CHANGES AND IMPLICATION OF NEW PAM CONTRACT (2018) WITH A PREVIOUS YEARS

Centre of Studies for Construction Faculty of Architecture, Planning and Surveying Universiti Teknologi Mara Shah Alam

CONTRACT MANAGEMENT BCM643 “Changes and Implication of New Contract (2018) with a previous contract”

Prepared for : Pn. Zainab Binti Mohd Zainorddin

Prepared by :

NAME Amirul Fahmi Bin Kamarulazmi Siti Shafiqah Binti Shaiful Yazan Rosnora Fina Binti Ismail Noor Shafikah Binti Shabudin

STUDENT ID 2017462582 2016598601 2016709616 2016709143

Date of Submission : 25 October 2019

TABLE OF CONTENTS CHAPTER 1 ................................................................................................................................................ 3 INTRODUCTION................................................................................................................................... 3 CHAPTER 2 ................................................................................................................................................ 4 CHANGES ............................................................................................................................................... 4 CHAPTER 3 .............................................................................................................................................. 12 IMPLICATION..................................................................................................................................... 12 CHAPTER 4 .............................................................................................................................................. 16 CONCLUSION ..................................................................................................................................... 16 REFERENCES .......................................................................................................................................... 17

CHAPTER 1 INTRODUCTION Pertubuhan Akitek Malaysia (PAM) - Malaysian Institute of Architects - is the national professional institute representing architects in Malaysia. PAM was founded in 1920 as the Institute of Architects Malaya. In 1948, the name and consequently the Constitution were changed to the Federation of Malaya Society of Architects (FMSA) which was allied to the Royal Institute of British Architects (RIBA). Another change in name to reflect national sovereignty, and registration under the current name, came about when PAM was registered with the Registrar of Societies on 20 January 1967.

The Institute is managed by an elected Council consisting of a President, Deputy President, Vice President, Honorary Secretary, Honorary Treasurer and 13 Council Members. Also in Council are the Immediate Past President, up to 4 nominated Past Presidents, up to 3 nominated non-Corporate member and 4 elected representatives from the Chapters. The mission statement of the Institute is "To promote the advancement of architecture and the architectural profession for the betterment of society". The Institute provides a framework for its members to operate effectively: to do, to run and to get the business of architecture within the Code of Conduct and Scale of Fees.

Since its introduction in 1969, the Pertubuhan Akitek Malaysia (PAM) standard forms of building contract are used extensively in the private sector commercial, institutional, housing and other building projects. It is estimated that 90% of the building contracts in the private sector are based on a PAM form. As such, the PAM forms have become the defacto benchmark as the Malaysian Standard Form of Building Contract from its genesis in 1969 up to their last revision in 1998.

The PAM/ISM 1969 Forms has had its fair share of criticism and judicial scrutiny. The PAM 1998 Forms did, to a large extent address the shortcomings of the previous PAM 1969 forms and continued to be popular in the later part of the last century and to date. PAM has recently introduced a new set of standard forms entitled PAM 2006 Forms to replace the PAM 1998 Forms.

Although the new forms are dated 2006, they were officially launched in 2007 and made available for use recently.

CHAPTER 2 CHANGES

2.1

Copies of Documents

For 2006 Immediately after the execution of the contract, the architect or quantity surveyor shall without charge to the contractor provide him with. 3.3(a) one of the two signed original copies of the contract document 3.3(b)two further copies of the contract drawing and 3.3(c) two copies of the unpriced contract bill. 2018 within fourteen (14) days after the award of the contract or on any dates after the award as agreed between the architect and the contractor, the architect or quantity surveyor shall without charge to the contractor provide with him. 3.3(a) two copies of the contract drawing 3.3(b) two copies of the unpriced contract bill.

For 2018, within fourteen (14) days after the award of the contract or on any dates after the award as agreed between the architect and the contractor, the architect or quantity surveyor shall without charge to the contractor provide with him. 3.3(a) two copies of the contract drawing and 3.3(b) two copies of the unpriced contract bill.

2.4

Definition of Variations

For 2006 11.1 The term "Variation" means the alteration or modification of the design, quality or quantity of the Works including 11.1(a) the addition, omission or substitution of any work; 11.1(b) the alteration of the kind or standard of any materials and goods to be used in the Works; 11.1(c) the removal from the Site of any work executed or materials and goods brought thereon by the Contractor for the purposes of the Works other than work, materials and goods which are not in accordance with the Contract; and 11.1(d) (i)any changes to the provisions in the Contract with regards to: any limitation of working hours; 11.1(d) (ii) working space; 11. 1 (d)(iii) access to or utilization of any specific part of the Site; and 11.1 (d)(iv) the execution and completion of the work in any specific order. But shall exclude any changes intended to recto' any negligence, omission, default and/or breach of contract by the Contractor and such changes shall be executed by the Contractor entirely at his own cost.

For 2018 11.1 The term "Variation" means the alteration or modification of the design, quality or quantity of the Works including 11.1(a) the addition, omission or substitution of any work; 11.1(b) the alteration of the kind or standard of any materials and goods to be used in the Works; 11.1(c) the removal from the Site of any work executed or materials and goods brought thereon by the Contractor for the purposes of the Works other than work, materials and goods which are not in accordance with the Contract; and 11.1(d) (i)any changes to the provisions in the Contract with regards to: any limitation of working hours; 11.1(d) (ii) working space; 11.1 (d)(iii) access to or utilization of any specific part of the Site; and 11.1 (d)(iv) the execution and completion of the work in any specific order. 11.1 (d) (v) the execution of temporary work but shall exclude any changes intended to recto' any negligence, omission, default and/or breach of contract by the Contractor and such changes shall be executed by the Contractor entirely at his own cost.

2.3

Relevant Event

For 2006. (23.8h) delay on the part of Nominated Sub-Contractors for the reasons set out in Clauses 21.4(a) to 21.4(w) of the PAM Sub-Contract 2006.

For 2018. (23.8h) compliance with all issued by the architect under clause 1.4,11.2, and 21.4

2.4

Architect’s review of extension of time after practical completion

For 2006 The Architect may (but not obliged to) within twelve (12) Weeks after the date of Practical Completion review and fix a Completion Date later than that previously fixed, if in his opinion the fixing of such later Completion Date is fair and reasonable having regard to any of the Relevant Events, whether upon reviewing a previous decision or otherwise and whether or not relevant event has been specifically notified by the contractor under clause 23.1.no such final review of extension of time shall result in a decrease in any extension of time already granted by the architect. In the event the fixing of such later completion date affects the amount of liquidate damage. The employer is entitled to retain, he shall repay any surplus amount to the contractor within the period of honoring certificates.

For 2018 The Architect may within twelve (12) Weeks after the date of Practical Completion review and fix a Completion Date later than that previously fixed, if in his opinion the fixing of such later Completion Date is fair and reasonable having regard to any of the Relevant Events, whether upon reviewing a previous decision or otherwise and whether or not a Relevant Event has been specifically notified by the Contractor under Clause 23. l. No such final review of extension of time shall result in a decrease in any extension of time already granted by the Architect. In the event the fixing of such later Completion Date affects the amount of Liquidated Damages the Employer is entitled to retain, he shall repay any surplus amount to the Contractor within the Period of Honoring Confiscates.

2.5

Final payment to nominated sub-contractor

For 2006 If the Architect wishes to make final Payment to any Nominated Sub-Contractor before final payment is due to the Contractor, and if the Nominated Sub-Contractor has indemnified the Contractor against all of his liabilities under the Nominated Sub-Contract, the Architect shall issue a certificate to the Contractor and the Contractor shall pay to such Nominated Sub-Contractor the amount so certified less any retention and deductions expressly provided under PAM Sub-Contract 2006. Upon such final payment, the amount stated in the Appendix as Limit of Retention Fund shall be reduced by the sum of the retention released to the Nominated Sub-Contractor.

For 2018 If the Architect wishes to make final payment to any Nominated Sub-Contractor before final payment is due to the Contractor, and if the Nominated Sub-Contractor has indemnified the Contractor against all of his liabilities under the Nominated Sub-Contract, the Architect shall issue a certificate to the Contractor and the Contractor shall pay to such Nominated Sub-Contractor the amount so certified fess any retention and deductions expressly provided under PAM Sub-Contract 2018. Upon such final payment, the Retention Fund shall be reduced by the sum of the retention released to the Nominated Subcontractor.

2.6

Contractor permitted to tender for p.c sum

For 2016 Where the Contractor carries out works for which P.C. Sums and Provisional Sums are included in the Contract Bills, the Contractor shall be permitted to tender for the same. If the tender of the Contractor for such work is accepted, it shall be considered as a Variation and the Contractor shall not be entitled to profit and attendance charges as priced under the relevant P.C. Sum, notwithstanding the provision of Clause 30.11 (c).

For 2018 Where the Contractor carries out works for which P.C. Sums and Provisional Sums are included in the Contract Bills, the Contractor shall be permitted to tender for the same. If the tender of the Contractor for such work is accepted, it shall be considered as a Variation and the Contractor shall not be entitled to profit and attendance charges as priced under the relevant P.C. Sum, notwithstanding the provision of Clause 30.11 (c). The Architect may omit any P.C. Sums, which are included in the Contract Bills, provided prior consent of the Contractor has been obtained. The Employer shall only be permitted to award the works related to such P.C. Sums to any other contractors with the consent of the Contractor.

2.7

Set-Off by Employer

For 2006 The Employer shall be entitled to set-off all cost incurred and loss and expense where it is expressly provided under Clauses 2.4, 4.4, 5. l, 6.5(e), 6.7, 14.4, 15.3(b) 15.3(c), 15.4, 15.5, 19.5 and 20. A.3. No set-off under this clause may be made unless: 30.4(a) the Architect (on behalf of the Employer) has submitted to the Contractor complete details of their assessment of such setoff; and 30.4(b) the Employer or the Architect on his behalf has given the Contractor a written notice delivered by hand or by registered post, specifying his intention to set-off the amount and the grounds on which such set-off is made. Unless expressly stated elsewhere, such written notice shall be given not later than twenty-eight (28) Days before any set-off is deducted from any payment by the Employer. Any set-off by. the Employer shall be recoverable from the Contractor as a debt or from any monies due or to become due to the Contractor under the Contract and/or from the Performance Bond If the Contractor after receipt of the written notice from the Employer

or the Architect on his behalf, disputes the amount of. set-off, the Contractor shall within twentyone (21) Days Of receipt of such written notice, send to the Employer delivered by hand or by registered post a statement setting out the reasons and particulars for such disagreement. If the parties are unable to agree on the amount of set-off within a lather twenty-one (21) Days after the receipt of the Contractor's response, either party may refer the dispute to adjudication under Clause 34.1. The Employer shall not be entitled to exercise any set-off unless the amount has been agreed by the Contractor or the adjudicator has issued his decision.

For 2018 The Employer shall be entitled to set-off all cost incurred and loss and expense where it is expressly provided under Clauses 2.4, 4.4, 5. l, 6.5(e), 6.7, 14.4, 15.3(b) 15.3(c), 15.4, 15.5, 19.5 and 20. A.3. No set-off under this clause may be made unless: 30.4(a) the Architect (on behalf of the Employer) has submitted to the Contractor complete details of their assessment of such set-off; and 30.4(b) the Employer or the Architect on his behalf has given the Contractor a written notice delivered by hand or by registered post, specifying his intention to set-off the amount and the grounds on which such set-off is made. Unless expressly stated elsewhere, such written notice shall be given not later than twenty-eight (28) Days before any set-off is deducted from any payment by the Employer. Any set-off by. the Employer shall be recoverable from the Contractor as a debt or from any monies due or to become due to the Contractor under the Contract and/or from the Performance Bond If the Contractor after receipt of the written notice from the Employer or the Architect on his behalf, disputes the amount of. setoff, the Contractor shall within twenty-one (21) Days Of receipt of such written notice, send to the Employer delivered by hand or by registered post a statement setting out the reasons and particulars for such disagreement. If the parties are unable to agree on the amount of set-off within a lather twenty-one (21) Days after the receipt of the Contractor's response, either party may refer the dispute to adjudication under Clause 36.0 The employer shall not be entitled to set-off the disputed amount until the adjudicator has issued his decision.

2.8

Antiquities Property Of Employer

For 2006 34.0 adjudication For 2018 34.0 Mediation

2.9

Meditation under PAM Rules

2006 -none New 2018 34.1 Upon the written agreement of both the employer and contractor, the parties may refer any dispute from mediation. If the parties fail to agree on a mediator after twenty-one (21) days from the date of written agreement to refer to dispute to mediation, any party can apply to the president of Pertubuhan Arkitek Malaysia to appoint a mediator. Upon appointment, the mediator shall initiate the mediation in accordance with the current edition of the PAM Mediation Rules or any modification or revision to such rules.

2.10

Mediation shall not prejudice the parties right to adjudication or arbitration

2006-none 2018 34.2 Prior reference of the dispute to mediation under Clause 34.1 shall not be a condition precedent for its reference to adjudication or arbitration by either the Contractor or Employer, nor shaft any of their rights to refer the dispute to adjudication under Clause 36.0 or arbitration under Clause 37.0 of these Conditions be in any way prejudiced or affected by this clause.

2.10

Decision of the adjudicator

For 2006 34.4 If a party disputes the adjudicator's decision, he shall nevertheless be bound by the adjudicator's decision until Practical Completion but shall give a written notice to the other party to refer the dispute which was the subject of the adjudication to arbitration within six (6) Weeks from the date of the adjudicator's decision. The adjudicator's decision shall be final and binding on the parties if the dispute on the adjudicator's decision is not referred to arbitration within the stipulated time. The parties may settle any dispute with the adjudicator's decision by agreement between the parties or by arbitration under Clause 34.5 For 2018 36.4 If a party disputes the adjudicator's decision, he shall nevertheless be bound by the adjudicator's decision until Practical Completion but shall give a written notice to the other party to refer the dispute which was the subject of the adjudication to arbitration within six (6) Weeks from the date of the adjudicator's decision. The adjudicator's decision shall be final and binding on the parties if the dispute on the adjudicator's decision is not referred to arbitration within the stipulated time. The parties may settle any dispute with the adjudicator's decision by agreement between the parties or by arbitration under Clause 37.1.

2.11

Notice deem served

For 2006 36.6Any written notice or other document shall be deemed to have been duly served upon and received by the addressee: 36.6(a) if delivered by hand, at the time of delivery; 36.6(b) if sent by ordinary mail or registered post, after three (3) Days of posting; 36.6(c) if transmitted by way of facsimile transmission, at time of transmission.

For 2018 38.2 Any written notice or other document shall be deemed to have been duly served upon and received by the addressee: 38.2(a) if delivered by hand, at the time of delivery; 38.2(b) if sent by ordinary mail or registered post, after three (3) Days of posting; 38.2(c) if transmitted by way of facsimile transmission, at time of transmission; or 38.2(d) if transmitted by way of electronic transmission, at time of transmission

2.12

Prove of notice

For 2006 In proving the giving of a written notice or any other document under or in respect of the Contract, it shall be sufficient to show: 36.3(a)in the case of hand delivery, a signed acknowledgement of receipt; 36.3(b) in the case of registered post, a receipt of posting from the Post Office; 36.3(c)in the case of facsimile transmission, that the facsimile transmission was duly transmitted from the dispatching terminal, as evidenced by a transmission report generated by the transmitting equipment.

For 2018 38.3 In proving the giving of a written notice or any other document under or in respect of the Contract, it shall be sufficient to show: 38.3(a)in the case of hand delivery, a signed acknowledgement of receipt; 38.3(b) in the case of registered post, a receipt of posting from the Post Office; 38.3(c)in the case of facsimile transmission, that the facsimile transmission was duly transmitted from the dispatching terminal, as evidenced by a transmission report generated by the transmitting equipment; or 38.3(d) in the case of electronic transmission, that the electronic transmission was duly transmitted from the dispatching terminal, as evidenced by a transmission report generated by the transmitting equipment.

2.13

Performance bond

2006 - none New added 2018

CHAPTER 3 IMPLICATION 1)

Copies of Documents

The implication of this clause are not really burden the contractor. In 2006, there are a lot of requirement that the architect want. But in 2018, they remove one sub clause which they combine it in one words but different quantities. For example in 2006, sub clause 3.3(a) stated that Contract must provide one of the two signed original copies of contract document and sub clause 3.3(b) two further copies of the contract drawing. But in 2018, sub clause 3.3(a) stated that contractor must provide two copies of the contract drawing.

2)

Definition of Variations

For this clause. There are not really obvious implication. The definition of variations have a little bit different from 2006 and 2018. In 2006, there are only four sub clause which is 11.1(d) I, 11.1(d)ii, 11.1(d)iii, and 11.1(d)iv. But in 2018 there are five sub clause, they added one more sub clause and words. The implication of this clause is the clause are more clearly to understand the terms of the contract.

3)

Relevant Event

This clause have a lot of changes. They change the content from this clause. It has same clause but different content. If we look at the PAM contract in 2006 and 2018. Clause 23.8(h) 2006 it is stated about delay on part of Nominated Sub-Contractors while 2018 stated all issued by architect under clause 1.4 11.2 and 21.4. the implication for this is maybe the content clause have change. So the contractor must not refer PAM 2006 when doing works. Contractor must alert before continue the contract.

4)

Architect’s review of extension of time after practical completion

This is quites obvious implication. In 2006 the architect can review it within twelve weeks after the date of Practical Completion but it is not really obliged. But in 2018 the review must be within twelve 12 weeks and it is obliged. it has implication to the architect that are need to give review within that time.

5)

Final payment to Nominated Sub-Contractor.

On this clause, it is have a lot of advantage to the Nominated Sub-Contractor which architect that wishes to give final payment before the main contractor did.

6)

Contractor permitted to tender for P.C Sum

In this clause they added one more words at PAM 2018 which says that architect may omit any P.C Sums included in the Contract Bills. Means that Architect can changes any of the thing in P.C Sums include in Contract Bills. It doesn’t mean that architect can do it without consent from contractor. Any changes or anything it must have consent by the other contractor.

7)

Set-off by Employer

In 2006 it is says that the employer shall not be entitled to exercise any set-off unless the amount has been agreed. But in 2018, it says that the employer shall not be entitles to set-off the disputed amount. The implication in here is the employer can be entitled to set-off only when the amount is disputed.

8)

Antiquities property of employer

In this clause, it is all change. In 2006 it is adjudication while in PAM 2018 it is Mediation. Implication of this, the senior contractor must be confused. The clause is same but the content has a lot of thing that are change. So contractor must really alert about the clause and content.

9)

Mediation shall not prejudice the parties’ right to adjudication of arbitration.

In PAM 2006, there is nothing that are related in this. But in PAM 2018, it’s is stated that the parties can dispute their right to adjudication and arbitration. Contractor has right to do adjudication and arbitration and the Architect shall not dispute about this.

10)

Decision of the Adjudicator

This content are not really change but the clause are change. Implication of this, contractor must be alert about the clause and content.

11)

Notice deem served

In this clause, can see that in PAM 2006 there is only sub clause until 26.6(c).

While in PAM 2018, it added one more sub clause that content about if transmitter by way of electronic transmission, at time of transmission. It is really convenient to the contractor for transmission. To cope with nowadays technologies, everything can be transfer or transmitted with electronic devices or online.

12)

Prove of notice

In this clause, it has same changes as notice deem served. It can be transmitted through electronic devices or online. Can be really convenient and can make contractor do work a bit easier because contractor doesn’t have to transmitted in traditional way.

13)

Performance Bond In PAM 2006, there is no performance bond. But in PAM 2018 they added it. The reasons why they added the performance bond is to protect the contractor or bind contractor for the losses.

CHAPTER 4 CONCLUSION What can conclude is, the PAM 2018 Agreement takes into consideration compliance with new laws and regulations, client reviews, and practitioners shared experiences. Then, it also adds a new Expert Determination clause as another dispute resolution tool. It is important to review the different clauses with the relevant cases in order to explain a problem relating to a specific clause or to provide a general view of some aspect of the execution of the process laid down in the contract. The PAM Contract is a generic construction contract that requires all construction projects to be applied. In additional, over the years, it has been revised in reaction and anticipation of the contracting parties industry practices, pitfalls and idiosyncrasies, background and also the Architect’s broader position as contract manager, certifier, quasi, arbitrator and public custodian in Malaysia. Most of the standard contract models evolve over time to adapt to changing conditions. The evolution from the previous form is well known and will evolve in the future again.

REFERENCES Agreement and Conditions of PAM 2006 Agreement and Conditions of PAM 2018