Tuesday, June 14, 2005



DRB-HICOM Bhd chairman Tan Sri Dr Saleh Sulong said both the Government and the company have mutually agreed to appoint an independent claim consultant (ICC) to resolve the dispute on the variation order of the double-tracking project between Rawang and Ipoh.

The variation order refers to the work ordered by the Government that is not included in the original contract, which reportedly is worth RM700mil.

The ICC or arbitrator will be appointed “which will be acceptable by both parties to address the issue of the variation order,” Tan Sri Salleh told reporters.

“For DRB-HICOM, I hope that this issue could be settled as soon as possible because it involves a lot of money,” he said.

Second Finance Minister Tan Sri Nor Mohamed Yakcop last month said the Government had already paid all normal payments to DRB-HICOM with regard to the project. He, however, said the variation order was a separate issue.

The Government had on May 26, taken over the project and on June 1, given the remainder of the project to UEM Construction Sdn Bhd.

Construction claims and disputes are the result of failure of the owner and/or contractor to recognize contractual entitlement, the rights and obligations of each party to the contract and possibly, caused by a changed condition in the context of contract obligations.

Over the years, construction projects have experienced an increasing numbers of claims, liability exposure and disputes issues along with increasing difficulty in reaching reasonable settlements in an effective, economical, and timely manner.

This is largely due to the fact that many project managers and contract administrators are lacking in ability and skills in handling and managing those contractual issues.

Apart from it, there is also the failure to organize and manage adequate documentations to provide evidence in support of their claims.

Construction claims are a reality and management must be prepared for the eventuality of a claim and disputes. Disputes and claims can be traced back to failure by one or more of the parties to the contract to do the work efficiently, to express clearly, or to understand the full implication of the instructions issued to, or received. Claims for loss and/or expenses and damages are often subject of fierce disputes and bitter battles.

An in depth knowledge of contractual rights and obligations together with the knowledge of contract administration is now a prerequisite to managing a successful and profitable project. Project managers are required to have the relevant knowledge and competencies in the area of contract management and administration of construction projects. They must also have the skills of documentation, managing communication system, and have ability to write and serve notices on contractual matters and managing site instructions.

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