comparison between pwd form 203a and pwd form design and built
TRANSCRIPT
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Abstract
All standard forms of construction contract contain clauses for determination of contracts.
For example, PWD 203A forms, PWD Design and Built, PAM 2006 form and etc. It is the same
with the PWD 203A form where the PWD 203A (Rev. 10/83) has been replaced by the PWD
203A (Rev. 2007). These are the traditional forms of contract based on drawings and
specification (203) or bills of quantities (203A) produced for use in public sector or government
projects in both building and civil engineering contracts. Generally it can be said that a majority
of the risks have been transferred to the contractor under these standard forms of contract and
this remains true with the 2007 version.
The standard form is generally used in conjunction with the accompanying standard
administrative forms which have been produced specifically for use with the contract forms and
in many instances enhance the obligations contained within the conditions of contract. However,
based on a preliminary study that had been conducted for the research, it has been found out that
both of the employers and contractors may not actually realize their rights, procedures and
effects in determining the contractors employment under the new forms.
Hence, this study will focus on comparison between PWD 203a and PWD Design and
Built, procedures and effects as a result of determination of the contractors employment under
the forms.
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1.1 Introduction
A contract is a legally binding agreement between the parties identified in the agreement
to fulfill all the terms and conditions outlined in the agreement. A prerequisite requirement for
the execution of a contract, amongst other things, is the condition that all the parties to the
contract accept the terms of the claimed contract. Construction contracts are basically different
from major service contracts. There are various types of construction contract. The choice of
contract depends on the basis of pricing and the contract strategy that best meets the project
objectives. The various types offer different ways of handling pricing, risk transfer,
responsibility for performance, cost certainty, and complexity.
The purpose of standard forms of contract is to facilitate the contractual arrangements
between actors in a project. Standard forms of contract are readymade terms and conditions
when making a contract (Kwakye 1997). The standards vary from country to country and from
one type of project to another. These standards are generally used and accepted by different
contracting parties. It would be practically impossible to devise a standard form of contract that
would take account of all eventualities that might occur in a construction project (Andersson andGunnarsson, 2002). Standard forms of contracts are often criticized as being a compromise
containing some defective aspects. However, the advantage of their adoptions is that with the
passage of time, persons using them become familiar withtheir overall content as well as their
particular strengths and weaknesses (Kwakye 1997).
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1.2 Comparison between PWD (203a) and PWD (D & B)
There are different specialists or parties during the process of building procurement. It leads to
the fragmentation process in construction industry (Murdoch and Hughes, 2000). Each project
participant has particular aims and objectives and it is rare to find contract structures that
encourage harmony among these aims. According to the scale and requirement of the project the
parties may differ in types of contract. Figure 2 provides parties organization in PWD DB form
of contract and figure 3 shows parties relation in PWD 203A form of contract.
Figure 1: Organization chart of PWD DB form of contract
Client
Turnkey Contractor
Architect
Architect
C & S
Builders
C & S
Project
Engineer
Joint Venture Contractor
Project Director
M & E
Engineer
Design and
Implementation Project
Validation
Team
Accreditation
Team
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Figure 2: Organization chart of PWD 203A form of contract
Architect
Client
Contractor
Nominated Sub-Contractor
M & E Services
C & S
Engineer
Quantity
Surveyor
Safety
Officer
Superintending
Officer
M & E
Engineer
Executive
Director
Site
Supervisor
Assistant of Site
Supervisor
Assistant of Quantity
Surveyor
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MAIN PARTY ROLES PWD D & B PWD 203A
Client
Consultant
Contractor
Representative
Advisor
Stakeholder
Design Leadership
Management
Design
Administration
Site inspectorOverall responsibility
Constructors staff
Partial responsibility
Project director
Advisory group,
feasibility consultantEnd-user, general
public, tenant-
-
-
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-Consultant(architect),main contractor, joint
venture contractor,
design and buildproject manager
Contract manager,
project engineer,
supervision team,builders
Architect, C & Ssub-contractor, M &E sub-contractor,
supplier
Superintending Officer
Advisory group,
feasibility consultantEnd-user, general
public, tenantArchitect(management
function)Consultant team
manager
Architect(designfunction)
Architect, contract
administrator,
supervising officer,project administration
Clerk of workBuilder, maincontractor,
principal contractor,
executive director
Project manager, site
supervisor, builders
C&S sub-contractor,M&Esub-contractor,
quantity
surveyor, supplier
Table 1: Comparison of PWD DB and PWD 203A form of contract parties
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According to table 1; PWD DB. form, there is no consultant party which directly would
be employed by the client. In fact, the client employs the contractor to design and build which
means the consultant is included in the package of the contractor. Therefore the design
leadership, design management, administration team and site inspector roles are under
contractors responsibilities. The contract management is the method in use in PWD DB. The
contract manager controls, monitors and maintains the project since the earliest stage of a
project.
One of the benefits for the client is that the client does not have to be so active during the
project, because most of the responsibility of the project is allocated to the contractor (Sderberg
1993). Architect (management function), consultant team manager, design manager, architect
(design function), engineer, consultant, contract administrator, supervising officer, planning
supervisor, project administration, clerk of work are the roles involved in consultant which are
the subordinates of contract manager. In PWD DB the contractor is compensated for all costs
incurred. Also failing such deductions will be recovered from the performance bond or as a debt
from contractor. Identifying and controlling (by avoiding or minimizing) the risks to a project is
a vital part of managing it. This includes those risks that have been transferred to the contractor
under PWD DB contract. The reason of popularity for using this type of contract is that the client
does not take the risk as much as the contractor has.
Hence the contractor consists of a contract manager to control over the cost and time. However
in PWD 203A the client employs consultant separately which is directly linked. In this type of
contract there is a separation of construction and design. There is a designing team, which is
contracted by the client, and they shall provide the contractor with a complete design (Ashworth
1991). The contractor subordinates include executive director who is the person in charge at site
for complementation. Any problem happens during project development or any difference
between designed and built documents in details, the executive director informs the superior and
handles all.
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The executive director includes site supervisor, quantity surveyor and safety officer who occupy
positions at the site of construction. The quantity surveyor monitors all required materials
quantities, proper cost and suggests to the client. The site supervisor manages all works, workers,
daily reports (site dairy) and the quality of work. Arranging the masonries, material maintenance
and all machines installation are the site supervisors responsibilities. In occurrence of a
problem, they refer to the project manager for handling. The different method of organizing and
maintaining the project is used in PWD 203A which is project management.
The project manager controls and monitors the work through schedule of planning during
constructing. The important aspect in PWD 203A is bills of quantities. Therefore the contractor
has the responsibility to complete the work according to the requested quantities referred to the
contract documents. In PWD 203A the government is entitled to deduct such costs, expenses and
on-cost charges or any part from any monies due to the contractor or to recover it from
performance bond as debt due from the contractor. That is the reason of being popular for this
type of contract for government sector in Malaysia.
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1.3 Categories of Comparison
In this report, the comparison will be carried out based on these categories:
1. Parties who involves in payment2. Type of payment3. Interim payment stages statement4. Advance payment5. Procedure of Interim Payment6. Schedule of issuing interim certificates7. Requirement upon issuing interim certificates8. Contractors obligation in applying payment9. Procedure of payment upon completion10.Wages of workmen affects the final payment11.Retention fund/performance bond12.Payment for liquidated damages13.Payments upon termination14.Performance bond15.Direct payment to the third party16.Late payment by government/employer
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8 Contractors
obligation in applying
payment
To make a works is done and SP
can make a valuation
1. The value of works done andproperly executed
2. The amount on any valuationof variations or the
instructions by the PD
(clause 24
3. The amount in regard to theexpenditure of provisional
sums executed or expended
(clause 25)
4. The value of any goods orunfixed materials delivered
to or adjacent to the site
intended for use or to be
incorporated into the works
5. The upervision reports asrequired by the PD under
clause 13.1
9 Procedure of paymentupon completion
1.
Within 3 month after theissuance of the certificate of
practical completion, the
contractor shall submit
application to enable the final
account prepared by the SO.
If contractor failed, SO shall
forthwith make the
assessment based on available
document for the final
account
1.
Within 3 month afterissuance of the certificate of
completion of making good
defects or the certificate of
completion of maintenance
(if any), Contractor shall
submit to PD a statement of
the final account showing in
detail the value
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2. Within 3 months after theexpiry of the defects liability
period for the whole of the
works or 3 month after the
issue of the certificate of
completion of making good
defects under clause 48
hereof, SO shall issue the
final certificate that consists
of supported documents, full
particulars complete with
receipt, vouchers, final
valuation, any amount
determined in clause 31.1
3. Final payment is paid by thegovernment to the contractor.
Final payment will not be
paid unless the contractor
satisfied the SO in hisobligation due to the
workmen
2. PD proceed to verify the finalaccount based on the
document which is given by
contractor
3. If final account is verified,PD shall issues Final
certificate which consists of
balance sum
4. Final payment is paid by thegovernment to the contractor.
Final payment will not be
paid unless the contractor
satisfied the SO in his
obligation due to the
workmen
10 Wages of workmen
affects the final
payment
Wages of all the workmen has to
be paid and all contributions
under the Employment Act 1955,
The Employee;s Social Security
act 1969, The Employees
provident Fund Act 1991 and any
other laws relevant to the
employment of workmen have
been paid.
Wages of all the workmen has to
be paid and all contributions
under the Employment Act
1955, The Employee;s Social
Security act 1969, The
Employees provident Fund Act
1991 and any other laws relevant
to the employment of workmen
have been paid.
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11 Retention fund No retention fund is applied in
government standard form.
No retention fund is applied in
government standard form.
12 Payment for
liquidated damages
If the contractor fails to complete
the works by the date for
completion or within any
extended time granted pursuant to
clause 43, the SO shall issues a
certificate of non completion to
the contractor and notice the
intention of the Government to
impose liquidated and ascertained
damages that stated in appendix.
If the contractor fails to complete
the works by the date for
completion or within any
extended time granted pursuant
to clause 49, the PD shall issues
a certificate of non completion to
the contractor and notice the
intention of the Government to
impose liquidated and
ascertained damages that stated
in appendix.
13 Payment upon
termination
Base on reasonable valuation. If
contract is terminated under
clause 50 and 52, the amount to
be paid (in so far as such amounts
or items have not already been
covered by payments on accountmade to the contractor) shall be
the following:
a. The value of all work carriedout up to the date of
termination
Base on reasonable valuation. If
contract is terminated under
clause 50 and 52, the amount to
be paid (in so far as such
amounts or items have not
already been covered bypayments on account made to the
contractor) shall be the
following:
a. The value of all work carriedout up to the date of
termination
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b. The amounts payable inrespect of any preliminary
items so far as the work of
service comprised therein has
been carried out or performed
and a proper proportion of
any such items which have
been partially carried out or
performed
c. The cost of materials or goodsreasonably ordered for the
works which have been
delivered to the contractor or
of which the contractor is
legally liable to accept
delivery
d. A sum being the amount ofany expenditure reasonably
incurred by the contractor inthe expectation of completing
the whole of the works in so
far such expenditure has not
been recovered by any other
payments
e. The reasonable cost of anyprotection works and removal
of equipment and site
facilities pursuant to
termination as provided under
the contract.
b. The amounts payable inrespect of any preliminary
items so far as the work of
service comprised therein
has been carried out or
performed and a proper
proportion of any such items
which have been partially
carried out or performed
c. The cost of materials orgoods reasonably ordered for
the works which have been
delivered to the contractor or
of which the contractor is
legally liable to accept
delivery
d. A sum being the amount ofany expenditure reasonably
incurred by the contractor inthe expectation of
completing the whole of the
works in so far such
expenditure has not been
recovered by any other
payments
e. The reasonable cost of anyprotection works and
removal of equipment and
site facilities pursuant to
termination as provided
under the contract.
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14 Performance bond If the contractor fails to performs
any of his obligations under the
contract and such failure is non
remedied in accordance with this
contract, the government shall be
entitled to call upon the
performance bond, wholly or
partially.
The performance bond may be
released or refunded to the
contractor upon the completion of
works.
If the contractor fails to performs
any of his obligations under the
contract and such failure is non
remedied in accordance with this
contract, the government shall be
entitled to call upon the
performance bond, wholly or
partially.
The performance bond may be
released or refunded to the
contractor upon the completion
of works.
15 Direct Payment to the
third party
Government shall paid the
nominated sub
contractor/suppliers according to
interim certificates/final
certificates
Applied in direct payment to the
contractors consultants. Forthe
purpose of payment to the
consultant, the contractor and the
consultant shall enter an
irrevocable Deed of Assignment
for the assignment of any moneydue to the consultant to be paid
directly by the government.
16 Late payment by
employer/government
No provision No provision
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Conclusion
In conclusion, the main differences in construction contract are the extent to which the
client is responsible for the management of the project, risk allocation and the internal
responsibilities of the project members. According to the comparison which is given above, the
roles link are depended on the type of contract and it would lead the liabilities and risk to the
parties. In PWD DB, contractors responsibilities vary from PWD 203A. The contractors
responsibilities in PWD DB are the design leadership, design management, administration team
and site inspection roles.
The traditional contractual arrangement sets out the legal relationship the parties wish to
establish and the rights, obligations and procedures for resolving contractual disputes .There are
several factors that affect what type of contract is suitable for a certain project such as the
amount of involvement from the client, the location of the project, technical complexity.
The project manager controls and monitors the work through schedule of planning during
constructing.
The trend of the faster development of the construction industry in Malaysia make Design &
Build contract more familiar and efficient because it may avoid the delay in completing the
project. The increasingly of complex projects, and the search for quicker and cheaper solutions
and achievement of value for money will influence the need for new organisational and
management methods. This will have a positive influence in terms of the integration of main
project stakeholders and phases, as well as the ultimate success of the entire construction project.
In an initial stage of the design phase, the client has to adopt a suitable contractual arrangement
for the project and a corresponding standard form of contract in order to attain the proper
management and organization in project.
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References
Malaysian Construction and Contract Law, Retrieved from
http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-
forms/p-w-d-form-of-contract-203-2007/
Determination Of Contractors Employment UnderPWD 203a (Rev. 2007) And PAM2006 Standard
Forms Of Contract Retrieved from
http://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdf
http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdfhttp://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdfhttp://fab.utm.my/files/2012/07/ThesisUGBQS2010ChenKianMun.pdfhttp://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/http://simplymalaysia.wordpress.com/standard-forms-of-contract/domestic-standard-contract-forms/p-w-d-form-of-contract-203-2007/