POSSESSION OF SITE AND INSURANCE &

BONDS

PRESENT BY

NUR FARAH IZZATI BINTI BASHARUDIN (2017204694)

NIK AHMAD ADAM BIN NIK MUHAMMAD RIDZWAN (2017829664)
MUHAMMAD AMIRUL HAFIDZ BIN ABD MALIK (2017215498)
POSSESSION
OF SITE
 DEFINITION
Definition for possession of site
INTRODUCTION

DIFFERENTS BETWEEN PAM

CONTRACT 2018 WITH CASE STUDY
HW Nevill (Sun blest) Ltd v
QUANTITIES & PWD FORM William Press & Son Ltd
203A (REV.1/2010)
 01
DEFINITION
DEFINITION

POSSESSION SITE
Something that you own or has with you A place where something is, was or will
at a particular time. be built.
 02
INTRODUCTION
INTRODUCTION

1. The date for possession of the site may stated in the contract by the contractor.

2. If the date of possession is not stated in the contract, the site will be handed over to the contractor within a
reasonable time after both parties signing the contract.

3. If client fails to give possession of the site to the contractor without provisions for delay in the contract, then they
will be in breach of contract.
 03
DIFFERENTS BETWEEN PAM
CONTRACT 2018 WITH
QUANTITIES & PWD FORM 203A
(REV.1/2010)
DIFFERENTS BETWEEN PAM CONTRACT 2018
WITH QUANTITIES & PWD FORM 203A
(REV.1/2010)
PAM CONTRACT PWD FORM 203A
2018 WITH QTY (REV.1/2010)
Clause 11.0 – Inspection of
Clause 9.0 – Access to the Site
works
Clause 38.0 – Possession of
Clause 21.0 – Date of Site
commencement, Postponed
& Completion Date Clause 46.0 – Access for
work, etc
PAM CONTRACT 2018 WITH
QUANTITIES
CLAUSE 9.0 - ACCESS TO THE WORKS
CLAUSE 9.1 :

➢ The contractor need to ensure that Architect,

Consultant and their authorized representatives have
access to the construction site or other places such as
factories and places where any construction plant and
machineries and others being fabricated or stored.
➢ Contractor also need to ensure all sub-contracts
contain provisions that the design team have access
to the site.
 PAM CONTRACT 2018 WITH QUANTITIES (CONT’D)

CLAUSE 21.0 – DATE OF COMMENCEMENT, POSTPONED & COMPLETION DATE

CLAUSE 21.1 (Commencement & Completion) :

➢ On the date of commencement, the contractor shall be able to commence their
work and should complete their work on or before the date of completion.
➢ If any delay from the employer in giving possession of site to the contractor, the
Architect shall grant an extension of time under clause 23.8(g).

CLAUSE 21.2 (Sectional Commencement Date) :

➢ If there are different Dates of Commencement for sections of the works, it
should be stated in the appendix.

CLAUSE 21.3 (Sectional Completion Date) :

➢ If the Completion Dates for sections of the works stated in the Contract
Document is different, Architect shall issue certificate to the contractor.
➢ Only the provisions in the contract shall apply with necessary changes as if
each such section was a separate contract.
 PAM CONTRACT 2018 WITH QUANTITIES (CONT’D)

CLAUSE 21.0 – DATE OF COMMENCEMENT, POSTPONED & COMPLETION DATE

CLAUSE 21.4 (Postponed or Suspension of the Works) :

➢ Architect may issue an AI in regard to the postponed or suspension of all or any
parts of works to be executed under the contract.
➢ If insurance is covered by the contractor (19.0 & 20.A), the contractor shall
ensure the full insurance coverage for the whole period of postponed or
suspension of the works.
➢ If insurance is covered by the employer(20.B & 20.C), employer should ensure
the similar insurance coverage.
 PWD FORM 203A (REV.1/2010)
CLAUSE 11.0 – INSPECTION OF SITE

CLAUSE 11.1 :

✓ The contractor shall had inspect and examined the site

before proceed with his tender.

✓ There are several things that the contractor need to satisfy

himself before submit the tender which are:

▪ Nature of the ground & subsoil

▪ Form & nature of the site
▪ Extent & nature of the work, materials, & goods
necessary for the completion of the works
▪ Means of communication & Access to the site
▪ Accommodation he may require
▪ All necessary information
PWD FORM 203A (REV.1/2010)
CONT’D
CLAUSE 11.2 :

• Any information or documents forwarded by the Government to the contractor shall not
relieve the contractor of his obligations under the provisions of this clause
PWD FORM 203A (REV.1/2010)
CLAUSE 38.0 – POSSESSION OF SITE

CLAUSE 38.1 :
• No work under this contract shall commence until the Performance Bond
stipulated (13.0) & insurance policy (15.0 & 18.0).
• If the contractor shall produce to the Government the cover note of the
said insurance policy and the receipt of the premium paid, it shall be
sufficient discharges of his obligations under this clause.
CLAUSE 38.2 :
• Unless the contract document shall otherwise provide, possession of the
site as complete as may reasonably be possible but not as to constitute a
tenancy, shall be given on or before the “Date of Possession” stated in
Later of Acceptance (LA).
PWD FORM 203A (REV.1/2010)
CLAUSE 38.0 – POSSESSION OF SITE (CONT’D)
CLAUSE 38.3 :
❑ Provided always that the possession of site may be given in section or in
parts.
❑ Other restrictions upon possession of the site shall be stated in the
Appendix to these conditions or in the Contract Documents.
CLAUSE 38.4 :
❑ S.O may issue instructions (43.1h)
❑ If any delay in giving possession of the site as stated in the LA or delay in
giving any section or part of the site as provided in Clause 38.3
❑ The contractor shall not be entitled to claim for any loss or damage
caused by such delay in giving possession of the site.
❑ The contractor also do not entitled to terminate the contract.
 If the delay is less than 90 If the delay is more than 90
days, refer to Clause 38.4 days, refer to Clause 38.5

<90 Days
Original date of site New date for site
possession possession
PWD FORM 203A (REV.1/2010)
CLAUSE 38.0 – POSSESSION OF SITE (CONT’D)
CLAUSE 38.5 :
▪ S.O shall give written notice to the contractor of the causes for the delay.
▪ If the delay is more than 90 days of the “Date of Possession” stated in LA,
the contractor have two options.

OPTION 1 :
• Agree to proceed the works when the site is OPTION 2 :
available. • Contractor can determine his own employment.
• Contractor cannot claim for loss & damages. • Contractor entitled to claim for loss & damages
• Contractor cannot determine his own employment caused by the delay
PWD FORM 203A (REV.1/2010)
CLAUSE 38.5 (CONT’D)

If the contractor failed to reply within 14 days,

✓ The contractor is obliged to proceed with the works.

✓ Contractor is considered as not taking the option

✓ Contractor cannot terminate the contract after agreeing to proceed with the works.
 PWD FORM 203A (REV.1/2010)
CLAUSE 38.6

If the delays in giving the part of the site possession is exceed 90 days, S.O will give written
notes and the contractor also may inform the S.O in writing within 14 days of its decision.

Date for If S.O agrees, becomes

possession variation.
> 90 Days 14 Days
❖ Contractor required to
carry out the work
❖ Contractor cannot
terminate contract
OPTION 1 :
OPTION 2 :
• Agree to proceed the If S.O disagree,
• To request for the affected
works ❖ Contractor proceed work
part to be omitted from the
• Cannot terminate the when the portion of the site
contract
contract is made available.
❖ Contractor can claim for
loss & damages & cannot
terminate contract
PWD FORM 203A (REV.1/2010)
CLAUSE 46.0 – ACCESS FOR WORK, ETC

CLAUSE 46.1 (ACCESS FOR S.O) :

➢ S.O and other authorized person shall have access to the site at all times.
➢ A similar right to access to the factories, workshops or other places of a
sub-contractor or supplier by the S.O and need to be in the sub-contract.
➢ Any person so removed from the Works shall be replaced without delay
with substitute approved by the S.O
CLAUSE 46.2 (ACCESS FOR OTHER CONTRACTORS OR WORKMEN) :
➢ The contractor shall in accordance with the requirements of the S.O
afford all reasonable access and facilities to any other person engaged by
the Government and their workmen and of any other constituted
authorities for the purposes of executing any work on or near the site.
04CASE STUDY
HW Nevill (Sun blest)
Ltd v William Press &
Son Ltd
HW Nevill (Sun blest) Ltd v William Press
& Son Ltd

A. B. C.
HW Nevil is the employer William already done his Nevil had give certificate
& William is the work on time and also of practical completion to
contractor. giving back the site to the the William.
employer.

D. E. F.
William need to re-enter Nevil should give Nevil do not allowed
the site in order to make permission to William William to enter the site
good the defects. because William is because the date of
necessary to make good possession of William is
his works. ended.
HW Nevill (Sun blest) Ltd v William Press &
Son Ltd (Cont’d)

• In clause 15(2) and (3) gave only a right to re-enter to the site to
such extent as was necessary to remedy defects pursuant to a
schedule prepared or instructions given by the architect.
• The defects in the drains discovered after the certificate of practical
completion had been given undoubtedly constituted breaches of
contract. Clause 15(2) and (3) provided an efficient way of dealing
with defects to the advantage of both parties.
INSURANCE
DEFINITION

INSURANCE
Insurance is a contract, represented by a
policy, in which an individual or entity
receives financial protection or
reimbursement against losses
 WHAT TIME TO PROVIDE THE INSURANCE

• Before the works are start on site. This is to ensure that the liability of the contractor
and the sub-contractor are always covered with the necessary insurances.

• The contractor is not entitled to extension of time due to the delay in depositing
insurance policies with the government.
 IMPORTANCE OF INSURANCE

• Insurance is intended to reinforce the compensation since insurance provide better

protection
• If the insurance fails to pay damages adequately, the contractor is still responsible to
meet the situation.
• The contractor compensation the employer in respect of :
a. Any personal injury to or death of any person, for example to the supplier
b. Any injury or damage of any kind to any property, for example building near by
 TYPE OF INSURANCE BETWEEN PAM CONTRACT 2018
WITH QUANTITIES & PWD FORM 203A (REV.1/2010)

PWD FORM 203A PAM CONTRACT 2018 WITH

(REV.1/2010) QTY

• Indemnity In Respect of Personal Injuries

and Damages to Property (Clause 14.0) • INJURY TO PERSON OR LOSS AND/OR
DAMAGE OF PROPERTY AND IDEMNITY TO
• Public Liability Insurance (clause 15.0) EMPLOYER (clause 18.0)

• Insurance of Work (clause 18.0) • INJURY TO PERSON OR LOSS AND/OR

DAMAGE OF PROPERTY (clause 19.0)
• Workmen compensation (clause 16.0)
• INSURANCE OF NEW BUILDINGS/WORKS –
• SOCSO (clause 17.0) BY THE CONTRACTOR (clause 20.0)
 PWD FORM 203A (REV.1/2010)
Injury to Person and Property

From Clause 14.1(a) :

• The contractor is responsible for any personal injury or death of any person while
performing his duty in work.

• The client is not responsible for any injury and death of any person in implement work.
• The contractor is to compensation the employer to provide protection to the
government against the claims by a third party due its negligence and fault.

• Not liable to compensation the government if the loss is will caused by the
government’s negligence

• Contractor’s obligation is to provide protection to the government covers the whole

contract.
• The contractor is to compensation the employer to provide protection to the
government against the claims by a third party due its negligence and fault.

• Not liable to compensation the government if the loss is will caused by the
government’s negligence

• Contractor’s obligation is to provide protection to the government covers the whole

contract.
 AMOUNT INSURED
◦ The insured amount is the limit of liability for any one accident, for example maximum compensation that
could be paid to the injured party in an accident.
◦ The number of accident is not limited.
◦ Limit of liability is difficult to determine but usually the employer fixed it based on the value of contract.
◦ The risk factors normally considered by the employer in determining insured amount include:
a) Source of risk
b) Site safety
c) Public access to site
d) Physical conditions of surrounding building
e) Types of work – renovation, piling, etc.
f) Types of plant and machineries used
AMOUNT INSURED

For government projects with normal risks, the minimum coverage for any 1 accident
where the number of accidents is unlimited are as follows :-

CONTRACT SUM MINIMUM COVERAGE FOR EACH

ACCIDENT

< RM50,000 RM10,000

RM50,001 – RM100,000 RM20,000
RM100,001– RM200,000 RM50,000
RM200,001 – RM500,000 RM100,000
RM500,001 – RM5,000,000 RM200,000
RM5,000,001 – RM20,000,000 RM500,000
RM20,000,001 – RM50,000,000 RM1,000,000
.RM50,000,000 RM2,000,000
INSURED PARTIES

PDW FORM 203A

From Clause 15.1(c)

• The insurance is to be taken under the joint names of the employer and the contractor.

• For sub-contract work, under the joint names of the employer, contractor and the sub-
contractor.
PERIOD OF INSURANCE

• The contractor is required to maintain the insurance for the whole construction period
and the whole of the defect liability period.

• The insurance is to cease only upon the issuance of the certificate of completion of
making good defects.
CALCULATION PREMIUM

• The contractor is required to furnish the SO the insurance policy and the receipt of the
premium paid before it start the work.

• No fixed rate because each risk has its unique features.

• Rates difference between insurance companies and much influenced by the limit of
indemnity, contract sum, location of site, insurance companies regulations and etc.

• Contractor is normally given discount up to 50% of amount of premium payable and

this depends much on their business relationship.
RENEWAL OF INSURANCE

PDW FORM 203A

Clause 15.3

• The Contractor is responsible to renew the insurance policy if necessary, for example
have EOT
• If not, the employer may renew the insurance on behalf of contractor
• The Government is entitled to the on cost charges as stated in the appendix
• The Employer also may deduct the renewing cost from the Performance Bond
CANCELLATION OF INSURANCE

PDW FORM 203A

Clause 15.4(a)

• The Contractor can make any cancellation to the insurance policy within 30 days after
the notice of cancellation is issued to the employer.
• Cancellation only can be made after the issuance of CCMGD
• The 30 day period gives ample time for the government to take any necessary action
before the cancellation of the insurance policy.
 DIFFERENCES OF INSURANCE POLISY BETWEEN PWD 203A AND PAM

PWD 203A PAM

INSURANCE WORKS
Clause 18 : Clause 20 :

• If the loss and damage is caused by contractor, the • If the loss and damage is caused by contractor, the

contractor must pay for the loss or damages. insurance will covered the default.

PUBLIC LIABILITY

Clause 15 : Clause 19 :

• Insurance policy cover all personal injury or death • Insurance policy cover personal injury or death and

and damages to the property for the third party damages to the property for the third party in execution of

including within the site area and the nearby. works.

 WORKMEN COMPENSATION

Clause 15 : Clause 18 :

• Insurance of workmen compensation is not a • Insurance of workmen is compulsory rule for local or

compulsory rule in construction contract and its not a foreign worker.

pre-rule before contractor start the construction as

stated in clause 37.

 Case of O'Shaughnessy v.
Smuckler Corp.
The momentum gained by construction insureds has already carried into 2008, with the court's opinion in
Aten v. Scottsdale Ins. Co., 2008 WL 65595 (8th Cir. Jan. 8, 2008), applying Minnesota law. Relying on
O'Shaughnessy v. Smuckler Corp., 543 N.W.2d 99 (Minn. App. 1996), the Eighth Circuit Court of Appeals
held that the defective construction of a home, which led to water damage to that home, was an accident,
and thus an "occurrence." The court remanded the case to the trial court for a determination as to
whether the defective workmanship had been performed by a subcontractor.
PERFORMANCE
BOND
DEFINITION

PERFORMANCE BONDS
debt investment in which an investor
the action or process of carrying out or loans money to an entity (typically
accomplishing an action, task, or function. corporate or governmental) which
borrows the funds for a defined period of
time at a variable or fixed interest rate.
 PERFORMANCE BOND CAN USE

• The performance bond can be used at any time whenever there is non-performance of the
contract by the employer.
• The performance bond may be used in the following circumstances:
i. Payment of defects made good by others if SO elected to do so.
ii. Payment of works executed by others if failure by the contractor to perform work when
instructed.
iii. Payment for removal of improper works, material or plant.
iv. Reimbursement of insurance premium paid by the employer if the contractor fails to insure as
required.
v. The recovery of liquidated damages
vi. The recovery of loss in determination by Employer.
 PERFORMANCE BOND
• A performance bond is an agreement between the Government, the contractor and a third party like
bank or insurance company.

Clause 13.1(a)
• The contractor is required to submit the Performance Bond before he is allowed to start work on site.

Clause 13.1(b)
• Contractor deemed to opt for performance guarantee sum

Clause 13.2
The third party agrees to pay a sum of money to the Government in the event of non-performance of the
contract by the contractor.The duration of the performance bond is from the date of possession until 12
month after expiry of defects liability.
 AMOUNT OF GUARANTEE
Clause 13.1 (a)
The value of the performance bond must be for an amount equal to 5% of
the contract sum.
Example calculation of value of performance bond:
Contract Sum = RM10,000,000.00
Value of PB = 5% of RM10,000,000.00
= RM500,000.00

The value of the performance bond does not change even though the
contract sum changes.
 Performance guarantee sum
PWD FORM 203A
Clause 13.2
PAM WITH QUANTITIES
Clause 39

• deduction ten percent (10%) of amount from first and subsequent interim
payments
• Until the total deduction is equivalent to the 5% of the total sum.
 PERFORMANCE BOND
• The performance bond provides protection to the government against non-
performance of a contract by the contractor and will be released to the
contractor when the work has been completed and the defects made good by
the contractor.

• If the contract is terminated by the government, the performance bond is

automatically forfeited. The forfeiture takes effects regardless whether the
termination is lawful or not.

• This is to pay for the loss and damage incurred by the employer due to the
termination of the contract.
 CASE STUDY
“In consideration of Esso Production Malaysia Inc. (EPMI) agreeing to release to
Perbadanan Ladang-Ladang Tabung Haji Sdn. Bhd. (PLLTH) the sum of DM466,562 (Four
hundred sixty six five hundred sixty two only) being the amount of liquidated damages (L/D)
presently withheld by EPMI pursuant to several purchase Orders made between EPMI and
PLLTH, we hereby Unconditionally and Irrevocably guarantee the payment to EPMI, the
Ringgit equivalent of the sum of DM466.562 (Four hundred sixty six five hundred two
only).”
THANK YOU!