Issues in the Construction Industry Commonly Faced

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• Payment delays: Contractors often face payment delays from clients or project owners. The delay of payment claims can cause cash flow problems and hinder the contractor's ability to pay suppliers, subcontractors, and workers on time.

• Certification delays: Contractors sometimes do not even receive payment even after interim certificate has been issued. It is common for contractors to be slammed with under certification, non-certification or partial certification of work done which extinguish the spirit of the contractor to continue delivering top notch service for the project.

• Construction Contract disputes: Disputes arising from contract terms, scope of work, or payment terms can be a common issues in construction industry. These disputes can lead to legal battles and impact project timelines and profitability. Contractors are always at the lower hand when comes to contractual rights and its common for contractors to not understand the terms written in the contract in full when being awarded with the project. The most common contract disputes are for the areas of backcharges, extension of time, defective works, retention sum, performance bond, third party backcharge and etc. 

• Variation works: Contractors may face challenges in claiming for additional works carried out in the absence of express written instructions. It is common      for the contractors to be ordered to carry out the additional works first by way of verbal instruction in which the written instruction has never surfaced even until the project completed, thereby hinder the eligibility by the contractor to claim for the additional works carried out based on the express procedure in the contract.

• Extension of Time: The timeline in a project in the construction industry in      Malaysia is highly competitive and contractors often face challenges in meeting      the master work program as there are plenty of external factors that can affect the progress of works at site. Many contractors fails to comply with the procedure to obtain extension of time and most of the time just let the golden opportunity slips away due to non-familiarity with the contract terms. Some contractors do not even realise that application for extension of time can be done several times and the decision given on the EOT application can be appealed.

• Labour shortage: There can be a shortage of skilled and experienced workers in      the construction industry, leading to delays in project completion and increased      labor costs. In such circumstances, it is advisable to write to the main-contractor or employer to explain the situation and seek a common ground to resolve the issue at hand, rather than wait until being slammed with LAD imposition.

• Project delays and disruptions: Various factors such as weather conditions,      unforeseen site conditions, and issues with suppliers or subcontractors can lead to project delays and disruptions. These delays can result in LAD imposition and termination for contractors, and the contractors are liable for the third party contractor cost engaged by main-contractor and employer to replace the defaulting contractor.

It's important to note that these construction issues may vary depending on the specific circumstances and individual projects undertaken by contractors in Malaysia. Contractors should stay informed about industry trends, regulations, and best practices to mitigate these challenges effectively. At MyContractSolutions, we provide top tier services in explaining the CIPAA procedure and how as a contractor you can minimize your risk with our excellent CIPAA claims.

If you are unsure about what to do when faced with the above challenges, feel free to contact us and secure your 1-to-1 free consultation from us.