The legal conditionality of performance bond in Malaysian construction contract
Azizan Supardi, Hamimah Adnan and Jamaluddin Yaakob
Built Environmental Journal, Volume 4, No. 2, 2007, pp. 11-22
In construction contracts, a 'performance bond' is a bond taken out by the contractor, usually with a bank or... more In construction contracts, a 'performance bond' is a bond taken out by the contractor, usually with a bank or insurance company (in return for payment of a premium), for the benefit of and at the request of the employer, in a stipulated maximum sum of liability and enforceable by the employer in the event of the contractor's default, repudiation or insolvency. There are two types of performance bonds: Conditional bond or default bond; and Unconditional bond or on-demand bond. However, in Malaysia, the question of whether the performance bond in a construction contract is a conditional or an unconditional guarantees is still one of the issues relating to performance bond that has been discussed. Therefore, the objective of this research is to determine the phrase(s) in the Performance Bond in a construction contract that determine whether the performance bond is a conditional or unconditional on demand guarantee. In order to achieve this objective, the research was conducted by analyzing relevant court cases. From the findings, it can be concluded that unless an undisputed meaning of the words in the performance bond to make the performance bond to be purely conditional or unconditional 'on-demand' bond, most court interpreted performance bond to be an on-demand performance bond which is only conditional upon the beneficiary asserting the basis of the claim upon the issuer of the bond contending that there has been breach of contract.
Security of payment in Malaysian construction industry: issues on sub-contract's direct payment
Azizan Supardi and Hamimah Adnan
3rd International Conference on Mechanical and Electrical Technology, Dailan, China, 26-27 August 2011, pp. 407-412
In Malaysia, sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of... more In Malaysia, sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment. However, „direct payment‟ provision is applied for in most of the nominated sub-contracts and not to the domestic sub-contractors; thus the Construction Industry Payment and Adjudication (CIPA) Act is proposed. This paper, though, is to disclose the findings on legal cases and sub-contractors‟ perspective on direct payment, by preliminary analyzing the quantitative questionnaire survey to the first 81 from the identified 1,500 sub-contractors throughout the country. Before that, from 186 cases, only 5 selected cases are analysed that thoroughly addressed the judgment of direct payment. It is found out that the particularly small sized subcontractors are definitely need to enhance their knowledge of the so-called the „Security of Payment‟ Regime to benefits from the proposed Act
The adequacy of Malaysian security of payment legislation for sub-contractors in construction industry
Azizan Supardi, Hamimah Adnan and Mohammad Fadhil Mohammad
Sixth International Conference on Construction in the 21st Century, Kuala Lumpur, Malaysia, 5-7 July 2011, pp. 677-684
In Malaysia, the particularly small sized subcontractors are definitely benefited from payment provisions in the... more In Malaysia, the particularly small sized subcontractors are definitely benefited from payment provisions in the proposed Construction Industry Payment and Adjudication Act (CIPA Act). However, they need to enhance their knowledge of the so-called the ‘Security of Payment’ Regime to benefits from the Act. Due to this, this on-going research attempts to introduce payment framework to the sub-contractors, in giving the knowledge, to claim for payment. This paper, though, is to disclose the finding of the level of knowledge that the sub-contractors have to the proposed Act, by preliminary analyzing the quantitative questionnaire survey. It was found that the adequacy of security of payment framework to the particularly small sized sub-contractors needs to be produced, and the analysis on effectiveness of the various avenues incorporated in the construction contract or statutes in the other developed countries as well as the proposed Act needs to be done. However, as long as the regime remains in proposal, the sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment.
Security of Payment in Malaysian Construction Industry: Eradication of Sub-contract's Contingent Payment
Azizan Supardi and Hamimah Adnan
International Conference on Energy, Environment, Entrepreneurship, Innovation, Lanzarote, Canary Islands, Spain, 27-29 May 2011, pp. 116-121
In Malaysia, the sub-contractors have to bear with the current structure of payment mechanisms in the standard forms... more In Malaysia, the sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment. However, with.the proposed Construction Industry Payment and Adjudication Act (CIPA Act), contingent payment will be no longer valid. This paper, though, is to disclose the findings on legal cases and sub-contractors’ perspective on contingent payment, by preliminary analyzing the quantitative questionnaire survey to the first 79 from the identified 1,500 sub-contractors throughout the country. Before that, from 186 cases, only 3 selected cases are analysed that thoroughly addressed the main issue of contingent payment. It is found out that the particularly small sized subcontractors are definitely benefited from payment provisions in the proposed Act. However, they need to enhance their knowledge of the so-called the ‘Security of Payment’ Regime to benefits from the proposed Act.
Legal Comparison Between Conditional And Unconditional On Performance Bond In Malaysian Construction Contract
Azizan Supardi, Hamimah Adnan and Jamaluddin Yaakob
International Surveying Research Journal, Volume 1, No. 1, 2011, pp. 45-55
In Malaysia, during the research period of 20 years since the famous case of Teknik Cekap Sdn Bhd v Public Bank Berhad... more In Malaysia, during the research period of 20 years since the famous case of Teknik Cekap Sdn Bhd v Public Bank Berhad [1995] 3 MLJ 449 to Suharta Development Sdn Bhd v United Overseas Bank (M) Bhd & Anor [2005] 2 MLJ 762, the question of whether the performance bond in a construction contract is a conditional or an unconditional guarantees is still one of the issues relating to performance bond that has been discussed much of the time. Therefore, the objective of this paper is to determine the phrase(s) in the Performance Bond in a construction contract that determine whether the performance bond is a conditional or unconditional on demand guarantee. In order to achieve this objective, this pure legal research was conducted by content analyzing relevant court cases. From the findings, it can be concluded that unless an undisputed meaning of the words in the performance bond to make the performance bond to be purely conditional or unconditional ‘on demand’ bond, most court interpreted performance bond to be an on-demand performance bond which is only conditional upon the beneficiary asserting the basis of the claim upon the issuer of the bond contending that there has been breach of contract.
Security of Payment in Malaysian Construction Industry: Sub-contract 'Payment Upon Certification'Cases
Azizan Supardi and Hamimah Adnan
2nd International Conference on Construction and Project Management, Singapore, 16-18 September 2011, pp. 220-224
In Malaysia, the sub-contractors have to bear with the current structure of payment mechanisms in the standard forms... more In Malaysia, the sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment. However, ‘payment upon certification’ provision mostly applied for nomiinated sub-contracts and not to the domestic sub-contractors; thus the Construction Industry Payment and Adjudication (CIPA) is proposed. This paper, though, is to disclose the findings on legal cases and subcontractors’ perspective on payment upon certification, by preliminary analyzing the quantitative questionnaire survey to the first 81 from the identified 1,500 sub-contractors throughout the country. Before that, from 186 cases, only 12 selected cases are analysed that thoroughly addressed the main issue of payment upon certification. It is found out that the particularly small sized subcontractors are definitely need to enhance their knowledge of the so-called the ‘Security of Payment’ Regime to benefits from the proposed Act.
Performance bond: conditional or unconditional
Azizan Supardi, Jamaluddin Yaakob and Hamimah Adnan
2nd Construction Industry Research Achievement International Conference, Kuala Lumpur, Malaysia, 3-5 November 2009
In construction contracts, a 'performance bond' is a bond taken out by the contractor, usually with a bank or... more In construction contracts, a 'performance bond' is a bond taken out by the contractor, usually with a bank or insurance company (in return for payment of a premium), for the benefit of and at the request of the employer, in a stipulated maximum sum of liability and enforceable by the employer in the event of the contractor's default, repudiation or insolvency, as stated by Nigel M Robinson et. al. in his book, Construction Law in Singapore and Malaysia. He further added that there are two types of performance bonds: Conditional bond or default bond; and Unconditional bond or on-demand bond. However, in Malaysia, for the past 20 years and since the famous case of Teknik Cekap Sdn Bhd v Public Bank Berhad [1995] 3 MLJ 449 to the recent Suharta Development Sdn Bhd v United Overseas Bank (M) Bhd & Anor [2005] 2 MLJ 762, the question of whether the performance bond in a construction contract is a conditional or an unconditional guarantees is still one of the issues relating to performance bond that has been discussed. Therefore, the objective of this research is to determine the phrase(s) in the Performance Bond in a construction contract that determine whether the performance bond is a conditional or unconditional on demand guarantee. In order to achieve this objective, the research was conducted by analyzing relevant court cases. From the findings, it can be concluded that unless an undisputed meaning of the words in the performance bond to make the performance bond to be purely conditional or unconditional 'on-demand' bond, most court interpreted performance bond to be an on-demand performance bond which is only conditional upon the beneficiary asserting the basis of the claim upon the issuer of the bond contending that there has been breach of contract.
Legal Analysis on Malaysian Construction Contract: Conditional versus Unconditional Performance Bond
Azizan Supardi, Hamimah Adnan and Jamaluddin Yaakob
Journal of Politics and Law, Volume 2, No. 3, 2009, pp. 25-34
In Malaysia, the question of whether the performance bond in a construction contract is a conditional or an... more In Malaysia, the question of whether the performance bond in a construction contract is a conditional or an unconditional guarantees is still one of the issues relating to performance bond. Therefore, the objective of this research is to determine the phrase(s) in the Performance Bond in a construction contract that determine whether the performance bond is a conditional or unconditional on demand guarantee. In order to achieve this objective, the research was conducted by analyzing relevant court cases. From the findings, it can be concluded that unless an undisputed meaning of the words in the performance bond to make the performance bond to be purely conditional or unconditional 'on-demand' bond, most court interpreted performance bond to be an on-demand performance bond which is only conditional upon the beneficiary asserting the basis of the claim upon the issuer of the bond contending that there has been breach of contract.
Sub-Contractors' readiness on the Malaysian security of payment legislation in construction industry
Azizan Supardi. Hamimah Adnan and Mohammad Fadhil Mohammad
International Conference on Construction and Project Management, Chengdu, China, 16-18 November 2010, pp. 248-252
In Malaysia, subcontractors are definitely benefited from payment provisions in the proposed Construction Industry... more In Malaysia, subcontractors are definitely benefited from payment provisions in the proposed Construction Industry Payment and Adjudication Act (CIPA Act). However, the particularly small sized sub-contractors need to enhance knowledge of the so-called the ‘Security of Payment’ Regime to improve their awareness of the benefits of the Act. Due to this, this on-going research attempts to introduce balance and proper guidelines to the sub-contractors, in giving the knowledge, to claim for payment and the main contractors able to make prompt payments. Before that, the research may first identify the payment provisions in the standard forms of contracts as well as in domestic sub-contracts especially on Contingent Payment, and exploring the problems and legal issues relating to payment default. Then, by determining the level of knowledge that the sub-contractors have to the proposed CIPA Act, and analysing the various avenues which improve the payment problem in the construction industry those have been incorporated in the construction contract or statutes in the other developed countries as well as the proposed CIPA Act, the aim may be achieved. The purpose of this paper, though, is to disclose the finding of the first objective of the on-going research. In the standard forms of construction contracts, currently, the payment structure to the sub-contractors are divided into three: payment upon certification, direct payment from the employer, and contingent payment or conditional payment. As long as the Malaysian ‘Security of Payment’ Regime remains in proposal, the sub-contractors have to bear with the current structure of payment mechanisms.
Security of Payment Regime in Construction Industry: Are Malaysian Sub-Contractors Ready?
Azizan Supardi, Hamimah Adnan and Mohammad Fadhil Mohammad
The Built & Human Environment Review, Volume 4, Special Issue 1, 2011, pp. 122-137
In Malaysia, the particularly small sized sub-contractors are definitely benefited from payment provisions in the... more In Malaysia, the particularly small sized sub-contractors are definitely benefited from payment provisions in the proposed Construction Industry Payment and Adjudication Act (CIPA Act), but need to enhance their knowledge in order to improve their awareness of the benefits of the Act. Accordingly, this on-going research attempts to introduce proper guidelines to the sub-contractors, in giving the knowledge, to claim for payment. Firstly, the research explored the problems and legal issues relating to payment default in law cases and standard forms of contract. By downloading from the Malayan Law Journal, cases that indicated the issues of payment to the subcontractors, were analyzed. It is found that on its relevancy, the adjudicator shall be equipped enough with the knowledge on the issues to become a good and reliable adjudicator, as well as sub-contractors will need to enhance their knowledge on the issues of payment in order to be successful in benefitting the proposed CIPA Act. However, as long as the CIPA Act remains in proposal, the sub-contractors have to bear with the knowledge of the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment.
Value Management: An Extension of Quantity Surveying Services in Malaysia
Conference Paper
Value Management (VM) initially started in early 1940s in the US manufacturing industry has increasingly... more
Value Management (VM) initially started in early 1940s in the US manufacturing industry has increasingly becoming popular within the construction industry community internationally. It has been widely accepted as an important tool in the management of projects. The structured, systematic and multi-disciplinary approach in decision making process is a niche for VM in delivering better value for money project to the client investment. It would appear to be gaining some momentum as an essential management tool in the Malaysian construction sector especially in the quantity surveying practice. Quantity surveyors increasing involvement in VM provides an opportunity for the profession to re-model some of its traditional services in a more positive light and develop leading-edge skills and promote the profession. International practice has associated VM to be part of services offered in the quantity surveying practice; especially in UK has proven to be a natural progression of QS profession.
The introduction of VM as early 1980’s in Malaysia combined with increasing demand for construction project to facilitate nation progress is shedding a positive light for quantity surveying profession to take lead in developing VM as one of their niche area. Therefore, the quantity surveying profession having the opportunity to take lead of this service which reflect their traditional attributes for providing the best value-for-money advise to the client. This paper shall discuss on the development of VM in Malaysia and the challenges VM face services in QS firm to remain ahead of their competitors.
Download (.pdf) Anexo 1: Metodología de la encuesta
HAMELIN, Philippe ; MARTIN, Ceydric ; BOLOGNA Eduardo (2007) " Anexo 1: Metodología de la encuesta", in DOMENACH, Hervé; ARZE, Hugo; CELTON, Dora; HAMELIN, Philippe, Movilidad y procesos migratorios en el espacio de frontera argentino-boliviana, University Press of Córdoba, Córdoba, Argentina 274 p., p. 219-270
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FUSING 4D MODELLING AND LASER SCANNING FOR CONSTRUCTION SCHEDULE CONTROL
by Yelda Turkan
The construction industry remains one of the riskiest of all. This risk is mainly the result of a poorly controlled,... more The construction industry remains one of the riskiest of all. This risk is mainly the result of a poorly controlled, and thus uncertain, environment. For instance, construction progress is often improperly controlled, resulting in some unnoticed errors with considerable impact on later project activities, and ultimately project success. Better progress control requires, among other things, better project three-dimensional (3D) as-built status control. Until recently, comprehensive and accurate 3D as-built status control remained almost impossible because the lack of adequate technology made it too time- and labour-intensive. However, the progress made in the last two decades in 3D (even 4D) modelling, and more recently in laser scanner (and also photogrammetry), is such that fast and accurate 3D as-built status control is now conceivable. In this paper, a system for automated construction progress control using laser scanning and 4D modelling is presented. Given a laser scan of a construction site and its acquisition date, the system quasi-automatically recognizes the building elements that (1) are expected to be built at that date and (2) visible in this scan. Results from multiple scans obtained on the same date but from different locations can be aggregated, and the combined recognition results are used to automatically infer site progress status, and consequently update the schedule. Experimental results demonstrate these features and the significant potential of this approach.
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Mapping of sustainability education to construction related curricula: a case study of quantity surveying (QS) degree programme
Refereed Conference Paper
Ekundayo, D., Zhou, L., Udeaja, C., Pearson, J. and Perera, S. (2011), ‘Mapping of sustainability education to construction related curricula: a case study of quantity surveying (QS) degree programme’, Proceedings of the RICS COBRA Research Conference, University of Salford, UK, 12-13 September 2011, pp. 698-707.
An effective response is required to climate change and the steady diminution of resources of our natural world. We... more
An effective response is required to climate change and the steady diminution of resources of our natural world. We are all situated within and dependent upon the Built Environment for our survival. We all benefit from buildings and infrastructure. The creation, refurbishment and maintenance of this environment is a £100 Billion industry. Each new build operation, every refurbishment and the operation of existing systems all consume resources, in many cases scarce and non-renewable. What is vital is awareness in those actually responsible for the creation and renewal of the facilities referred to above? There can only be a concerted effort at sustainable building when there is genuine, informed, concern on the part of all members of the construction team. Perhaps we should look to our providers of construction-related education to instil students with increasing awareness of the issues. The current study examines the extent to which there is appreciation of issues of sustainability amongst educators and the extent of their inclusion within the curricula of (in this case) Quantity Surveying students at a northern university chosen for the study. The literature review findings and results from the content analysis of the series of interviews conducted suggest the level of inclusion appears to be low. This supports findings from the recent RICS research, which suggested that sustainability may be evident across only 3-5% of the curricula of most Quantity Surveying programmes, and incorporated at a basic level only.
Keywords: Carbon, construction education, quantity surveying, stakeholders, sustainability development
Mapping RICS quantity surveying competencies to curricula of RICS accredited programmes
Refereed Conference Paper
Perera, S., Pearson, J. and Ekundayo, D. (2011), ‘Mapping RICS quantity surveying competencies to curricula of RICS accredited programmes’, Proceedings of the 15th Pacific Association of Quantity Surveyors Congress, Colombo, Sri Lanka, 23-26 July 2011.
The education and training of graduate Quantity Surveyors are highly influenced by academic institutions which produce... more
The education and training of graduate Quantity Surveyors are highly influenced by academic institutions which produce the graduates and professional body such as Royal Institution of Chartered Surveyors (RICS) which sets competencies that guide both academic and industrial learning. The RICS competency documents set the requirements for candidates ready to sit the Assessment of Professional Competence (APC) but do not state the level of competency expected of a graduate. As such, it is a matter of interpretation open for dispute and debate. This research therefore examines the extent of coverage of RICS QS competencies in the programmes accredited by the RICS. A detailed case study exercise was carried out based upon 4 RICS accredited quantity surveying programmes offered by 4 leading universities in the UK to map the RICS QS competencies to the individual module specifications of the respective QS programmes. In effect, a scoring system and competency mapping matrix was devised to carry out a systematic numerical evaluation of the extent of competency mapping to curricula. The study revealed that different universities aim to achieve competencies at different levels based on their interpretations as there is no threshold standard or benchmark for level of competencies to be achieved by QS graduates completing a RICS accredited programme. It is thus recommended that a clearly defined Graduate Competency Threshold Benchmark (GCTB) should be created by the RICS who regulates the QS profession. In addition, a competency mapping framework that describes the process of the mapping of competencies to QS programme curricula should be developed to form the basis of identifying whether a programme seeking accreditation will have the necessary mapping levels to produce a graduate that will achieve this threshold benchmark.
Keywords: Academic Curricula, Competency Mapping, Graduate Quantity Surveyor, RICS QS Competencies.
A survey on the use and impact of information technology in quantity surveying service delivery in Nigeria
Refereed Conference Paper
Ibironke, O.T., Ekundayo, D. and Awodele, O.A. (2011), ‘A survey on the use and impact of information technology in quantity surveying service delivery in Nigeria’, Proceedings of the 27th Annual ARCOM Conference, University of the West of England, Bristol, UK, 5-7 September 2011, vol. 1, pp 433-442.
The construction industry has recently witnessed a paradigm shift from traditional paper-based method of service... more
The construction industry has recently witnessed a paradigm shift from traditional paper-based method of service delivery to electronic information exchange using Information Technolog (IT), at least in the western world like UK. It is now evident that the adoption of IT can enhance construction productivity and improve communications for effective decision-making and coordination among construction participants. The ability of the industry to avail itself of technology depends on the level of usage by construction participants including the Quantity Surveyor (QS) who plays a major role in the management of project success determinants, such as cost, time and quality. This research therefore evaluates the level of adoption of IT by QS in Nigeria and its impact in discharging their professional obligations to achieve improved service delivery. A review of the relevant literature using published sources was conducted to identify the current state and use of IT in the industry in various parts of the world. In order to assess the level of adoption of technology by QS in Nigeria and to evaluate its impact on their service delivery, data collected through questionnaires administered to practicing professionals were analysed and subsequently ranked using their mean item score (MIS) and the Kruskal Wallis H test. The research revealed that despite the average to high awareness of the importance of IT in improving service delivery and productivity, QS in Nigeria are still reluctant in using these technologies mainly due to the high initial cost of acquisition; lack of infrastructures to support its use and security concerns such as the susceptibility of IT system. It is concluded that the Nigerian Institute of Quantity Surveyors should act as a champion in raising the awareness of IT among its members and the Government should provide an enabling environment for its importation and usage.
Keywords: information technology, Nigeria, productivity, quantity surveyor, service delivery.
Alignment of academic and industrial development needs for quantity surveyors: the views of industry and academia
Refereed Conference Paper
Perera, S., Pearson, J., Robson, S. and Ekundayo, D. (2011), ‘Alignment of academic and industrial development needs for quantity surveyors: the views of industry and academia’, Proceedings of the RICS COBRA Research Conference, University of Salford, UK, 12-13 September 2011, pp. 676-86.
Education and training of Quantity Surveyors (QS) is subjected to conflicting pressures; firstly from Academic... more
Education and training of Quantity Surveyors (QS) is subjected to conflicting pressures; firstly from Academic Institutions, which seek to address the academic learning of students; secondly from Industry, which is the graduate employer and thirdly the Professional Body, the regulator of the profession. This can cause tensions between these main stakeholders resulting in greater levels of employer and graduate dissatisfaction and obstacles to early career development of the Quantity Surveying graduate. These problems are further exacerbated in the current economic recession. The research investigates the changing developmental needs of QS within a post recession industrial environment. These must satisfy the aspirations of industrial, academic and professional stakeholders such as the RICS. The RICS provide a comprehensive list of basic, core and optional competencies for the QS. These were comprehensively reviewed to provide the basis for the survey questionnaires with the use of an Expert Forum and literature. Two detailed surveys were conducted; one to obtain views of the industry and the other targeting academia with respect to the RICS QS competencies and the debate of “training versus education”. The research revealed that the stakeholders, mainly the employers and academics, hold diverse views of the development needs for graduate QS. There is wide spread variation in the interpretations, the expected levels of attainment and the perceptions of the level of actual achievement of competencies by graduate QSs. The research proposes a framework that enables to define expectations, ambitions, and practical constraints in QS education that will lead to better understanding, effective collaboration and greater satisfaction in producing a Quantity Surveying graduate who will be seen as fulfilling the requirements of all stakeholders.
Keywords: Academic, industry, quantity surveying competencies, quantity surveying graduate, RICS
Construction research: a field of application
by Will Hughes
Hughes, W.P. (1999) Construction research: a field of application. Australian Institute of Building Papers, 9, 51-58.
Research in construction management is diverse in content and in quality. There is much to be learned from more... more Research in construction management is diverse in content and in quality. There is much to be learned from more fundamental disciplines. Construction is a sub-set of human experience rather than a completely separate phenomenon. Therefore, it is likely that there are few problems in construction requiring the invention of a completely new theory. If construction researchers base their work only on that of other construction researchers, our academic community will become less relevant to the world at large. The theories that we develop or test must be of wider applicability to be of any real interest. In undertaking research, researchers learn a lot about themselves. Perhaps the only difference between research and education is that if we are learning about something which no-one else knows, then it is research, otherwise it is education. Self-awareness of this will help to reduce the chances of publishing work which only reveals a researcher’s own learning curve. Scientific method is not as simplistic as non-scientists claim and is the only real way of overcoming methodological weaknesses in our work. The reporting of research may convey the false impression that it is undertaken in the sequence in which it is written. Construction is not so unique and special as to require a completely different set of methods from other fields of enquiry. Until our research is reported in mainstream journals and conferences, there is little chance that we will influence the wider academic community and a concomitant danger that it will become irrelevant. The most useful insights will come from research which challenges the current orthodoxy rather than research which merely reports it.
