THE LEGAL STATUS OF CONSTRUCTION WORK PROGRAMME IN THE

CONSTRUCTION INDUSTRY

SITI FAIRUS BINTI OTHMAN

A project report submitted in partial fulfillment of the

requirement for the award of the
Master of Sciences in Construction Contract Management

Faculty of Built Environment

University Technology Malaysia

NOVEMBER 2009
 iii

For my beloved Mother,

Husband, Sisters, Brothers
And Farya Nafeesa

Thank you for your support, guidance and everything.

 iv

ACKNOWLEDGEMENTS

In the name of Allah most gracious most merciful

A research of this nature may not be undertaken without help and support of others.
They have contributed useful ideas towards my understanding and thoughts. In
particular, I wish to express my sincere appreciation to my supervisor, Dr Nur Emma
Mustaffa, for encouragement, guidance, critics, and friendship. Also not forgotten to the
other lecturers PM Dr Maizon Hashim, PM Dr. Rosli Abdul Rashid, En. Jamaludin
Yaacob and En. Norazam for being so helpful and understanding.

My fellow postgraduate students should also be recognized for their support, guidance
and care. My sincere appreciations also extend to all my colleagues and others who have
provided assistance at various occasions. Their views and tips are useful indeed.

Most of all, I wish to express my deep sense of gratitude to my family, especially to my

mother, sisters for their never-ending support and encouragement. I am so very thankful
to my beloved husband, Alhadi Bujang for always being there to light up my spirit and
give motivation, also to my kindred spirit beautiful baby Farya Nafeesa, having both of
you makes me feel complete. Without their continued support and interest, this thesis
would not have been the same as presented here.

Last but not least, thank you to all who have made this dissertation possible.

Thank you and God bless.

 v

ABSTRACT

In construction contracts, a programme is usually produced to record the

sequence of work. Most standard forms of contract neither state it to be part of the
contract document nor give guidelines of how to prepare a work programme and the
form it should take. The form does not clearly defined the programme’s role and it does
not state that there is a clear obligation to proceed in accordance with the programme.
The aim of this research is to identify the legal status of a work programme and whether
it is contractually binding or not and whether it can be used as an evidence in
establishing variations, assessing extension of time and in determining a contractor’s
employment. The research is based on literature information about construction work
programme, its provisions for international and local standard forms of contract and the
legal implications in court cases where work programme was considered an important
document in the judgment. From the research, it is found that a contractor has to have at
least an updated documents about its project’s progress, minimally in the form of critical
path analysis and logical link for a causative event of delay to be proven. If the
programme includes a method statement then that stated method may become the
specified method of working. This entitles the contractor to a variation if the specified
method is required to be changed. It is also found that the subcontract programme had
no contractual effect as to original main programme. But non-performance under its
obligations may be treated as a repudiatory breach and claims for damages is liable due
to parties determination. Lastly the research found that his entitlement to recover losses
due to the delay or awardment of an extension of time can be considered the
compensation under the contract. All the existence and extent of these obligations are
determined by the terms of the contract.
 vi

ABSTRAK

Dalam kontrak pembinaan, perancangan kerja biasanya dikemukakan untuk

menunjukkan aliran kerja projek tersebut. Tetapi kebanyakan Borang Kontrak Setara
menyatakan perancangan kerja bukannya sebahagian dokumen kontrak. Cara-cara dan
bentuk program yang harus ada, peranannya dari segi kontrak, obligasi pelaksanaan
kerja mengikut aliran dalam perancangan kerja juga tidak spesifik dinyatakan. Oleh itu,
penyelidikan ini adalah bertujuan untuk mengkaji status penggunaan perancangan kerja
dari segi perundangan berdasarkan ikatan kontrak serta kesahihan dokumen tersebut
dalam membuktikan perubahan kerja, lanjutan masa mahupun menjadi asas untuk
penamatan kontrak. Kajian ini dibuat berdasarkan maklumat penulisan mengenai
perancangan kerja, peruntukan klausa berkenaan yang ada dalam Borang Kontrak Setara
di Malaysia dan Antarabangsa dan beberapa kes mahkamah yang menggunakan rekod
perancangan kerja ini sebagai sandaran perbicaraan. Kajian mendapati seseorang
Kontraktor harus mempunyai dokumen yang sentiasa dikemaskini mengenai pencapaian
pelaksanaan sekurang-kurangnya melalui analisa laluan genting dan analisa secara
pautan logik untuk membuktikan peristiwa penyebab kelewatan projek itu. Perancangan
kerja berserta penyata kaedah merupakan dokumen rasmi aturan kerja ketika pembinaan.
Jika adanya perubahan kepada aturan kerja yang diluluskan, ia boleh diberi hak
berdasarkan klausa perubahan. Perancangan kerja subkontraktor tidak mempunyai
sebarang implikasi kontrak kepada perancangan kerja kontraktor utama, namun prestasi
yang tidak memuaskan boleh dianggap sebagai perlanggaran perjanjian dan boleh
mendapatkan tuntutan gantirugi jika penamatan kontrak berlaku. Kajian juga
menunjukkan pemberian ganti rugi atas sebab kelewatan mahupun lanjutan masa
merupakan alternatif pampasan dalam kontrak. Namun obligasi pengurusan kontrak
adalah termaktub terhadap syarat-syarat kontrak itu sendiri.
 vii

TABLE OF CONTENTS

CHAPTER TITLE PAGE

DECLARATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
ABSTRACT v
ABSTRAK vi
TABLE OF CONTENTS vii
LIST OF ABBREVIATIONS xi
TABLE OF CASES xii

1 INTRODUCTION 1
1.0 Introduction 1
1.1 Background of the study 1
1.2 Statement of issues 3
1.3 Objective of Study 5
1.4 Scope of Study 6
1.5 Importance of Research 6
1.6 Research Method 7
1.7 Organisation of the report 8

2 WORK PROGRAMME IN CONSTRUCTION INDUSTRY 11

2.0 Introduction 11
 viii

CHAPTER TITLE PAGE

2.1 Construction Planning 11
2.2 Project Time 12
2.2.1 Defining Project Time 12
2.2.2 Estimating the Project Time 13
2.2.3 Project Time Management 13
2.3 Construction Work Programme 14
2.4 Purpose of Construction Work Programme 16
2.4.1 Project Completion Time 17
2.4.2 Task Time 17
2.4.3 Conflict in Work Sequence 17
2.4.4 Requirement for Financing 18
2.4.5 Effect of Proposed Changes 18
2.4.6 Delay in Work 19
2.4.7 To serve as a Record of Actual Vs Schedule 19
Completion
2.4.8 Historical Cost Data 20
2.4.9 To satisfy a Contractual Requirement 20
2.5 Types of Work Programme 20
2.5.1 Bar Chart 21
2.5.2 Network Programme 23
2.5.2.1 Activity-on-Arrow 26
2.5.2.2 Activity-on-Node 26
2.5.3 Logic Links 27
2.5.4 Linked Bar Chart 27
2.5.5 Line of Balance Method 29
2.6 Advantages of Work Programme 29
2.7 Conclusion 33
 ix

CHAPTER TITLE PAGE

3 PROVISION OF WORK PROGRAMME AND RELATION 34
TO OTHER PROVISIONS IN STANDARD FORMS OF
CONSTRUCTION CONTRACT
3.0 Introduction 34
3.1 Background 34
3.2 Work Programme Provision and In Relation to Others in 35
Standard Forms
3.2.1 Fidic Forms 1999 36
3.2.2 ICE 7th Edition 39
3.2.3 ECC 2nd Eition 41
3.2.4 MF/1 Rev 4 2000 45
th
3.2.5 IChemE Red Book 4 Edition 2001 47
3.2.6 JCT 1998 Forms 49
3.2.7 PAM 1998 and 2006 50
3.2.8 CIDB 2000 50
3.3 Programme and Contractual Entitlement 51
3.4 How Construction Work Programme Can Contribute 55
Analysing Causative Event
3.4.1 Obligation to Complete 56
3.4.2 Obligation to Progress the Works 57
3.4.3 Establishing Compensation 57
3.5 Methodology of Delay Analysis 59
3.6 Conclusion 61
 x

CHAPTER TITLE PAGE

4 LEGAL IMPLICATIONS AND CASES 63
4.0 Introduction 63
4.1. Research Focus 64
4.2 The Obligation to Provide a Programme by Contractor 64
4.3 Obligation if the Programme is included in the 70
Contract Document
4.4 Obligation of SubContractors Towards Main Contract 73
Programme
4.5 Rights of Entitlement 78
4.5.1 Requirement to Reduce Delay 78
4.5.1.1 Mitigation of Loss 79
4.5.1.2 Mitigation of Delay 80
4.6 Obligation to Mitigate Delay or To Progress the Works 82
4.7 Conclusion 84

5 CONCLUSION AND RECOMMENDATIONS 86

5.0 Introduction 86
5.1 Background 86
5.2 Research`s Overview 87
5.3 Research Findings 88
5.4 Recommendation of Enhancement to Current Practice 89
in the Construction Industry for Malaysia’s Contracting
Parties
5.5 Research Constraints 95

REFERENCES 96
 xi

LIST OF ABBREVIATIONS

AC - Law Report Appeal Cases

Adj.LR - Adjudicator Law Report
BLR - Building Law Reports
CA - Contract Administrator
CIDB - Construction Industry Development Board
Con LR - Construction Law Report
ECC - Engineering and Construction Contract
EWHC - High Court of England and Wales Decision
FIDIC - Federation Internationale de Inginieurs Conseils
ICE - The Institution of Civil Engineers, UK
I ChemE Institution of Chemical Engineers
JCT - Joint Contract Tribunal
LT - Law Times Report
MF - Model Forms
MLJ - Malayan Law Journal
PAM - Persatuan Arkitek Malaysia
PWD - Public Work Department
TCC - Technology and Construction Court
SLR - Singapore Law Report
SO - Superintending Officer
 xii

TABLE OF CASES

CASES PAGE
Ascon Contracting Limited v Alfred McAlpine Construction Isle of 73, 81
Man Ltd (1999) 16 Const LJ 316, 66 ConLR 119, 19 October 1999

Balfour Beatty Construction Ltd v. The London Borough of Lambeth 32, 59, 93
(2002)

British Westinghouse-v-Underground Electric Railway (1912) 79

CFW Architects (a firm) v Cowlin Construction Ltd 69

DSND Subsea Ltd v Petroleum Geo-Services ASA and PGS Offshore 66, 67, 68, 83
Technology AS [2000] BLR 530

English Industrial Estates Corporation -v- Kier Construction Ltd 70

[1991] 56BLR93

Garmac Grain Co -v- Faire and Fairclough (1968) 80

GLC v Cleveland Bridge and Eng Co Ltd [1984] 34BLR50 65

Havant Borough Council -v- South Coast Shipping Company Ltd 71

(1996)CILL1146
 xiii

CASES PAGE
Henry Boot Construction (UK) Ltd v. Malmaison Hotel (Manchester) 30
Ltd. (1999)

Hiap Tian Soon Construction Pte Ltd and Another v Hola 77

Development Pte Ltd and Another

John Barker Construction Ltd. v. London Portman Hotel Ltd (1996). 6

John Doyle v. Laing Management 82

Jurong Engineering Ltd v Paccan Building Technology Pte Ltd 75, 77

[1999] 3 SLR 667

J.F Finnegan Ltd -v- Sheffield City Council (1988) 43 BLR 130 68

Kitson Sheet Metal Ltd -v- Matthew Hall Mechanical and Electrical 74
Engineers Ltd (1989)

Leighton Contractors (Asia) v Stelux Holdings Ltd (2004) HCCT 32

29/2004

Martin Grant and Co Ltd -v- Sir Lindsay Parkinson and Co Ltd 74
(1984)

Midland Land Reclamation Ltd -v- Warren Energy Ltd (1997) 84

Mirant Asia-Pacific Construction (Hong Kong) Limited v Ove Arup 74

and Partners International Limited v Ove Arup International Limited
and Ove Arup Partners Hong Kong Limited [2007] EWHC 918
 xiv

CASES PAGE
Motherwell Bridge Construction Limited v Micafil Vakuumtecchnik 31, 81
(2002) TCC 81 CONLR44

Multiplex Constructions (UK) Ltd v Honeywell Control Systems 71

Ltd[2007] EWHC 447 (TCC); 111 ConLR 78; [2007] Build LR 195

Pigott Foundations Ltd -v- Shepherd Construction Ltd (1993) 73

67BLR48

Royal Brompton Hospital NHS Trust v Frederick 29

Alexander Hammond and others (2002) 76 ConLR 131

Scottish Power plc v Kvaerner Ltd (1998) 75

Skanska Construction UK Limited v Egger (Barony) Limited (2004) 7

Sweatfield Ltd -v- Hathaway Roofing Ltd 76

Terrell -v- Mabie Todd and Co (1952) 84

Wells v. Army & Navy Co-operative Society 65

White and Carter (Councils) Ltd -v- Mc Gregor (1962) 80

Yorkshire Water Authority -v- Sir Alfred McAlpine and Son 70

(Northern) Ltd (1985) 32 BLR 114
 CHAPTER 1

INTRODUCTION

1.0 Introduction

This chapter will discuss briefly the background of the study, objective of
the study, scope of the study as well as the methodology of the study.

1.1 Background of the study

A contractor is someone who contracts to build things or someone who contracts

for and supervises construction, as of a building (Ashley, 1985). According to Chan
(2002), a contractor‟s obligation in a traditional contract to carry out and complete the
works would require him to provide the workmanship and materials as required by the
specifications given by the architect and engineers. Ficken (2006) similarly
acknowledges that the contractor is required to perform construction fully in accordance
with the contract documents, usually consisting of at least plans, specifications and the
 2

building code within required time. Thus, if the contractors fail to construct in
accordance with applicable contract documents, he is responsible for resulting damages.

Contract period is a binding period within which the contractor not only must do
the work but it is also a license for the contractor to spend that time carrying out the
works. In addition, he may plan and do the work in whatever order he pleases. It is
usually an express obligation for the contractor to proceed regularly and diligently with
the work, and where he must make sufficient progress to achieve the completion date
(Eggleston, 1992).

Any contract will have a time requirement even if it is simply to complete in a

reasonable time. In construction contracts, it is usual for a programme to be produced to
record the sequence of work. It is intended to assist the parties to plan and manage the
Contract and the various interfaces between the Employer and the Contractor as well as
other contractors. The programme of work is normally submitted by the Contractor after
entering into the Contract. The programme has two possible roles in the management of
the contract, either a Monitor Role or a Dynamic Role. The Monitor Role allows the
extent of compliance with the parties' obligations as to time to be assessed at particular
stages. The Dynamic Role allows an analysis of progress to determine the corrective
actions to be taken to comply with the particular obligation or to ascertain the right to
compensation1.

In the Malaysian standard form of contract, the employer usually requires the
contractor to provide a programme (construction work programme) at the
commencement of the work to show the sequences and timing of the activities involved
in the construction of the project. In most standard forms, the programme which the

1
Retrieved from http://www.atkinson-law.com
 3

contractor is required to submit is not stated to be a contract document as in PWD 75

(rev.2006) Clause 14.2, PAM 2006 3.6. In PWD 203A (Rev.2007), the express
obligation of work programme requirement is silent. But for other international standard
forms the provision of the programme entitles to become a compensation programme in
determining delay and damages allowable. This again depend on what is the content of
the work programme required and the comprehensiveness of its usage in context of the
standard forms.

1.2 Statement of issues

The effect of making the programme an express requirement without it being a

contract document is that while the contractor may in breach for failure to submit a
master programme, he may not be in breach if the series of events are not followed as
scheduled (Rajoo,1999). But if the contract requires the contractor to submit a
programme in accordance with the requirements of the contract then his failure to do so
will be a breach of contract. The contractor will then be liable for substantial damages if
the Employer can establish a loss.

For Malaysian standard forms, it makes provision for the submission of

programme and their revision to S.O. for approval or endorsement. But there are no
guideline of how to prepare a work programme, the role of the programme is not clearly
defined, and the uniformity of form it should take is not described. It also does not state
a clear obligation to proceed in accordance with the programme, the exceptions being
FIDIC Forms and ICE. Even though Rajoo (1999) in The Malaysian Standard Form of
Building Contract (The PAM 1998 Form) had stated the elements of work programme, it
is not defined in any clause in any standard form of contract. He stated that,
 4

…….the elements of Work programme is not defined in clause 3.4. As such, it may take
the form of a bar chart, critical path, precedence diagram, schedule, network analysis or
otherwise. A good work programme should show interfaces with sub-contractors, dated,
time frames, activities, stages and more.

For example in Malaysia, the programme of works as prepared by the contractor

is usually not detailed, not realistic or do not have the activities properly linked to show
the critical path. It is usually used for „show‟ only more than anything else which is the
cause of many incidents where EOT was not granted even when the contractor rightly
has its entitlement to EOT if a proper programme of works was presented and all the
information related to delays was provided (Entrusty Group, 2006). It is essential to
appreciate in EOT computations that the period of extension to be granted is the effect
(actual or estimated) that the delaying event had (or will have) on the date for
completion. The recording of immediate or direct consequence of the event on the
carrying out of the work is of no concern, for its effect on the final outcome may be very
different, not least because it is the contractor's duty to mitigate the effect of a delaying
event as far as he reasonably can with his intended level of resources2.

Engineer or architect appointed as Superintendent Officer (SO) or C.A (Contract

Administrator) generally acts as an agent of the employer, and the certifier in
administering the contract on the employer‟s behalf. The responsibilities of the CA and
SO include deciding whether an event is one that gives rise to an entitlement on the part
of the contractor under the contract and whether that event has caused delay and or is
likely to affect the date for completion of the work3. In practice generally, the measure
of actual progress against the programme will be cogent evidence of a failure to proceed
with due expedition. The failure of the Contractor to proceed in accordance with the
programme will be sufficient, without more, to terminate the Contract, providing that

2
Construction Law in Singapore & Malaysia (2nd Ed) at p 312
3
Sundra Rajoo (1999).The Malaysian Standard Form of Building Contract (The PAM1998 Form). MLJ
 5

this is "without reasonable excuse". The meaning of that term is not further defined, but
an entitlement to an extension of time will clearly qualify. The statement of "failure to
proceed regularly and diligently" must be significant in terms of the overall contract or
a particularly critical activity for the project, and not simply a failure to follow the
timing of isolated activities on the programme4. Only an updated and verified `quality`
work programme, will be able to show the status or progress of any in contractor‟s plan
of proceeding the works. It will also be a strong evidence in any dispute which may arise
on issues of responsibilities arising from delay to completion from changes of
programme sequences and duration of activities5.

The main aim of this research is to identify the legal status of a work programme
whether contractually binding or not and whether the obligations in programming can be
used as evidences in establishing variations, assessing extension of time and in
determining a Contractors employment.

1.3 Objective of Study

The objective of this research is

i). To identify the legal status of work programme in the current construction
industry in binding contractual obligations of parties involved and as supporting
evidences in assessing validity of delays, variations, and in determination of
employment

4
Vincent Powell-Smith and John Sims (1989). Building Contract Claims.
5
Edward M. Willis (1997), Scheduling Construction Projects.
 6

1.4 Scope of Study

The main thrust of this dissertation is on determining the legality of work

programme incorporated as part of contract document and its attribute to notifying delay
in managing ongoing construction phase. The scope of this study will be confined to the
following areas:

a. The available construction work programme

b. Available standard forms emphasizing usage of work programme

c. Cases related to works programme and mitigation to the delay and loss

1.5 Importance of research

This study is intended to give an in-depth insight of how a programme is (or should
be) formulated and give indications of the legal aspect as to who should make the
decisions, and the factors that should be taken into account when making these decisions
due to the effect of methods, sequencing and programme on works and finally the
outcome of it. A better understanding of the process of compiling and monitoring a
programme, and indeed the limitations of a programme, and that they will also have a
better understanding of the factors that need to be reviewed when adjudicating a
dispute6. Some of the issues to be taken into account when analysing for example
determination of contract due to delay of works, an entitlement to EOT which were
inherent in the analysis in the John Barker 7case, are:

6
Edward M. Willis (1997), Scheduling Construction Projects.
7
John Barker Construction Ltd. v. London Portman Hotel Ltd (1996).
 7

 The need for a programme.

 The need to take into account the actual progress and update the
programme.

 The need to consider the critical path (including changes in the critical
path).

The courts, in tune with practice, regularly make their decisions taking into
account assessments based on as-planned programme. That is, of course, provided that
the programme are realistic and applicable in the first place. See for example the English
8
case of Skanska Construction UK Limited v Egger (Barony) Limited where the judge
held that the programming expert had based his analysis on a programme which had
become “virtually redundant, almost at the outset”.

1.6 Research Method

In pursuance of the aim or objective as stipulated above, the primarily methods

that have used to complete this project are research by literature review.

Sources for literature review are from books, journals, newspaper article, lecturer
notes and magazines. These sources provide lots of data that can help to determine the

8
[2004] EWHC 1748 (TCC)
 8

background of the research, work programme roles, and nature of contractor‟s

obligations in enforcing his schedule of works.

All these reading sources can be obtained at the internet sites that are related to
this dissertation and library; Perpustakaan Sulatanah Zanariah, UTM . Analysis of cases
collected from Malayan Law Journal (MLJ) and UK Cases and Combined Courts.

1.7 Organisation of the Report

The dissertation consists of five chapters. The brief descriptions of each chapter
are as follows:

Chapter 1: Introduction

This chapter presents the overall content of the whole project writing. It introduces the
subject matter, the problems that are purported to solve. The objective is specified with
an appropriate research method to achieve them.

Chapter 2: Work Programme in Construction Industry

This chapter with the overview and analysis of work programme promising valuable
information for identifying and modeling delays and their effect on progress and the use
of computerized work programme techniques for proving delay is become a practical
requirement nowadays. Nevertheless techniques are being considered by the courts and
 9

it is now almost inevitable in litigation involving disputes over the extent of project
delays that a programming expert will be appointed. Therefore, it is good for the parties
involved in a construction project, especially contractor to have a proper documented
record such as work programme as a step to help in reducing disputes in the future,
although it is still not a legal requirement in standard form of contract in Malaysia.

Chapter 3: Provision of Work Programme and Relation to Other Provisions In

Standard Forms of Construction Contract

This chapter reviews the various definitions of International and Malaysia Standard
Forms in used, the relation to the provision of work programme and the different of
approaches under contract.

Chapter 4: Legal Implications and Cases

This chapter analyses the results from the judicial decisions as reported in law reports
and further explore related cases regarding the contractor‟s liability to third party for not
following through its work programme during construction works and what
circumstances that the contractor liable or not liable. Attempts were made to analyse the
reported judicial decisions and to state the law there from. This would allow not only
the law to be stated, but equally important, it allows the law to be assessed in relation to
the facts as found by the court.
 10

Chapter 5: Conclusion and Recommendations

This chapter presents the conclusions for the overall dissertation. It includes the
summary of the findings of this study, conclusions, recommendations for future
management of contracts as well as enhancements of the current practice.
 96

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 98

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 99

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