause so
carefully written to fill all the wishes of the owner by assigning.
30
John Murdoch and Will Hughes (2000) stated that basically, a contract is an
enforceable promise. And the subject of this enforceable promise is the production of a
unique, technical artifact, using temporary management.
2.4.1 Enforceable Promises
Building contract, like any other contract, are concerned with making promises,
with the expectation that one can be forced to carry them out. A person who has no
intention of doing a thing should not sign a contract recording that there is such an
intention.
Of course, it can happen that people enter into contracts that they did not
completely intend. A shared mistake is no real problem, as the parties can rectify it by
mutual consent. However what sometimes happens is that one party claims, due to
oversight or mistake, to have signed a contract that does not accurately reflect his or her
attention. If there is a difference of interpretation, then the type contract will be important
in term of the way in which it will be interpreted. If it is not a standard form of contract, the
principal of ‘contra proferentem’ will prevail. This means that any ambiguity in the
contract will be construed against the party who seeks to benefit by exclutions or
limitations in it. This will usually, although not always, be the party which put it forward.
It is during disagreements about the intentions of contracting parties that such
details as notes of telephone conservations, minutes of meetings, correspondence and the
like may become relevant. These seek to provide evidence to the parties intentions.
However, it will in most cases be too late for the dissenting party to alter the contract.
Building contract, as we have seen, are very comprehensive and specific about what is
31
expected of each party, and it is difficult to claim that the obligations arising from entering
into such a contract were not properly understood at the time it was made.
2.4.2 Technical Matters
Disagreements often arise over technical questions. The technology involved in
construction is idiosyncratic, difficult to understand and subject to change. Added to this is
any change that may be associated with the technology of the client organization. The use
of different and/or familiar techniques is often the causes arguments and disagreements.
For example, the nature of the site is often source of contention. While the site itself
is clearly visible at ground level, it can hold many surprises once excavation starts. It is not
enough merely to look at a site in order to ascertain the site condition. Adequate site
investigation is a constant source of problem in the industry. Who responsibility is it? In
order to answer that question, one must look at the clauses in the contract. Do they
represent what is intended? Once the cause is identified, it is a fairly straightforward matter
to allocate blame and with it legal responsibility.
2.4.3 Legal Matters
Some disputes are technically simple, and turn on what is the law on a specific
point. The law is not infinite. There many day-to-day occurrences that have not previously
been decided upon by the courts. There are many spheres of activity not covered by statute.
The resolution of a dispute may hinge upon the ascertainment of the law in a previously
undefined area.
32
One particular legal problem area arises from the inconsistencies between various
contracts. A major problem mentioned by Latham (1994) was the inconsistencies and gaps
between the various consultant appointments and the building contract. As a result, most of
the bodies who drafts the contracts now seek to produce integrated packages of contracts,
rater than a standard form for just one of the relationship.
Where a dispute arises under a construction contract, the first means of resolving
that dispute in a binding manner is often through a decision of the contract administrator.
Until recently, a party wishing to pursue a dispute beyond the contract administrator
had two options: either to go to arbitration, if the contract made provision for this, or to
begin proceedings in court.
2.5
Causes of Dispute
Causes of disputes can be traced into five sources as follows:
2.5.1 Defects or omission in the contract document.
This can be a simple of or a catastrophic error in drawings or specifications on the
part of the designer, or can stem from an error in reading or understanding the intention or
scope of the contract documents by the person who is the ultimate doer of the work and
who must first divine and then meet the intent of the designer. Contract document errors
are major sources of construction disputes.
33
2.5.2 The failure of someone to accurately estimate the costs
It could be that the owner did not properly understand the magnitude of the
project’s cost and then finds itself in a position in which it must force the situation in order
to meet the economic limitations. Or perhaps the designer’s fee was not large enough to
accomplished the studies, investigations, or whatever is needed to deliver a product timely
and satisfactorily to its client. The designer decides it must take short cuts in order to avoid
financial loss.
The contractor often will not estimate a job properly. It could fail to provide for
means, methods, and materials thus become involved in a contract based on a difficult bid.
Often a subcontractor will not include everything the general contractor insists or believes
was written into the subcontract proposal and agreement, or perhaps the subcontractor
made an error. The initial failure to account the cost in a construction programmed
accurately by any and all of the participants is fertile ground in which to construction
dispute. Builders, subcontractors, suppliers, and designers need to make a profit, as do
people in all endeavors. Poor estimates often reduce or eliminate the profit margin, make
the party with slim or negative profit projections supersensitive, and lead to search for
every opportunity to create income to recover estimate errors.
2.5.3 Changed of condition.
For example, the soil borings or investigations indicate clay, but upon excavation
the soil turns out to be ledge rock, the hole is wet, but upon it was supposed to be dry.
Change condition dispute often begin with the problem of deciding if the condition
discovered or experienced is in fact a changed conditions. A change of conditions can also
have an impact on an entire program and cause what are known as ripple damages. More
34
often than not the scope and quantification of ripple damages comprise a dispute of major
proportion
2.5.4 The consumer
Consumer has become a fourth major origin of disputes. The rise of tenant and
condominium owner associations, and a sense or a reality of public awareness has made the
ultimate user of a facility a source of dispute. The rise in the last 20 years in the courtroom
and the media of recognition of individual rights is a great contrast to the earlier doctrines
in our land of ‘buyer beware’. The recognition and enforcement of implied duties of the
builder have created many concerns not only for those who are build and design but also
for those who are finance and act as insurers and guarantors in the construction industry.
2.5.5 The people involved.
The construction business is a people business. In the construction industry, people
design the building, bridges, dams, roads or whatever is to be built, people draw the plans,
write the specifications, read the plans, bid the jobs, estimate the prices, and make certain
assumption rapidly. In construction industry, and in so doing put their individual and set all
sorts of personal goals. The practices of the people of the industry, their personal habits,
their interpersonal relationship, the position and power, the hierarchies and tradition that
encumber management in all disciplines that are all fertile ground for disputes (Hohns,
H.Murray,1979). There are also various causes of dispute by different researcher such as
follows:
i) Six areas: unrealistic expectations; contract documents; communications; lack of team
spirit; and changes (Bristow and Vasilopoulous, 1995)
35
ii) Six areas: payment; performance; delay; negligence; quality; and administration (Conlin,
1996)
iii) Three areas: people; process; and product (Diekmann, 1994)
iv) Seven areas: contract terms; payment; variations; time; nomination; renomination; and
information (Heath, 1994)
v) Six areas: change of scope; change conditions; delay; disruption; acceleration; and
termination (Hewit, 1991)
vi) Two areas: root causes; and proximate causes (Kumaraswamy, 1996)
vii)10 areas: management; culture; communications; design; economics; tendering
pressures; law; unrealistic expectations; contracts; and workmanship (Rhys Jones, 1994)
viii) Four areas: acceleration; access; weather; and changes (Semple 1994)
x) Two areas: misunderstandings; and unpredictability (Sykes,1996)
36
2.6
The Effects of the Disputes
Jeff Whitfield (1994) states that, in construction three things cause most, if not all,
of the disputes, quality, time and money
2.6.1 Quality
Our definitions of quality should be realistic and appropriate to the price we are
prepared to pay. It is sometimes the case that the client will specify a much higher standard
than he really requires only to talk at the price once the money has been spent on his behalf.
Brief to designers should concentrate on the items the client finds important. If they
do not then the architect will tend to give priority to aesthetics and the engineer to
structural stability. The completed building may then either be short of space and look
marvelous or withstand an earthquake and look awful.
Quality and finish are very much in the eye of the beholder and failure to
adequately specify will lead to a conflict of beliefs, where the contractor really believes it is
acceptable, or a conflict of interests, where the contractor simply provides the lowest cost
solution.
2.6.2 Time
It is rare to see a dispute arise from a contractor having too much time, and so we
will concentrate on the real issue, which is too little time. Time is only important in
construction because we set completion dates and provide for the remedy of liquidated
37
damages if the date is not met. Almost everyone directly involved in the industry has a
profit motive. We know that time is money and so to deprive someone of time can be as
galling as robbing the of their money.
When specifying the time for the completion of a project we need to be realistic.
We need to anticipate those problem that will consume valuable time and resources. For
example, allowing the quantity surveyor less time to prepare his contract documents
because the design was late does not save time, it merely increases the prospect of error
which will add more time to the overall process. The whole constructional process needs to
be time controlled from inception to occupation. Each element of the construction process
must have an appropriate and agreed time scale, independent on the shortcomings of other
progress. The shorten contracts periods because early milestone were not met is not the
answer. Such a remedy will only move the eventual dispute back in time.
2.6.3 Money
If the price for a project is wrong then we can expect problems and conflicts to
harass that project throughout its life. As with time, the money must be adequate for the
project in hand. If fee competition is too harsh and an architect accepts a commission on
ruinous terms then he will not be the only sufferer from the effects of his foolhardiness. He
will try to design the project with lower quality staff and in fewer hours, he could skimp on
his overseeing and quality control roles, he might even decides to cease practicing
altogether and leave the client with a time and money problem far greater than any saving
in fees. Adequacy of funding and appropriateness of funding will reduce the inevitable
conflicts which arise over financial matters.
38
2.7
Conclusion
Disputes between parties to construction projects are of great concern to the
industry; nevertheless, the subject is dominated by anecdote and hearsay. The study of
construction industry disputes, and the causes of those disputes, is essential. In fact, it
would seem that effective management action can be taken only if based on reliable
evidence and as project manager it is essential for them to consider all kinds of dispute in
construction industry.
39
CHAPTER 3
PROFILING
3.1
Introduction
This chapter will divided into two parts which are the theoretically on profiling and
the element or parameter of profiles of construction disputes. This profile required
information such as the nature of dispute, parties involved, type of project, time of the
disputes occur, and the standard form of contract.
3.2
Definition of Profile
Wikipedia Dictionary defined profile as a “brief description of a person,
publication, broadcast station, or group in terms of a number of relevant parameters. An
editorial profile describes a magazine in terms of it departments, features, and general
focus. Advertisers use editorial profiles to evaluate the suitability of a publication for their
message. A station profile would describe the programming and music offered by a radio or
television station. A market profile describes the prospective buyers or audience for a
product or service in terms of the demographic and/or psychographic characteristics of the
individuals constituting the market. For example, the market profile for a luxury sedan
40
might be status-conscious, affluent, professional couples aged 35-55, living in singlefamily homes valued at $500,000 or more, in and around densely populated urban areas “
Therefore, profile is an important to be developing in construction industry. In this
case the profile will describe the common features of construction disputes.
.
3.3
The Importance of Profile
The development of this profile is based on certain reasons such as individual
used or it could be used by a company. The importance of the profile of construction
disputes is as below:
a)
The clients of any construction projects are absolutely try to avoid any disputes
from arising in their project. Therefore, this profile architect, engineer, quantity
surveyors, and contractor could prevent disputes by learning from others mistakes.
b)
Project Manager specially, could recognize previous construction disputes through
this profile and then figure out how to prevent and look for the best solution in
handling disputes. A ‘framework’ could be built in order to satisfy everyone’s
needs. As what people said ‘a cure’ or ‘correction mechanism’ could be provided in
handling disputes.
c)
This profile will also become a tool in construction industry which contains
information on dispute in construction industry where could be accessed by anyone
41
for examples to identify the origin of most common dispute in construction industry
in Malaysia.
3.4
Parameter of Profiles of Construction Disputes
The information which are needed in developing profile of construction’s cases
consists as follows:
a) the nature of disputes
b) the parties involved
c) type of construction
d) time of dispute occur
e) type of standard form of contract
3.4.1 Nature of Construction Disputes
Nature of dispute can be consists as follow:
a)
Certificate and Payment
Norazam Othman (2007) stated payment, among others are, monetary consideration
for the contractor’s performance, the principal obligation of the client where any failure
considered as a fundamental breach, and as primary source of contractor’s cash flow.
42
Dispute regarding to payment are stated as follows:
i)
Problem with interim certificate
ii)
Amount of certificate incorrect
iii)
Wrongful deduction from the certificate by the employer
iv)
Off-site goods and materials
v)
Retention
b)
Variation
‘The valuation of variations has been recognised as a prime cause of conflict and dispute in
construction industry. Such disputes often concern the prices and/or rates to be applied to
the varied works.’(Monty Sutrisna, Kevan Buckley,Keith Potts and David Proverbs, 2005)
There is no one definition of what is a variation. Each of standard form of building
contract has its own definition but clearly ‘variations’, in the generic sense, refers to any
alteration to the basis upon which the contract was let. This means the term embraces not
only changes to the work or matters appertaining to the work accordance with the
provisions of contract, but also changes to the contract conditions themselves (Peter R.
Hibberd, 1986).
A variation disputes can be taken to be any, a combination of any or all of the
following:
i)
Variation in building projects may mean ‘the alteration or modification of the
design, quality or quantity of the Works, as shown upon the Contract Drawings
43
and described by or referred to in the Contract Bills, and includes the addition,
omission or substitution of any work, the alteration of the kind or standard of
any of the materials as goods to be used in the works, and the removal from the
site of any work materials or goods executed or brought thereon by the
contractor for the purposed of the work other than work or material or goods
which are not in accordance with the contract.
ii)
Variation in building projects together with instructions regarding the
expenditure of provisional sums, prime cost sums and instruction concerning
the nature of the work which are not specifically termed a variation in the
contract documents.
iii)
Variation of contract in law, i.e. if the both parties alter a contract document by
agreement after execution of the original contract this is a variation of the
contract terms or conditions.
iv)
Variations of price clause which enables the contract sum to be adjusted for
rises and falls in the cost of labour or materials.
c)
Delay and Disruption
‘To delay’ means to slow up or cause to be late (Vincent Powell-Smith and John
Sims, 1985) where the disputes can occur to the following matter:
f)
Possession of the site and commencement of work
ii)
Extension of time
iii)
Liquidated and ascertained damages
iv)
Reimbursement of loss and expense
44
d)
Negligence
Robb G.G.G and Brookes John P. (1970) stated that negligence has two separate
and distinct meanings in the law tort:
i) A state of mind which some torts may be committed. I may commit to trespass
intentionally; or I may commit it negligent, not actively desiring to do so but as a
result of carelessness or inadvertence. The distinction between intentional and
negligent conduct is whether or not the person desires the consequences of his act;
ii) an independent tort consisting of the breach of a legal duty to take care resulting
in damage. It is negligence as an independent tort which we are here concerned.
Negligence as a tort is the breach of a legal duty to take care owed by the defendant
to the plaintiff, which results in damage to the plaintiff.
‘…negligence means more than heedless or careless conduct …; it properly
connotes the complex concept of duty, breach and damage thereby suffered by the
person to whom the duty was owing.’
e)
Performance
The performance of the contract must be precise and exact (Guest A.G, 1975).
Parties associated with the performance of the work such as contractor and employer are
under obligation for certain duties.
45
Dispute can occur when the contractor failure to complete the work, design and
quality of materials or the employer failure in giving site possession, supplying instruction
as to the carrying out of the work, nomination of specialist sub-contractors and suppliers,
etc.
Disputes in performance also can be included discharged from further performance
such as repudiation, release, impossibility, frustration, and illegality.
f)
Defect
The word defect in this context includes any breach of contract affecting the quality
of the work, whether structural on the one hand or merely decorative on the other, and
whether due to faulty material or workmanship, or even design, if the latter part of the
contractor’s obligation. But in nearly all the cases of defect, whatever its cause, must be a
defect which appears within the maintenance period.
3.4.2 The Parties Involved
There are two parties involve in any disputes where case names are usually given
with the plaintiff first, as in Plaintiff v. Defendan. In every legal action, whether civil or
criminal, there are two sides. The person suing is the plaintiff and the person against whom
the suit is brought is the defendant. In some instances, there may be more than one plaintiff
or defendant. Discussion of plaintiff and defendant are as follows:
46
a)
Plaintiff
Plaintiff can be defined as:
i) The party that institutes a suit in a court.
ii) One who initially brings the suit. In a personal action, he seeks a remedy in a court of
justice for an injury to, or a withholding of, his rights (Business Dictionary).
iii) The person who brings a lawsuit. Contrast with Defendant
Example: A plaintiff sued for Specific Performance to force the owner of land to sell at the
agreed upon terms.(Real Estate Dictionary)
iv) One that makes a formal complaint, especially in court (Thesaurus Dictionary)
A plaintiff, also known as a claimant or complainer, is the party who initiates a
lawsuit (also known as an action) before a court. By doing so, the plaintiff seeks a legal
remedy and if successful, the court will issue judgment in favour of the plaintiff and make
the appropriate court order (eg. an order for damages)
b)
Defendant
The party to whom the complaint is against is the defendant or in the case of a
petition, a respondent. Defendant can be defined as:
i) The party against which an action is brought.
ii) One of two parties in a negligence lawsuit (the other party being the plaintiff) from
whom the plaintiff seeks releases because of bodily injury and or property damage incurred
as the result of the defendant's allegedly negligent acts.(Insurance Dictionary)
47
iii)The party sued in an action at law. Example: Abel brings suit against a former landlord,
Baker, for refusing to return a Security Deposit. In the suit, Baker is the defendant.(Real
Estate Dictionary)
iv) A person against whom an action is brought (Thesaurus Dictionary)
A defendant or defender is any party who is required to answer the complaint of a
plaintiff or pursuer in a civil lawsuit before a court or any party who has been formally
charged or accused of violating a criminal statute.
A defendant in a civil action usually makes his or her first court appearance
voluntarily in response to a summons, whereas a defendant in a Criminal law, criminal case
is usually taken into custody by police and brought before a court, pursuant to an arrest
warrant. The actions of a defendant, and its lawyer counsel, is known as the defense.
Both plaintiff and defendant above can be anyone of construction team. Allan
Ashworth, (2002) stated construction team as follows:
a)
Client
Clients as the person or organization who is responsible for commissioning and
paying the design and construction,
b)
Architect
The architect function is to determine a proper arrangement of space within the
building, its shape, form, type of construction and material to be used, environmental
requirement and aesthetic consideration. This is all now done within the concept of a whole
project life approach. Architects prepare the design, obtain planning permission and
48
building regulation approval, prepare detail drawing and specifications an advice of the
appointments of a constructor. They may be involve in the appointment of other
consultants. During construction on site, the architect duties are largely one of inspection of
the works to ensure that they comply with the contract.
c)
Engineer
A wide range of different types of engineer are employed within and outside the
construction industry. On civil engineering projects the design and supervision of the works
is undertaken by the civil engineer. Structural engineers really work in branch of civil
engineering concerned with the analysis of structure capability of buildings and
engineering structures.
Building services engineers claim that they are the people who bring a building to
life. Services in building today include, heating, lighting, plumbing, energy supply,
telephones, computer systems, fire, security protection, etc. Without these services the
building is a shell providing little more than the traditional function of shelter.
d)
Quantity surveyor
The quantity surveyor has developed from the role and function of a measurer to
that of cost and value consultant. The emphasis of their work has moved from being solely
concern with accounting function to those involving the financial forecasting of
construction projects. The quantity surveyor’s role is threefold. First, as a cost, consultant
at the strategic and conceptual phase of pre-design, both on an initial cost and whole
lifetime basis. Second, in preparing tendering and contractual documentation for use by
general and specialist contractors. Third, in an accounting role during the construction
49
phase where reports are made for interim payments, financial progress and the control, the
adjudication of contractual claims and the preparation and agreement of the final project
expenditure. The role of quantity surveyors has shifted from one focusing on cost to one
now mainly concerned with added value.
e)
Builders and contractor
Builders are engaged in the administrative, commercial, managerial, scientific and
technical aspects of building. They are responsible for managing the construction process
on site including planning and programming the works, budgeting and costing and ensuring
that the standards and quality meet the expectations set out in the contract. Their skills
ensure that the projects meets all the requirements of the developer or client.
f)
Planners
Planners are employed in the planning departments of local authorities, by many
other statutory undertakings and in consultancy. Planners recognize that land is a limited
and scarce resource and that the increasing demand placed upon it require an adequate
system of allocation of use. The planners need to consider aspects of whether or not a
proposed development will cause pollution or increased road traffic, what effects it will
have on neighbours and whether it will create even greater demands for further
development. Planning consultant will advise on how best to obtain planning permission
where this is difficult and prepare application to the planning authority on the developer’s
behalf.
50
3.4.3 Types of Construction
The field of construction is as diversified as the uses and forms of the many types of
structures it produces. However, construction is commonly divided into four main
categories, although there is some overlap among these divisions and certain projects do
not fit neatly into any one of them. In general, contracting firms specialize to some extent,
limiting their efforts to relatively narrow range of construction types. Specialization is
usual and necessary because of the radically different equipment requirements, construction
methods, trade and supervisory skills, contract provisions and financial arrangements
involved with the different construction categories.
Glenn A. Sears and S. Keoki Sears (2005) stated four main divisions are residential,
building, engineering and industrial constructions are describe in the following paragraph.
a)
Residential Construction
Residential or housing construction includes the building of single-family homes;
condominiums; multiunit town house; low-rise, garden-type apartments; and high-rise
apartments. Design of this construction type is done by owner, builder-vendors, architect,
or the builders themselves Construction is performed by the owner, builder-vendors, or
independent contractors under contract with the owner.
This category of construction is dominated by small building firms and normally
account for 40-45 percent of new construction during a typical year. Historically,
residential construction has been characterized by instability of market demand and is
strongly influenced by the governmental regulation and national monetary policy. Housing
51
is an area of construction typified by periodic high rates of contractor business failure. A
large proportion of housing construction is financed through private financial institution.
b)
Building Construction
Building construction includes building in the commonly understood sense, other
than housing, that are erected for institutional, educational, light industrial, commercial,
social, religious, governmental and recreational purposes. In normal business years, private
capital finances most building construction, which normally accounts for 25-30 percent of
the annual total a new construction. Design of this construction category is predominantly
done by architects, with engineering design services being obtained as required.
Construction of this kind, is generally accomplished by prime contractors or construction
manager who subcontract substantial portions of the work to specialty firm.
c)
Engineering Construction
Engineering construction is a very broad category and covers structures that are
planned and designed by the engineers. This category includes those structures whose
design is concerned more with functional consideration than aesthetics and which involve
field material such as earth, rock, steel, asphalt, concrete, timbers and piping. Most
engineering construction project are publicly financed and account for approximately 20-25
percent of the construction market. Engineering construction divided into three subgroups:
highway and airfield, heavy and utility construction.
Highway and airfield construction covers clearing, excavation, fill, aggregate
production, subbase and base, paving, drainage structure, bridges, traffic signs, lighting
52
system, and other such items commonly associated with this type of work. Heavy
construction is usually construed to include sewage and water-treatment-plant, dams,
levees, pipe and pole lines, ports and harbor structures, tunnels, large bridges, reclamation
and irrigation work, flood control structures, and railroads. Utility construction mostly
involves work performed for municipalities, such as the construction of sanitary and storm
drains, curbs, and gutters, street paving, water lines, electrical and telephone distribution
facilities, drainage structures, and pumping stations.
d)
Industrial Construction
Industrial construction includes the erection
of projects associated with the
manufacturer or production of commercial products or services. Such structures required a
highly technical approach and are frequently built by large, specialized contracting firms
that do both the design and field construction.
Petroleum refineries, steel mills, chemical plants, smelters, electric powergenerating stations, heavy manufacturing facilities, and ore-handling installations for
examples of industrial construction.
3.4.4 Time of Dispute’s Occur
Dispute in construction can arise at any phase of development process. Allan
Ashworth (2002) stated that development cycle for a construction project can be best
classified into five different stages which discuss as follows:
a)
Inception Phase.
53
This phase involved of appraisal stage, strategic briefing , feasibility and viability
study.
b)
Design Phase
This phase involved of outline proposals stage, detailed proposals, final proposals,
production of information, tender documentation, and tender action.
c)
Construction Phase
This phase involved stage of mobilization, and construction to practical completion
d)
Occupation Phase
This phase include after practical completion and during the purpose of the project.
f)
Demolition Phase
Thus, this research will identify when the construction dispute occur according to
five of development phases above.
54
3.4.5 Types of Standard Form of Contract
A different form is used depending on the type of work, contract document
produced and client, and many Standard Forms have been prepared by other bodies such as
that Pertubuhan Arkitek Malaysia, Construction Industry Development Board Malaysia,
and Jabatan Kerja Raya, Malaysia.
Examples of some Standard Forms of Contract are given below:
a) The Malaysian PWD Form of Construction Contract
b) The Malaysian Standard Form of Building Contract (The PAM 1998
Form)
c) FIDIC Standard Form
d) CIDB Standard Form of Contract For Building Works
e) IEM Standard Form
f) Standard Form of Domestic SubContract (DSC)
3.5
Conclusion
This chapter completely discuss of the profile of construction disputes where
include the definition of profile, the importance of this profile, and discuss the parameter or
element which important in developing this profile. These parameter are, the nature of
dispute, parties involved, type of project, time of dispute, and the standard form of contract
that involved in construction disputes.
55
CHAPTER 4
THE PROFILE OF CONSTRUCTION DISPUTES
4.1
Introduction
The nature and characteristic of construction which contributed to the construction
disputes and the theoretically of profiling with the element had been explained in the
previous chapter. Consequently, this chapter describes the profile of construction disputes
which focus on the achievement of each objective that had set up.
There were 72 Malaysian cases had been collected between 1997 to 2007, and all
the cases had been analyzed in achieving the objective of this study and briefly this chapter
will be divided into five parts as following:
i)
The nature of construction disputes
ii)
The parties involved in constructions disputes
iii)
Type of the project
iv)
Time of the disputes
v)
Standard form of contract of the project.
C1
C2
C5
C6
LOW KOK HWA v SIME
DARBY URUS HARTA
BHD
[1997] MLJU 365
KEMAYAN
CONSTRUCTION SDN
BHD V PRESTARA SDN
BHD
[1997] 5 MLJ 608
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
VICTOR BUYCK STEEL
CONSTRUCTION SDN
BHD V PI CORROSION
ENGINEERING SDN BHD
[1998] 7 MLJ 513
Claim for extra payment in lump sum
contract
Unpaid for balance of certificates
Sanction to pay incoming supplier, sub
contractor for existing and future project
Prevent others party receive payment
Issuance of payment certificate by party
not construction contract
Non payment on the ground non
registration as professional body
False evaluation the amount in
certificates
No issuance of interim certificate due non
of CPC
Quantum meruit
Mislead/differences in payment
procedure (according to privity/ terms of
contract)
Non payment / non payment for certified
sums
Claim for balance of services fee
Claim for payment of work done
No bank guarantee which is precedent of
payment
Argument of the amount to be paid
Over deduction of the sum payment
Unpaid for further payment due to debt
problem
Delay in progress payment
Case
Nu.
Unpaid of work done due failed on
defect work
Unpaid the architect fees by the
employer.
56
TABLE 4.2(a): ANALYSIS NATURE OF CONSTRUCTION DISPUTES
Nature of Dispute
PAYMENT
Law Cases(1997-2007)
57
C10
KEEN BUILDERS SDN
BHD v UTARA DUA
(MALAYSIA) SDN BHD
AND THIRD PARTY
[1998] MLJU 408
CHOO NGIE SIN v TAN
KOK MING
C13
C15
[1998] MLJU 214
ORIENTAL STAR
ENTERPRISE SDN BHD v
TROPICAL REALTY SDN
BHD
[1998] MLJU 279
C16
C22
C24
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
FASDA HEIGHTS SDN
BHD V SOON EE SING
CONSTRUCTION SDN
BHD & ANOR
[1999] 4 MLJ 199
LIGHTWEIGHT
CONCRETE SDN BHD V
NIRWANA INDAH SDN
BHD
[1999] 5 MLJ 351
58
C25
C27
ISMAIL BIN MOHD
YUNOS & ANOR V FIRST
REVENUE SDN BHD
[2000] 5 MLJ 42
TEKNIK CEKAP SDN
BHD V VILLA GENTING
DEVELOPMENT SDN
BHD
[2000] 6 MLJ 513
C29
WAC ENGINEERING
SDN. BHD. v MUI HIKARI
CONSTRUCTION SDN.
BHD.
[2000] MLJU 234
C31
SUM-PROJECTS
(BROTHERS) SDN. BHD.
v BINA JATI SDN. BHD.
[2000] MLJU 235
C32
MEDA PROPERTY
SERVICES SDN. BHD. v
ABRIC CLADDING SDN.
BHD. (KANDUNGAN 11)
[2000] MLJU 310
C34
CRYSTAL REALTY SDN.
BHD. v WARY
HOLDINGS SDN. BHD.
[2000] MLJU 212
59
C35
C37
MAHKOTA
TECHNOLOGIES SDN
BHD V BS CIVIL
ENGINEERING SDN BHD
[2000] 6 MLJ 505
SIEMENS BUILDING
TECHNOLOGIES
(MALAYSIA) SDN. BHDv
GEAHIN ENGINEERING
BERHAD
[2001] MLJU 26
C38
MARPLAN SDN. BHD. v
HANHYO (M) SDN. BHD.
& ORS
[2001] MLJU 458
C39
CHASE PERDANA
BERHAD v PEKELILING
TRIANGLE SDN. BHD. &
ORS
[2001] MLJU 389
C40
ORIENTAL ENTERPRISE
SDN. BHD. (NO. SYKT.:
99870-A) v SRI
HARTAMAS
CONTRACTORS SDN.
BHD.
[2001] MLJU 549
C41
JAK KWANG BUILDERS
& DEVELOPERS SDN
BHD V NG CHEE KEONG
& ORS
[2001] 4 MLJ 391
60
C42
BMC CONSTRUCTION
SDN BHD V DATARAN
RENTAS SDN BHD
[2001] 1 MLJ 356
C43
JALLCON (M) SDN BHD
V NIKKEN METAL (M)
SDN BHD (NO 2)
[2001] 5 MLJ 716
C44
C45
NEOH KHOON LYE V
TRANS-INTAN SDN BHD
[2002] 6 MLJ 8
ANTARA ELEKTRIK
SDN BHD V BELL &
ORDER BHD
[2002] 3 MLJ 321
C46
MULTIGUNA
CONSTRUCTION &
DEVELOPMENT SDN
BHD v HICOM MENANG
PROPERTIES SDN BHD
[2002] MLJU 697
C48
BBR CONSTRUCTION
SYSTEMS (M) SDN BHD v
MAXDOUBLE
CONSTRUCTION (M)
SDN BHD
[2002] MLJU 104
61
C49
PEOPLE REALTY SDN
BHD v RED ROCK
CONSTRUCTION SDN
BHD & ANOR
[2002] MLJU 543
C50
HAP AIK
CONSTRUCTION BHD v
HPC ENGINEERING (M)
SDN BHD
[2002] MLJU 105
C51
JKP SDN BHD V PPH
DEVELOPMENT (M) SDN
BHD
[2003] 6 MLJ 192
C52
RIBARU BINA SDN BHD
& ANOR v BAKTI
KAUSAR
DEVELOPMENT SDN
BHD & ANOR
[2003] MLJU 385
C54
PERNAS OTIS
ELEVATOR CO. SDN
BHD v SYARIKAT
PEMBENAAN YEOH
TIONG LAY SDN BHD
[2003] MLJU 394
62
C56
NAFAS ABADI
HOLDINGS SDN BHD v
PUTRAJAYA HOLDINGS
SDN BHD & ANOR
[2004] MLJU 148
C61
C67
TRADEBOND (M) SDN
BHD
V
HALIM-O
CONSTRUCTION SDN
BHD
[2005] 7 MLJ 624
KM QUARRY SDN BHD V
HO HUP
CONSTRUCTION CO
BHD
[2006] MLJU 157
C68
CM INDAH V UB
USHABINA SDN BHD
[2006] MLJU 426
1
1
3
3
2
4
1
2
1
5
5
TOTAL
37
1
1
1
1
1
1
1
1
1
C3
C4
C7
C9
USAHA DAMAI SDN BHD
V SETIAUSAHA
KERAJAAN SELANGOR
[1997] 5 MLJ 601
DAEWOO CORP V
BAUER (M) SDN BHD
[1998] 7 MLJ 25
FAJAR MENYENSING
SDN BHD V ANGSANA
SDN BHD
[1998] 6 MLJ 80
MALAYAN FLOUR
MILLS SDN BHD V RAJA
LOPE & TAN CO &
ANOR
[1998] 6 MLJ 377
Unregistered engineer
Termination by wrong party
Unproved of termination
Appointment another contractor
Termination of agreement because of
misstatement of building approve.
Economic downturn
Contractor not rectify various default
VARIATION
Termination of architect
Refuse to accept determination of
contract
Notice of termination is invalid
Contractor not perform regularly and
diligently
Wrongful determination
Variation of work (the work not
according to document tender)
Variation of agreement in the contract
(no terms in agreement)
Law Cases(1997-2007)
Improper certificate of variations
Case
Nu.
Claim for variation of work / additional
variation amount
Whether arbitrator should issue each of
work order
63
TABLE 4.2(b): ANALYSIS NATURE OF CONSTRUCTION DISPUTES
Nature of Dispute
TERMINATION
64
C11
THE RADIO & GENERAL
TRADING CO SDN BHD
V WAYSS & FREYTAG
(M) SDN BHD
[1998] 1 MLJ 346
C17
C20
C21
C22
C26
C29
DMCD MUSEUM
ASSOCIATES SDN BHD v
SHADEMAKER (M) SDN
BHD
[1998] MLJU 364
HOCK HUAT IRON
FOUNDRY (SUING AS A
FIRM) V NAGA
TEMBAGA SDN BHD
[1999] 1 MLJ 65
AKITEK TENGGARA
SDN BHD V MID
VALLEY CITY SDN BHD
& ANOR
[1999] 2 MLJ 625
FASDA HEIGHTS SDN
BHD V SOON EE SING
CONSTRUCTION SDN
BHD & ANOR
[1999] 4 MLJ 199
HIGHCEED CORP SDN
BHD V WARISAN
HARTA SABAH SDN BHD
& ANOR
[2000] 5 MLJ 33
WAC ENGINEERING
SDN. BHD. v MUI HIKARI
CONSTRUCTION SDN.
BHD.
[2000] MLJU 234
65
C47
C49
ZASALIM
DEVELOPMENT SDN
BHD V LUM SIEW &
SONS SDN BHD
[2002] 7 MLJ 119
PEOPLE REALTY SDN
BHD v RED ROCK
CONSTRUCTION SDN
BHD & ANOR
[2002] MLJU 543
C55
C57
C58
C59
C63
TRAVELSIGHT (M) SDN
BHD & ANOR V ATLAS
CORP SDN BHD
[2003] 6 MLJ 658
TAHAN STEEL CORP
SDN BHD V BANK
ISLAM MALAYSIA BHD
[2004] 6 MLJ 1
SK STYROFOAM SDN
BHD V PEMBINAAN LCL
SDN BHD
[2004] 5 MLJ 385
KUA CHAI SING
CONSTRUCTION SDN
BHD LWN UPHA
PHARMACEUTICAL
MANUFACTURING (M)
SDN BHD
[2004] 1 MLJ 609
LINGKARAN LUAR
BUTTERWORTH
(PENANG) SDN BHD v
PERUNDING JURUTERA
D.A.H. SDN BHD
[2005] MLJU 214
66
C64
C66
C69
C70
C71
C72
HALIM BIN SUTARJO V
KPMB BUILDER BHD
(FORMERLY KNOWN AS
KONSORTIUM
PELADANG (M) BHD)
[2005] 4 MLJ 273
VISTANET (M) SDN BHD
V PILECON CIVIL
WORKS SDN BHD
[2005] 6 MLJ 664
LUXOR HOLDING SDN
BHD v HAINAL-KONYI
(M) SDN BHD
[2006] 3 MLJ 727
KENANGA INNOVASI
SDN BHD v TOH KIM
LAM & ANORS
[2006] 4 MLJ 590
POH GEOK SING v HB
ENTERPRISE SDN BHD
[2006] 1 MLJ 617
I-EXPO SDN BHD v TNB
ENGINEERING
CORPORATION SDB
BHD
[2007] 3 MLJ 53
1
2
1
3
2
1
1
2
1
1
1
TOTAL
9
13
1
1
1
1
1
1
C2
C3
KEMAYAN
CONSTRUCTION SDN
BHD V PRESTARA SDN
BHD
[1997] 5 MLJ 608
USAHA DAMAI SDN BHD
V SETIAUSAHA
KERAJAAN SELANGOR
[1997] 5 MLJ 601
C5
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
C8
LEMBAGA PELABUHAN
JOHOR V PANGLOBAL
INSURANCE SDN BHD
[1998] 6 MLJ 505
Extension of time were not properly
assessed
Late design information and inadequate
design
PERFORMANCE
BOND
Late/ inadequate instruction by architect
Wrong estimation of project cost
Demand of sum performance bond
Claim of performance bond due to
termination
Law Cases(1997-2007)
Wrong procedure to call performance
bond
DAMAGES
Unpaid sum of money and the interest
(didn’t fulfill the guarantee)
Wrong in directing an assessment of
damages for work done
Mitigate damages
Claim damages for late payment
LAD due delay on completion date
DEFECT
Wrong person to impose LAD
Claim for losses and damages suffered
due to termination
Failure to prove the amount of LAD
DELAY
Failed on defect work
Case
Nu.
Default of the stipulation time
Delay in completion
67
TABLE 4.2(c): ANALYSIS NATURE OF CONSTRUCTION DISPUTES
Nature of Dispute
DEFAULT
68
C10
KEEN BUILDERS SDN
BHD v UTARA DUA
(MALAYSIA) SDN BHD
AND THIRD PARTY
[1998] MLJU 408
C14
C16
C18
C20
C23
RAMAL PROPERTIES
SDN BHD V EAST WESTUMI INSURANCE SDN
BHD
[1998] 5 MLJ 233
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
LOTTEWORLD
ENGINEERING &
CONSTRUCTION SDN
BHD V CASTLE INN SDN
BHD & ANOR
[1998] 7 MLJ 105
HOCK HUAT IRON
FOUNDRY (SUING AS A
FIRM) V NAGA
TEMBAGA SDN BHD
[1999] 1 MLJ 65
PERUMAHAN NCK SDN
BHD V ARABMALAYSIAN
MERCHANT BANK &
ANOR
[1999] 4 MLJ 444
69
C24
C26
C28
C29
LIGHTWEIGHT
CONCRETE SDN BHD V
NIRWANA INDAH SDN
BHD
[1999] 5 MLJ 351
HIGHCEED CORP SDN
BHD V WARISAN
HARTA SABAH SDN BHD
& ANOR
[2000] 5 MLJ 33
TRANSFIELD PROJECTS
(M) SDN BHD & ANOR V
MALAYSIAN AIRLINES
SYSTEMS BHD
[2000] 7 MLJ 583
WAC ENGINEERING
SDN. BHD. v MUI HIKARI
CONSTRUCTION SDN.
BHD.
[2000] MLJU 234
C33
C34
GASING HEIGHTS SDN
BHD V PILECON
BUILDING
CONSTRUCTION SDN
BHD
[2000] 1 MLJ 621
CRYSTAL REALTY SDN.
BHD. v WARY
HOLDINGS SDN. BHD.
[2000] MLJU 212
70
C35
MAHKOTA
TECHNOLOGIES SDN
BHD V BS CIVIL
ENGINEERING SDN BHD
[2000] 6 MLJ 505
C40
ORIENTAL ENTERPRISE
SDN. BHD. (NO. SYKT.:
99870-A) v SRI
HARTAMAS
CONTRACTORS SDN.
BHD.
[2001] MLJU 549
C43
C44
JALLCON (M) SDN BHD
V NIKKEN METAL (M)
SDN BHD (NO 2)
[2001] 5 MLJ 716
NEOH KHOON LYE V
TRANS-INTAN SDN BHD
[2002] 6 MLJ 8
C53
JOO LEONG TIMBER
MERCHANT V DR
JASWANT SINGH A/L
JAGAT SINGH
[2003] 5 MLJ 116
C60
MASCOM (M) SDN BHD
& ORS V KEN
GROUTING SYSTEM
SPECIALIST SDN BHD
[2004] 2 MLJ 163
71
C62
C63
TAI WAH
CONSTRUCTION CO V
GOVERNMENT OF
MALAYSIA
[2005] 2 MLJ 442
LINGKARAN LUAR
BUTTERWORTH
(PENANG) SDN BHD v
PERUNDING JURUTERA
D.A.H. SDN BHD AND
OTHERS
[2005] MLJU 214
C65
LIM TECK KONG V DR
ABD HAMID ABDUL
RASHID AND ANOR
[2005] MLJU 512
C66
C71
C72
VISTANET (M) SDN BHD
V PILECON CIVIL
WORKS SDN BHD
[2005] 6 MLJ 664
POH GEOK SING v HB
ENTERPRISE SDN BHD
[2006] 1 MLJ 617
I-EXPO SDN BHD v TNB
ENGINEERING
CORPORATION SDB
BHD
[2007] 3 MLJ 53
13
1
1
1
2
1
1
1
1
1
2
2
1
1
1
2
1
TOTAL
14
1
8
6
6
2
72
4.2
Analysis the Nature of Construction Disputes
Table 4.2(a),(b) and (c) shows various number of natures or causes of construction
disputes. The natures of disputed which had been identified are payment, variations,
termination, delay, damages, defect, performance bond and default.
From Table 4.2(a), there were 37 cases involved in various kinds of payment
disputes. The disputes are include; unpaid architect fees by the employer (1 case), unpaid
of work done due failed on defect work (1 case), delay in progress payment (3 cases),
unpaid for further payment due to debt settlement (3 cases), over deduction of the sum
payment/set-off (2 cases), argument of the amount to be paid (4 cases), no bank guarantee
which is precedent of payment (1 cases), claim for payment of work done (2 cases), claim
for balance of services fee (1 cases), non payment for certified sums (5 cases), mislead in
payment procedure according to privity/terms of contract (5 cases), quantum meruit (1
case), no issuance of interim certificate due non of CPC, incorrect evaluation the amount
in certificates, non payment on the ground non registration as professional body, issuance
of payment certificate by party not in construction contract, prevent others party to
receive payment, sanction to pay incoming supplier, sub contractor for exist and in the
future project, unpaid for balance of certificates, and claim for extra payment in lump
sum contract which each represent 1 case. Percentage of each payment disputes are show
as a chart below.
73
Figure 4.2.1: Types of Payment Disputes
13.50% 13.50%
14.0%
12.0%
10.80%
10.0%
8.1% 8.1%
8.0%
5.40%
6.0%
4.0%
2.7% 2.7%
5.40%
2.70%
2.70%
2.70%
2.0%
0.0%
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20
Legend:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
- Unpaid architect fees by the employer
- Unpaid of work done due failed on defect work
- Delay in progress payment
- Unpaid for further payment due to debt settlement
- Over deduction of the sum payment
- Argument of the amount to be paid
- No bank guarantee which is precedent of payment
- Claim for payment of work done
- Claim for balance of services fee
- Non payment for certified sums
- Mislead in payment procedure according to privity/terms of contract
- Quantum meruit
- No issuance of interim certificate due non of CPC
- False evaluation the amount in certificates
- Non payment on the ground non registration as professional body
- Issuance of payment certificate by party not in construction contract
- Prevent others party receive payment
- Sanction to pay incoming supplier, sub contractor for exist and in the future project
- Unpaid for balance of certificates
- Claim for extra payment in lump sum contract
74
From the bar chart, we can identified the most payment problem are related to non
payment for certified sums and mislead or misunderstanding in payment procedure due to
different type of different form between main contractor and sub contractor or between
subcontractor and sub-subcontractor which each represent (13.5%). This is followed by
argument of the amount to be paid (10.8%), delay in progress payment, and unpaid for
further payment due to debt settlement (8.1%), over deduction of the sum payment and
claim for payment of work done (5.4%) while the others payment problem only represents
1%.
Table 4.2(b) shows that there were 9 cases related to variations and 13 cases due
termination during the construction. Disputes of variations involved of claim for variation
of work or additional variation amount (2 cases), improper certificate of variations (1 case),
variation of agreement in the contract (3 cases), variation of work where the work is not
according to document tender(2 cases), and whether arbitrator should issue each of work
order (1 case). The most disputes according to variations are shows in the bar chart below.
Figure 4.2.2: Types of Variations Disputes
Issuance by arbitrator for each of work order
11%
Variation of work
22%
Variation of agreement
33%
Improper certificate of variations
11%
Claim for variation of work done
22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
4
75
From bar chart above, the major disputes are variation of agreement (33%). This
dispute occurred when there were an addition of variation term and condition in the existed
contract. This is followed by variation of work and claim for variation of work done and
each represents 22%, improper of variation certificate and issuance of work order by
architect (11%).
Besides variation, terminations are also one of the main natures of disputes in
construction industry. The disputes are includes wrongful determination (1 case),
contractor not perform regularly and diligently (1 case), notice of termination is invalid (2
cases), and there were only 1 case related to; refuse to accept determination of contract,
termination of architect, termination when contractor not rectify various default, economic
downturn, termination of agreement because of misstatement of building approved,
termination due appointment another contractor, unproved of termination, termination by
wrong party and termination of unregistered engineer. All of these disputes are shows as
bar chart below.
Figure 4.2.3: Types of Termination Disputes
16.0%
Wrongful determination
15.4%
Contractor not perform regularly and
diligently
notice of termination is invalid
14.0%
refuse to accept determination of
contract
termination of arcitect
12.0%
contractor not rectify various default
10.0%
8.0%
6.0%
4.0%
7.7%
7.7%
economic downturn
misstatement of building approval
termination by wrong party
appointment another contractor
unproved of termination
termination by wrong party
2.0%
0.0%
termination of unregistered engineer
76
From the bar chart, shows the common nature of termination disputes are because
of an invalid of termination notice (15.4%) followed by the others which each represents
7.7%.
Table 4.2(c) shows others nature of disputes which are delay (14 cases), defect (1
case), damages (8 cases), performance bond (6 cases) and default (6 cases).
There were 13 cases related to delay in completion (93%) and 1 case related to
default of the stipulation time (7%) as shown in the pie chart below.
Figure 4.2.4: Types of Delay Disputes
Delay in
completion
7%
93%
Default of
stipulated
time
77
Figure 4.2.5: Types of Damages Disputes
13%
12%
12%
13%
13%
24%
13%
Failure to prove the amount of LAD
Claim for losses and damages suffered due to termination
Wrong person to impose LAD
LAD due delay on completion date
Claim damages for late payment
Mitigiate damages
Wrong in directing an assessment of damages for work done
Pie chart above shows the percentage of each disputes related to damages. The
disputes are found as failure to prove the amount of LAD (12.5%), claim for losses and
damages suffered due to termination (25%), wrong person to impose LAD (25%), LAD
due delay on completion date, claim damages for late payment, mitigate damages, wrong in
directing an assessment of damages for work done which each represent 12.5%. This shows
that the most disputes related to damages is about claim for losses and damages suffered
due to termination of the contractor.
78
From the Table 4.2(c), shows disputes which related to performance bond. The
disputes are shown as follow:
Figure 4.2.6: Types of Performance Bond Disputes
50%
45%
40%
35%
33%
33%
30%
25%
20%
17%
17%
Claim of
performance
bond due to
termination
Demand of
sum
performance
bond
15%
10%
5%
0%
Unpaid sum of
money and
with the
interest
Wrong
procedure to
call
performance
bond
From the bar chart, we can identified that the most disputes occur are related to
unpaid sum of money with the interest which it is not fulfill the guarantee of the
performance bond and wrong procedure to call performance bond which each represent
(33%), followed by claim of performance bond due to termination (17%), and demand of
sum performance bond (17%).
79
The last nature of disputes which had been identified is default by an architect and
surveyor. The most disputes are related to late and inadequate instruction by architect
(33%), not properly assessed the extension of time which each represents (33%), followed
by wrong estimation of project cost, late design information and inadequate design which
each represent (17%). These are shows as follows.
Figure 4.2.7: Types of Default
50%
45%
40%
35%
33%
33%
30%
25%
20%
17%
17%
15%
10%
5%
0%
Late and
inadequate
instruction
improperly
assessed the
exyension of
time
Wrong
Late design
estimation of
information
project cost and inadequate
design
These are shows that the professional bodies are also the other factors which
influences in construction disputes.
80
All of the natures of construction disputes had been identified and described. The
percentages for each nature of the disputes are shows as follow:
Figure 4.2.8: The Nature of Construction Disputes
Defect
1%
Default
8%
Performance Bond
8%
Damages
11%
Variations
13%
Termination
18%
Delay
19%
Payment
51%
0%
5%
10% 15% 20% 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 8
Figure 4.2.8 shows that payment is a common natures of disputes in construction
industry which contribute 51%, followed by delay in completion (19%), termination (18%),
variations(13%), damages (11%), performance bond (8%), default (8%) and defect (1%).
The next discussion will be follow by the analysis of the parties involved in
construction disputes. This analysis will be identified the most potential party that may
contribute to construction disputes.
81
TABLE 4.3: ANALYSIS OF THE PARTIES INVOLVED IN CONSTRUCTION DISPUTES
Case.
Nu.
Nature of Dispute
Employer Architect
Law Cases(1997-2007)
C1
LOW KOK HWA v SIME
DARBY URUS HARTA BHD
C2
[1997] MLJU 365
KEMAYAN CONSTRUCTION
SDN BHD V PRESTARA SDN
BHD
[1997] 5 MLJ 608
C3
USAHA DAMAI SDN BHD V
SETIAUSAHA KERAJAAN
SELANGOR
C4
C5
C6
C7
D
P
P
D
P
P
D
VICTOR BUYCK STEEL
CONSTRUCTION SDN BHD
V
PI CORROSION
ENGINEERING SDN BHD
[1998] 7 MLJ 513
FAJAR MENYENSING SDN
BHD V ANGSANA SDN BHD
[1998] 6 MLJ 80
Quantity
Main
Sub
Surveyor Contractor Contractor
D
[1997] 5 MLJ 601
DAEWOO CORP V BAUER
(M) SDN BHD
[1998] 7 MLJ 25
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
Engineer
P
D
D
D
P
P
Supplier
Others
82
C8
LEMBAGA PELABUHAN
JOHOR V PANGLOBAL
INSURANCE SDN BHD
[1998] 6 MLJ 505
C9
MALAYAN FLOUR MILLS
SDN BHD V RAJA LOPE &
TAN CO & ANOR
P
D
P
D
D
P
D
P
[1998] 6 MLJ 377
C10
KEEN BUILDERS SDN BHD v
UTARA DUA (MALAYSIA)
SDN BHD AND THIRD
PARTY
[1998] MLJU 408
C11
THE RADIO & GENERAL
TRADING CO SDN BHD V
WAYSS & FREYTAG (M)
SDN BHD
[1998] 1 MLJ 346
C12
USAHABINA v ANUAR BIN
YAHYA
D
P
D
P
[1998] MLJU 176
CHOO NGIE SIN v TAN KOK
MING
C13
C14
[1998] MLJU 214
RAMAL PROPERTIES SDN
BHD V EAST WEST-UMI
INSURANCE SDN BHD
[1998] 5 MLJ 233
P
D
83
C15
ORIENTAL STAR
ENTERPRISE SDN BHD v
TROPICAL REALTY SDN
BHD
P
D
D
P
[1998] MLJU 279
C16
C17
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
DMCD MUSEUM
ASSOCIATES SDN BHD v
SHADEMAKER (M) SDN
BHD
P
[1998] MLJU 364
C18
C19
C20
LOTTEWORLD
ENGINEERING &
CONSTRUCTION SDN BHD
V CASTLE INN SDN BHD &
ANOR
[1998] 7 MLJ 105
D
P
MURNI BUILDERS SDN BHD
v LEGENDS GOLF &
COUNTRY RESORT BHD &
ANOR
D
P
[1999] MLJU 441
HOCK HUAT IRON
FOUNDRY (SUING AS A
FIRM) V NAGA TEMBAGA
SDN BHD
[1999] 1 MLJ 65
D
P
D
84
C21
AKITEK TENGGARA SDN
BHD V MID VALLEY CITY
SDN BHD & ANOR
D
P
[1999] 2 MLJ 625
C22
C23
FASDA HEIGHTS SDN BHD
V SOON EE SING
CONSTRUCTION SDN BHD
& ANOR
[1999] 4 MLJ 199
PERUMAHAN NCK SDN
BHD V ARAB-MALAYSIAN
MERCHANT BANK & ANOR
P
D
D
P
[1999] 4 MLJ 444
C24
C25
C26
LIGHTWEIGHT CONCRETE
SDN BHD V NIRWANA
INDAH SDN BHD
[1999] 5 MLJ 351
ISMAIL BIN MOHD YUNOS
& ANOR V FIRST REVENUE
SDN BHD
[2000] 5 MLJ 42
HIGHCEED CORP SDN BHD
V WARISAN HARTA SABAH
SDN BHD & ANOR
D
P
D
P
D
P
D
P
[2000] 5 MLJ 33
C27
TEKNIK CEKAP SDN BHD V
VILLA GENTING
DEVELOPMENT SDN BHD
[2000] 6 MLJ 513
85
C28
C29
TRANSFIELD PROJECTS
(M) SDN BHD & ANOR V
MALAYSIAN AIRLINES
SYSTEMS BHD
[2000] 7 MLJ 583
WAC ENGINEERING SDN.
BHD. v MUI HIKARI
CONSTRUCTION SDN. BHD.
D
P
P
D
D
P
P
D
P
D
D
P
[2000] MLJU 234
C30
CCG CONCRETE
CONSTRUCTIONS (M) SDN.
BHD. v RICH AVENUE SDN.
BHD.
[2000] MLJU 422
C31
SUM-PROJECTS
(BROTHERS) SDN. BHD. v
BINA JATI SDN. BHD.
[2000] MLJU 235
C32
MEDA PROPERTY
SERVICES SDN. BHD. v
ABRIC CLADDING SDN.
BHD. (KANDUNGAN 11)
[2000] MLJU 310
C33
GASING HEIGHTS SDN BHD
V PILECON BUILDING
CONSTRUCTION SDN BHD
[2000] 1 MLJ 621
86
C34
CRYSTAL REALTY SDN.
BHD. v WARY HOLDINGS
SDN. BHD.
D
P
[2000] MLJU 212
C35
C36
MAHKOTA
TECHNOLOGIES SDN BHD
V BS CIVIL ENGINEERING
SDN BHD
[2000] 6 MLJ 505
SYARIKAT RASABINA SDN.
BHD. v PERNAS
CONSTRUCTION SDN. BND.
D
P
P
D
[2001] MLJU 321
C37
SIEMENS BUILDING
TECHNOLOGIES
(MALAYSIA) SDN. BHDv
GEAHIN ENGINEERING
BERHAD
P
D
[2001] MLJU 26
C38
MARPLAN SDN. BHD. v
HANHYO (M) SDN. BHD. &
ORS
D
[2001] MLJU 458
C39
CHASE PERDANA BERHAD
v PEKELILING TRIANGLE
SDN. BHD. & ORS
[2001] MLJU 389
P
D
P
87
C40
ORIENTAL ENTERPRISE
SDN. BHD. (NO. SYKT.:
99870-A) v SRI HARTAMAS
CONTRACTORS SDN. BHD.
D
P
[2001] MLJU 549
C41
JAK KWANG BUILDERS &
DEVELOPERS SDN BHD V
NG CHEE KEONG & ORS
P
D
D
P
[2001] 4 MLJ 391
C42
C43
BMC CONSTRUCTION SDN
BHD V DATARAN RENTAS
SDN BHD
[2001] 1 MLJ 356
JALLCON (M) SDN BHD V
NIKKEN METAL (M) SDN
BHD (NO 2)
P
D
[2001] 5 MLJ 716
C44
NEOH KHOON LYE V
TRANS-INTAN SDN BHD
[2002] 6 MLJ
C45
ANTARA ELEKTRIK SDN
BHD V BELL & ORDER BHD
[2002] 3 MLJ 321
C46
MULTIGUNA
CONSTRUCTION &
DEVELOPMENT SDN BHD v
HICOM MENANG
PROPERTIES SDN BHD
[2002] MLJU 697
Purchaser
D
P
Sub SubCon.
D
D
P
P
88
C47
C48
ZASALIM DEVELOPMENT
SDN BHD V LUM SIEW &
SONS SDN BHD
[2002] 7 MLJ 119
D
P
NomSubcon.
BBR CONSTRUCTION
SYSTEMS (M) SDN BHD v
MAXDOUBLE
CONSTRUCTION (M) SDN
BHD
D
P
[2002] MLJU 104
C49
PEOPLE REALTY SDN BHD
v RED ROCK
CONSTRUCTION SDN BHD
& ANOR
P
D
[2002] MLJU 543
C50
HAP AIK CONSTRUCTION
BHD v HPC ENGINEERING
(M) SDN BHD
P
D
[2002] MLJU 105
C51
JKP SDN BHD V PPH
DEVELOPMENT (M) SDN
BHD
Client
D
P
[2003] 6 MLJ 192
C52
RIBARU BINA SDN BHD &
ANOR v BAKTI KAUSAR
DEVELOPMENT SDN BHD &
ANOR
[2003] MLJU 385
D
P
89
C53
C54
JOO LEONG TIMBER
MERCHANT V DR
JASWANT SINGH A/L
JAGAT SINGH
[2003] 5 MLJ 116
D
PERNAS OTIS ELEVATOR
CO. SDN BHD v SYARIKAT
PEMBENAAN YEOH TIONG
LAY SDN BHD
P
D
P
[2003] MLJU 394
purchaser
C55
C56
TRAVELSIGHT (M) SDN
BHD & ANOR V ATLAS
CORP SDN BHD
[2003] 6 MLJ 658
NAFAS ABADI HOLDINGS
SDN BHD v PUTRAJAYA
HOLDINGS SDN BHD &
ANOR
D
D
P
P
[2004] MLJU 148
C57
TAHAN STEEL CORP SDN
BHD V BANK ISLAM
MALAYSIA BHD
[2004] 6 MLJ 1
purchaser
P
D
C58
SK STYROFOAM SDN BHD
V PEMBINAAN LCL SDN
BHD
[2004] 5 MLJ 385
D
P
90
C59
C60
C61
C62
C63
KUA CHAI SING
CONSTRUCTION SDN BHD
LWN UPHA
PHARMACEUTICAL
MANUFACTURING (M) SDN
BHD
[2004] 1 MLJ 609
D
P
MASCOM (M) SDN BHD &
ORS V KEN GROUTING
SYSTEM SPECIALIST SDN
BHD
[2004] 2 MLJ 163
D
TRADEBOND (M) SDN BHD
V
HALIM-O CONSTRUCTION
SDN BHD
[2005] 7 MLJ 624
D
P
D
P
D
P
TAI WAH CONSTRUCTION
CO V GOVERNMENT OF
MALAYSIA (JABATAN
KERJA RAYA SARAWAK)
[2005] 2 MLJ 442
LINGKARAN LUAR
BUTTERWORTH (PENANG)
SDN BHD v PERUNDING
JURUTERA D.A.H. SDN BHD
AND OTHERS
[2005] MLJU 214
P
91
C64
HALIM BIN SUTARJO V
KPMB BUILDER BHD
(FORMERLY KNOWN AS
KONSORTIUM PELADANG
(M) BHD)
P
D
[2005] 4 MLJ 273
C65
LIM TECK KONG V DR
ABD HAMID ABDUL
RASHID AND ANOR
P
D
[2005] MLJU 512
C66
VISTANET (M) SDN BHD V
PILECON CIVIL WORKS
SDN BHD
P
D
[2005] 6 MLJ 664
C67
KM QUARRY SDN BHD V
HO HUP CONSTRUCTION
CO BHD
D
[2006] MLJU 157
C68
CM INDAH V UB USHABINA
SDN BHD
P
D
[2006] MLJU 426
C69
LUXOR HOLDING SDN BHD
v HAINAL-KONYI (M) SDN
BHD
[2006] 3 MLJ 727
D
P
P
92
C70
C71
C72
KENANGA INNOVASI SDN
BHD v TOH KIM LAM &
ANORS
[2006] 4 MLJ 590
POH GEOK SING v HB
ENTERPRISE SDN BHD
[2006] 1 MLJ 617
D
P
client
P
I-EXPO SDN BHD v TNB
ENGINEERING
CORPORATION SDB BHD
[2007] 3 MLJ 53
D
TOTAL
55
D
P
2
2
1
58
18
0
7
93
4.3
Analysis of the Parties Involved in Construction Disputes
Table 4.3.1: Data Analysis of Parties Involved
Nu.
Parties Involved
Number out of 140
Percentage
1
Client
2
1.42%
2
Employer
55
39.28%
3
Architect
2
1.42%
4
Engineering
2
1.42%
5
Surveyor
1
0.71%
6
Main Contractor
59
42.14%
7
Subcontractor
20
14.28%
8
Supplier
0
0%
9
Purchaser
3
2.14%
TOTAL
144
100%
Table 4.3 shows the percentage for each party who’s involved in construction
disputes where the client represents 1%, employer (39%), architect (1%), engineering (1%),
surveyor (1%), main contractor (42%), sub contractor (14%), purchaser (2%) and supplier
is not involved in any cases as parties involved in disputes.
94
Figure 4.3.1: Percentage of Parties Involved in Disputes.
1%
1%
2% 1%
Main Contractor
1%
Employer
Subcontractor
Purchaser
14%
39%
Client
Architect
41%
Engineer
Surveyor
Supplier
Figure 4.3 shows the ranking of parties involved in construction dispute. From the
pie chart, main contractor (41%) can be identified as the main common party who’s
involved in disputes. This is followed by the employer (39%), subcontractor (14%),
purchaser (2%), client, architect, engineer and surveyor which each represent 1%.
Besides, this study also will analyze the plaintiff and the defendant which are
categorized in the table below.
95
Table 4.3.2: The Parties Involved in Construction Disputes
Nu.
The Parties in Disputes
Number of Cases
(Defendant and Plaintiff)
1
Developer and Client
1
2
Employer and Architect
2
3
Employer and Engineer
2
4
Employer and Main Contractor
45
5
Employer and Sub Contractor
3
6
Employer and Purchaser
3
7
Client and Main Contractor
1
8
Surveyor and Main Contractor
1
9
Main Contractor and Sub Contractor
12
10
Sub Contractor and sub-subcontractor
2
Table 4.3.1 shows that the parties involved in disputes are between developer and
client (1 case), employer and architect (2 cases), employer ad engineer (2 cases), employer
and main contractor (45 cases), employer and sub contractor (3 cases), employer and
purchaser (3 cases), client and main contractor (1 case), surveyor and main contractor (1
case), main contractor and sub contractor (12 cases) and between sub contractor and subsub contractor (2 cases). The percentages for each of the parties involved are shown as
follows:
96
Figure 4.3.2: The Percentages of the Parties Involved in Construction Disputes
Sub Contractor and sub-subcontractor
2.70%
17%
Main Contractor and Sub Contractor
Surveyor and Main Contractor
Client and Main Contractor
1.30%
1%
Employer and Purchaser
4%
Employer and Sub Contractor
4%
63
Employer and Main Contractor
Employer and Engineer
Employer and Architect
Employer and Client
0%
3%
3%
1%
7%
14%
21%
28%
35%
42%
49%
56%
63%
Table 4.3.2 shows that the common parties in disputes are between employer and
main contractor (63%), followed by main contractor and subcontractor (17%), employer
and purchaser (4%), employer and sub contractor (4%), employer and engineer (3%),
employer and architect (3%), sub contractor and sub-subcontractor(2.7%), employer and
client, client and main contractor, surveyor and main contractor which represent 1%.
The further study will be on the analysis of the type of construction which involved
in construction disputes and the common type of construction will be identified.
97
TABLE 4.4: ANALYSIS OF THE TYPE OF CONSTRUCTION DISPUTES
Case.
Nu.
C1
Nature of Dispute
Law Cases(1997-2007)
LOW KOK HWA v SIME
DARBY URUS HARTA BHD
[1997] MLJU 365
C2
C3
KEMAYAN CONSTRUCTION
SDN BHD V PRESTARA SDN
BHD
[1997] 5 MLJ 608
USAHA DAMAI SDN BHD V
SETIAUSAHA KERAJAAN
SELANGOR
[1997] 5 MLJ 601
C4
DAEWOO CORP V BAUER (M)
SDN BHD
[1998] 7 MLJ 25
C5
LIM JOO THONG V KOPERASI
SERBAGUNA TAIPING BARAT
BHD
[1998] 1 MLJ 657
C6
C7
VICTOR BUYCK STEEL
CONSTRUCTION SDN BHD
V
PI CORROSION
ENGINEERING SDN BHD
[1998] 7 MLJ 513
FAJAR MENYENSING SDN
BHD V ANGSANA SDN BHD
[1998] 6 MLJ 80
Residential
Construction
Building
Construction
Engineering
Construction
Industrial
Construction
98
C8
LEMBAGA PELABUHAN
JOHOR V PANGLOBAL
INSURANCE SDN BHD
[1998] 6 MLJ 505
C9
MALAYAN FLOUR MILLS SDN
BHD V RAJA LOPE & TAN CO
& ANOR
[1998] 6 MLJ 377
C10
KEEN BUILDERS SDN BHD v
UTARA DUA (MALAYSIA) SDN
BHD AND THIRD PARTY
[1998] MLJU 408
C11
THE RADIO & GENERAL
TRADING CO SDN BHD V
WAYSS & FREYTAG (M) SDN
BHD
[1998] 1 MLJ 346
C12
USAHABINA v ANUAR BIN
YAHYA
[1998] MLJU 176
CHOO NGIE SIN v TAN KOK
MING
C13
[1998] MLJU 214
C14
RAMAL PROPERTIES SDN
BHD V EAST WEST-UMI
INSURANCE SDN BHD
[1998] 5 MLJ 233
99
C15
ORIENTAL STAR
ENTERPRISE SDN BHD v
TROPICAL REALTY SDN BHD
[1998] MLJU 279
C16
C17
LIM JOO THONG V KOPERASI
SERBAGUNA TAIPING BARAT
BHD
[1998] 1 MLJ 657
DMCD MUSEUM ASSOCIATES
SDN BHD v SHADEMAKER (M)
SDN BHD
[1998] MLJU 364
C18
C19
LOTTEWORLD
ENGINEERING &
CONSTRUCTION SDN BHD V
CASTLE INN SDN BHD &
ANOR
[1998] 7 MLJ 105
MURNI BUILDERS SDN BHD v
LEGENDS GOLF & COUNTRY
RESORT BHD & ANOR
[1999] MLJU 441
C20
HOCK HUAT IRON FOUNDRY
(SUING AS A FIRM) V NAGA
TEMBAGA SDN BHD
[1999] 1 MLJ 65
C21
AKITEK TENGGARA SDN BHD
V MID VALLEY CITY SDN
BHD & ANOR
[1999] 2 MLJ 625
100
C22
C23
FASDA HEIGHTS SDN BHD V
SOON EE SING
CONSTRUCTION SDN BHD &
ANOR
[1999] 4 MLJ 199
PERUMAHAN NCK SDN BHD V
ARAB-MALAYSIAN
MERCHANT BANK & ANOR
[1999] 4 MLJ 444
C24
LIGHTWEIGHT CONCRETE
SDN BHD V NIRWANA INDAH
SDN BHD
[1999] 5 MLJ 351
C25
C26
ISMAIL BIN MOHD YUNOS &
ANOR V FIRST REVENUE SDN
BHD
[2000] 5 MLJ 42
HIGHCEED CORP SDN BHD V
WARISAN HARTA SABAH SDN
BHD & ANOR
[2000] 5 MLJ 33
C27
C28
TEKNIK CEKAP SDN BHD V
VILLA GENTING
DEVELOPMENT SDN BHD
[2000] 6 MLJ 513
TRANSFIELD PROJECTS (M)
SDN BHD & ANOR V
MALAYSIAN AIRLINES
SYSTEMS BHD
[2000] 7 MLJ 583
101
C29
WAC ENGINEERING SDN.
BHD. v MUI HIKARI
CONSTRUCTION SDN. BHD.
[2000] MLJU 234
C30
CCG CONCRETE
CONSTRUCTIONS (M) SDN.
BHD. v RICH AVENUE SDN.
BHD.
[2000] MLJU 422
C31
SUM-PROJECTS (BROTHERS)
SDN. BHD. v BINA JATI SDN.
BHD.
[2000] MLJU 235
C32
MEDA PROPERTY SERVICES
SDN. BHD. v ABRIC
CLADDING SDN. BHD.
(KANDUNGAN 11)
[2000] MLJU 310
C33
GASING HEIGHTS SDN BHD V
PILECON BUILDING
CONSTRUCTION SDN BHD
[2000] 1 MLJ 621
CRYSTAL REALTY SDN. BHD.
v WARY HOLDINGS SDN. BHD.
C34
C35
[2000] MLJU 212
MAHKOTA TECHNOLOGIES
SDN BHD V BS CIVIL
ENGINEERING SDN BHD
[2000] 6 MLJ 505
102
C36
SYARIKAT RASABINA SDN.
BHD. v PERNAS
CONSTRUCTION SDN. BND.
[2001] MLJU 321
C37
SIEMENS BUILDING
TECHNOLOGIES (MALAYSIA)
SDN. BHDv GEAHIN
ENGINEERING BERHAD
[2001] MLJU 26
C38
MARPLAN SDN. BHD. v
HANHYO (M) SDN. BHD. &
ORS
[2001] MLJU 458
C39
CHASE PERDANA BERHAD v
PEKELILING TRIANGLE SDN.
BHD. & ORS
[2001] MLJU 389
C40
ORIENTAL ENTERPRISE SDN.
BHD. (NO. SYKT.: 99870-A) v
SRI HARTAMAS
CONTRACTORS SDN. BHD.
[2001] MLJU 549
C41
JAK KWANG BUILDERS &
DEVELOPERS SDN BHD V NG
CHEE KEONG & ORS
[2001] 4 MLJ 391
103
C42
C43
BMC CONSTRUCTION SDN
BHD V DATARAN RENTAS
SDN BHD
[2001] 1 MLJ 356
JALLCON (M) SDN BHD V
NIKKEN METAL (M) SDN BHD
(NO 2)
[2001] 5 MLJ 716
C44
NEOH KHOON LYE V TRANSINTAN SDN BHD
[2002] 6 MLJ 8
C45
ANTARA ELEKTRIK SDN BHD
V BELL & ORDER BHD
[2002] 3 MLJ 321
C46
MULTIGUNA CONSTRUCTION
& DEVELOPMENT SDN BHD v
HICOM MENANG
PROPERTIES SDN BHD
[2002] MLJU 697
C47
ZASALIM DEVELOPMENT
SDN BHD V LUM SIEW &
SONS SDN BHD
[2002] 7 MLJ 119
C48
BBR CONSTRUCTION
SYSTEMS (M) SDN BHD v
MAXDOUBLE
CONSTRUCTION (M) SDN BHD
[2002] MLJU 104
104
C49
PEOPLE REALTY SDN BHD v
RED ROCK CONSTRUCTION
SDN BHD & ANOR
[2002] MLJU 543
C50
HAP AIK CONSTRUCTION
BHD v HPC ENGINEERING (M)
SDN BHD
[2002] MLJU 105
C51
JKP SDN BHD V PPH
DEVELOPMENT (M) SDN BHD
[2003] 6 MLJ 192
C52
RIBARU BINA SDN BHD &
ANOR v BAKTI KAUSAR
DEVELOPMENT SDN BHD &
ANOR
[2003] MLJU 385
C53
JOO LEONG TIMBER
MERCHANT V DR JASWANT
SINGH A/L JAGAT SINGH
[2003] 5 MLJ 116
C54
PERNAS OTIS ELEVATOR CO.
SDN BHD v SYARIKAT
PEMBENAAN YEOH TIONG
LAY SDN BHD
[2003] MLJU 394
105
C55
C56
TRAVELSIGHT (M) SDN BHD
& ANOR V ATLAS CORP SDN
BHD
[2003] 6 MLJ 658
NAFAS ABADI HOLDINGS SDN
BHD v PUTRAJAYA
HOLDINGS SDN BHD & ANOR
[2004] MLJU 148
C57
C58
C59
C60
C61
TAHAN STEEL CORP SDN
BHD V BANK ISLAM
MALAYSIA BHD
[2004] 6 MLJ 1
SK STYROFOAM SDN BHD V
PEMBINAAN LCL SDN BHD
[2004] 5 MLJ 385
KUA CHAI SING
CONSTRUCTION SDN BHD
LWN UPHA
PHARMACEUTICAL
MANUFACTURING (M) SDN
BHD
[2004] 1 MLJ 609
MASCOM (M) SDN BHD & ORS
V KEN GROUTING SYSTEM
SPECIALIST SDN BHD
[2004] 2 MLJ 163
TRADEBOND (M) SDN BHD
V
HALIM-O CONSTRUCTION
SDN BHD
[2005] 7 MLJ 624
106
C62
C63
TAI WAH CONSTRUCTION CO
V GOVERNMENT OF
MALAYSIA (JABATAN KERJA
RAYA SARAWAK)
[2005] 2 MLJ 442
LINGKARAN LUAR
BUTTERWORTH (PENANG)
SDN BHD v PERUNDING
JURUTERA D.A.H. SDN BHD
AND OTHERS
[2005] MLJU 214
C64
HALIM BIN SUTARJO V KPMB
BUILDER BHD (FORMERLY
KNOWN AS KONSORTIUM
PELADANG (M) BHD)
[2005] 4 MLJ 273
C65
LIM TECK KONG V DR ABD
HAMID ABDUL RASHID AND
ANOR
[2005] MLJU 512
C66
C67
VISTANET (M) SDN BHD V
PILECON CIVIL WORKS SDN
BHD
[2005] 6 MLJ 664
KM QUARRY SDN BHD V HO
HUP CONSTRUCTION CO BHD
[2006] MLJU 157
107
C68
CM INDAH V UB USHABINA
SDN BHD
[2006] MLJU 426
LUXOR HOLDING SDN BHD v
HAINAL-KONYI (M) SDN BHD
C69
C70
[2006] 3 MLJ 727
KENANGA INNOVASI SDN
BHD v TOH KIM LAM &
ANORS
[2006] 4 MLJ 590
C71
C72
POH GEOK SING v HB
ENTERPRISE SDN BHD
[2006] 1 MLJ 617
I-EXPO SDN BHD v TNB
ENGINEERING
CORPORATION SDB BHD
[2007] 3 MLJ 53
TOTAL
12
52
8
1
108
4.4
Analysis Types of Construction
Table 4.4 shows that four type of construction that involved in construction disputes
which are residential (12 cases), building (52 cases), engineering (8 cases), and industrial
construction (1 case). The percentages for each of type construction are shown as below:
Figure 4.4.1: Types of Construction that Involved in Construction Disputes
80%
71%
70%
60%
50%
40%
30%
16%
20%
10%
10%
0%
1%
Figure 4.3: Percentage of Types of Construction
Building
Residential
Engineering
Industrial
From the bar chart, the common type of building that involved in construction
disputes are building construction (71%), followed by residential (16%), engineering (10%)
and industrial construction (1%). These show that building construction is the highest type
of construction which is potential to involve in disputes. Next, this study will analyze the
common time of the disputes occur.
109
TABLE 4.5: ANALYSIS OF THE TIME CONSTRUCTION DISPUTES
Case.
Nu.
Nature of Dispute
Law Cases(1997-2007)
C1
LOW KOK HWA v SIME
DARBY URUS HARTA BHD
C2
[1997] MLJU 365
KEMAYAN CONSTRUCTION
SDN BHD V PRESTARA SDN
BHD
[1997] 5 MLJ 608
C3
USAHA DAMAI SDN BHD V
SETIAUSAHA KERAJAAN
SELANGOR
C4
C5
C6
C7
[1997] 5 MLJ 601
DAEWOO CORP V BAUER (M)
SDN BHD
[1998] 7 MLJ 25
LIM JOO THONG V KOPERASI
SERBAGUNA TAIPING BARAT
BHD
[1998] 1 MLJ 657
VICTOR BUYCK STEEL
CONSTRUCTION SDN BHD
V
PI CORROSION
ENGINEERING SDN BHD
[1998] 7 MLJ 513
FAJAR MENYENSING SDN
BHD V ANGSANA SDN BHD
[1998] 6 MLJ 80
Initial
Phase
Design
Phase
Construction
Phase
Occupation
Phase
After Completion
Demolition
Phase
110
C8
LEMBAGA PELABUHAN
JOHOR V PANGLOBAL
INSURANCE SDN BHD
[1998] 6 MLJ 505
C9
C10
MALAYAN FLOUR MILLS SDN
BHD V RAJA LOPE & TAN CO
& ANOR
[1998] 6 MLJ 377
KEEN BUILDERS SDN BHD v
UTARA DUA (MALAYSIA) SDN
BHD AND THIRD PARTY
[1998] MLJU 408
C11
THE RADIO & GENERAL
TRADING CO SDN BHD V
WAYSS & FREYTAG (M) SDN
BHD
[1998] 1 MLJ 346
C12
USAHABINA v ANUAR BIN
YAHYA
[1998] MLJU 176
CHOO NGIE SIN v TAN KOK
MING
C13
[1998] MLJU 214
C14
RAMAL PROPERTIES SDN
BHD V EAST WEST-UMI
INSURANCE SDN BHD
[1998] 5 MLJ 233
111
C15
ORIENTAL STAR
ENTERPRISE SDN BHD v
TROPICAL REALTY SDN BHD
[1998] MLJU 279
C16
C17
LIM JOO THONG V KOPERASI
SERBAGUNA TAIPING BARAT
BHD
[1998] 1 MLJ 657
DMCD MUSEUM ASSOCIATES
SDN BHD v SHADEMAKER (M)
SDN BHD
[1998] MLJU 364
C18
LOTTEWORLD
ENGINEERING &
CONSTRUCTION SDN BHD V
CASTLE INN SDN BHD &
ANOR
[1998] 7 MLJ 105
C19
MURNI BUILDERS SDN BHD v
LEGENDS GOLF & COUNTRY
RESORT BHD & ANOR
[1999] MLJU 441
C20
HOCK HUAT IRON FOUNDRY
(SUING AS A FIRM) V NAGA
TEMBAGA SDN BHD
[1999] 1 MLJ 65
112
C21
C22
C23
AKITEK TENGGARA SDN BHD
V MID VALLEY CITY SDN
BHD & ANOR
[1999] 2 MLJ 625
FASDA HEIGHTS SDN BHD V
SOON EE SING
CONSTRUCTION SDN BHD &
ANOR
[1999] 4 MLJ 199
PERUMAHAN NCK SDN BHD V
ARAB-MALAYSIAN
MERCHANT BANK & ANOR
[1999] 4 MLJ 444
C24
LIGHTWEIGHT CONCRETE
SDN BHD V NIRWANA INDAH
SDN BHD
[1999] 5 MLJ 351
C25
C26
ISMAIL BIN MOHD YUNOS &
ANOR V FIRST REVENUE SDN
BHD
[2000] 5 MLJ 42
HIGHCEED CORP SDN BHD V
WARISAN HARTA SABAH SDN
BHD & ANOR
[2000] 5 MLJ 33
C27
TEKNIK CEKAP SDN BHD V
VILLA GENTING
DEVELOPMENT SDN BHD
[2000] 6 MLJ 513
113
C28
C29
TRANSFIELD PROJECTS (M)
SDN BHD & ANOR V
MALAYSIAN AIRLINES
SYSTEMS BHD
[2000] 7 MLJ 583
WAC ENGINEERING SDN.
BHD. v MUI HIKARI
CONSTRUCTION SDN. BHD.
[2000] MLJU 234
C30
CCG CONCRETE
CONSTRUCTIONS (M) SDN.
BHD. v RICH AVENUE SDN.
BHD.
[2000] MLJU 422
C31
SUM-PROJECTS (BROTHERS)
SDN. BHD. v BINA JATI SDN.
BHD.
[2000] MLJU 235
C32
MEDA PROPERTY SERVICES
SDN. BHD. v ABRIC
CLADDING SDN. BHD.
(KANDUNGAN 11)
[2000] MLJU 310
C33
GASING HEIGHTS SDN BHD V
PILECON BUILDING
CONSTRUCTION SDN BHD
[2000] 1 MLJ 621
CRYSTAL REALTY SDN. BHD.
v WARY HOLDINGS SDN. BHD.
C34
[2000] MLJU 212
114
C35
MAHKOTA TECHNOLOGIES
SDN BHD V BS CIVIL
ENGINEERING SDN BHD
[2000] 6 MLJ 505
C36
SYARIKAT RASABINA SDN.
BHD. v PERNAS
CONSTRUCTION SDN. BND.
[2001] MLJU 321
C37
SIEMENS BUILDING
TECHNOLOGIES (MALAYSIA)
SDN. BHDv GEAHIN
ENGINEERING BERHAD
[2001] MLJU 26
C38
MARPLAN SDN. BHD. v
HANHYO (M) SDN. BHD. &
ORS
[2001] MLJU 458
C39
CHASE PERDANA BERHAD v
PEKELILING TRIANGLE SDN.
BHD. & ORS
[2001] MLJU 389
C40
ORIENTAL ENTERPRISE SDN.
BHD. (NO. SYKT.: 99870-A) v
SRI HARTAMAS
CONTRACTORS SDN. BHD.
[2001] MLJU 549
115
C41
JAK KWANG BUILDERS &
DEVELOPERS SDN BHD V NG
CHEE KEONG & ORS
[2001] 4 MLJ 391
C42
BMC CONSTRUCTION SDN
BHD V DATARAN RENTAS
SDN BHD
[2001] 1 MLJ 356
C43
JALLCON (M) SDN BHD V
NIKKEN METAL (M) SDN BHD
(NO 2)
[2001] 5 MLJ 716
C44
NEOH KHOON LYE V TRANSINTAN SDN BHD
[2002] 6 MLJ 8
C45
ANTARA ELEKTRIK SDN BHD
V BELL & ORDER BHD
[2002] 3 MLJ 321
C46
MULTIGUNA CONSTRUCTION
& DEVELOPMENT SDN BHD v
HICOM MENANG
PROPERTIES SDN BHD
[2002] MLJU 697
C47
ZASALIM DEVELOPMENT
SDN BHD V LUM SIEW & SONS
SDN BHD
[2002] 7 MLJ 119
116
C48
BBR CONSTRUCTION
SYSTEMS (M) SDN BHD v
MAXDOUBLE
CONSTRUCTION (M) SDN BHD
[2002] MLJU 104
C49
PEOPLE REALTY SDN BHD v
RED ROCK CONSTRUCTION
SDN BHD & ANOR
[2002] MLJU 543
C50
HAP AIK CONSTRUCTION
BHD v HPC ENGINEERING (M)
SDN BHD
[2002] MLJU 105
C51
JKP SDN BHD V PPH
DEVELOPMENT (M) SDN BHD
[2003] 6 MLJ 192
C52
RIBARU BINA SDN BHD &
ANOR v BAKTI KAUSAR
DEVELOPMENT SDN BHD &
ANOR
[2003] MLJU 385
C53
JOO LEONG TIMBER
MERCHANT V DR JASWANT
SINGH A/L JAGAT SINGH
[2003] 5 MLJ 116
117
C54
PERNAS OTIS ELEVATOR CO.
SDN BHD v SYARIKAT
PEMBENAAN YEOH TIONG
LAY SDN BHD
[2003] MLJU 394
C55
C56
TRAVELSIGHT (M) SDN BHD
& ANOR V ATLAS CORP SDN
BHD
[2003] 6 MLJ 658
NAFAS ABADI HOLDINGS SDN
BHD v PUTRAJAYA
HOLDINGS SDN BHD & ANOR
C57
[2004] MLJU 148
TAHAN STEEL CORP SDN
BHD V BANK ISLAM
MALAYSIA BHD
[2004] 6 MLJ 1
C58
SK STYROFOAM SDN BHD V
PEMBINAAN LCL SDN BHD
[2004] 5 MLJ 385
C59
C60
KUA CHAI SING
CONSTRUCTION SDN BHD
LWN UPHA
PHARMACEUTICAL
MANUFACTURING (M) SDN
BHD
[2004] 1 MLJ 609
MASCOM (M) SDN BHD & ORS
V KEN GROUTING SYSTEM
SPECIALIST SDN BHD
[2004] 2 MLJ 163
118
C61
C62
TRADEBOND (M) SDN BHD
V
HALIM-O CONSTRUCTION
SDN BHD
[2005] 7 MLJ 624
TAI WAH CONSTRUCTION CO
V GOVERNMENT OF
MALAYSIA (JABATAN KERJA
RAYA SARAWAK)
[2005] 2 MLJ 442
C63
LINGKARAN LUAR
BUTTERWORTH (PENANG)
SDN BHD v PERUNDING
JURUTERA D.A.H. SDN BHD
AND OTHERS
[2005] MLJU 214
C64
HALIM BIN SUTARJO V KPMB
BUILDER BHD (FORMERLY
KNOWN AS KONSORTIUM
PELADANG (M) BHD)
[2005] 4 MLJ 273
C65
LIM TECK KONG V DR ABD
HAMID ABDUL RASHID AND
ANOR
[2005] MLJU 512
C66
VISTANET (M) SDN BHD V
PILECON CIVIL WORKS SDN
BHD
[2005] 6 MLJ 664
119
C67
KM QUARRY SDN BHD V HO
HUP CONSTRUCTION CO BHD
[2006] MLJU 157
C68
CM INDAH V UB USHABINA
SDN BHD
[2006] MLJU 426
LUXOR HOLDING SDN BHD v
HAINAL-KONYI (M) SDN BHD
C69
[2006] 3 MLJ 727
C70
KENANGA INNOVASI SDN
BHD v TOH KIM LAM &
ANORS
[2006] 4 MLJ 590
C71
C72
POH GEOK SING v HB
ENTERPRISE SDN BHD
[2006] 1 MLJ 617
I-EXPO SDN BHD v TNB
ENGINEERING
CORPORATION SDB BHD
[2007] 3 MLJ 53
TOTAL
1
0
55
16
0
120
4.5
Analysis Time of Construction Disputes Occur.
Table 4.5 shows that the times of disputes occur. There was initial phase (1%),
design phase (0%), construction phase (76%), after completion or occupation phase (25%)
and demolition phase (0%). These shows that the most of construction disputes occurred
during construction phase. This because all of construction activities start during this phase
for example payment progress, variations and the contractor have to carry out the work
with diligently and regularly. If he failed to do so, some sort of problem will come out such
as delay in completion or the contractor may terminate from the contract. Percentages time
of disputes are shows in the bar chart below.
Figure 4.5.1: Time of Construction Disputes Occur
80%
75%
70%
65%
60%
55%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
-5%
76%
25%
1%
Construction
Phase
Occupation Phase
Initial Phase
Next, the last analysis will be on analysis of the standard form of contract which are
commonly involved in construction disputes.
121
TABLE 4.6: ANALYSIS OF STANDARD FORM OF CONTRACT
Case.
Nu.
Nature of Dispute
Law Cases(1997-2007)
C1
LOW KOK HWA v SIME
DARBY URUS HARTA BHD
C2
[1997] MLJU 365
KEMAYAN CONSTRUCTION
SDN BHD V PRESTARA SDN
BHD
[1997] 5 MLJ 608
C3
USAHA DAMAI SDN BHD V
SETIAUSAHA KERAJAAN
SELANGOR
[1997] 5 MLJ 601
C4
DAEWOO CORP V BAUER (M)
SDN BHD
[1998] 7 MLJ 25
C5
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
C6
C7
VICTOR BUYCK STEEL
CONSTRUCTION SDN BHD
V
PI CORROSION
ENGINEERING SDN BHD
[1998] 7 MLJ 513
FAJAR MENYENSING SDN
BHD V ANGSANA SDN BHD
[1998] 6 MLJ 80
JKR203
PAM
FIDIC
CIDB
IEM
DSC
122
C8
LEMBAGA PELABUHAN
JOHOR V PANGLOBAL
INSURANCE SDN BHD
[1998] 6 MLJ 505
C9
MALAYAN FLOUR MILLS
SDN BHD V RAJA LOPE &
TAN CO & ANOR
[1998] 6 MLJ 377
C10
KEEN BUILDERS SDN BHD v
UTARA DUA (MALAYSIA)
SDN BHD AND THIRD PARTY
[1998] MLJU 408
C11
THE RADIO & GENERAL
TRADING CO SDN BHD V
WAYSS & FREYTAG (M) SDN
BHD
[1998] 1 MLJ 346
C12
USAHABINA v ANUAR BIN
YAHYA
[1998] MLJU 176
CHOO NGIE SIN v TAN KOK
MING
C13
[1998] MLJU 214
C14
RAMAL PROPERTIES SDN
BHD V EAST WEST-UMI
INSURANCE SDN BHD
[1998] 5 MLJ 233
123
C15
ORIENTAL STAR
ENTERPRISE SDN BHD v
TROPICAL REALTY SDN BHD
[1998] MLJU 279
C16
C17
LIM JOO THONG V
KOPERASI SERBAGUNA
TAIPING BARAT BHD
[1998] 1 MLJ 657
DMCD MUSEUM
ASSOCIATES SDN BHD v
SHADEMAKER (M) SDN BHD
[1998] MLJU 364
C18
C19
LOTTEWORLD
ENGINEERING &
CONSTRUCTION SDN BHD V
CASTLE INN SDN BHD &
ANOR
[1998] 7 MLJ 105
MURNI BUILDERS SDN BHD v
LEGENDS GOLF & COUNTRY
RESORT BHD & ANOR
[1999] MLJU 441
C20
C21
HOCK HUAT IRON FOUNDRY
(SUING AS A FIRM) V NAGA
TEMBAGA SDN BHD
[1999] 1 MLJ 65
AKITEK TENGGARA SDN
BHD V MID VALLEY CITY
SDN BHD & ANOR
[1999] 2 MLJ 625
124
C22
FASDA HEIGHTS SDN BHD V
SOON EE SING
CONSTRUCTION SDN BHD &
ANOR
[1999] 4 MLJ 199
C23
PERUMAHAN NCK SDN BHD
V ARAB-MALAYSIAN
MERCHANT BANK & ANOR
[1999] 4 MLJ 444
C24
C25
C26
C27
LIGHTWEIGHT CONCRETE
SDN BHD V NIRWANA INDAH
SDN BHD
[1999] 5 MLJ 351
ISMAIL BIN MOHD YUNOS &
ANOR V FIRST REVENUE
SDN BHD
[2000] 5 MLJ 42
HIGHCEED CORP SDN BHD V
WARISAN HARTA SABAH
SDN BHD & ANOR
[2000] 5 MLJ 33
TEKNIK CEKAP SDN BHD V
VILLA GENTING
DEVELOPMENT SDN BHD
[2000] 6 MLJ 513
C28
TRANSFIELD PROJECTS (M)
SDN BHD & ANOR V
MALAYSIAN AIRLINES
SYSTEMS BHD
[2000] 7 MLJ 583
125
C29
WAC ENGINEERING SDN.
BHD. v MUI HIKARI
CONSTRUCTION SDN. BHD.
[2000] MLJU 234
C30
CCG CONCRETE
CONSTRUCTIONS (M) SDN.
BHD. v RICH AVENUE SDN.
BHD.
[2000] MLJU 422
C31
SUM-PROJECTS (BROTHERS)
SDN. BHD. v BINA JATI SDN.
BHD.
[2000] MLJU 235
C32
MEDA PROPERTY SERVICES
SDN. BHD. v ABRIC
CLADDING SDN. BHD.
(KANDUNGAN 11)
[2000] MLJU 310
C33
C34
C35
GASING HEIGHTS SDN BHD V
PILECON BUILDING
CONSTRUCTION SDN BHD
[2000] 1 MLJ 621
CRYSTAL REALTY SDN. BHD.
v WARY HOLDINGS SDN.
BHD.
[2000] MLJU 212
MAHKOTA TECHNOLOGIES
SDN BHD V BS CIVIL
ENGINEERING SDN BHD
[2000] 6 MLJ 505
126
C36
SYARIKAT RASABINA SDN.
BHD. v PERNAS
CONSTRUCTION SDN. BND.
[2001] MLJU 321
C37
SIEMENS BUILDING
TECHNOLOGIES
(MALAYSIA) SDN. BHDv
GEAHIN ENGINEERING
BERHAD
[2001] MLJU 26
C38
MARPLAN SDN. BHD. v
HANHYO (M) SDN. BHD. &
ORS
[2001] MLJU 458
C39
CHASE PERDANA BERHAD v
PEKELILING TRIANGLE SDN.
BHD. & ORS
[2001] MLJU 389
C40
ORIENTAL ENTERPRISE
SDN. BHD. (NO. SYKT.: 99870A) v SRI HARTAMAS
CONTRACTORS SDN. BHD.
(NO. SYKT.: 187074-A)
(DAHULUNYA DIKENALI
SEBAGAI MBF
CONSTRUCTION SDN. BHD.)
[2001] MLJU 549
C41
JAK KWANG BUILDERS &
DEVELOPERS SDN BHD V NG
CHEE KEONG & ORS
[2001] 4 MLJ 391
127
C42
C43
BMC CONSTRUCTION SDN
BHD V DATARAN RENTAS
SDN BHD
[2001] 1 MLJ 356
JALLCON (M) SDN BHD V
NIKKEN METAL (M) SDN
BHD (NO 2)
[2001] 5 MLJ 716
C44
NEOH KHOON LYE V TRANSINTAN SDN BHD
[2002] 6 MLJ 8
C45
ANTARA ELEKTRIK SDN
BHD V BELL & ORDER BHD
[2002] 3 MLJ 321
C46
C47
C48
MULTIGUNA
CONSTRUCTION &
DEVELOPMENT SDN BHD v
HICOM MENANG
PROPERTIES SDN BHD
[2002] MLJU 697
ZASALIM DEVELOPMENT
SDN BHD V LUM SIEW &
SONS SDN BHD
[2002] 7 MLJ 119
BBR CONSTRUCTION
SYSTEMS (M) SDN BHD v
MAXDOUBLE
CONSTRUCTION (M) SDN
BHD
[2002] MLJU 104
128
C49
PEOPLE REALTY SDN BHD v
RED ROCK CONSTRUCTION
SDN BHD & ANOR
[2002] MLJU 543
C50
HAP AIK CONSTRUCTION
BHD v HPC ENGINEERING
(M) SDN BHD
[2002] MLJU 105
C51
JKP SDN BHD V PPH
DEVELOPMENT (M) SDN BHD
[2003] 6 MLJ 192
C52
RIBARU BINA SDN BHD &
ANOR v BAKTI KAUSAR
DEVELOPMENT SDN BHD &
ANOR
[2003] MLJU 385
C53
C54
JOO LEONG TIMBER
MERCHANT V DR JASWANT
SINGH A/L JAGAT SINGH
[2003] 5 MLJ 116
PERNAS OTIS ELEVATOR
CO. SDN BHD v SYARIKAT
PEMBENAAN YEOH TIONG
LAY SDN BHD
[2003] MLJU 394
129
C55
C56
TRAVELSIGHT (M) SDN BHD
& ANOR V ATLAS CORP SDN
BHD
[2003] 6 MLJ 658
NAFAS ABADI HOLDINGS
SDN BHD v PUTRAJAYA
HOLDINGS SDN BHD & ANOR
C57
[2004] MLJU 148
TAHAN STEEL CORP SDN
BHD V BANK ISLAM
MALAYSIA BHD
[2004] 6 MLJ 1
C58
SK STYROFOAM SDN BHD V
PEMBINAAN LCL SDN BHD
[2004] 5 MLJ 385
C59
C60
C61
KUA CHAI SING
CONSTRUCTION SDN BHD
LWN UPHA
PHARMACEUTICAL
MANUFACTURING (M) SDN
BHD
[2004] 1 MLJ 609
MASCOM (M) SDN BHD &
ORS V KEN GROUTING
SYSTEM SPECIALIST SDN
BHD
[2004] 2 MLJ 163
TRADEBOND (M) SDN BHD
V
HALIM-O CONSTRUCTION
SDN BHD
[2005] 7 MLJ 624
130
C62
C63
TAI WAH CONSTRUCTION
CO V GOVERNMENT OF
MALAYSIA (JABATAN KERJA
RAYA SARAWAK)
[2005] 2 MLJ 442
LINGKARAN LUAR
BUTTERWORTH (PENANG)
SDN BHD v PERUNDING
JURUTERA D.A.H. SDN BHD
AND OTHERS
[2005] MLJU 214
C64
C65
HALIM BIN SUTARJO V
KPMB BUILDER BHD
(FORMERLY KNOWN AS
KONSORTIUM PELADANG
(M) BHD)
[2005] 4 MLJ 273
LIM TECK KONG V DR ABD
HAMID ABDUL RASHID AND
ANOR
[2005] MLJU 512
C66
VISTANET (M) SDN BHD V
PILECON CIVIL WORKS SDN
BHD
[2005] 6 MLJ 664
C67
KM QUARRY SDN BHD V HO
HUP CONSTRUCTION CO
BHD
[2006] MLJU 157
131
C68
CM INDAH V UB USHABINA
SDN BHD
[2006] MLJU 426
LUXOR HOLDING SDN BHD v
HAINAL-KONYI (M) SDN BHD
C69
[2006] 3 MLJ 727
C70
KENANGA INNOVASI SDN
BHD v TOH KIM LAM &
ANORS
[2006] 4 MLJ 590
C71
C72
POH GEOK SING v HB
ENTERPRISE SDN BHD
[2006] 1 MLJ 617
I-EXPO SDN BHD v TNB
ENGINEERING
CORPORATION SDB BHD
[2007] 3 MLJ 53
TOTAL
6
20
0
0
0
0
132
4.6
Analysis Standard Form of Contract
Table 4.6 shows that the common types of standard form involve in construction
disputes are PAM Standard Form of Contract (36%) where most of the disputes are
related to arbitration clause for examples the arbitrator neglect in giving award of the
disputes and the argument of arbitrator selection. This followed by JKR/PWD 203
Standard Form of Contract (1%), while the other 62% are non-stated in the cases.
Besides, this study also shows that the most disputes are actually involved of private
client than the public client. Percentages of each standard form involved are shows in the
pie chart below.
Figure 4.6.1: Percentages of Standard Form of Contract which Involved in Construction
Disputes.
1%
JKR/PWD 203
63%
PAM
36%
Silent
133
4.7
Conclusion
From this analysis the nature of construction disputes, the parties involved, type
of construction involved, time of disputes occurred, and the standard form of contract
which involved in construction disputes had been identified.
There were eight (8) areas/nature of construction disputes had been identified
which are payment (51%), delay (19%), termination (18%), variation (13%), damages
(11%), performance bond (8%), default (8%), and defect (1%). From the analysis,
payment problems are the highest percentage in contributing construction disputes. The
disputes are include; unpaid architect fees by the employer, unpaid of work done due
failed on defect work, delay in progress payment, unpaid for further payment due to
debt settlement, over deduction of the sum payment (set-off), argument of the amount to
be paid, no bank guarantee which is precedent of payment, claim for payment of work
done, claim for balance of services fee, non payment for certified sums, etc.
This study also found that the most party involved in construction disputes are
the main contractors (41%), followed by the employer (39%), sub contractor (14%),
purchaser (2%), client, architect, engineer, and surveyor which each represent (1%).
Disputes between employer and main contractor is the most parties involved in
construction disputes which represent 63% followed by disputes between main
contractor and subcontractor (17%).
134
The common type of construction that involved in disputes also had been
identified which are building construction (71%), residential construction (16%),
engineering construction (11%), and industrial construction (1%). Besides, this study
also found that the most of the disputes occur during the construction phase (76%),
followed by after completion/occupation phase (22%) and during initial phase (1%).
Types of standard form of contract are also included in this study, and found
most of the disputes utilized PAM standard form of contract (36%) where the arbitration
clause as the main factor of disputes in this form of contract followed by JKR/PWD203
standard form of contract (2%) while the other 62% is silent (non-stated).
135
CHAPTER 5
CONCLUSION AND RECOMMENDATION
5.1
Introduction
This chapter attempts to conclude the research’s findings based on the analysis. In
brief, it consists of the research’s findings, research’s constrains, some suggestions for
future studies conclusion to the whole study
5.2
Research’s Findings
The objectives of this study is to develop profile of construction disputes feature
or characteristic where consists of the nature of the disputes, the parties involved, type of
the project, time of the disputes occurred, and standard form of contract for the project.
From the analysis, the common nature of construction disputes is payment which
it is represent 51% and the most disputes related to non payment of certified sums and
misleads in payment procedure according to terms of standard form of contract which
each represents 13.5%. The most party involved in construction disputes are between the
136
employer and the main contractor which represent 63%. The analysis also identified that
the most disputes occurred during construction phase (76%) and mostly involved of
building construction (71%), while PAM Standard Form of Contract is the most form of
contract that involved in construction disputes.
This research shows that the most disputes in construction industry are related to
money matter. The party who had suffered losses and expense will fight their right to get
their money and shows that money is the main factors in influencing disputes in our
construction industry for examples disputes on payment, damages and performance bond.
Therefore, Project Manager as the person responsible for managing the project
has to ensure that the progress payment will be in smooth progress without any
disruptions. Besides, Project Manager also has to ensure that the employer who are
responsible as a financier of the project and the main contractor who are responsible to
build out the project, will carrying out their duties, liabilities and rights as according to
the terms and condition of the contract.
As payment as the main nature of construction disputes, Quantity Surveyor are
also responsible in resolving this problem. In this case, quantity surveyors have to be
more responsible and careful in carrying out their work for example, measures the work
done on site in order that an acceptable figure can be agreed, record for any variations
and ensure that variation certificates is valid so that claims can be made for payment.
One of the main payment disputes are regarding to mislead on payment procedure
which is not according to the terms and condition of the standard form of contract. From
analysis, it shows that the main contractor and sub contractor, not really understand on
the payment terms specially when there was a main contract and sub contract. Hence,
137
Project Manager also can be a responsible person to ensure that both of parties above
understand on the payment procedure according to the contract which binds the parties.
As construction phase is the common time of construction disputes occur, Project
Manager has to be prepared in this stages where the Project Manager may be have to give
more attention on the main contractor. For examples ensure the main contractor carrying
out their work regularly and diligently, working as according to drawing and
specifications. Project Manager also should regularly make an inspection during
construction phase to ensure that disputes can be minimize specially in building
construction.
Project manager also has to be careful on those project where utilize of PAM
Standard Form of Contract where the ‘Arbitration Clause’ is the main factor influencing
on the disputes and the disputes mostly related on the argument of the arbitrator selection
and the award by the arbitrator.
5.3
Research’s Constraints
The main constraint of this study is insufficient of time. Due to the fixed time
frame, the extent and scope of this research has been narrowed down and limited to
certain objectives. Every process has been carried out in a very fast manner, especially
during the data collection process.
138
5.4
Suggestions For Further Research
In order to achieve the objective of the study within the time frame, the profile of
construction disputes which had been develop only focus on five element which are the
nature of the disputes, the parties involved, type of construction involved, the time of
disputes and the type of standard form of contract. Therefore, this profile can be
continued by find out the types of the client and the type of procurement that the project
adopted. Besides, the construction disputes also can be analyze in the next 10 years to
make a comparison whether the payment is still the main nature of construction disputes
or not.
Since payment had been identified as the common nature of construction disputes,
further analysis on payment disputes should be done for examples, analysis the causes of
payment disputes in detail and find out the method to improve contract management in
order to reduce payment disputes.
5.5
Conclusion
By developing this profile, hopefully it will help the project manager or contract
manager in anticipate the common disputes, the features or the characteristic of the
disputes at an early stage of the project. Besides as a tool in contract management, this
profile definitely helps to prevent or minimize the disputes in Malaysian construction
industry.
139
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