DEFECT LlA.BILITY PERIOD IN THE CONSTRUCTION

CONTRACT: LESSONS LEARNT FROM AN INSTITUTION OF HIGHER EDUCATION

(IOHE)

BUILDING PROJECT

FAIT BIN HANAPI

RESEARCH REPORT SUBMITTED TO THE FACULTY OF BUILT ENVIRONMENT. UNIVERSITY OF MALAYA

fULFILMENT OF THE REQUIR.l\1ENT FOR DEGREE OF MASTER OF SCIENCE PROJECT

IN PARTIAL

THE

MANAGEMENT

Abstract

Construction on

projects

the Defect

things

that

are

often

given

Liability Period (DLP).

are

not

important

serious attention at Most

early stage,

but less

emphasize

parties consider the defect liability period

and does not affect the overall performance of the

project.

Defect liability period (DLP) that has been provided in the contract completely and

enough how it is governed. on

the

users

of the

The weakness in the

building

are

clearly

governing DLP will give negative impact

t�� government and

and would be detrimental to

causes an

additional cost to make good the rectification of defective work. This study aims to establish

(DLP).

good management practice

in

to manage defect

during

defect

liability period

study consists of three main objective covered about the defect management,

This

problem study

a

managing

of defect and the

occurrence

of defect. The methodology of the

is to conduct semi-structured interviews with the

building project.

The

analysis

contract related to DLP

found that the

provision

should be

parties

knowledge

�d

involved with the IOHE

understanding

emphasized. Through training

the level of understanding about the defect management increase among the and also defect management team. the

building

construction

quality.

about the

and

learning,

project team

Workmanship is the most important element to ensure The bad

workmanship

can

affect the whole process of

building construction is usually difficult to control.

III

Abstrak

Projek pembinaan sering diberi perhatian serius pada peringkat awal tetapi kurang diberi ,

penekanan semasa tempoh tangungan kecacatan (DLP ).

Kqbanyakan pihak menganggap

bahawa tempoh tangungan kecacatan adalah perkara-perkara yang tidak penting dan tidak keseluruhan

menjejaskan prestasi telah

projek. Tempoh tanggungan

kecacatan

(DLP)

yang

diperuntukan dalam kontrak sepenuhnya dan cukup je\fls bagaimana ianya ditadbir.

Kelemahan dalam pengurusan DLP akan memberi kesan negatif kepada pengguna ban gun an dan akan

memperbaiki

merugikan pihak kerajaan

kecacatan

bangunan

IOHE.

amalan pengurusan yang baik untuk

kecacatan

(

DLP

)

.

Kajian

pengurusan kecacatan

Metodologi kajian pihak-pihak bahawa

,

Kajian ini

menyebabkan

dalam

tiga objektif

yang terlibat

dengan projek bangunan

dan

meliputi kira-kira

beriakunya kecacatan

temu bual separa berstruktur

lORE dan

pemahaman tentang kontnVc

satu

tempoh tanggungan

utama

masalah dalam pengurusan kecacatan dan

menjalankan

kos tambahan untuk

bertu�pan untuk mewujudkan

menguruskan kecacatan

ini terdiri daripada

ini adalah untuk

pengetahuan

dan

dengan

daripada analisis, didapati perlu difokuskan

yang

terutamanya pada peruntukan tangunggan kecacatan di dalam kontrak. Melalui latihan dan

pembelajaran

dipertingkatkan

,

antara

tahap

kefahaman

pasukan projek

dan

kecacatan. Mutu kerja adalah elemen yang

pembinaan bangunan. keseluruhan proses

Mutu

kerja

mengenai

yang

pengurusan

kecacatan

dapat

juga peng4fUsan pasukan tangunggan

paling penting

untuk memastikan kualiti

kurang memuaskan

boleh

menjejaskan

pembinaan bangunan biasanya sukar untuk dikawal.

IV

Table of Contents

List of Table

,

,

..

"

,

"

"

,',."."

,'

,

,

,

,

viti

List of Figure

ix

List of Abbreviations

x

CHAPTER ONE

1

INTRODUCTION

1

,:

1

1.1

Background

1.2

Statement of The Problem

1.3

Aim and

1.4

Research

1.5

Scope

1.6

Significance of Study

11

1.7

Structure of Tbesis

12

of Study

xii 11

Objective of Study

11

Questions

of Study

CHAPTER TWO

11

,\

,

13

,

�

LITERATURE REVIEW

13

2.1

Introduction

13

2.2

Management of Defect During DLP

15

2.3

Learning Management

19

2.4

The Occurrence of Defect

22

,

CHAPTER THREE

31

RESEARCH METHODOLOGY

31 31

3.1

Introduction

3.2

Research Process

3.3

Method of Data Collection

31

;:

32

CHAPTER FOlJR

37

DATA COLLECTION AND ANALYSIS

37 37

4.1

Introduction

4.2

Analysis

4.3

Management of Defect During DLP

4.4

Problem in

4.5

The Occurrence of Defect

,

of Interview

;

38 .41 47

Managing Defect During

and After DLP

50

CHAPTER FIVE

56

FINDING AND DISCUSSION

56

4.1

Introduction

4.2

Management of Defect During

4.3

Problem in

4.4

The Occurrence ofDefect

Managing

'

Defect

DLP

56 56 59 61

VI

CHAPTER SIX

66

CONCLUSION AND RECOMMENDATION

66

6.1

Introduction

6.2

General Conclusion

6.3

Recommendation for Future Research

66 ;

.

.{

66 67

REFERENCES

69

APPENDIX

74

VB

List of Table

Table 1.1

I

I

DLP

pro�isions in the local standard forms of

I

construction

contracts

Table 1.2 'I'able 2.1

Other Provision in Standard Form of Contract The Critical Success Factor and Possible Measure

Table 2.2

Factor of Lack of Workmanship in

Building

Construction

Table 2.3

The Counter Measure to Minimize the Lack of

Table 4.5

Workmanship Quality Sample ofInterviewees '1 'he interview Question Interview Transcribe (The understanding of DLP provision in the contract) Interview Transcribe (The prohlem in managing defect) Interview Transcribe (The occurrence of defect during

Table 4.6

and after DLP) Most Common Construction Defect

Table 4.7

Total Comnlaint Report

Table 4.8

Total

,

Table 4.1 Table 4.2 Table 4.3

Table 4.4

Table 4.9

Table 4.10

(to date 20June 2013) Complaint Febraary 2012 until June 2013 Categories of Outstanding Complaint Report Outstanding Previous Compliant Report from

viii

List of Figure

Figure 2.1 Figure 2.2 Figure 2.3 Figure 4.1

Flowchart Clause 48.0 PWD Form 203A Flowchart Clause 47.0 CIDB 2000

2006 Rectification Works by PWD

Flowchart Clause 15 PAM Flow Chart Defect

IX

List of Abbreviations CPC

IOHE

Completion Practical Certificate Construction Industry Development Board Defect Liability Period International Federation of Consulting Engineer Heating Ventilation Air Conditioning Institute of Engineers Malaysia Institution of Civil Engineer Institute of Higher Learning

JCT

Joint Contracts Tribunal

lUyf�K

Rancangan Malaysia Rancangan Malaysia Ke- 7 Rancangan Malaysia Ke-8 Rancangan Malaysia ke-9 Pertubuhan Akitek Malaysia

CIDB

-_.--

DLP FIDIC H.V.A.C

IEM ICE

RMK-7 RMK-8

RMK-9 PAM P.W.D P.D

I

Public Works Department Project Director

S.O

Quantity Surveyor Superintending Officer

SON

Statement of Needs

TNB

Tenaga Nasional Berhad

QS

---.--.------�--.-.

x

CHAPTER ONE

INTRODUCTION

1.1

Background

According to

of Study

Webster's

Dictionary,

It is also defined

completeness; shortcoming. term for defect is

or

Webster's

deficiency.

quality of being deficient in

wanting, lacking

some

or a

quality

deficient. Defect is the "the

2005).

Construction defect is

a

a

failure to

accordance with

a

or

buyer

phenomena

in construction

construction

industry.

material used

or

the

shortage;

the

construct in

reasonable

lack of something necessary for

imperfection; fault;

deficit. As for

necessary for

deficiency in

design

as an

as

blemish. Another

Dictionary defines the word deficiency

nonconformity

characteristic (Robert,

from

defect is defmed

of

a

design a

compone:qt

or

defective and

with

a

construction of

reasonably

expectation.

a

manner

of defects that have

procedure. Thus knowledge

happen

defect, effective action

can

is

important.

be taken to

are

the

specific

andlor in

common

image

of the

construction stage.

Construction defect occurring when the parties involved misconduct him or

that is

relatively related with the quality of the

workmanship employed during the

the construction process

one

be

building resulting

Construction detect

on

state

as to

standard of

wo�tcrnanlike

industry, and it gives negative impact

Construction defect is also

it is defined

deficient,

completeness;

as a

With the

and

herself during

understanding

knowledge

improve the

or

and

of the nature

understanding

process. One of the

key

of that

success

criteria in defect management is

types of construction defect 1.

Not

2.

Not

are

a

continuous

mechanical

functioning

and

improvement.

Common

(Ahzahar et a1. 2011):

of electrical system such

functioning

development

as

wiring, lighting,

ventilation, cooling

or

etc.

fire

heating system (HVAC),

protection system; 3.

Inadequate insulation or sound proofing,

4.

Structural defect

Statement of The Problem

1.2 IOHE

that

resulting in cracks or collapse

buildings

c�m

in

Malaysia

to create a

encourage, stimulate and

research activities. IOHE

suitable, conducive and adequate environment

support learning system, teaching and innovation and

building contain unique and complex functions that are used to

perform

various type of activities. It is in these university

captains

of industry, entrepreneurs,

professional

that future

building

and scientists

are

leaders,

produced (Mat

et

at,

2009). Therefore, if any uncomfortable or inadequacy with that building and the facilities, of the IOHE is difficult to achieve. A

the main

objective

required

services is

a

loss in value to the TOHE,

failure in the

completed and issuing the CPC,

Building end-users

are

DLP and maintenance

the group of individuals

adequate functioning of that building. They

building

and the

extent that the

the

building

building

is also affected

by

are

be said to be

a source

accommodating, learning, teaching

and

as soon a

building

that building begins.

department, who

affected

by

the

are

interested in

performance

of the

the activities of its end-user itself. To the

building is capable of allowing the

can

or

of the

surrounding community, students,

academic staff, non-academic staff and other stakeholders. However, is

supply

users to

perform

their

of value creation to the

doing research. (Olanrewaju,

functions,

required et

a1.

then

service of

2010) 2

Defect

Liability

Period

(DLP)

is

a

period

where the contractor must

rectify

any

defect,

shrinkage or other fault as directed by the s.o after a particular works has duly completed. All expenses to

charged

to the

rectify the defect shall be government

or

by the contractor and no additional

borne

End-user. Table 1.1 shows the DLP

provisions

costs

that

are

found under the local standard forms of construction contracts: sor

The Relevant Clauses "Clause

27.1

Completion

_

of

Outstanding

Work

and

"

Remedying Defects; "Clause 27.1(a) the Contractor shall, during the defect Liability Period complete with due expedition or within such time as may be specified by the Superintending Officer, any work outstanding at the Date of Practical Completion (whether or not the Contractor has undertaken to do so)"

CIDB Standard Form I of Contract 2000

I

"Clause 27.1 (b) the

I

Superintending Officer may at any time Liability Period or within 14 Days after

during the Defects its expiration instruct the Contractor to execute all works of reconstruction and remedying of any Defects. The Contractor shall complete all such works with due expedition or within such time as may be specified by the Superintending Officer." "Clause 27.1 (c) The

obligation Q[ the

Contractor to

comply

with this Clause 27 shall not in any way prejudice the Employer's right under the provisions of any guarantees and/or warranties relating to the Works or any section of the Works provided in accordance with the Contract including provided by sub-contractor and suppliers, whether

those

nominated

"Clause 15.4 the Defects Architect in PAM Contract 2006 I

otherwise."

or

Any defect in the Liability Period

Works which appear within shall be specified by the

schedule of defects which he shall deliver to the Contractor not later than fourteen (14) Days after the expiration of the Defects Liability Period. The Contractor a

good the Defects specified within twenty eight (28) Days after receipt of the schedule of defects (or within such longer period as may be agreed in writing by the Architect) at the Contractor's CO$t. If the Contractor fails to attend to the Defects, the Employer may, without prejudice to any other rights and remedies which he may possess under the Contract, employ and pay other Person to rectify the Defects and all costs incurred shall be set-off by the Employer under Clause 30.4. If the Architect with the consent of the Employer, instruct the.Contractor to leave the shall make

3

I

Defects in the Works, then such Defects not made good

I

off by the

appropriate

"Clause 48.0 Defect after

"Clause

(Rev.1/2010)

Remedying Defects"

deduction for

the Contractor shall be set­

by Employer under Clause

P.W.D Form 203A

"Clause

an

30.4"

Completion"

Completion of' Outstanding

48.1

Work

and

during the Defect Liability Appendix hereto (or if none stated the is twelve period (12) months from the date of practical completion of the Works), any defects, imperfection, shrinkage or any other fault whatsoever which may appear and which are due to materials or goods or workmanship not Period

48.1(a)

as

At any time

stated in

in accordance with this Contract, the S.O shall issues written instruction to the Contractor to-make good such defects, any other fault whatsoever at the Contractor's own cost The Contractor shall complete all

imperfection, shrinkages

I

or

such works with due expedition be specified by the S.O."

or

within such time

as

may

I

"Clause 47.0 Defects after

Completion"

The Contractor

the Defect

P.W.D Form DB

"Clause 47.1

(Rev. 112010)

expedition or within complete such time as may be specified by the P .D, any work outstanding at the Date of Practical Completion (whether or not the Contractor has undertaken to do so)" Liability

I I I

Period

shall, during

with .due

I

"Clause 47.2 The Contractor shall, at any time during the Defect Liability Period as stated Appendix 1 hereto (or if none stated the period is twenty-four (24) month from the I date of practical completion of the Works) make good any I

fn

4

I

defect,

imperfection,

shrinkage

or

whatsoever which may appear and which

material,

goods, workmanship

any are

equipment specified by the or

accordance with this Contract, as written instruction to the Contractor."

fault

I

design,

I

other due to

not

in

P.D in

a

"Clause 47.3

Notwithstanding sub-clause 47.1 above, any defect, imperfection, shrinkage or any other fault whatsoever which may appear during the Defects Liability Period to be made good by the Contractor, shall be specified by the P.D in the Schedules of Defects of which the first schedule shall be delivered to the Contractor within fourteen

(14) days and the final schedule shall be delivered not later twenty-eight (28) days after expiration of the Defects Liability Period. The defects, imperfections, shrinkages or any other fault whatsoever specified in the Schedule of Defects shall be made good by the Contractor at his own costs and to be completed within a reasonable time but in any case not later than three (3) months after the receipt of

than

the final schedule. Provide that the P.D shall not be allowed

requiring the Contractor to good any defect, imperfection, shrinkage or any other

to issues any further instruction

make

fault whatsoever after the issuance of the said Schedule of

Defect

or

eight (28) days from the expiration of Liability Period, whichever is the later."

after twenty

the said Defects

Table 1.1: DLP Provisions in the Local Standard Forms

�t Construction Contracts

5

Table 1.2 show the other provision in standard form of contract related with the defect management during DLP The Relevant

Clauses

"Clause 8 Notice" "Sub-clause 8.1 CIDB Standard Form of Contract 2000

Serving of Notices" a) stipulated elsewhere in the Contract, notices to be given under the terms of the Contract shall be in writing and shall be deemed to have been served by either party upon the other if

I

"Unless otherwise

it shall have been sent to the address of such party as set out in the Articles of Agreement:"

"By hand delivery or courier and an acknowledgement of receipt obtained; or" "By post in which case it shall be deemed to have been served 7 Days after posting"

i)

ii)

h)

"Either party may change the address set out in the Articles of Agreement by giving 14-Day notice to

the other party and the

Superintending Officer and Superintending Officer by giving 14-Day notice to both parties."

in the

"Clause 42

case

of the

Payment"

"Sub-clause 42.7 Final Claim �fatement" a) "Within 30 Days of the issues of the Certificates of Making Good Defects (or the Certificate of Making Good Defect in respect of the last section of the Works, in the case of completion in sections), the

Contractor

shall

writing to the (hereinafter referred to as the "Final Claim Statement") in such form as the Superintending Officer may prescribe." submit

Superintending Officer

a

iii

statement

"Clause 30.0 Certificate and Payment" "Sub-clause 30.14 The Final PAM Contract 2006

a)

C!itificates shall be issued:"

"Within twenty one (20 Days after the Period of Honoring Certificates for the payment of Penultimate Certificate; or"

b) "Within twenty eight (28) Days after the Certificate of Making Good Defects has been issued, in the event no Penultimate Certificate has been issued."

I I

"Clause 36.0 Notice"

6

I

"Sub-clause 36.1 be

Any written notice

or

other document to

given under the Contract shall be

given a) "hand;" b) "ordinary mail or registered post; or" c) "facsimile transmission"

"Sub-clause 36.2

Any

or

written notice

or

sent

other document

served upon and

shall be deemed to have been

I

by:"

duly by the addressee:" a) "if delivery by hand, at the time of delivery" b) "if sent by ordinary mail or registered post, after three (3) Days of posting;" c) "If transmitted by way of facsimile transmission, at

received

I

time of transmission." "Sub-clause 36.3 In

proving the giving

of a written notice

any other document under or in respect of the Contract, it shall be sufficient to show:"

or

a) "in the case of hand delivery, a signed acknowledgement of receipt;" b) "in the case of registered post, a receipt of posting c)

from the Post

Office;

"in the

of facsimile

case

or"

facsimile transmission

transmission,

was

duly

that the

transmitted from

I

dispatching terminal, as evidenced by a transmission report generated by the transmitting equipment. the

"

"Sub-clause 36.4 All written communication shall be sent to the address stated in the Article of Agreement unless otherwise notified in

writing." Payment Certificate" is practicable but not later

"Clause 31.0 Final Account and

P.W.D Form 203A

"Sub-clause 31.1 As

(Rev.112010)

than three (3) months after the issuance of the Certificate of Practical Completion, the Contractor shall submit full particular complete with the receipts, vouchers records that

soon as

would substantiate the Contractor's claim under clause 44 together with any document, supporting vouchers and any

explanation and calculations including documents relating to

the

accounts

of

Nominated

Sub-Contractors

or

Suppliers, which may be necessary to enable the Final Account to be prepared by the S.O PROVIDE ALWAYS the contractor had given the notice of claim in

Nominated

writing within provisions."

the

stipulated

[ime

or

times in the said

I I

"Sub-clause 31.2 if the Contractor fails to submit full particulars of all claim within the stipulated period, the S.O. shall forthwith make the .assessment based on the available documents submitted

by

the Contractor for the

purpose of the Final Account. The Government shall be 7

I

from all liabilities

discharged

��aimbs'l"

I

connection with the I

....

"Su -c ause

I

in

.

.

3"1. 3 WIthiIII three (-' j) months

aft. er the

expiry

I

the whole of the Works Liability Period three (3) months after the issues of the Certificate of Completion of f\.1aking Good Defects under clause 48

f�;

of the Defect or

hereof, whichever is the later, the S.O. shall issues the Final Certificate."

"Clause 49.0 Unfulfilled

Obligations"

"Notwithstanding the Completion of Making

issue

of

the

Certificate

of

Goods Detects under clause 48.4

hereof the Contractor and the Government shall remain liable for the fulfilment of any obligation incurred under the

provisions of the Contract, ppor to the issues of the said

certificate, which remains unfulfilled at the time such certificates is issued, and for the purpose of determining the nature and extent of any such obligation, the Contract shall be deemed to remain in force between the Parties hereto."

Notice, ETC." "Sub-clause 67.1 Any notice, approval, consent, request or "Clause 67.0

other communication

required

or

permitted to be given or writing in Bahasa

made under this Contract shall be in

Malaysia or English Language." "Sub-clause 67.2 Such notice shall be effected "Hand delivery or courier and an i)

ii)

by:"

acknowledgement of receipt obtained;" "Leaving the notice at the registered office or site office of the Contractor in which case it shall be deemed to have been duly delivered; or"

iii)

"Registered post in which case be deemed to have been received seven (7) days after the date of posting" ,

"Sub-clause 67.3 The address of the Government and the Contractor is as shown below or such other address as either party may have notified the sender" "to The Government:"

"Address:" "To The Contractor" "Address:"

duty of the parties to chance of address or entity by notify giving a written notice within fourteen (14) days. In the event of the Contractor failing to notify the S.O. of such "Sub-clause 67.4 It shall be the the other if there is

a

8

I

ill"1 address or any change in his address, such written notices and instruction shall be deemed to have been

served upon the Contractor if they are sent in the manner stated above to the address stated in this Contract or to

the Contractor's site office."

"Clause 81.0 Time" "Time whenever mentioned shall be of the

essence

of this

Agreement."

P.W.D Form DB

"Clause 48.0 Unfulfilled

(Rev. 1120 10)

issues of the Certificate of "Notwithstanding of Good Defect under clause 47.6, the Completion making

Obligations"

the

Contractor and the Government shall remain liable for the

I

fulfillment of any obligation arising under the provisions of the Contract, prior to the issuance of the said certificate, which remain unfulfilled at the time such certificate is issued. For the purpose of determining the nature and extent of any such obligation, the Contract shall be deemed to remain in force between th.e Parties."

"Clause 54,0 Final Account and Final Certificate" "Sub-clause 54.1 Within three (3) months after issuance of the Certificate of Completion of Making Good Defects 0'�

th Certtticate � Ie

Ol

whichever is the P ,D

a