Tutorial 5 Answer

FACULTY OF BUILT ENVIRONMENT (FOBE)
BTQS3024 CONTRACT MANAGEMENT TUTORIAL 5
WEEK 5 (2020)
Please answer the following question based on the information from the lecture notes, reference
books or journals.
1. A construction contract enters between a Developer and Contractor for a housing

project in Seremban. In the Appendix of the PAM Contract 2018, the amount of
liquidated damages is stated “nil”. The Contractor fail to complete the Works on the
Date for Completion. The Architect issued Certificate of Non-completion due to the
delay. Explain how the developer can recover his monetary compensation.
Answer:
As there is no amount stated in the Appendix for liquidated damages, the developer
cannot impose LD on the Contractor and waiver his right under contractual claim.
However, the developer can recover the monetary compensation under common law,
claim for unliquidated damages.
2. Ali Baba Sdn Bhd is the main contractor for an affordable home project in Sepang. He
substantially sub-contract the whole Works to Mampu Construction.
Briefly explain this situation under PAM Contract 2018.
Answer:
Ali Baba is not allowed to wholly or substantially the Works under clause 17 PAM Contract
2018. Ali Baba may sub-contract the contract works to other contractors (domestic sub-
contractors) as long as the work is not substantial or significantly large. However, the sub-
contracted works are still considered under the responsibility of Ali Baba.
3. The contractor entered into lift installation nominated sub-contract with a sub-contractor.
During the implementation of the Works, discrepancies found between specification on
materials between the main contract and the sub-contract. Based on PAM Contract
2018, explain the action to be taken by the lift sub-contractor.
Answer:
Refer to PAM NSC Contract Clause 1.3, ambiguities between the Main and Sub-
contract. If there any ambiguities or inconsistencies related to the works, materials,
goods and workmanship to be carried or supplied, the Sub-contract shall prevail over
the Main Contract.
Therefore, standard of materials specified In the NSC contract shall prevail. The NSC
must construct follow the specification in the NSC documents.
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WEEK 5 (2020)
4. a.) Explain the selection of FIDIC Contract.

b.) Explain the contractor’s obligation under Clause 9.0 FIDIC Red Book.
Answer (a):
Depend on the nature on the project. Generally, the selection can look from the aspect
of employer design, contractor design, fixed price – lump sum, extend of the employer’s
involvement, turnkey or EPCC
Answer (b):
Employer is considered to have taken possession of the completed works on the date it
is scheduled to be completed.
Engineer shall issue a Taking-Over Certificate to the Contractor to certify the taking-over.
5. The contractor refused to replace the lower quality floor tile; the reason given was the
tendering period was too short. He did not have sufficient time to read through the tender
documents thoroughly. Discuss this situation.
Answer:
The Contractor cannot use this reason as the contract was awarded to him. The
Contractor was bind with the terms as stipulated in the contract documents. He should
request the extension of time for submission during tender exercise. He needs to comply
with the instruction and remove the inferior quality materials off site.
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6. Compare the 2 differences between PAM Contract 2018 (with quantities) and PAM
Contract 2018 (without quantities).
Answer:
Clause 11 - Variation
Form (With Quantities) empowers the Architect and/or the Quantity surveyor to
evaluate claims.
The QS is absent in Form (Without Quantities) although in practice a QS may be
commissioned to assist the architect in the contract administration.
Clause 12 - Quality and Quantity of works
Form (With Quantities) - Contract Bills form the basis for quantity of the works. The BQ
carry the risk of error in quantities. Since the risk of error of quantity is born by the
employer, any correction to the quantity would entitle the contractor for a VO (12.2)
Form (Without Quantities) - The Contract Sum is derived from the contractor's own
estimate of the quantity based on Drawings and Specifications. Here, the risk of error in
quantity is borne by the contractor.
Risks allocation
Form (With Quantities) – the Employer bears higher risks.

Form (Without Quantities) – the Contractor bears higher risks.
Tender Price Submission
Form (With Quantities) – very competitive as all the tenderers price based on the same
quantity stated in the Bills of Quantities.
Form (Without Quantities) – the tender price higher because the Contractor derived
the quantity based on their own working.
Discrepancies between Contract Bills and Contract Drawings
Form (With Quantities) – Contract Bills will take precedence.

Form (Without Quantities) – Contract drawings will take precedence.
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FACULTY OF BUILT ENVIRONMENT (FOBE)

BTQS3024 CONTRACT MANAGEMENT TUTORIAL 5

1. A construction contract enters between a Developer and Contractor for a housing

BTQS3024 CONTRACT MANAGEMENT TUTORIAL 5

4. a.) Explain the selection of FIDIC Contract.

BTQS3024 CONTRACT MANAGEMENT TUTORIAL 5

Clause 12 - Quality and Quantity of works

Form (With Quantities) – the Employer bears higher risks.

Tender Price Submission

Discrepancies between Contract Bills and Contract Drawings

Form (With Quantities) – Contract Bills will take precedence.

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