Sub-Contractors’ readiness on the Malaysian security of payment legislation in construction industry

Supardi, Azizan and Adnan, Hamimah and Mohammad, Mohammad Fadhil (2010): Sub-Contractors’ readiness on the Malaysian security of payment legislation in construction industry. Published in: International Conference on Construction and Project Management (16 November 2010): pp. 248-252.

Abstract

In Malaysia, subcontractors are definitely benefited from payment provisions in the proposed Construction Industry Payment and Adjudication Act (CIPA Act). However, the particularly small sized sub-contractors need to enhance knowledge of the so-called the ‘Security of Payment’ Regime to improve their awareness of the benefits of the Act. Due to this, this on-going research attempts to introduce balance and proper guidelines to the sub-contractors, in giving the knowledge, to claim for payment and the main contractors able to make prompt payments. Before that, the research may first identify the payment provisions in the standard forms of contracts as well as in domestic sub-contracts especially on Contingent Payment, and exploring the problems and legal issues relating to payment default. Then, by determining the level of knowledge that the sub-contractors have to the proposed CIPA Act, and analysing the various avenues which improve the payment problem in the construction industry those have been incorporated in the construction contract or statutes in the other developed countries as well as the proposed CIPA Act, the aim may be achieved. The purpose of this paper, though, is to disclose the finding of the first objective of the on-going research. In the standard forms of construction contracts, currently, the payment structure to the sub-contractors are divided into three: payment upon certification, direct payment from the employer, and contingent payment or conditional payment. As long as the Malaysian ‘Security of Payment’ Regime remains in proposal, the sub-contractors have to bear with the current structure of payment mechanisms.

• Item Type: MPRA Paper
• Language: English
• Keywords: legal readiness; Malaysia; 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

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