Monday, July 01, 2013

KLIA2: UEMC-Bina Puri JV Contract - "MAHB Adament about LAD fine"

The blame game of KLIA2
The Star Online
Saturday June 29, 2013

I like to make a few comments on some of the facts and statements that was made by Datuk Azmi Murad, the General Manager of MAHB.

[QUOTE from Para 5-7 ]

According to MAHB operations senior general manager Datuk Azmi Murad, the last-minute instructions are just minor changes needed by stakeholders, and this doesn't affect the completion date of the seven sectors of the terminal itself. Among the requests are the addition of 45 more immigration counters, and additional ticket booths and counters. “The instructions for the immigration counters are a valid point, and the contractors can apply for extension of time (EOT) to justify the extension. This may take only a further two to four weeks to complete, but does not justify an EOT for one year. The JV (referring to UEMC-Bina Puri JV, who is the Main Contractor for the Main terminal Building and Satellite Building & Associated works) already has enough time to complete the works before June,” he says.


My remarks:

As reported, Datuk Azmi acknowledged that “the instructions for the immigration counters are a valid point and the Contractors can apply for EOT to justify the extension.” (ibid)

But what was puzzling is: Datuk Azmi had acknowledged the VO works for the extra 45 immigration counters and that such additional works (or what we call, 'Variation Order' works) may take 2 to 4 weeks to complete. This statement in itself means that the Contractors are contractually entitled to EOT. The fact is, this VO Instruction was issued on 29th May 2013 and the Contract Completion Date is 15th June 2013. So, would MAHB still expect the Contractor to complete the works by 15th June 2013? And if Datuk Azmi admitted that it may only take 2 to 4 weeks to complete, then the Contract Administrator (CA) must perform his fiduciary duty by granting the Extension of Time (EOT) accordingly. However, the CA failed to do so, and instead choose to issue the Certificate for Non Completion on 16th June 2013 and thereof imposed the LAD. From the presentations made at the press conference on 28th June 2013 at the KLIA2 site, there were quite many instructions issued by MAHB for additional works and modification of designs during the period between March to June 2013. The period between March to June was significant as the earlier EOT granted was made on 15th March 2013. As such, it was imperative that the CA would have to assess the EOT fairly and reasonably.

It is trite construction law that there will be implied into every construction contract terms whereby the owner shall cause the Contract Administrator (CA) to act fairly, impartially and within the times required by the contract conditions. It is also understood that the CA has a legal obligation to so act, using his 'professional skills' and 'best endevours' to reach the correct decision rather than necessarily deciding in the owner's favour.

On the legal perspective, the Employer and/or his Contract Administrator (CA) had wrongfully issued the Certificate for Non Completion (CNC) because it is trite law that the CA is duty bound, before issuing the CNC, to act fairly and reasonably, by assessing and exhausting all the events of delay caused by the Employer before he forms his opinion, and that the Contractor has no more valid entitlement to any EOT. However, the Variation Order instruction to add 45 extra immigration counters was issued only on May 29, 2013 while the CNC was issued on 16th June 2013, i.e. 2 weeks later.

Clearly, the Contract Administrators are ignorant of the law of contracts. What is puzzling is the fact that MAHB has a legal department filled with legal experts.

In Peak Construction (Liverpool) Ltd v McKinney Foundations Ltd (1970) the Court of Appeal held that Peak Construction was not entitled to recover Liquidated Damages from McKinney. The Court of Appeal found that at least part of the 58-week delay had been caused by the corporation itself, and no attempt had been made by the corporation to extend time. Accordingly, there was no date from which Liquidated Damages under the main contract could begin. Lord Salmon held “If the failure to complete on time is due to the fault of both the employer and the contractor, in my view, the clause does not bite. I cannot see how, in the ordinary course, the employer can insist on compliance with a condition if it is partly his own fault that it cannot be fulfilled.”

The Court of Appeal had held that:

'Notwithstanding that the Contractor is not entitled to or has not claimed an extension of time, the Superintendent Officer (SO) or CA may at any time and from time to time before the issue of the Certificate for Non Completion (CNC) by notice in writing to the Contractor extend the time for practical completion for any reason.'

In such a case where MAHB and his CA has issued the CNC and LAD notice, Edmund Davies has this advice:

“The stipulated time for completion having ceased to be applicable by reason of the employer’s own default and the extension clause having no application to that, it seems to follow that there is in such a case no date from which liquidated damages could run and the right to recover them has gone.”

Importantly, common law courts have construed extension of time clauses narrowly when determining their application to events of owner-caused delay. By way of example, courts have held that clauses providing general grounds for delay, including the catch all other causes beyond the contractor's control and for any cause not under the control of the builders will not cover specific acts of prevention by an owner. As stated by Professor Wallace QC as editor of the 11th edition of Hudson's Building and Engineering Contracts, it is likely courts interpreted these clauses narrowly because of their dislike of, and willingness to invalidate, liquidated damages provisions for any event not expressly provided for in a contract or within the contractor's scope of responsibility.

A well-known example of the prevention principle is the 1971 English Court of Appeal judgment, Peak Construction (Liverpool)Limited v McKinney Foundations Limited. 

In Summary, it can be observed that MAHB had shot their own feet by issuing the CNC and invoking the LAD while at the same time, they acknowledged that they had knowledge of the delay events caused by the issuance of Written Instruction for Variation (legally classified as Employer’s Delay) whereof MAHB and his CA had failed to grant the necessary EOT to the Contractor. In this circumstances, the Contract will become time at large and any wrongful deductions enforced unto the contractors’ payment will be construed as an Act of Prevention to Completion and a Fundamental Breach of Contract that activates Section 56 and Section 74 of the Contracts Act 1950.

PARA 11 of the News report


Besides the incomplete terminal, the taxiway and the new Runway 3 are also unfinished, which according to MAHB would not prevent KLIA2 from a delayed opening as it can direct air traffic to KLIA2 via the existing Runway 2, assuming if the terminal was operational.



According to the report, MAHB states that “the taxiway and new Runway 3 (contracted to other corporations) which are unfinished till today (where EOT was granted until August 2013) would not prevent KLIA2 from a delayed opening (in reference to June 15, 2013 completion date for Main Terminal Building & Satellite Building Contract) as it can direct air traffic to KLIA2 via the existing Runway2, assuming if the terminal was operational.”

I am puzzled and flabbergasted! How is it possible for MAHB to assume that the terminal can be operational without the planned taxiway at the Main Terminal Building and Satellite Building? The taxiway and runway has not been completed and will not complete till probably September 2013. So how do the airplanes get to the link-bridge to allow the passengers disembark? And would DCA permit the airplane to land at the airport where construction works and heavy machinery and equipment are still plying and working at the airport sites? What are the safety compliance standards and requirements specified by ICAO, IATA and NACO for this LCCT? The photographic proof and evidence of the existing site conditions will convince any judges to dump this argument. MAHB prides itself of their international standards of Management of Airports and such statement will be embarrassing to potential airport owners.


First envisioned to become a low cost carrier terminal (LCCT) with a price tag of RM1.9bil, it has ballooned to RM4bil featuring state-of-the-art specifications. It is a LCCT but definitely not a low cost terminal. 



Rightly said, this KLIA2 is not a “Low Cost Terminal” as envisaged in the tender document. The design was intended and tendered out to the Contractors as LCCT but the enforcement of the Concept Design Consultants (CDC) who forced unto the Contractors to deliver a detailed design that encompasses high state of the art specifications that ultimately produced a High Cost Terminal (similar or of much higher standards and specification compared to the current KLIA Terminal) for a Low Cost Carrier Terminal Design-and-Build Contract which may be arbitrated in a legal forum at a later date.

The Blame Game of KLIA2

Main contractor of KLIA2 to appeal fine for delay

Wednesday, August 20, 2008

Kg Baru redevelopment: The Paradox

The redevelopment of Kampung Baru will proceed soon. DBKL is pushing ahead with the project and will spend RM236mil to upgrade the pedestrian walkways.

Thereafter, the development will encroach into the Malay heartland and the people within will be influenced to accept the change - destroy the old, and built a new cityscape; destroy the original, and replace it with a modern cityscape.

Former Titiwangsa MP Datuk Seri Suleiman Mohamed insists that Kampung Baru must move with the times to progress and modern development would help upgrade the lifestyle of the residents.

“Traditions and sentimentality are fine, but the residents must understand that for Kampung Baru to progress, the residents must embrace change,’’ he said.

Change is imminent; but will it be a change for the better or worse? This is the dilemma!

The Malays in Kampung Baru have to think carefully, think deeply and think broadly about this change which once it is agreed upon and contract is sign and works begin, then if any risk event takes place which are not foreseen at this stage the outcome may be insurmountable and fatal.

Ponder, Ponder, Ponder!
Risk, Risk, Risk.
Reward? Reward? Reward?

Development is surely good and once Kg Baru is redeveloped the land will fetch a high premium. The current price of land there may be valued around RM30-RM50 per sq ft. Once developed with a new city skyline the land price may shoot up to RM1,000 per sq ft. But, by then, the people of Kg Baru would not be the owner of the land anymore; it would probably be acquired by DBKL or the private developers and it is they (the new owners) who would reap all the benefits and reward of the new land price. The Kg Baru residents would probably have opted to trade-in their land in exchange for a condominium and some cash (sufficient for them to buy furnitures and renovate their new home). They could only stand and stares at the land and say to their grandchildren: "Dulu tanah ini hak Tok. Sekarang sudah tak da." The grandchildren would then asked: "Kenapa Tok jual tanah yang molek ini? Sekarang kami tak sanggup beli balik hak ini lagi."

Once development gets underway, the bungalows and shophouses would be demolished and highrise buildings and skyscrapers will be the new skyline.

The cost of redevelopment and the cost of procurement of the rights to the redevelopment would be more than RM1 billion. Who could afford to pay such sum? The big time guys! Who are they? The Chinese and the foreigners!

With such massive investments, the developers must get sufficient buyers for those properties. The price of the properties will not come cheap; each apartment or each condominium units, each office lot or retail space will cost RM700,000 and above; it could even be as high as RM2mil for each strata title. Who could afford to buy them? The residents would have opt out of the land or would have acquired a condominium unit in exchange for the land. But the residents are a small population as compared to the vast development. The development needs a lot of buyers; anyone who can afford to invest and buy them; anyone.

As such, people from outside will have to be lured to buy the properties. Investors, speculators, foreigners and non-Malays would be lured to own a property there.

What would then become of Kampung Baru, the Malay heartland? So, what then happens to a Malay heartland?

It will no more be Kampung Melayu. It would most likely become "Bandar Cina dan Mat Salleh", because it has being turned into a metropolitan city.

By then, it would be too late and the Malays will have to cry "Kami Hilang Ketuanan" and cry "Kami di serang oleh pendatang"; they have then lost the last bastion of control in the city.

It must be noted that, for without the investors and buyers, the redevelopment will fail. Look at South Johor Economic Region/ Iskandariah Development Zone (Gelang Patah) - without the Singaporeans the development is a standstill; but with Singaporeans, the Johor Malays will cry "invasion". Mahathir had warned about the risk of "invasion".

So, the people of Kampung Baru is in a paradoxical position - develop or remain?

My opinion? Remain; developed and Kampung Baru becomes Bandar Cina campur Orang Putih.

But if the Malays can accept the change, and are able, capable and competent to deal with globalization and liberalization and capitalism, then redevelopment is acceptable and good. Please remember: Don't blame the Chinese; the mooters of the redevelopment are the Malays themselves. You take your own risk and blame only yourself. I am of the opinion that Kampung Baru should remain as the Malay heartland. But that is only one man's viewpoint and carries no weight.


Read more about it below:

Star Metro: RM236mil to upgrade Kampung Baru

Star Metro: DBKL prefers landowners to develop area on their own

Residents worried development will spell death for heritage


Star Metro: RM236mil to upgrade Kampung Baru

THE Kuala Lumpur City Hall (DBKL) will spend a whopping RM236.5mil to upgrade the infrastructure in Kampung Baru.

The federal government is contributing RM100mil from the allocation under the 9th Malaysia Plan.

One of the projects involves building a series of pedestrian walkways to improve connectivity and accessibility within the city.

The DBKL said a tender would be called soon to build the walkways connecting Dataran Merdeka to Chow Kit and Kampung Baru at a cost of RM31mil.

According to DBKL land development unit director Mohd Sahak Surip, the pedestrian project will be carried out in phases.

THE Kuala Lumpur City Hall (DBKL) prefers to let the Kampung Baru residents develop their own land while it plays the role of administrator.

According to DBKL master plan department director Zainab Mohd Ghazali, under the Draft Kuala Lumpur City Plan 2020, there are four options for the Kampung Baru landowners on the development of their area.

The first option allows the landowners who want to develop their land on their own to go ahead and do so.

The second option is a joint development project among the landowners to develop their land and to share the development cost.

The third option involves the Kampung Baru Development Corporation teaming up with developers to develop the land. In this instance, the DBKL will act as the mediator.

The fourth option involves the DBKL acquiring land in Kampung Baru for development under Section 3 (1) (b) of the Land Acquisition Act 1960.

ALTHOUGH the federal government has announced the setting up of a Kampung Baru Development Corporation with an initial funding of RM100mil to develop one of Kuala Lumpur’s oldest villages, most of Kampung Baru residents do not seem to be excited.

Obviously, they do not want outsiders to be involved in the development of their precious heritage and want the right to determine the future development of the area.

Since the Draft Kuala Lumpur City Plan 2020 was unveiled nearly three months ago, most of the Kampung Baru landowners have been having sleepless nights, worrying that their lands may be acquired by force under the Land Acquisition Act 1960.

As the Aug 31 objection period deadline for the draft plan draws near, many landowners are concerned and worried that the plan may be confirmed without due consideration of their rights, interests and welfare.

Most of the residents welcome development but are not very sure what the draft plan is all about, especially the matters concerning the mechanism for developing the land.

“It is so confusing. I’m afraid to lose my house. It’s all I have. I want to stay here forever,’’ 69-year-old Aishah Mohd Tawil said with a sob.

The poor woman has apparently been impressed by the pictures of mega projects printed in the draft plan but wondered just where her little kampung house was going to fit in all those beautiful but daunting pictures.

“Can you blame us for seeking help from our wakil rakyat (MP) because the DBKL (Kuala Lumpur City Hall) did not want to listen to us or come here to see us,’’ 62-year-old Zakaria Yahaya said.

“I don’t care what party the MP (Titiwangsa MP Dr Lo’ Lo’ Mohamad Ghazali of PAS) represents, but she is the only one who can present our views in parliament,’’ the Kampung Baru native said.

Resident Hashidah Abdul Razak said she would never trust anyone again when it concerned development affecting her home.

Hashidah, 50. said both her father Abdul Razak Syed and grandfather Mohd Sayed were cheated in the 1980s when a developer friend forged the S&P documents to swindle them of their land in Kampung Baru.

Hashidah has not recovered from the pain and anguish brought upon by endless court battles and an out- of-court settlement that was only half of what the property was worth.

“It makes no difference to me who develops Kampung Baru but I will not be cheated again,’’ she said.

“We want to make sure that outsiders are not involved in the development of Kampung Baru,’’ Hashidah said.

However, former Titiwangsa MP Datuk Seri Suleiman Moahamed insists that Kampung Baru must move with the times to progress and modern development would help upgrade the lifestyle of the residents.

“Traditions and sentimentality are fine, but the residents must understand that for Kampung Baru to progress, the residents must embrace change,’’ he said.

Friday, May 11, 2007

$220 million BDC Project

The RM220 million BDC interchange project, which encompasses the Kuching International Airport-Stutong Link Road was finally completed in a record 8 months, one year ahead of schedule.

Who could have done that? Which company has such ability?

It is none other than ... Ting Pek Khiing, the superman of construction and the company is Global Upline Sdn Bhd of which Ting could only be named as the advisor.

"Many people are doubtful we can make it. Today we prove we can do it," Ting said.

According to Ting, the design and workmanship of the interchange was among the best in Malaysia.

I am not able to comment if this is the best in Malaysia regarding workmanship and design, but one thing is for certain - only Ting Pek Khiing can do such a massive project in 8 months for a project that has 18 months contract period and of which is worth some RM220 million. No other contractor could... bearing in mind that the duration is calculated from the date in the award letter, not the date of physical commencement.

Syabas to Tan Sri Datuk Ting Pek Khiing and Global Upline. Sarawak Boleh!

Monday, February 05, 2007

Designed to Fail!

Some shocking facts about contractors who were awarded government projects:
  • They lack expertise. Incompetent.
  • Too ready to make a quick buck.

Projects in the spotlight recently:

  • Middle Ring Road 2: Cost - RM120m (it actually cost RM238.8mil); an extra RM70m to pay for repair work paid by the govt even though it was contractor's fault.
  • Navy Recruit Training Centre (Pularek): Cost - RM198m; extra RM13m needed, 7,032 defects and paid by govt even though it was contractor's fault.
  • Matrade Building: Cost - RM287m; the cost kept rising until it reached that amount. Original contract value is RM167m. The extra RM120 mil is paid by govt.

It may sound astonishing; even ridiculous. But it is true.

Reasons for these blunders was revealed by Second Finance Minister:

(1) Projects were awarded to contractors who do not have the expertise whatsoever.

(2) Projects given to those who do not have the financial means to complete the projects.

(3) Bumi contractors sold the project for quick bucks.

(4) Consultants' grossly incompetent.

(5) The actual builder is ultimately the sub-sub-sub-sub-sui contractor. (A $200m award to the maincon becomes $80mil when it was passed down to the ultimate builder.)

Incompetent contractors, delays, cost overruns, failed projects: Lessons learnt?

The government has put in place mechanisms to avoid delays in project completion and ensure cost effectiveness. Referring to the New Sunday Times report yesterday on cost overruns in projects due to the incompetence of contractors and consultants, Minister in the Prime Minister’s Department Datuk Seri Mohd Effendi Norwawi said the mechanisms
would ensure only competent contractors were given government jobs.

He said the government had drawn valuable lessons from case studies of failed projects, as well as the successful ones.

“We have put in place new initiatives to streamline our procurement processes and to ensure projects are delivered efficiently and cost effectively.”

These, he said, included:
• Ensuring projects are awarded to competent contractors; and,
• Installing systems to monitor projects on near real-time basis to spot any delivery problems early and resolve problems immediately.

Read more HERE

Thursday, February 01, 2007

MRR2 Repair: RM70 mil

Repairs to MRR2 flyover cost RM70m

1st February 2007, The Star

THE Public Accounts Committee (PAC) has revealed that repairs to the MRR2 flyover in Kepong cost more than RM70mil, Utusan Malaysia reported.

PAC chairman Datuk Shahrir Abdul Samad said the figure was high compared with its construction cost – RM120mil.

He was quoted as saying that this reflected “shoddy design and construction concepts” that were approved by the Government when projects were given to contractors.

“There is no point in spending more and not being able to use it,” he said, adding that it was difficult to pinpoint who was responsible for the mistakes in such a project.

“As an example, the MRR2 project has the contractor and concessionaire constantly pointing fingers at each other. The problems were with the design and construction.”

Shocking? It was originally estimated to be RM20 million.

More shocks? The government is paying the bills. The MRR2 is a Design-Built-Turnkey contract and the contractor has to give an absolute guarantee to the government for the design and construction.

Much more shocks? Wait!!!!

Monday, October 02, 2006

Report Unsatisfactory Contract Works

Schools urged to report unsatisfactory contract jobs

School authorities have been urged to report discrepancies in contract jobs without fear.

Deputy Education Minister Datuk Hon Choon Kim said shoddy work and over-valued jobs should be reported so that appropriate action could be taken against those responsible.

“After the over-valued contract job in a school in Johor came to the limelight, I had called on the schools to give feedback.

“I even had my fax number flashed in the media. But we did not receive a single call from schools."

“So, I took the initiative to ask my officers to call 114 schools to find out if they are happy with the repair jobs at the schools. "

“Most said they are satisfied, some said they have no comment, and a handful of them said they are not satisfied. "

“I forwarded the dissatisfied cases to the Works Ministry for follow up action,” he said.

He added the Works Ministry was in charge of monitoring repair works in schools and awarding contracts.

Hon said this after visiting SJK (C) Keat Hwa K and SJK (C) Keat Hwa S here on Monday.

He said the Keat Hwa K school board members had requested for the school to be relocated elsewhere.

A teacher fell to his death last year when the wooden flooring on the second floor that was heavily infested with termites gave way.

Hon said the the school board should find suitable piece of land and initiate fund-raising drives to finance building works.

“The government will only help to top up the fund, if needed,” he said.

Hon also said the government had doubled the allocation for partially aided schools from RM50mil during the Eighth Malaysia Plan to RM100mil in the Ninth Malaysia Plan.

“This year alone, 152 partially aided Chinese schools were given a total of RM8.257 mil,” he said, adding that last year the Chinese schools only received about RM4mil.

He said 114 Chinese primary schools received an additional allocation of RM4.7 mil last year to repair damages caused by termites.

Pay as Contracted

PM wants government to make prompt payment for services and goods

Monday October 2, 2006

The Star Online

Prime Minister Datuk Seri Abdullah Ahmad Badawi wants Ministries, departments and agencies to make payment for services and goods provided to them without delay.

The Prime Minister has also ordered the Economic Planning Unit (EPU) and the Implementation and Co-ordination Unit (ICU) to issue reminders to the ministries and departments to make the payment as soon as possible.

“I want payments for goods and services provided to the Government be paid expeditiously. Do not wait any longer.

"If the goods had already been supplied and services has been provided to us, then there is no reason to delay payment.

“A contract is a form of promise and if the other party has carried out their part of the deal, then we should carry out ours, which is to pay them for their services,” he told staff of the Prime Minister’s Department at its monthly gathering here on Monday.

The Prime Minister said in Islam, it was important that responsibility be carried out and promises be kept, adding that fulfilling one’s part of the contract was viewed seriously by the religion.

He said delay in payments would not benefit the Government which did not want unpaid bills to pile up, making payment a problem.

“If we do not pay, a lot of people will suffer.

"Workers will not get paid, banks will not be paid for the loans issued and suppliers could not supply construction materials because of they get paid late.

“This will cause anger and dissatisfaction against the Government.

"Therefore, I want to remind ministries, department and agencies to expedite payments and I want the central agencies to remind them on this,” he said.

Cakap boleh serupa bikin kah?

Wednesday, August 02, 2006

MRR2 Re-Open to Light Traffic

MRR2 reopens to light traffic

Light vehicles can now use the Kepong stretch of the Middle Ring Road II (MRR2), closed in March for repairs to structural defects.

Two lanes opened on both sides at 2pm yesterday but the third – the fast lane – would remain close for structural reinforcement works.

Works Minister Datuk Seri S. Samy Vellu, who visited the site yesterday, said these lanes, however, would be closed every weekend from 10pm on Saturday to 6am on Sunday.

He said the Public Works Department was also repairing a stretch on the MRR2 between the bus stop near the Manjalara junction and the access road to the Forest Research Institute of Malaysia near Taman Indah Perdana.

Samy Vellu said repair works on the MRR2 was 70% complete and “progressing smoothly without any delay.”

“Preliminary pier crosshead reinforcement work on all the pillars has been completed. This is to allow light vehicles (below 2.1m in height) to ply the MRR2,” he said.

“Further structural reinforcement work is being done on all pier crossheads and is expected to be completed by the end of November.”

Samy Vellu assured motorists that the MRR2 was now safe and “above the international standard safety benchmark.”

On the RM52.85mil interchange linking the new Sungai Buloh Hospital to the North-South Expressway, he said he expected it to be opened to traffic from Aug 14.

Samy Vellu also said repairs to the Sierra Mas bridge in Sungai Buloh, damaged by floods recently, were set to be completed by the end of this month, and the bridge would be opened on Sept 1.

He also said the Government has approved RM110mil for the repair and upgrading of more than 300 bridges nationwide.

“Some bridges need major repairs while some minor ones.”

NST Report: MRR2 reopens and it's 'safer than ever'

Samy Vellu said the cost of repairs was still being calculated although earlier estimates had pegged it at RM40 million. Contractor Bumihighway, which built the initial stretch, is paying for the repairs.

Structural reinforcement is being done on all pier crossheads and is expected to be completed by the end of November.

The MRR2 was closed for the first time for three months from Aug 8, 2004, and reopened in November last year.

The decision to close the stretch for a second time came after cracks were discovered and a study by independent consultant, Halcrow Group Limited of Britain, found cracks on 31 of the 33 pillars of the flyover.

The company said a design flaw and improper anchorage of the crossbeams on the concrete columns were to blame.

Repairs to the 1.7km stretch included water-proofing and installing metal braces as recommended by Halcrow.