Security of payment in Malaysian construction industry: issues on sub-contract's direct payment

Supardi, Azizan and Adnan, Hamimah (2011): Security of payment in Malaysian construction industry: issues on sub-contract's direct payment. Published in: 3rd International Conference on Mechanical and Electrical Technology , Vol. 3, (26 August 2011): pp. 407-412.

Abstract

In Malaysia, sub-contractors have to bear with the current structure of payment mechanisms in the standard forms of contract, which are payment upon certification, direct payment from the employer, and contingent or conditional payment. However, „direct payment‟ provision is applied for in most of the nominated sub-contracts and not to the domestic sub-contractors; thus the Construction Industry Payment and Adjudication (CIPA) Act is proposed. This paper, though, is to disclose the findings on legal cases and sub-contractors‟ perspective on direct payment, by preliminary analyzing the quantitative questionnaire survey to the first 81 from the identified 1,500 sub-contractors throughout the country. Before that, from 186 cases, only 5 selected cases are analysed that thoroughly addressed the judgment of direct payment. It is found out that the particularly small sized subcontractors are definitely need to enhance their knowledge of the so-called the „Security of Payment‟ Regime to benefits from the proposed Act.

• Item Type: MPRA Paper
• Language: English
• Keywords: Malaysia; Legal readiness; Sub-contractors; Security of payment; Construction industry
• Subjects: K - Law and Economics > K3 - Other Substantive Areas of Law > K32 - Environmental, Health, and Safety Law; K - Law and Economics > K1 - Basic Areas of Law > K12 - Contract Law; L - Industrial Organization > L7 - Industry Studies: Primary Products and Construction > L74 - Construction

References

ABDULLAH, F. Construction industry and economic development: The Malaysian scene [B], 2004, Johor: Universiti Teknologi Malaysia.

AMEER-ALI, N. A. N. (2006). A “Construction Industry Payment and Adjudication Act”: Reducing payment-default and increasing dispute resolution efficiency in construction. Masters Builders [J], 2006.3, PP:4-14.

ANONYMOUS. A contractor‟s point of view on security of payment. Masters Builders [J], 2006.3, PP:16-17.

FONG, L. C. The Malaysian construction industry – The present dilemmas of unpaid contractors. Masters Builders [J], 2005.4, PP:80-82.

MAY, A.L.; SIDDIQI, K. Contingent-payment provision puzzle – Safeguarding against and unintended outcome. Journal of Architectural Engineering [J], 2006.12, PP:158-162.

SIN, T. A. S. Payment issues – The present dilemmas of Malaysian construction industry. Masters dissertation [D], 2006, Retrieved from Universiti Teknologi Malaysia Institutional Repository.

SINGH, H. Construction of contingent payment clauses: Is there light at the end of the tunnel?. Malayan Law Journal Articles [J], 2006.3.

SINGH, H. Engineering and construction contracts management – Post-commencement practice [B], 2003, Kuala Lumpur: LexisNexis.

SUPARDI, A.; ADNAN, H.; MOHAMMAD, M.F. Security of Payment Regime in Construction Industry: Are Malaysian Sub-contractors Ready?. The Built & Human Environment Review [J], 2011. 4 (1), PP:122-137.

SUPARDI, A.; ADNAN, H.; MOHAMMAD, M.F. Sub-Contractors‟ Readiness on the Malaysian Security of Payment Legislation in Construction Industry. International Conference on Construction and Project Management [C], 2010, Chengdu: IEEE, PP:248-252.

SUPARDI, A.; ADNAN, H.; YAAKOB, J. Legal Analysis on Malaysian Construction Contract: Conditional versus Unconditional Performance Bond. Journal of Politics and Law [J], 2009.2(3), PP:25-34.

SUPARDI, A.; YAAKOB, J.; ADNAN, H. (2009). Performance Bond: Conditional or Unconditional. 2nd Construction Industry Research Achievement International Conference [C], 2009, Kuala Lumpur: CREAM.