PAM 2006: AN OVERVIEW

by IR. HARBANS SINGH K.S. P.E., C. Eng., Advocate and Solicitor (Non-Practicing)

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INTRODUCTION BACKGROUND The PAM Standard Forms of Contract have been widely used by the Malaysian Building Industry over the last 40 years or so. PAM undertook a complete revamp of the PAM/ISM 1969 Form which was replaced by the PAM 1998 Form. The PAM 1998 Form was extensively employed for the Building Industry in Malaysia but was subjected to criticism by a segment of the said industry. The above necessitated a further review which culminated in the drafting and implementation of the latest revised Form entitled The PAM CONTRACT 2006. The latter Form has been officially launched and intended by PAM to replace the earlier PAM 1998 Form.

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FORMS REVISED The PAM 2006 Family of Forms comprise the following individual Forms that have been revised:

PREVIOUS FORM

NEW FORM

APPLICATION

1.

The Malaysian Standard Form of Building Contract (PAM 1998 Form With Quantities Edition).

Agreement and Conditions of PAM Contract 2006 (With Quantities)

For Building Contracts based on Bills of Quantities (BQ)

2.

The Malaysian Standard Form of Building Contract (PAM 1998 Form Without Quantities Edition)

Agreement and Conditions of PAM Contract 2006 (Without Quantities)

For Building Contracts based on Drawings and Specifications

3.

Agreement and Conditions of Building Sub-Contract (PAM 1998 Sub-Contract Form)

Agreement and Conditions of PAM Sub-Contract 2006

For Nominated SubContractors

It should be noted that the above Forms are for Contracts (or Sub-Contracts) employing the Traditional General Contracting route of procurement and are only for building works. No such Form has been drafted nor formulated for Contracts procured along the Turnkey/Design & Build/Design & Construct/EPC method of procurement.

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NUMBER OF CLAUSES With Quantities Edition PREVIOUS FORM (PAM 1998) 35 NEW FORM (PAM 2006) 38 CHANGE (CLAUSES) Additional 3 Clauses

Without Quantities Edition PREVIOUS FORM (PAM 1998) 35 NEW FORM (PAM 2006) 38 CHANGE (CLAUSES) Additional 3 Clauses

Sub-Contract Form PREVIOUS FORM (PAM 1998) 23 NEW FORM (PAM 2006) 33 CHANGE (CLAUSES) Additional 10 Clauses

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PRINCIPAL CHANGES Though the general arrangement of the clauses as in the previous PAM 98 Form, has been maintained, both the format and content has been appreciably altered. Some changes undertaken have brought the new Form more in tandem with contemporary developments, although these are still relatively deficient in some material aspects. Definite time periods for the principal procedural matters have now been stipulated even for the Architect and the Employer. The Contractors and Employers obligations and liabilities have been now set out in much clearer language and the roles and responsibilities of the Architect expanded and amplified. Prima facie, as compared with the previous PAM 98 Form, in particular, the Employers obligations and liabilities have been appreciably enhanced with its rights relatively reduced or watered-down. In terms of risk allocation, there is a significant transfer of the risk involved in the contract to the Employer as compared to the previous PAM 98 Form. Notwithstanding it being touted as a more balanced Form in terms of risk allocation, in the context of the local building industry, it appears to be now more Contractor friendly. Despite some improvements in style and formatting, the Form is still cluttered with deficiencies, material omissions and provisions difficult to comprehend and implement by an average practitioner. Overall, for a Standard Form that has just undergone major revisions touted to address the alleged shortcomings of the previous Form and to make it a frontrunner for the local building industry, save for some welcome changes, it falls rather short of expectations. Consequently, it may need another major revamp depending on how it is accepted by all the main players in the industry, especially the Employers.

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CONCLUDING COMMENTS The layout and design of the Form is inadequate and confusing. Like provisions dealing with similar issues should have been collated and drafted consecutively e.g. provisions dealing with financial matters such as variations, payment, etc. should have been set out in close relation to each other instead of being all over the Form. In the absence of being privy to the drafting philosophy, the Form appears to be just a revision and reformulation of the previous PAM 98 Form with the layout being maintained but additions/amendments made on a cut and paste basis. It would have been more appropriate to undertake a wholesale revision and reformatting of the previous PAM 98 Form to bring it in tandem with other contemporary Forms of COC. The revisions have not generally taken into account contemporary developments in the industry e.g. the recommendations of documents such as the SCL Protocol on Delay and Disruption have not been given due consideration, etc.; thereby defeating the aim of the local industry being on par with international developments/practice. Predominant use of terms and expressions that are inherently vague or smacking of legalese leading to lack of clarity, precision and disputes as to interpretation. The Form could have been structured such that it would have given the parties especially the Employer greater flexibility and more options in using the Form; which being a Standard Form cannot fit into the varied uses that are likely to be encountered in practice.