THE PAM 2006 FORM OF BUILDING CONTRACT: AN OVERVIEW

By
IR. HARBANS SINGH KS

Chaired by
MR. SUNDRA RAJOO

23rd MAY 2009 (SATURDAY)

Since its introduction in 1969, the Pertubuhan Akitek Malaysia (PAM) standard forms of building contract are used extensively in the private sector commercial, institutional, housing and other building projects. It is estimated that 90% of the building contracts in the private sector are based on a PAM form. As such, the PAM forms have become the defacto benchmark as the Malaysian Standard Form of Building Contract from its genesis in 1969 up to their last revision in 1998.

The PAM/ISM 1969 Forms has had its fair share of criticism and judicial scrutiny. The PAM 1998 Forms did, to a large extent address the shortcomings of the previous PAM 1969 forms and continued to be popular in the later part of the last century and to date. PAM has recently introduced a new set of standard forms entitled PAM 2006 Forms to replace the PAM 1998 Forms. Although the new forms are dated 2006, they were officially launched in 2007 and made available for use recently. .

The PAM 2006 Forms are stated to be a redraft of its 1998 predecessor. However, a closer scrutiny of the two Forms shows only superficial resemblance. The various provisions in the new Forms have been re-worded, reshuffled, and amalgamated. The risk allocation for time, money matters, quality issues and dispute resolution between the contractor, employer and consultant team has been shifted significantly. Although the PAM 2006 Forms contain some contemporary provisions, they are also more procedural requiring the contractor, employer and consultants to strictly adhere to time provisions with the attendant loss of rights or incurring of liabilities. Comparatively, the PAM 2006 Forms limit the rights of employers while reducing the risks borne by contractors. This reallocation of risks proportionately increases the employer’s exposure and burden in terms of claims and payments while providing more possible grounds for disputes between the contractor and employer. Further, the PAM 2006 imposes definite and at times, mandatory time periods on the Architect/consultant team to carry out certain duties, for example, certification and approvals within a specified time. The failure to do so may open the consultant team to professional negligence claims. Prima facie, the PAM 2006 Form has also not referred to nor dealt with directly the statutory requirements of the Certificate of Completion and Compliance (CCC).

In view of the impact of the new forms on all practitioners in the local building industry, this one day course has been formulated to address, as an overview (with emphasis on the PAM 2006 (with quantities) Form), the principal revisions that have been undertaken, the plus points of such revisions, the apparent deficiencies and drawbacks in practice, foreseeable areas of contention and possible improvements that should be made to make these forms relevant and applicable in the contemporary political, commercial and professional scenarios.