Assignment-EMCM (Contract Management) Q3

Name: Mohd. Norizam Bin Md. Salleh Matriculation No.
: CGS 00534317 Intake: September 2010 Assignment EMCM5103
Question 3
Your company has a 2-year, RM 80 million construction contract that has got into troubles.
The problems include: Soil problems that necessitate additional RM 5 million of concrete piles and 2-month delay. Material price was up 20%. Transportation cost was up by 30%. Shoddy work by two sub-contractors has necessitated re-work causing RM 3 million and a delay of 1 month. Long monsoon season with heavy rain and flood caused a aggregate delay of two months. The consultant modified the design which caused RM 5 million worth of re-work (including tear-down, clearing and re-build) and 2-month delay (including re-design time). Work efficiency is only 70% of original estimate The client (owner) has threatened to sue your company for the delays and claim penalties of RM 100,000 per day.
Your company may be facing huge direct financial losses and possible litigation. Your boss put the blame on the project manager, who is your colleague, and he was removed from the
Q 3 - Page 1 of 24
Name: Mohd. Norizam Bin Md. Salleh Matriculation No.: CGS 00534317 Intake: September 2010 Assignment EMCM5103
project and subsequently asked to resign. You have been assigned by the management to take over the project.
This is the golden opportunity for you to show off your skills, and to avoid the prospect of been sacked!
Describe how you would manage the contract.
Be specific, i.e., solve the problems one by one. Dont just give general approaches. You are solving a problem in this particular case study. Use all the knowledge and skills you have learnt from the Contract Management module. You are encouraged to use your initiatives.
Present your solution with the following headings: Status Definition, Solution Approach, Resolution of the legal and contractual problems, Strategy for Modern Contract Management, Solutions of problems.
(Approx. 2 to 4 marks for each of the first four sections, rest for solution section)
[TOTAL: 20 MARKS]
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Answer 3;
The original contract worth is RM 80 million and the construction contracts duration is to be completed in 2 years. Assumption was made that this is a government project, the Director of JKR is the Superintending Officer (S.O) and the power was delegated to JKR District Engineer. The project name is The Proposed Construction of Academic Building, Dental Hospital, Hostel and Infrastructure Works for the Faculty of Dentist UITM Sungai Buloh, Selangor Darul Ehsan. Also assumed that the contract is bounded by JKR (PWD) 203a conditions of contract where bill of material is form part of the contract and shall also referred to The Commercial Law of Malaysia.
Figure 1: Traditional Building Contract (BEM Bulletin, Sep-Nov 2007).
It is important to overcome the current difficulties, disadvantage and under pressure situation and turn it to a better position. The proposal to overcome this situation shall be structured as follows;
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1. Status Definition. 2. Solution Approach. 3. Resolution of the legal and contractual problems. 4. Strategy for Modern Contract Management. 5. Solutions of problems.
1. Status Definition.
This is a traditional contract where client (JKR) initiates and sanctions of a project, concept design was done by the architect and the design engineering consultant who are the one who design and prepare all the necessary document for tender. The company is now facing huge direct financial losses, progress claims was freeze due to some unresolved issues and possible litigation. The former project manager was removed from the project and I have just been assigned by the management to take over the project.
In any contract three main criteria which are the time, cost and acceptable performance with safety and sustainability are upmost important to determine the project success. In order to achieve that the commercial issue which is the cash flow and the adequate time are very-very important or else the project cannot be running smoothly. We had analysed the project current situation and it can be summarised as follows;
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Table 1: Summary of Estimated Delay and Forecast Additional Cost Incurred. No i) ii) iii) iv) v) vi) vii) viii) Description Soil Problems, additional concrete piles (fall under provisional quantities) Material price was up 20%. Transportation cost was up by 30% Delay 2 months Cost (RM) 5.0 Million 3.0 Million (Assumption) 0.3 Million (Assumption) 3.0 Million
Shoddy work by two sub-contractors has 1 months necessitated re-work Long monsoon season with heavy rain and 2 months flood The consultant modified the design which 2 months 5.0 Million caused to re-work and additional design time. Work efficiency dropped to 70% of original 2 months 1.0 Million estimate productivity (Assumption) The client (owner) has threatened to sue your Not Max 10% of company for the delays and claim penalties of effective Contract Value 8 RM 100,000 per day. yet Million (estimated) Total 9 months 25.3 Million
Note: Marked in blue Marked in red
Consultant/Client issues Contractor issues
Project progress claims have been very little since a couple of months during the monsoon and flood as the work progress is affected very badly. In the same time due to the shoddy works by our two sub-contractors, our progress claims under their portion were not being approved and not paid. These had tarnished the project cash flow very badly and had caused the payment to suppliers, sub-contractors, machineries and even the wages to our in house workers were also two months delayed. Due to this the project had loose its momentum and productivities were reduce to 70%.
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Need to carry out additional pilling works due to soil issue, estimated cost incurred RM 5 million with two months additional time. In addition JKR had requested their consultant to redesign some building section where all of this had resulted to some reworks and additional to existing job scope. This shall involve quite extensive amount of money where RM 5 million worth of re-work (including tear-down, clearing and re-build) and 2-month delay (including re-design time) shall be required.
Due to petrol/diesel hikes, natural disaster and redevelopment for those affected countries e.g. Japan, Australia, New Zealand, United States and others, currently the company need to absorb the materials and transportation escalation costs of 20% and 30% in which these had worsened the project cash flow. The project will be at lost shall we are forced to absorb all these additional cost not to mentioned the heavy penalty/LAD of approximately RM 100,000.00 per day for 9 month which is surely additional of RM 8 million (Normally, maximum LAD is limited to 10% of the contract value).
The company shall requires additional funding to finance the additional incurred cost of RM 25.3 million and may requires additional time of nine (9) months to complete all these works shall no step or action taken to resolve them via contractually approach. Additional 32% of cost from the total contract value (25.3 million / 8 million X 100 = 32%) is very huge and surely cannot be covered with the 15% (12 million) estimated net profit. In addition RM 4 million (5% of the contract value) are deducted gradually from the claims and shall be retained for 12 months after the completion date as retention money.
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Basically all the matter arises here can be portrayed in these followings figures;
Figure 3: Provisional Quantities in Conjunction to PWD Form 203a Condition of Contract Clause 26.5 to 26.7.
Chart 4: S.Os Instruction and Variation are in Conjunction to PWD Form 203a Condition of Contract Clause 5.0 to 24.0.
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Chart 3: Failure to Complete on Time (BEM Bulletin, Sep-Nov 2007).
Chart 4: Price Escalation Who Will Pay??? (BEM Bulletin, Sep-Nov 2007).
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2. Solution Approach.
I believe collaboration approaches between contractor, consultants and client is the best strategy to overcome this issues. After all Conditions of Contract in PWD Form 203a is a very established form of contract and the most important is it offers a very fair deal to all the parties involves. We can fight for our right via collaboration approach and win-win strategy.
However shall the matter have been left for a length of time and therefore some personnel that represent the parties involves might leaved the project either resigned or being assigned to another project, the solution even via collaboration also not as simple as it take especially when the person who give the instruction is no more in the picture.
The good working relations between all the parties involves i.e. the client, consultant and contractor that have the spirit of partnering and sharing the common goal objectives to complete the project within budgeted cost, scheduled time and at acceptable performance with safety and sustainability shall ease the collaboration and the negotiation of all parties in finding the best solution methods to resolves these issues.
In partnering and collaboration contract approach, it can lower the risk of time and cost overrun as the parties including the contractor, client and consultant are working together towards the completion of the project and to complete them on time. This understanding of all parties involve are also reducing the exposure to litigation. Less confrontation and a good
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working environment and trust contribute the fast solving problems before they escalate to disputes. The project performance and quality are improved because energies are focused to achieve the project goal and not misdirected to adversarial concerns.
The partners shall proactively anticipate and try to solve or avoided the problems. Variations if happen mean they are really genuine and unavoided. With a good communications and empowerment by senior management this shall be able to reduce the need of lawyers in the administration. Good communication allows all parties to resolve issues expeditiously as they can meet up frequently and this shall avoid mistake or rework. The opportunity for financial successful also increased because of non adversarial or win-win attitude on all parties.
3. Resolution of the legal and contractual problems.
It is part of a project manager responsibility find an equitable, speedy and cheap method of resolving disputes and maintains focus on the project. In my opinion collaboration and cooperative attitude among all parties involves including the client (JKR), consultant and contractor is still the best method to resolve all the issues and disputes face in this project however shall it is fails we still have other options as proposed by alternative dispute resolution approach as tabulated in Table 1, below;
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Table 2: Dispute Resolution Steps Steps 1 2 3 4 5 6 High Cost/ Hostility Low Name Prevention Negotiation Independent Expert Mediation Arbitration Litigation Process Risk allocation, Incentive for cooperation, Partnering Direct negotiation, Step negotiations Dispute review board, Standing arbitrator or Independent expert. Non-binding resolution, Mini-trial, Advisory opinion, Advisory arbitration. Binding resolution Civil Court, Judge
In my opinion and based from my previous experiences, all the issues arise here are straight forward and can be resolved in conjunction to PWD Form 203a Conditions of Contract and the Contract Document. If all parties have the spirit of partnering and sharing common goal all these issues can be amicably resolved. Despite collaboration approach, negotiation is another good approach to resolve all the crops up issues. In normal practice contractor shall approach and convince the consultant and JKR especially on the variation orders that results to schedule and commercial impacts.
The project team shall require to search for any documents that might help to support our claim on the variation, escalation cost, provisional quantities and E.O.T., The document might come in various forms e.g. Sites Instruction (if any), Notification of Change (if any), proof of any instruction written on site diary, instruction recorded in the Minute of Meetings, soil investigation report, piling records, rain records recorded in site diary and materials invoices, PWD Cost of Index for escalation cost and etc.
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Convincing the consultant earlier then the client (JKR) might also help to resolve these issues. Maybe we should approach their COW and their RE and put all the issues, stories and issues to them for their understanding and for them to chew first. This can be done over a coffee talk, golf game or even a karaoke session. That is where good communication and interpersonal skill is very important. Later the consultant may give their good recommendation to the client shall we managed to explain them properly and convincingly about the problems faced. This can be followed appending all the issues, who responsible for it and how to solve in the weekly or monthly meetings with that is attended by the consultant and the client/JKR.
It might creates a havoc as the quantities is quite big and not been highlighted in advance but this is unavoided as that should be done by the earlier project manager. We will also include all the issue arises in the coming biweekly or monthly report. After that notification about these issues can be forwarded concurrently to both the consultant and the client (JKR). In order to avoid an upset the client (JKR) we can also approach them separately. That is where in modern contract management, good relations between all parties are important as after all everybody are sharing the common goal to complete the work in time.
Theorically most of the issues arises are unavoidable and allows by the contract and therefore with a good communication skill and approach might be able to achieve a mutual understanding and solution. Shall everybody are transparent to each other, have a high respect and understanding these issues can be easily be resolved cordially.
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We shall then submit the detail justification and variation claim where normally it will be followed by a few meetings as the consultant and the client want to know these issues in more detail. Shall the consultant and the client agreed to the change order/variation and the EOT that have been submitted, another meeting shall normally be called in order to quantify and negotiate for the additional cost and EOT required.
Basically the following issues shall fall under the stipulated clause of the PWD 203a Conditions of Contract; Soil problems that necessitate additional RM 5 million of concrete piles and 2-month delay. - fall under clause 26.0 Bill of Quantities, Sub-clause Provisional Quantities 26.5, 26.6 and 26.7 and additional time should fall under clause 43.0 Delay and EOT. Material price was up 20% - fall under clause 30.0 Fluctuation of Price. Transportation cost was up by 30% - fall under clause 30.0 Fluctuation of Price. Shoddy work by two sub-contractors has necessitated re-work causing RM 3 million and a delay of 1 month fall under clause 10.1 Obligation of the Contractor sub-clause i). Long monsoon season with heavy rain and flood caused a aggregate delay of two months - Clause 43.1 b) exceptionally inclement weather and clause 57.0 Effect of Force Majeure sub-clause 57.2 c) can be used to apply for extension of time clause 43.0 Delay and EOT. The consultant modified the design which caused RM 5 million worth of re-work l(including tear-down, clearing and re-build) and 2-month delay (including re-design time). - This fall under Clause 5.0 S.O.S Instruction and Clause 24.0 Variations. To apply for extension of time clause 43.0 Delay and EOT.
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Work efficiency is only 70% of original estimate fall under 10.1 Obligation of the Contractor sub-clause i) to complete the works on time. It is the responsibility of the contractor to accelerate the works progress in order to get the work progress back to right track. The client (owner) has threatened to sue your company for the delays and claim penalties of RM 100,000 per day. fall under clause 40.0 Damages for Non-Completion but this can be avoided as most of the issues are actually subject to EOT in conjunction to clause 43.0 Delay and EOT.
In my opinion and through my past experiences dealing with various clients including JKR, all the above issues are not so serious as for most of them we have the basis to make claim for extra quantities, variation claims and EOT. I believed with the right approach, proper documentations, convincing justifications and sufficient proof and supporting documents, all these issues can be settled amicably. Most of the issues are actually allowed by the Conditions of Contract of JKR/PWD Form 203a. The most important thing we need to notify and justify to the consultant and JKR what make we feel we are entitle for the variation, additional claims on provisional sum and the EOT.
In worst scenario shall some of our request being rejected although they are allowed by the contract conditions, we can bring this matter to arbitration court. Litigation although it is legally allowed in the contract law in the other hand is not advisable as it will be carried out openly and might not favourable by the client. One thing for sure although our intention is to protect the companys right and to recover from loses we also do not want this exercise to
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tarnish any parties and our potential for future job with them and other project provider might also notice this as well and may not favourable to our action. Arbitration in the other hand shall be carried out in a close court and can be settled quietly.
4. Strategy for Modern Contract Management.
In modern contract management win-win solution approach to all the parties involves is something that everybody is looking forward to achieve best. In modern contract management traditional approach which full with adversarial confliction should be avoided. Win-lose strategy in traditional adversarial attitude might put the project in jeopardy. Conflicting does not help the project to succeed. In modern contract management all the parties involved should sharing the common goals which is to complete the project within budgeted cost, scheduled time and at acceptable performance with safety and sustainability.
Treating all the parties as smart partner can plays a key role in attaining continuous improvement especially in delivering of the construction project. The spirit of partnering approach treats contractors as own resources, motivate them, recognition of commons goal create atmosphere of trust, teamwork and goodwill which will facilitate this goals. Working in a good working atmosphere shall ease all parties in discussing sharing ideas and making a good decision shall any problem arise. By conflicting we not only will failed to solve the problems but might go deeper into trouble.
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In the other hand prolong or avoidance of problems and the issues faced are not giving the project any good. All parties should understand that we are actually in this mess together and therefore in making the project into a success all parties involves should give their best commitment and to trust each other in solving the problems and achieving the mutual goals.
All parties should sit down and discuss about the project problems and what is the best approach to resolve are the issues. For instance all parties involve should accept their fault shall any, fairly treatment to other parties, to fulfil each party obligations as what have been stipulated in the Conditions of Contract, to work as a team, and etc. in order to lead the project towards a success. Owner and contractor work together to manage the risk and achieve a better result for both parties.
Client also need to safeguards and to protect the contractors against unforeseen risks and circumstances beyond their control for their mutual benefits. The key to all of this is communication, consideration and anticipation for risk how to solve them before they occurs. Farsighted project contract management Ex-ante Incentivization that plan incentives in advance normally adopted to goverment projects where project risk are between low to medium. In the other hand Ex-post Governance were used where the risk need to be monitored closely to allow adaptation to deal with uncertainty or unforeseen events that can caused incompleteness.
The following conclusion was made by the contractor on who should be responsible for each problem arises;
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Table 3: Proposed Amicably Solution as Per Modern Contract Management Strategy. No 1 Description of Problems Responsibility of Proposed Solution To allow contractor claim for extra quantities under Provisional Quantities / re-measured items and to grant EOT. Client to issue Variation Order under Fluctuation of Price (Building Cost Index). Client to issue Variation Order under Fluctuation of Price. Main Contractor to ensure the re-works is carried out either by the sub-contractors or themselves. Client to issue EOT.
Soil problems that necessitate additional Client RM 5 million of concrete piles and 2month delay. Under Provisional Quantities)
Material price was up 20%.
Client
Transportation cost was up by 30%.
Client
Shoddy work by two sub-contractors has Main Contractor necessitated re-work causing RM 3 and submillion and a delay of 1 month. contractor
Long monsoon season with heavy rain Client and flood caused an aggregate delay of two months. The consultant modified the design which Client/Consultant caused RM 5 million worth of re-work (including tear-down, clearing and rebuild) and 2-month delay (including redesign time). Work efficiency is only 70% of original Main Contractor estimate.
Client to issue Variation Order and grant EOT
The client (owner) has threatened to sue Main Contractor your company for the delays and claim Subject to penalties of RM 100,000 per day. whether the requested EOT is sufficient or not.
Main Cont to accelerate the work at their own cost to fulfil their contractual obligation. Negotiation and request for the EOT.
Note: Marked in blue Marked in red

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5. Solutions of problems. The following is our strategy on how to settle these problems;
a) Commercial Issues; Additional RM 25.3 million estimated shall be required in order to complete the works and to pay the LAD and the statuses are tabulated below; Table 4: Estimated Commercial Impact and their Solution. No i) Description Soil Problems additional concrete piles (Under Provisional Quantities) Cost (RM) What to do 5.0 Million To notify the Consultant and JKR on Extra amount under Provisional Quantities and request EOT. 3.0 Million To notify the Consultant and (Assumption) JKR request Variation Order and EOT. 0.3 Million To notify the Consultant and (Assumption) JKR request Variation Order and EOT. 3.0 Million To notify the sub-contractors
ii)
Material price was up 20%.
iii)
Transportation cost was up by 30%.
Shoddy work by two sub-contractors has necessitated re-work. v) Long monsoon season with heavy rain and flood vi) The consultant modified the design which caused to re-work and additional design time. vii) Work efficiency dropped to 70% of original estimate productivity.
iv)
To notify the Consultant and JKR request EOT. 5.0 Million To notify the Consultant and JKR and request Variation Order and EOT. 1.0 Million Catch up plan to increase (Assumption) productivity by adding resources. viii) The client (owner) has threatened to Not effective yet Max 10% of Contract Value sue your company for the delays and 8 Million Shall request for EOT. claim penalties of RM 100,000 per (estimated) day. Total 25.3 Million Note: Marked in blue Marked in red

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The details of action and justification to be made shall be as follows;
i. Due to soil problems that necessitate additional RM 5 million of concrete piles and the project was delayed 2 months because of it. Under Bill of Quantities Contract, the concrete piles quantities should fall under clause 26.0 Bill of Quantities, Sub-clause Provisional Quantities 26.5, 26.6 and 26,7 Therefore despite we can actually claim the
additional quantities under re-measured items we can also apply for extension of time due this issue under clause 43.0 Delay and EOT.
In addition shall we refer to the case of, The Privy Council held in the case of Mitsui Construction Co v. Attorney of Hong Kong (1986) 33 BLR 1 that quantities for certain works in the BQ under re-measurement contract are wildly wrong (in this case substantially increased) and contractor was entitled to higher rates for those works.
ii. Material price was up 20% due to patrol hikes and a lot of development going on in almost in every part of the world which had push the materials cost to an upward trend. In JKR 203a there is a clause that allows claims for escalation on materials. It is under clause 30.0 Fluctuation of Price.
iii. Transportation cost was up by 30% due to patrol hikes and increase on maintenance and spare parts cost. The clause 30.0 Fluctuation of Price of the Contract Conditions shall be used.
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iv. Shoddy work by two sub-contractors has necessitated re-work causing RM 3 million and a delay of 1 month. The two sub-contractors are actually the nominated sub-contractors for this project, under clause 61.0 stated no liability to the government because of the nominated sub-contractor/supplier failure to do their job. But being our sub-contractor we can either instruct them to repair or re-do their shoddy job or we can deduct their claims and retention money and seeking the S.O. approval either to do it ourselves or to engage other sub-contractors. After all the payments to nominated sub-contractor/supplier are made direct to them deducted from the main contractor claims. Therefore shall our claim are not approved due to their shoddy job, they also shall not got their claims. Clause 60.0 Payment to Nominated Sub-Contractor or supplier.
v. Long monsoon season with heavy rain and flood caused an aggregate delay of two months. Clause 43.1 b) exceptionally inclement weather and clause 57.0 Effect of Force Majeure sub-clause 57.2 c) can be used to apply for extension of time clause 43.0 Delay and EOT.
vi. The consultant modified the design which caused RM 5 million worth of re-work (including tear-down, clearing and re-build) and 2-month delay (including re-design time). This additional works should be fall under Clause 5.0 S.O.S Instruction and Clause 24.0 Variations, where the price shall later being discussed and agreed by all parties. The agreed addition/omission shall be later be adjusted to the contract sum. To apply for extension of time clause 43.0 Delay and EOT.
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Referring to section 71 (Act 136) Contract Act 1950 stated, Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done delivered. (Emphasis supplied). Case of Aw Yong Wai Choo & Ors v. Arief Trading Sdn Bhd. & Anor [1992] 1 MLJ 166 are referred.
vii. Work efficiency is only 70% of original estimate fall under 10.1 Obligation of the Contractor sub-clause i) to complete the works on time. It is the responsibility of the contractor to accelerate the works progress in order to get the work progress back to right track.
viii. The client (owner) has threatened to sue your company for the delays and claim penalties of RM 100,000 per day. Maximum of RM 8 million as max LAD are limited to 10% of Contract Value. I believed it should fall under clause 40.0 Damages for Non-Completion but this can be avoided as most of the issues are actually subject to EOT in conjunction to clause 43.0 Delay and EOT.
The company shall required additional funding to finance the additional RM 25.3 million which consists of RM 13.3 million that we feel a claimable amounts from client due to variation to original scope of works and provisional sum and RM 3 million for repair/redo the shoddy works and RM 1 million for accelerating the works progress for catch up plan
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including increase resources e.g. manpower, machineries, longer working hours and etc and 8 million for the LAD (maximum of 10% of the contract value).
However we might be able to recover RM 3 million for the shoddy works from the two subcontractors or to instruct them to carry out the repair and redo works at their cost. Although contractually we can recover them from the two sub-contractors but there is a possibility it is not going to happen after all their performance bond is only 10% of their work value of RM 5 Million which is only worth RM 500, 000.00. Good news is the client (JKR) has not paid their work portion yet therefore the sub-contractors might not have the capacity and money to carry out the redo works.
My suggestion is, to buy the raw materials and supply required machineries in order to assist our sub-contractor but they need to supply the manpower and supervision. Later all these additional cost shall be deducted from the sub-contractors claims. One thing for sure they must be agreed but both parties and necessary notices and meeting need to be carried out to make them legally minuted in order to avoid any future argument. Another alternative is to take over the sub-contractors works and to be deducted accordingly from their contract.
Shall the cost are more we can either forfeit their performance bond and bring them to arbitration court or litigation or to absorb the excess cost..
My proposal requires us to spend extra RM 1 million from our own pocket for the catch up plan but shall this can be carried out within the approved period of EOT, this might enable us
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to avoid from paying high penalty or LAD. The partnering spirit and our effort to drive the work progress back to the right track might be sufficient to convince the consultant and client.
b) Delay Proposed EOT Required.
Below is how we strategise to resolve the delay issue;
Table 5: Showing How Many EOT Required in Completing all Problematic Issues. No i) ii) Description Soil Problems, additional (Provisional Quantities) Material price was up 20%. concrete piles Delay 2 months Month M1 M2 M3 M3
iii) Transportation cost was up by 30% iv) v) vi) Shoddy work by two sub-contractors has necessitated re-work Long monsoon season with heavy rain and flood 1 months 2 months 2 months 2 months
The consultant modified the design which caused to re-work and additional design time. vii) Work efficiency dropped to 70% of original estimate productivity viii) The client (owner) has threatened to sue your company for the delays and claim penalties of RM 100,000 per day. Total Required EOT Note: Marked in blue Marked in red
4 months
Total extension of time (EOT) required shall be as the above table, where due to long monsoon and flood (this incident had occurred) we need a replacement of two months the
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effected works can be carried out concurrently with the additional pilling works due to soil problems. For the change of design, this activity shall be carried out immediately after the piling works completed. This because the sequence of works as the pilling works needs to be completed before we could build the building structure. For this activity we are also entitled for EOT therefore in total only four months additional numbers of days are required. Two months additional duration also requires to carry out the acceleration works and one month for the repair/redo works as the result of our sub-contractors fault, we will also carry out them concurrently and to complete them within the requested EOT duration.
By doing this we shall complete all of the said activities within the four (4) months required additional periods and possibly no penalty/LAD will be imposed to us. As mentioned earlier I personally feel that with win-win approach all these issues can be amicably resolve and the common goal of completing the project within budgeted cost, scheduled time and at acceptable performance with safety and sustainability can be achieved. It is important for every party involve giving a high respect to each other right and acting accordingly in conjunction to the conditions of contract fairly for everybody benefit and towards achieving the project common goals.
All in all as other issues are more or less under control, we only need to spend additional cost of RM 1 million for the acceleration of works and shall be given VO and the provisional quantities amounted of RM 13.3 million. In which RM 5 million for additional concrete piles (provisional quantities), RM 3 million for materials escalation, RM 300 thousand for transportation escalation cost and RM 5 million for the rework due to the change in design.
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Name: Mohd. Norizam Bin Md. Salleh Matriculation No.

: CGS 00534317 Intake: September 2010 Assignment EMCM5103

Describe how you would manage the contract.

Figure 1: Traditional Building Contract (BEM Bulletin, Sep-Nov 2007).

Note: Marked in blue Marked in red

Consultant/Client issues Contractor issues

Chart 3: Failure to Complete on Time (BEM Bulletin, Sep-Nov 2007).

3. Resolution of the legal and contractual problems.

4. Strategy for Modern Contract Management.

Material price was up 20%.

Transportation cost was up by 30%.

Client to issue Variation Order and grant EOT

Note: Marked in blue Marked in red

Consultant/Client issues Contractor issues

Material price was up 20%.

Transportation cost was up by 30%.

Consultant/Client issues Contractor issues

The details of action and justification to be made shall be as follows;

b) Delay Proposed EOT Required.

Below is how we strategise to resolve the delay issue;

Consultant/Client issues Contractor issues

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