FIDIC Forms 1999 Edition

Salam and dear all,

Students studying contract administration and international construction procurement courses at IIUM and practitioners ask me on the various types of forms currently available and in use for construction contracts globally.

In Malaysia, the more popular standard forms of contract in use include the PWD 203 (1983;2007) with and without quantities series, PAM (1998;2006) with and without quantities series, the IEM forms and forms of contract published by CIDB. These Malaysian forms are used as reference materials for contract administration courses in the B.QS (Hons) programme at IIUM.

Internationally, the FIDIC standard forms of contract are preferred by many employers and contractors. To understand better the FIDIC forms, the FIDIC website at http://www1.fidic.org/resources/contracts/which_contract.asp lists the various types of FIDIC forms:

Before 1999;

• Conditions of Contract for Works of Civil Engineering Construction: The Red Book (1987)
• Conditions of Contract for Electrical and Mechanical Works including Erection on Site: The Yellow Book (1987)
• Conditions of Contract for Design-Build and Turnkey: The Orange Book (1995)

New FIDIC forms First Edition 1999:

• Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer: The Construction Contract
• Conditions of Contract for Construction for Building and Engineering Works Designed by the Employer (M;DB Harmonised Edition) - for bank financed projects only: The MDB Construction Contract
• Conditions of Contract for Plant and Design-Build for Electrical and Mechanical Plant and for Building and Engineering Works Designed by the Contractor: The Plant and Design-Build Contract
• Conditions of Contract for EPC/Turnkey Projects: The EPC/Turnkey Contract
• Short Form of Contract: The Short Form
• Dredgers Contrcat (based on the Short Form of Contract): Dredgers Contract

Go to http://www1.fidic.org/resources/contracts/launch/bowcock1.html for the speech by Mr J. Bowcock, Chair of FIDIC Contracts Committee during the launching of the new FIDIC forms.

Source: FIDIC websites as stated above.

Wassalam.

"Integrity Pact" in public procurement

Salam and dear all,

Furthering her effort to combat corruption in public procurement, Malaysia has introduced what is known as an "Integrity pact". The pact, to be signed by all bidders and the authority responsible for calling tender/a contract, aims to:

• Uphold transparency and accountability, and
• Ensure excellent work ethics and good governance.

The "Integrity Pact", introduced by the Port Klang Authority, a body under the Ministry of Transport; requires among others that bidders must not collude with each others, and they must report all commissions or expenses paid to anyone in relation to a tender or in a contract.

An ongoing initiative to combat corruption is a training program entitled "Integrity for Contractors" conducted by the CIDB. The training program, made compulsory to all firms registered with CIDB since 2007, reiterates the importance of integrity in public procurement and also includes aspects such as goverment procurement policies on integrity, work ethicts, etc. (http://www.cidb.gov.my).

Here goes the full story on the "Integrity Pact", as it appeared in The Star Online, 20^th March 2010:

Saturday March 20, 2010

PKA draws up anti-graft pact in its contracts

By DHARMENDER SINGH

PKA now requires contract bidders to sign integrity pact

PUTRAJAYA: Bidders for Port Klang Authority (PKA) contracts will have to sign an integrity pact with the authority, undertaking not to participate in activities linked to the payment, offering, demanding or accepting of bribes.

Transport Minister Datuk Seri Ong Tee Keat said the pact was proof that he was serious about his pledge to uphold transparency and accountability.

It also showed that the ministry was not in the habit of commissioning studies and appointing consultants just to have the reports lie on shelves gathering dust, he added.

"The integrity pact will ensure excellent work ethics and good governance, while also providing a deterrent against corrupt practices, which lead to blatant excesses like the ones involving the Port Klang Free Zone," Ong said.

"This will not be the end of efforts by me and the ministry to uphold transparency and accountability. "As long as I continue as the Transport Minister, I will walk the talk," he added.

Ong was speaking at a press conference after witnessing the signing of statutory declarations between PKA and Jurutera Perunding Hartkonsult, Business Associates Consulting Sdn Bhd, MSC Management Services Sdn Bhd, Engineering and Environmental Consultant Sdn Bhd, Minconsult Sdn Bhd and Orion Maritime Malaysia Sdn Bhd here yesterday.

The six firms are bidding for tenders for the Jalan Parang upgrading and Port Klang Master Plan study projects being undertaken by the authority.

Transparency International-Malaysia president Datuk Paul Low was also present at the signing.

Meanwhile, PKA chairman Datuk Lee Hwa Beng, who announced the integrity pact, added that it also required bidders to refrain from colluding with competitors to obtain contracts or engaging in such abuses while carrying out the contract.

Bidders also have to disclose all commissions and similar expenses paid by them to anyone in connection with the contract, he added.

"Anyone violating the pact will face stiff penalties, like the termination of contracts, blacklisting, forfeiture of performance bonds and claims for liquidated damages, as well as having the violation reported to the Malaysian Anti-Corruption Commission," said Lee, adding that the authority was also bound by the pact.

"The terms will also be included in the contract signed with the successful company, and will apply throughout the time that work on the project is being carried out," he added.

He said action could also be taken if proof of any corrupt practices surfaced years after work was completed.

Lee said signing the integrity pact would be a requirement for all future PKA contracts, although for now, it would only apply to jobs worth RM1mil or more.

Wassalam.

No more traditional light bulb

Salam and dear all,

• The government today announced that by 2014 the "traditional light bulb" will not be in the market anymore.
• The government's decision to switch to "compact fluorescent lamps, fluorescent tubes and light-emitting diodes" is in line with the concept of sustainable built environment.
• According to the government benefits of stopping the use of the traditional light bulbs include reduced carbon dioxide emissions by 732,000 tonnes a year and reduced energy usage in Malaysia by 1,074 gigawatts a year or 1% of the total current energy usage.
• Students may want to study the cost implication of the move, as in the context of life-cycle-costing or LCC, the cost of the traditional light bulbs is a lot cheaper but has a shorter life span when compared to the more energy efficient compact fluorescent lamps, fluorescent tubes and light-emitting diodes.
• Read the full article as it appeared in The Star Online, 19th March 2010 http://thestar.com.my/services/printerfriendly.asp?file=/2010/3/19/nation/5889920.asp&sec=nation:

Friday March 19, 2010 2014 date to switch off traditional light bulb By DHARMENDER SINGH and CHAN LI LEEN newsdesk@thestar.com.my PUTRAJAYA: The traditional light bulb will no longer be available by January 2014. The Government will stop all production, import and sales of the bulbs by that date as part of efforts to save power. Traditional light bulbs, also called incandescent light bulbs, are considered less energy-efficient and, as a result, not as environmentally-friendly as compact fluorescent lamps, fluorescent tubes and light-emitting diodes. Power, Green Technology and Water Minister Datuk Seri Peter Chin, who announced this yesterday, said the move to stop the use of these bulbs would help reduce carbon dioxide emissions by 732,000 tonnes a year. “The shift to more energy-efficient bulbs will help reduce energy usage in the country by 1,074 gigawatts a year. This is 1% of the total current usage,” he told a press conference after launching his ministry-level Chinese New Year celebrations. In money terms, Chin said the shift would save RM336mil a year in energy costs and this would allow consumers to better deal with any increase in tariffs that might occur in the future. Chin said the phasing out of the bulb would be implemented in two phases. The first phase, from January to December next year, would involve stopping all production, import and sales of 100 watt or higher capacity bulbs. The second phase, from January 2012 till the end of 2013, will see an end to the production, import and sales of all other light bulbs. He said the move was in line with Prime Minister Datuk Seri Najib Tun Razak’s commitment to reduce carbon intensity by 40% by the year 2020 that was made during the United Nations Framework Convention on Climate Change Conference that was held in Copenhagen in December last year. In a related development, the Housing and Local Government Ministry has proposed the use of LED bulbs to replace conventional light bulbs in street lamps. Minister Datuk Seri Kong Cho Ha said a 60W LED bulb gave out the same amount of light as a 250W conventional light bulb. This level of light was the minimum requirement under ministry guidelines. Kong, who was speaking to reporters after launching the Manjung district-level Ops Cerah in Lumut on Wednesday night, said the Government could save a lot on electricity if street lamps in the entire country used LED bulbs. Wassalam.

QS News and Stories and Building Legal News from BUILDING

Salam and dear all, I have added two news items namely "QS News and Stories from Building" and "Building Legal Case of the Week." Both news items are added on to this blog via RSS sourced from BUILDING (http://www.building.co.uk). I believe quantity surveying students (construction procurement and contract administration) would benefit from these news items. Wassalam.

Roof collapse at Sultan Mizan Zainal Abidin, Kuala Terengganu caused by design flaws, poor materials and workmanship

Salam and dear all,

Reference: previous postings dated 3^rd and 4^th June 2009 and 9^th January 2010.

The Mentri Besar of Terengganu today (11^th March 2010) released the report on the roof collapse at the Sultan Mizan Zainal Abidin, Kuala Terengganu. (Referring to the report) he said the main causes of the collapse were: engineering flaws, shoddy workmanship, inferior materials and lack of expertise in the key project management team. He also stated that the Terengganu government "had sent a letter to the main contractor to bear all the costs for the reconstruction as the incident occurred less than a year after the handover and the stadium was still under warranty" (Source: The Star Online, 11^th March 2010, for the full story visit http://thestar.com.my).

Wassalam.

Bank Negara raised the OPR

Salam and dear all,

Reference: earlier posting 30^th July 2009.

• Bank Negara Malaysia has, on 4^th March 2010, raised the OPR (Overnight Policy Rate) to 2.25% (from 2.0%). The move suggests that Malaysia is indeed easing out of the recession.
• Consequently, there is a potential that commercial banks may soon increase their BLR.
• What is OPR? OPR is the rate of interest that banks and other financial institutions lend money they have and deposited with the Bank Negara overnight to other banks and financial institutions. The interest rate, otherwise known as OPR, is 'controlled' by Bank Negara. The consequences of the changes in the OPR would normally include changes in the BLR, other costs of borrowing money (short-term interest rates, fixed deposits, long-term interest rates) and other events in the economy including employment, output, and prices of goods and services (http://www.realestateagent.com.my, 4^th March 2010).
• What is BLR? BLR is the minimum rate of interest determined by banks and other financial institutions. The BLR is based on factors including the banks' cost of funds and other administrative costs (http://www.realestateagent.com.my, 4^th March 2010).

Wassalam.