IN DEPTH STUDY OF MALAYSIAN STANDARD FORM OF
CONSTRUCTION CONTRACTS: PWD 203A VERSION 2007
Oh Chin Phang
Bachelor of Engineering with Honours
(Civil Engineering)
2010
Faculty of Engineering
UNIVERSITI MALAYSIA SARAWAK
BORANG PENGESAHAN STATUS TESIS
Judul: IN DEPTH STUDY OF MALAYSIAN STANDARD FORM OF
CONSTRUCTION CONTRACTS: PWD 203A VERSION 2007
SESI PENGAJIAN : 2009/2010
Saya, OH CHIN PHANG
(HURUF BESAR)
mengaku membenarkan tesis * ini disimpan di Pusat Khidmat Maklumat Akademik, Universiti
Malaysia Sarawak dengan syarat-syarat kegunaan seperti berikut:
1. Tesis adalah hakmilik Universiti Malaysia Sarawak.
2. Pusat Khidmat Maklumat Akademik, Universiti Malaysia Sarawak dibenarkan membuat salinan
untuk tujuan pengajian sahaja.
3. Membuat pendigitan untuk membanguankan Pangkalan Data Kandungan Tempatan.
4. Pusat Khidmat Maklumat Akademik, Universiti Malaysia Sarawak dibenarkan membuat salinan
tesis ini sebagai bahan pertukaran antara institusi pengajian tinggi.
5. ** Sila tandakan (√) di kotak yang berkenaan.
SULIT (Mengandungi maklumat yand berdarjah keselamatan atau kepentingan Malaysia seperti yang termaktub di dalam AKTA RAHSIA RASMI 1972). TERHAD (Mengandungi maklumat TERHAD yang telah ditentukan oleh organisasi/badan di mana penyelidikan dijalankan). TIDAK TERHAD Disahkan oleh
_______________________ __ ___________________________ (TANDATANGAN PENULIS) (TANDATANGAN PENYELIA)
Alamat tetap: 49, Jln Suadamai 4/1
Bdr Tun Hussein Onn, Bt 10, IR. Ting Sim Nee
Cheras, 43200, Selangor.D.E. (Nama Penyelia)
Tarikh: Tarikh:
CATATAN * Tesis dimaksudkan sebagai tesis bagi Ijazah Doktor Falsafah, Sarjana dan Sarjana Muda
** Jika tesis ini SULIT dan TERHAD, sila lampirkan surat daripada pihak berkuasa/organisasi
berkenaan dengan menyatakan sekali sebab dan tempoh tesis ini perlu dikelaskan sebagai
SULIT dan TERHAD.
The following Final Year Project Report:
Title : In Depth Study of Malaysian Standard Form of Construction
Contracts: PWD 203A Version 2007
Name : OH CHIN PHANG
Matric No : 17082
Has been read and certified by:
Ir. Ting Sim Nee Date
Supervisor
i
IN DEPTH STUDY OF MALAYSIAN STANDARD FORM OF
CONSTRUCTION CONTRACTS: PWD 203A VERSION 2007
OH CHIN PHANG
This project is submitted to
Faculty of Engineering,
University Malaysia Sarawak
in partial fulfilment of
the requirement for the
degree of Bachelor of Engineering with Honours
(Civil Engineering) 2009
ii
To my beloved friends and family
iii
ACKNOWLEDGEMENT
I wish to express my sincere gratitude to my dissertation supervisor, Ir. Ting
Sim Nee for her continuous support from the inception till the completion of this
thesis. She has never given up on me and has continuously been patient and kind to
me. I would also like to thank her for the ideas and views that she has given to me.
Meanwhile, I would also like to thank the people in the construction industry
who were so willing and cooperative in the questionnaire surveys that i passed out.
They were all kind and really gave good opinions on the topic which I am surveying.
Next, special thanks go out to my fellow coursemates, Judith Chan, Micheal
Chai, Timothy Wong and Samuel a/l Nadarajan who were more than willing to help
me with my scope of work and also to give very good ideas.
Besides, without the support of my beloved parents, it would not have been
possible for me to accomplish this thesis. Here I express my sincere love to them and
hope that they share in my delight. I dedicate this thesis to them.
iv
ABSTRAK
Borang kontrak JKR ialah borang kontrak yang lazimnya digunakan oleh sektor
awam di Malaysia yang merangkumi projek berskala besar dan ianya dibiaya oleh
kerajaan Malaysia. Borang kontrak JKR telah melalui proses rujukan dari JKR 203A
(Ruj. 83) kepada JKR 203A (Ruj. 2007) untuk menjadikan ianya lebih efektif
sebagai borang menetapkan syarat syarat perjanjian. Kajian ini bertujuan untuk
menjalankan satu analisis terperinci terhadap klausa yang terkandung di dalam
borang kontrak JKR 203A (Ruj. 2007) dan menilai klausa klausa tersebut dari sudut
yang neutral dan seterusnya menilai pengaplikasian klausa tersebut dalam industri
pembinaan di Malaysia. Kaedah survei digunakan untuk mendapatkan pandangan
golongan profesional untuk menentukan nilai kepentingan lapan (8) elemen yang
berkait rapat dengan kontrak iaitu elemen kejelasan, kelengkapan, konsistensi,
fleksibiliti, struktur pengurusan projek yang jelas, keadilan atau pembahagian
peranan dan pembahagian risiko. Sebanyak tujuh puluh lapan (78) klausa telah
dianalisis dan dinilai secara keseluruhan dengan tujuh magnitud pernilaian iaitu
kurang negatif, negatif dan sangat negatif, kurang positif, positif dan sangat positif.
Daripada kajian ini, borang kontrak JKR 203A ini boleh diklasifikasikan sebagai
positif. Beberapa cadangan telah dikemukakan untuk memantapkan lagi aplikasi
klausa klausa dalam borang ini.
v
ABSTRACT
The PWD forms of contract are the de facto standard forms of contraction contract
used by the Malaysian public sector and most of these big scaled projects are public-
funded which makes government a major player in the construction industry. PWD
standard form has gone through revision from PWD 203A Forms (Rev. 83) to PWD
203A Forms (Rev. 2007) to make it a better tool in governing project condition. This
research is aimed to carry out an in-depth study of all the clauses stated in PWD
203A (Rev. 2007) standard form of construction contract from a view of neutral
party and determine the adequacy of application of every clauses in the Malaysia
construction industry. Questionnaires used to collect the public’s opinion on the
degree of importance on the eight (8) elements identified as essential to a contract
form in Malaysia construction Industry, namely: clarity, comprehensiveness,
completeness, consistency, flexibility, clear structured project management
framework, fairness or role distribution and risk distribution. There are seventy eight
(78) clauses have been analyzed and evaluate the overall performance of clauses
based on the total evaluation score with seven magnitude of evaluation such as low
negative, average negative, high negative, neutral, low positive, average positive and
high positive. Through this research, the effectiveness and application of the revised
version of PWD 203A (Rev. 2007) in Malaysian construction industry is considered
as average positive evaluation and several recommendations have been suggested in
order to improve the overall performances of clauses.
vi
TABLE OF CONTENT
Page
ACKNOWLEDGEMENT iii
ABSTRAK iv
ABSTRACT v
LIST OF TABLES xvii
LIST OF FIGURES xxv
ABBREVIATIONS xxxiii
CHAPTER 1 INTRODUCTION
1.1 General and Definitions 1
1.2 Problem Statement 8
1.3 Research Hypothesis 12
1.4 Aim and Objectives 13
1.5 Scope and Limitation of Study 14
1.6 Research Significance 14
1.7 Structure of Thesis 15
CHAPTER 2 LITERATURE REVIEW
2.1 Introduction 18
2.2 Construction Contract 20
vii
2.3 Standard Form of Contract 28
2.3.1 Advantage of Standard Form of Contract 32
2.3.1 Disadvantage of Standard Form of Contract 35
2.4 Standard Form of Contract in Malaysia 38
2.5 PWD 203A (Rev. 2007) Standard Form of
Construction Contract 41
2.6 Comments on PWD 203A (Rev. 2007)
Standard Form of Construction Contract 43
2.7 “Ideal” Standard Form of Contract 59
2.8 Previous Form Studies 66
2.9 Summary 79
CHAPTER 3 METHODOLOGY
3.1 General 80
3.2 Research Framework 83
3.2.1 Literature Review 83
3.2.2 Structured Questionnaire 83
3.2.2.1 Sampling Method 88
3.2.3 Form Analysis of PWD 203A
Standard Form of Construction Contract 90
3.2.4 Quantitative and Qualitative Analysis 90
3.2.5 Results Summary / Discussion 94
3.2.6 Conclusion and Recommendations 94
viii
CHAPTER 4 RESULTS AND DATA ANALYSIS
4.1 General 95
4.2 Method 97
4.2.1 Samples 97
4.2.2 Calculation of Importance Weights 98
4.2.3 Calculation of Total Evaluation Score
in Clause Analysis 103
4.2.3.1 Example of Calculation of Total
Score of Evaluation 105
4.3 Clauses Analysis 107
4.3.1 Clause No 1.0: Definitions and Interpretation 107
4.3.2 Clause Analysis No 2.0: Contract Period 111
4.3.3 Clause Analysis No 3.0: The S.O and
S.O. ’S Representative 114
4.3.4 Clause Analysis No 4.0: S.O.’S Right
To Take Action 117
4.3.5 Clause Analysis No 5.0: S.O.’S Instructions 120
4.3.6 Clause Analysis No 6.0: Scope of Contract 123
4.3.7 Clause Analysis No 7.0: Contract Sum 126
4.3.8 Clause Analysis No 8.0: Contract Documents 129
4.3.9 Clause Analysis No 9.0: Representations,
Warranties and Undertakings Of
The Contractor 133
4.3.10 Clause Analysis No 10.0: Obligations of
The Contractor 137
ix
4.3.11 Clause Analysis No 11.0: Inspection of Site 140
4.3.12 Clause Analysis No 12.0: Programme Of
Work 143
4.3.13 Clause Analysis No 13.0: Performance Bond
or Performance Guarantee Sum 147
4.3.14 Clause Analysis No 14.0: Indemnity In
Respect of Personal Injuries and
Damage to Property 151
4.3.15 Clause Analysis No 15.0: Insurance Against
Personal Injuries and Damage
to Property 154
4.3.16 Clause Analysis No 16.0: Indemnities to
Government In Respect Of Claims
By Workmen 158
4.3.17 Clause Analysis No 17.0: Employees’ Social
Security Act, 1969 161
4.3.18 Clause Analysis No 18.0: Insurance of
Works 165
4.3.19 Clause Analysis No 19.0: Setting Out 169
4.3.20 Clause Analysis No 20.0: Unfixed Materials
and Goods 173
4.3.21 Clause Analysis No 21.0: Compliance
with the Law 176
4.3.22 Clause Analysis No 22.0: Design 179
x
4.3.23 Clause Analysis No 23.0: Employment
of Workmen 183
4.3.24 Clause Analysis No 24.0: Variations 187
4.3.25 Clause Analysis No 25.0: Valuation
of Variation 190
4.3.26 Clause Analysis No 26.0: Bill of Quantities 194
4.3.27 Clause Analysis No 27.0: Measurement
of Works 198
4.3.28 Clause Analysis No 28.0: Payment to
Contractor and Interim Certificates 201
4.3.29 Clause Analysis No 29.0: Adjustment of
Contract Sum 205
4.3.30 Clause Analysis No 30.0: Fluctuation
of Price 208
4.3.31 Clause Analysis No 31.0: Final Account
And Payment Certificate 211
4.3.32 Clause Analysis No 32.0: Effect of S.O.'S
Certificates 215
4.3.33 Clause Analysis No 33.0: Deduction from
Money Due To Contractor 218
4.3.34 Clause Analysis No 34.0: Prime Cost /
Provisional Sums 221
4.3.35 Clause Analysis No 35.0: Materials,
Goods and Workmanship 224
xi
4.3.36 Clause Analysis No 36.0: Inspection and
Testing Of Materials, Goods
and Equipment 227
4.3.37 Clause Analysis No 37.0: Constructional
Plant, Equipment, Vehicles and
Machineries 231
4.3.38 Clause Analysis No 38.0: Possession of Site 234
4.3.39 Clause Analysis No 39.0: Completion
of Works 238
4.3.40 Clause Analysis No 40.0: 0 Damages For
Non-Completion 242
4.3.41 Clause Analysis No 41.0: Sectional
Completion 245
4.3.42 Clause Analysis No 42.0: Partial Occupation/
Taking Over By Government 249
4.3.43 Clause Analysis No 43.0: Delay and
Extension of Time 253
4.3.44 Clause Analysis No 44.0: Claims for Loss
And Expense 257
4.3.45 Clause Analysis No 45.0: Investigation by
The Government and Other Persons
In Case Of Accident, Failure or
Other Event 261
4.3.46 Clause Analysis No 46.0: Access for
Works, Etc. 264
xii
4.3.47 Clause Analysis No 47.0: Sub-Contract
or Assignment 267
4.3.48 Clause Analysis No 48.0: Defects after
Completion 270
4.3.49 Clause Analysis No 49.0: Unfulfilled
Obligations 274
4.3.50 Clause Analysis No 50.0: Suspension
of Works 277
4.3.51 Clause Analysis No 51.0: Events And
Consequences of Default By
The Contractor 280
4.3.52 Clause Analysis No 52.0: Termination
on National Interest 286
4.3.53 Clause Analysis No 53.0: Termination on
Corruption 289
4.3.54 Clause Analysis No 54.0: Payments upon
Termination 293
4.3.55 Clause Analysis No 55.0: Certificate of
Termination Costs 296
4.3.56 Clause Analysis No 56.0: Surviving Rights 300
4.3.57 Clause Analysis No 57.0: Effect of Force
Majeure 303
4.3.58 Clause Analysis No 58.0: Site Agent and
Assistants 306
xiii
4.3.59 Clause Analysis No 59.0: Nominated
Sub-Contractors and/or Nominated
Suppliers 309
4.3.60 Clause Analysis No 60.0: Payment to
Nominated Sub-Contractor or Supplier 313
4.3.61 Clause Analysis No 61.0: No Liability of
Government to Nominated and/or
Sub Contractor or Supplier 317
4.3.62 Clause Analysis No 62.0: Responsibilities
of Contractor to Nominated and/or
Sub Contractors or Suppliers 320
4.3.63 Clause Analysis No 63.0: Intellectual
Property Rights 323
4.3.64 Clause Analysis No 64.0: Antiquities 326
4.3.65 Clause Analysis No 65.0: Arbitration 329
4.3.66 Clause Analysis No 66.0: Notice, Etc. 332
4.3.67 Clause Analysis No 67.0: Amendment 336
4.3.68 Clause Analysis No 68.0: Confidentiality 339
4.3.69 Clause Analysis No 69.0: Stamp Duty 342
4.3.70 Clause Analysis No 70.0: Severability 345
4.3.71 Clause Analysis No 71.0: Waiver 348
4.3.72 Clause Analysis No 72.0: Laws Applicable 351
4.3.73 Clause Analysis No 73.0: Successors Bound 354
4.3.74 Clause Analysis No 74.0: Epidemics
and Medical Attendance 357
xiv
4.3.75 Clause Analysis No 75.0: Technology
Transfer 360
4.3.76 Clause Analysis No 76.0: General Duties
and Performance Standard 363
4.3.77 Clause Analysis No 77.0: Restriction And
Procedure on Use of Imported Materials
and Goods 367
4.3.78 Clause Analysis No 78.0: Time 371
4.4 Summary of Results 374
4.4.1 Summary of Results Based On Total
Evaluation Score of Clause Analysis 374
4.4.2 Summary of Results for Agreement Level
of Attribute of Clause 385
4.4.2.1 Summary of Result in Term of
Clarity 385
4.4.2.2 Summary of Result in Term of
Comprehensiveness 391
4.4.2.3 Summary of Result in Term of
Completeness 397
4.4.2.4 Summary of Result in Term of
Consistency 403
4.4.2.5 Summary of Result in Term of
Flexibility 409
xv
4.4.2.6 Summary of Result in Term of
Clear Structured Project
Management Framework 415
4.4.2.7 Summary of Result in Term of
Fairness or Role Distribution 421
4.4.2.8 Summary of Result in Term of
Risk Distribution 427
CHAPTER 5 DISCUSSION AND RECOMMENDATION
5.1 General 434
5.2 Positive Evaluation of General Conditions 434
5.2.1 High Positive Evaluation of General
Conditions 435
5.2.2 Average Positive Evaluation of General
Conditions 436
5.2.3 Low Positive Evaluation of General
Conditions 442
5.3 Negative Evaluation of General Conditions 448
5.3.1 High Negative Evaluation of
General Condition 449
5.3.2 Average Negative Evaluation of General
Condition 452
5.4 Summary for Positive Evaluation and Negative
Evaluation of General Condition of Contract 454
xvi
5.5 Overall Performance 457
CHAPTER 6 CONCLUSION
6.1 General 460
6.2 Research’s Findings 460
6.3 Recommendation 462
6.4 Research’s Constraint 463
6.5 Suggestion for Future Research 463
6.6 Conclusion 464
REFERENCES 465
APPENDIX 475
xvii
List of Table
Tables Page
3.1
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
The Magnitude of Evaluation of the General Conditions
for Clause
Format of Table to Analyze Result of Structured
Questionnaire Survey
Importance Weight of Criteria
Importance Weight of Each Criterion in Percentage Form
The Magnitude of Evaluation of the General Conditions
for Clause
Example of Calculation for Total Evaluation Score of a
Sample Clause
Summary of Total Evaluation Score and Magnitude of
Evaluation
Total Evaluation Score and Magnitude of Evaluation for
Clause No.1.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No.2.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 3.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 4.0
93
99
100
102
104
105
107
110
113
116
119
xviii
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
4.19
4.20
4.21
4.22
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 5.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 6.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 7.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 8.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 9.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 10.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 11.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 12.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 13.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 14.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 15.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 16.0
122
125
128
132
136
139
142
145
150
153
157
160
xix
4.23
4.24
4.25
4.26
4.27
4.28
4.29
4.30
4.31
4.32
4.33
4.34
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 17.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 18.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 19.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 20.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 21.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 22.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 23.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 24.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 25.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 26.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 27.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 28.0
164
168
172
174
178
182
186
189
193
197
200
204
xx
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
4.46
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 29.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 30.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 31.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 32.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 33.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 34.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 35.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 36.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 37.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 38.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 39.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No.40.0
207
210
214
217
220
223
226
233
237
237
241
244
xxi
4.47
4.48
4.49
4.50
4.51
4.52
4.53
4.54
4.55
4.56
4.57
4.58
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 41.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 42.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 43.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 44.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 45.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 46.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 47.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 48.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 49.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 50.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 51.0
Total Evaluation Score and Magnitude of Evaluation for
Clause No. 52.0
247
252
256
260
263
266
269
273
276
279
284
288