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PWD 203/203A, Extension of Time and COVID-19

posted Sep 6, 2021, 8:00 AM by jeffery jim
Will there be Extension of Time (hereafter known as EOT) this time around for another round of lockdown? The previous lockdown or MCO 1.0 allows contractor to gain 100+ days of EOT.

1. I am not sure if EOT this time will be awarded since works are not forcefully stopped as it is in MCO 1.0. Knowing the industry, contractor(s) will try to squeeze everything the have to make their project moving (although we in Project Management understand such action is pretty much idiotic) so that they can work and then apply for EOT which they deemed will be one hundred percent awarded to them in coming months.

2(A). Nevertheless, from legal point of view when we review the Contract Form PWD 203 or 203A, there is one prerequisite in the contract which many contractor will fall into legal trap when EOT leads to Loss and Expenses. I foreseen this is the case within the next two or three years when government don't have the money to entertain such claim for final account.

2(B ). This points to the prerequisite as I have mentioned earlier which talks about Force Majeure. Now under PWD 203A, COVID-19 pandemic can be deemed fittingly described as per clause 57.2 and relevant sub-clauses which should be read in the light of Clause 43 - Delay and Extension of Time.

2(C).Under clause 57.3, the precursor to these sub-clauses activation would be the key condition of "... either Party is unable to perform any of its obligation under this Contract.." Hence, it is a contractual understanding that if one have failed to to perform the contractual obligation, only then EOT shall be awarded.

2(D). In the context of providing chances to work does not relieve the Contractor from their responsibilities to work as if they are in full force because there is no discussion on quantum of work or resources discussed. In another hand, government is relieved from any sort of claim due to delay of resources and so on when performing such work is sub-clause 43.1(i) where contractor have taken into consideration they are working with things under control as they should continue working diligently although this delay is unforeseen prior to binding of the contract but was given the option to work or to halt work.

2(E). This somehow will not be favorable to the contractor as there is no clear locus standi for arbitration and mediation. Now, bringing this in for any adjudication is futile based on CIPAA Act 2012 since EOT was being fair; contractor opt to continue with work despite knowing low capacity and productivity of all sort of resources.

3. Working during the lockdown have a lot of disadvantages and even may cause contractor to default their obligations based on 10.1(e) where Government should always being indemnified from troubles and legal suites in regards to COVID-19.

4. Working with no supervision from the Consultant or In-house Consultant may lead to Quality Assurance Quality Control (QAQC) issues. This will lead to an investigation and of course Stop Work Order until issues are resolved. For this, no EOT shall be awarded or granted. Hence, the contractor will have to suspend and halt all works until clearance is given.

5. With these being said, the last issue will be cost from project management point of view. Working at 60% capacity and without the ability of doing just-in-time (JIT) stock will crash the system financially. High cost for human resources, low WIP, increase waiting time, idling of other resources, and of course the excruciating pain in handling interest rate from creditors will actually jeopardize the project. These kind of issues will only provide contractor with a low productivity of maybe 35-45% of typical progress each day.