Assignment

MBG 1243 Construction Contract Studies 1

Lecture : En Norazam Othman

Comparative analysis on clauses concerning payment and

obligations:
1. PWD Form 203A
2. PWD Form DB (Rev. 2007)
3. PAM Contract 2006 (With Quantities)

NAZIB FAIZAL (MB101105)

Faculty of Build Environment
Course : MSc- Construction Contract Management

MB101105-Nazib Faizal

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

General view in payment obligation

Clauses that related to the payment obligation are in Table 1. PAM 2006 governs the payment in
clause 30. PWD 203A governs the payment in clause 28, and PWD DB governs payment in
clause 31, 36, 53, 55, and 57.
Table 1 Clauses that related to the payment obligation

N
o
1

Standard
Form
PAM 2006

PWD 203A

PWD DB

Clause
25
26
30
37
28
31
54
60
31
36
53
55
57
63

Description
Determination of contractors employment by employer
Determination of own employment by contractor
Certificates and payment
Performance bond
Payment to contractor and interim certificates
Final account and payment certificate
Payments upon termination
Payment to nominated sub-contractor or supplier
Default in payment of wages
Direct payments to contractors consultants
Interim payments
Effect of PDs certificates and payment by government
Advance payment
Payments upon termination

In this assignment, I would like to compare base on:

1. Parties who involves in payment obligation
2. Type of payment
3. Interim payment stages statement
4. Advance payment
5. Procedure of Interim Payment
6. Schedule of issuing interim certificates
7. Requirement upon issuing interim certificates
8. Contractors obligation in applying payment
9. Procedure of payment upon completion
10. Wages of workmen affects the final payment
11. Retention fund/performance bond
12. Payment for liquidated damages
13. Payments upon termination
14. Performance bond
15. Direct payment to the third party
16. Late payment by government/employer

MB101105-Nazib Faizal

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

Comparison

N
o
1

Item

PAM 2006

PWD 203A

PWD DB

Parties who involves

in payment
obligation:
Type of payments
Interim payment
stages statement
Advance payment

parties involves
1. Contractor
2. Superintending Officer(SO),
or SOs representatives
3. Employer
Stages
Stated in appendix

parties inv
1. Contra
2. Project
3. Employ

2
3

parties involves:
1. Contractor
2. Architect
3. Quantity Surveyor
4. Employer
Stages
Stated in appendix
No advance payment

No advance payment

Procedure:
1. Contractor submit a payment
application at the interim
claim interval as stated in the
Appendix
2. Architect and Quantity
consider and ascertain the
amount in 21 days
3. Architect issues the interim
certificates base on
consideration and certain
amount
4. Employer pay the contractor
base on interim certificates
issued by architect
21 days

Procedure:
1. Contractor shall complete the
work as in Appendix
2. Regarding to the complete
work, SO shall make
valuation of the complete
work in 14 days
3. SO issuing interim certificates
4. Government pays the
contractor base on interim
certificates

25% of the
sum
Procedure
1. Contra
interim
2. PD con
the am
3. PD iss
payme
4. Govern
contrac
certific

14 days

28 days

Within the period of honouring

certificates
Complete details and particulars
as required by the Architect and
Quantity Surveyor

Stated in appendix, if it not stated

= 30 days
To make a works is done and SP
can make a valuation

Stated in a
stated = 30
1. The va
proper
2. The am
of varia
instruc
(clause
3. The am
expend
sums e
(clause
4. The va
unfixed
to or ad

4
5

Procedure of interim
payment

Schedule of issuing
interim certificates
Schedule of interim
certificates payment
Contractors
obligation in applying
payment

7
8

Advance p
Stated in a

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

N
o

Item

PAM 2006

PWD 203A

PWD DB

5.

10

Procedure of
payment upon
completion

Wages of workmen
affects the final

1. After six month after practical

completion of the works, the
contractor shall send all
documents necessary for
preparing the final count to
Architect and Quantity
Surveyor
2. If the parties are agree in
final account, then architect
shall issues penultimate
certificate for the release of
the retention sums and any
other outstanding sum
3. Within 21 days after the
period oh honouring
certificates for the payment
of the penultimate certificate
and within 21 days after the
certificate of making good
defects has been issued, in
the event no penultimate
certificate has been issued;
the final certificate shall be
issued by architect
4. Final certificate are issued
which consists of final
account and the total sums
certified in previous payment
certificates
5. If any difference between
balance due to contractor
and employer, the balance
shall be payable by the
employer to the contractor
within the period of
honouring certificates
Final payment is not affected by
wages matter between the

intende
incorpo
The up
require
clause
Within
issuan
comple
defects
comple
(if any)
submit
the fina
detail t
PD pro
accoun
docum
contrac
If final
shall is
which c
sum
Final p
govern
contrac
not be
contrac
his obl
workm

1. Within 3 month after the

issuance 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
2. Within 3 months after the
expiry 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 the
government to the contractor.
Final payment will not be paid
unless the contractor satisfied
the SO in his obligation due
to the workmen

1.

Wages of all the workmen has to

be paid and all contributions

Wages of
be paid an

2.

3.

4.

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

N
o

Item

PAM 2006

PWD 203A

PWD DB

payment

workmen that have been

employed by the contractor,
workmen employed by sub
contractor, labor, and etc

11

Retention fund

under the
The Emplo
act 1969, T
provident F
any other
employme
been paid.
No retentio
governme

12

Payment for
liquidated damages

Retention fund will release after

Architect issued Pnultimate
Certificate. Performance bond
shall be refunded to the
contractor without interest on the
completion of works.
If the contractor fails to complete
the works by the completion
date, Architect shall issue a
certificate on non-completion.
Upon the issuance of the
certificate of non completion ,
the contractor shall pay or allow
to the employer a sum
calculated at the rate stated in
appendix

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.
No retention fund is applied in
government standard form.

13

Payment upon
termination

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.
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 account made to
the contractor) shall be the
following:
a. The value of all work carried
out up to the date of
termination
b. The amounts payable in
respect 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

If the contr
the works
completion
extended t
to clause 4
a certificat
the contra
intention o
impose liq
ascertaine
in appendi
Base on re
contract is
clause 50
be paid (in
amounts o
already be
payments
the contra
following:
a. The va
out up
termin
b. The am
respec
items
service
has be
perform
propor

Base on reasonable valuation

and put in the final account.

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

N
o

Item

14

Performance bond

15

Direct Payment to the

PAM 2006

In the event, If the employer

determine the employment of the
contractor, or if there is any
breach of contract, the employer
may call on the performance
bond and utilize and make
payments out of or deduction
from the performance bond for
the completion of and/or
rectification of the works and
reimbursement of loss, and
or/expense suffered by the
employer.
In the event, if the contractor
determines his own employment,
the employer shall return the
performance bond to the
contractor for cancellation.
No provision for direct payment

PWD 203A

PWD DB

which have been partially

carried out or performed
c. The cost of materials or
goods 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 of
any expenditure reasonably
incurred by the contractor in
the 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 any
protection works and removal
of equipment and site
facilities pursuant to
termination as provided under
the contract.
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.

which
carried
c. The co
goods
for the
been d
contra
contra
accept
d. A sum
any ex
incurre
the exp
comple
works
expend
recove
payme
e. The re
protec
remov
site fac
termin
under
If the contr
any of his
contract an
remedied
this contra
shall be en
performan
partially.
The perfor
released o
contractor
of works.

Government shall paid the

Applied in

Group Assignment 1-MBG 1223 Land, Planning, and Environmental Law

N
o

16

Item

PAM 2006

PWD 203A

PWD DB

third party

to the subcontractor/consultants

nominated sub
contractor/suppliers according to
interim certificates/final
certificates

Late payment by
employer/governmen
t

Employer shall pay interest

basen on the Maybank Lending
Tate plus one percent

No provision

contractor
purpose o
consultant
the consul
irrevocable
for the ass
due to the
directly by
No provisi