FACULTY OF BUILT ENVIRONMENT

DEPARTMENT OF QUANTITY SURVEYING

ATGB3663
BUILDING ACTS AND CONTRACTS
ASSIGNMENT 1
STANDARD FORM OF BUILDING CONTRACTS

COURSE/GROUP: DQS2_04

NO. NAME STUDENT ID

1. LOW ZHENG YONG 16WVD00246

2. NIEH ZEE HENN 16WVD0

Table of Contents
INTRODUCTION ..................................................................................................................... 3
STANDARD FORM OF CONTRACT MALAYSIA ............................................................... 4
1.1 INTRODUCTION ....................................................................................................... 4
1.1.1 Public Works Department (PWD) ............................................................................ 4
1.1.2 Pertubuhan Arkitek Malaysia (PAM) ....................................................................... 4
1.2 COMPARISONS ........................................................................................................ 5
1.2.1 Applications .............................................................................................................. 5
1.2.2 Clauses/Contents ....................................................................................................... 5
1.2.3 Challenges/Conflicts ................................................................................................. 6
INDIVIDUAL CONCLUSIONS ............................................................................................... 9
LOW ZHENG YONG (16WVD00246) ................................................................................ 9
INTRODUCTION

In Malaysia, there are at least four Standard Forms of contract being used namely PWD
(Public Works Department), PAM (Pertubuhan Arkitek Malaysia), CIDB (Construction
Industry Development Board), and IEM (Institution of Engineers Malaysia) Standard Form of
Contract. These standard forms of contract which are predominantly formulated and published
by authoritative bodies of the industry, as well as recognised by the contracting parties, are
among the most popular choice of standard form of contracts being used among industry
leaders. And they evolve and develop behaviours depending on the history and development
of construction industry in the world, especially in Malaysia. (Fray,2011)

For a relatively small country, Malaysia boasts of quite a number of Standard Forms of
Contract in the engineering/construction field. This may or may not augur well for the industry
as a whole since these Standard Forms are being supplemented by an increasing number of
modified or bespoke forms. This may also reflect on the extent of fragmentation of the
industry. Nevertheless, for the purposes of this paper, it may be prudent to review the
fundamental forms under the following categories:

- government/public sector contracts;

- private sector contracts; and
- contracts of an international nature. (Klrca, 2015)

In this report, we are going to discuss about the characteristics of two standard forms of contract:
PWD and PAM contracts. As well as researching related case study of either these two standard
forms of contract.
STANDARD FORM OF CONTRACT MALAYSIA
1.1 INTRODUCTION

1.1.1 Public Works Department (PWD)

All standard forms of construction contract contain clauses for determination of contracts. For
example, PWD 203A, PWD Design and Built, PAM 2006 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 a civil engineering contracts. Generally, it can be said that most of the risks have
been transferred to the contractor under these standard forms of contract and this remains true
with the 2007 version. These contract forms are proven successful in generally project unlike
CIDB form.

1.1.2 Pertubuhan Arkitek Malaysia (PAM)

The Malaysian Institute of Architects (Pertubuhan Arkitek Malaysia PAM) form of
contract for building works are by far the most often adopted standard forms of contract used
for building works in the Malaysian private sector. PAM 2006 is the third generation of the
PAM standard form has been adapted greatly from the first generation version known as PAM
1969. The first edition was for practical purposes a lightly amended version of the JCT 1963
standard form of building contract. PAM 2006 comes in two versions, with quantities and
without quantities and it was launched on April 2007. The latest edition has received mixed
reviews from the industry. Many consider it still to remain cluttered with deficiencies and
glaring omissions which many construction and legal practitioners still consider difficult to
comprehend and appear to have been carried through from earlier editions.

Depending upon your point of view you will either consider the latest edition of this form to
be more balanced in respect of risk allocation or pro-contractor in comparison with earlier
editions such as the second generation PAM 1998 version. There is now provision of elements
of contractors design in this latest version which also places greater time constraints on both
the contract administrator and contractor in the administration of the contract.
1.2 COMPARISONS

1.2.1 Applications
JKR/PWD Standard form of contract is commonly used in government or public-sector project
and they covered all building and engineering works.

Whereas, PAM standard form of contract is widely applied in private sector and traditional
general contracts. In contrast with PWD, PAM contract covered building works: PAM 98-with
quantities, PAM 98-without quantities (No Bills of Quantity), and PAM NSC 98. However,
they do not involve in Engineering construction contract (Other than buildings), package
deal/Turnkey, Management type, domestic subcontract, serial contract, periodic/term contract,
continuation control, and anything other than miscellaneous contract.

1.2.2 Clauses/Contents
PWD 203A Standard Form of Contract (Ed.1983) contains no expressed provision that
allows the Contractor to suspend the works if his payment was unduly delayed or he is not
getting his payment at all.

In the PWD 203A Form of Contract (2007), it is stipulated that the period for honouring the
certificate is 30 days from the date of the issuance of the certificate. Clause 30.1 of the PAM
Form of Contract (2006) stated that the period of honouring certificate is within 21days after
the issuance of the certificate. Any payment made later than the stipulated time frame can be
considered as late or delayed payment.

a. Sufficiency of Contract Documents:

PWD Form 203A says the Superintending Officer (S.O.) will issue instruction
regarding any discrepancies in the Contract Document. Whereas it is not stated in the
PAM Contract 2006.
b. Works programme:
PWD Form 203A says a programme of works is not provided by the S.O., the
contractor shall within fourteen days after the date of the Letter of Acceptance,
contractor must submit it to the S.O. to get his approval for the work in such forms and
details as the S.O. reasonably determined. Whereas, PAM Contract 2006 [Clause 3.5]
says the standard time period is 21 days from receipt of Letter of Award, the Contractor
shall provide to the Architect for his information, six (6) copies of the Works
programme showing the order in which he proposes to carry out the works.
 c. Submission of Performance Bond:
PWD 203A states that the Contractor shall provide the Performance Bond on the date
of the possession of Site under Clause 13.1(a). Whereas, PAM Contract 2006 states
that the Contractor shall submit the Performance Bond to the Employer before the Date
of Commencement under Clause 37.1.
d. Form of Performance Bond:
PWD 203A says Performance Bond shall be in the form as in Appendix issued by an
approved licensed band or financial institution incorporated in Malaysia according to
the Clause 13.1(a). Whereas, PAM Contract 2006 states the Performance Bond shall
be in the form as specified unless approved by Employer under Clause 37.2.

1.2.3 Challenges/Conflicts

PWD FORM OF CONTRACT 203/203A (REVISED 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 most of the risks have
been transferred to the contractor under these standard forms of contract and this remains true
with the 2007 version.

Although the forms are considered biased in favour of the Government it is evident that the
Government have been on the losing side in a number of legal and contractual disputes. 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, they enhance the obligations contained within the conditions of
contract.

Generally, the Contractor can claim for extensions to the contract period for various
circumstances deemed the Governments risks, but generally not for loss and expense as a
result of such. One other oddity is the fact that no retention money is withheld from
payments. A contractor whose employment is terminated will be blacklisted from
undertaking future Government projects and there is no provision for the contractor
determining his own employment with the Government.
It is not uncommon for these standard forms to be adopted and used in private sector projects
with amendments made to reflect the change in Employer.

It should be noted that although the PWD forms of contract are used extensively on nearly all
government projects there are some exceptions such as projects which receive funding from
the World Bank or Asian Development Bank which adopt variants of the FIDIC Forms of
Contract.

PAM CONTRACT 2006

Language Dilemmas
There can be problems with the language that is used in these standard form clauses and
offerers need to be careful and be clear in what they write. For example, 'shall' and 'may' are
two very different terms in law and it is important that the language is concise in a standard
form contract as it is legally binding.

The law often attaches on language. Words have specific meanings in contracts, and though
your eye might gloss over words that sound right, you must be aware that a simple word
change can alter your legal status. For example, use of the word "shall" has specific
connotations. If a contract says that you shall do something, that means you are obligated to
perform that action. It is legally binding language. If this word is used regarding an action
that you feel you should not be obligated to perform, ask that it be changed to "may."

Favouring one party

When you are told that a contract is standard, ask whose standard contract it is. The word
"standard" might sound like a group of attorneys somewhere agreed this is what a contract
should say, but that is never the case. The standardization could have been done on the part of
the company issuing the contract. It could be its standard contract. As such, it could favour
the company. You have a right to negotiate your own favourable terms. The moment you
hear that a company has given you a standard contract, start reading the fine print to find
areas that put you at a disadvantage.
INDIVIDUAL CONCLUSIONS
LOW ZHENG YONG (16WVD00246)
Standard forms are normally in a printed form and published by an authoritative body of
the industry which is recognised by both parties. These forms set out the terms or conditions
on which the contracts between the parties are to be carried out. It is also noted that these terms
or conditions are deemed to be agreed and are not subject to further negotiation and/or
amendment. Standard forms are generally suitable for a wide range of common projects or
works (Singh, 2004). A standard-form contract is otherwise known as standardized contract.
Standard-form contract is usually a pre-printed contract containing set clauses. Such contract
is mostly used by a business or within a particular industry by making slight additions or
modifications in order to meet the specific situation. Since a standard-form contract favours
the drafting party, they can amount to adhesion contracts. Unforeseeable contingencies
affecting performance, such as strikes, fire, and transportation difficulties can be taken care of
with the help of standard-form contract.

The standard forms of construction contracts commonly used in Malaysia include the
PAM98 form issued under the sanction of the Pertubuhan Arkitek Malaysia; JKR or PWD
forms issued by the Public Works Department of Malaysia, CIDB standard form of contract
for Building Works issued by the Construction Industry Development Board, IEM forms issued
by the Institute of Engineers of Malaysia, FIDIC forms and the ICE forms issued by the
Federation of Civil Engineering Contractors.

The Pertubuhan Akitek Malaysia (PAM) standard forms of building contract are used
extensively in the Malaysian building industry. The Malaysian construction industry is familiar
with the meanings of provisions of the PAM Forms through practice and court decisions. It is
estimated that 90% of the building contracts in the private sector are based on a PAM form
namely, the PAM/ISM 1969 Form or the PAM 1998 Form.

In 2007, PAM introduced the PAM 2006 Forms as drafted by the PAM Contract Review
Committee. It is not disputed that the PAM 2006 Forms significantly change the way the
risks for time, money matters, quality issues and dispute resolution are allocated between the
contractor, employer and consultant team. The Forms are also more procedural, requiring the
contractor, employer and consultants to strictly adhere to time provisions with the attendant
loss of rights or incurring of liabilities. The Forms were made available for use in 2008.