Construction Industry Payment Essay Sample

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The Government has long realized problems facing parties to construction contracts in securing regular and timely payment that impacts cash flow during project implementation. In ensuring the smooth implementation of construction projects, problems of this nature must be addressed especially at the onset of the 10th Malaysia Plan.

On 15th July 2009, Cabinet has agreed that CIPAA be enacted to resolve payment problems in construction industry. Following that, CIPAA has first read in the parliament on 1st December last year and read the second time in parliament on 2nd April 2012. [1]

The Master Builders Association Malaysia (MBAM) wants Works Minister Datuk Seri Shaziman Abu Mansor to announce the taking effect and enforcement of the Construction Industry Payment and Adjudication Act (CIPAA).

The MBAM has also indicated it should happen, preferably, in the beginning of 2013.

“The MBAM thanks the government for the enactment of this statute which was gazetted on June 22 this year.

“The CIPAA has been long awaited by the construction industry to arrest the pervasive prevailing payment problems. [2]

Purpose of CIPAA
1. To Facilitate Regular and Timely Payment
2. To Provide a Mechanism for Speedy Dispute Resolution Through Adjudication
3. To Provide Remedies for the Recovery of Payment in the Construction Industry Scope of the CIPAA Bill

Covers all construction contracts made in writing that relates to construction work carried out wholly or partly within territory of Malaysia including one that is entered into by the Government Malaysia is governed by the proposed Act.

Includes local and international construction contracts.

It does not apply to construction contracts entered into by a natural person for any construction work in respect of any building which is less than four storey’s high and which is wholly intended for his occupation (residential construction contract).

KLRCA as the appointed Adjudication Authority

Responsible for :
1. The setting of the competency standard and the criteria required of an Adjudicator. 2. The determination of the standard terms of appointment of an adjudicator and the fees for the services of an adjudicator. 3. To provide administrative support for the conduct of adjudication and any functions as may be required for the efficient conduct of adjudication.

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