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Malaysian Building Contract Types

There are four main categories of standard form building contracts used in Malaysia. The first category includes those prepared by Malaysian institutions like PAM, IEM, CIDB, and PORAM. The second includes contracts written by the public sector like JKR. The third includes contracts made by major employers. The fourth includes international forms that may be relevant if used in Malaysia or for Malaysian contractors working abroad. The PAM standard form falls into the first category as forms originated by institutions. It is the most widely used in the private sector, an estimated 90%. While originally based on UK forms, the PAM forms have diverged to suit local conditions. The PAM 2006 form specifically regulates aspects of the work, payments

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112 views3 pages

Malaysian Building Contract Types

There are four main categories of standard form building contracts used in Malaysia. The first category includes those prepared by Malaysian institutions like PAM, IEM, CIDB, and PORAM. The second includes contracts written by the public sector like JKR. The third includes contracts made by major employers. The fourth includes international forms that may be relevant if used in Malaysia or for Malaysian contractors working abroad. The PAM standard form falls into the first category as forms originated by institutions. It is the most widely used in the private sector, an estimated 90%. While originally based on UK forms, the PAM forms have diverged to suit local conditions. The PAM 2006 form specifically regulates aspects of the work, payments

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COMMON TYPES OF STANDARD FORM BUILDING

CONTRACTS
Firstly, it is those prepared under the auspices of Malaysian
institutions or industry groups such as the Pertubuhan Akitek
Malaysia (PAM), Institution of Engineers Malaysia (IEM),
Construction Industry Development Board (CIDB) and Palm Oil
Refiners Association of Malaysia (PORAM).
Secondly, it is those written or commissioned by a government/
public sector like the Jabatan Kerja Raya (JKR) which is used in
relation to public work.
Thirdly, it is those drawn up by major employers like Putrajaya, TNB
and Petronas for their own specialist need and use.
Finally, it is those drawn up by international or foreign institutions
like the Federation Intenationale des Ingenieurs Conseils (FIDIC)
and the Institution of Civil Engineers (ICE), United Kingdom for use
in other jurisdictions. This group of standard forms may be relevant
in the Malaysian context if one or more of their clauses are borrowed
to be included in an ad hoc contract, or if a Malaysian contractor
tenders on a project elsewhere for example, in the Middle East or in
India.

THE PAM STANDARD FORM OF BUILDING CONTRACT


During the Contract, PAM 2006 is used as the preferred standard
form of contract. The PAM standard form of building contract falls
into the first category of institutional originated.
They are used extensively in the Malaysian building industry and are
generally considered as the de facto Malaysian Standard Form of
Building Contract. It is estimated that 90 per cent of the building
contracts in the private sector are based on the PAM form.
Many of the clauses in the earlier PAM standard form of building
contract have their origin in the corresponding United Kingdom
forms, some being identical. There seems, however, in recent times
for the forms to diverge, no doubt because of increasing differences
between the conditions prevailing in Malaysia.
From the context of the local building industry, it is viewed to be
more contractor friendly particularly by employers and consultants
who still remain the single most influential segment of the local
building industry.

Advantages of Using Standard Form of Contract


-No drafting is needed and less uncertain terms in the contract.
-Spread risk equally to the employer and a contractor.
-Body of case law has developed addressing the specific contract
terms and clauses used in these types of contracts so that when
issues arise, the parties can look to prior decisions to see how
certain key provisions have been interpreted.
-Relatively low Cost

Disadvantages of Using Standard Form of Contract


-The terms and clauses might not be able to fit on all projects.
-The terms of conditions in the forms is not easy to understand.
Interpretation between parties can be different that can arise
disputes.

THE PROVISIONS OF THE PAM 2006 FORM


Like the PAM/ISM 1969, PAM 1998 and CIDB 2000 Forms, the PAM
2006 Form makes detailed provisions regulating:

the work to be executed by the contractor;


the sum to be paid;
the extent of the contractors liability for design;
the extent of the contractors liability for defective works;
the procedure for variations in work;
the procedure for payment to the contractor;
the circumstances in which the contractor is entitled to be
paid additional sums for variations in the work and/or
disturbance to the progress of the work;
liabilities with respect to insurance;
the circumstances in which either party may determine the
contract either on default of the other party or in other events;
and
the settlement of disputes.

Difference between JKR and PAM Contract

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