An Assessment on Variation Order and Extension of Time Clauses in PAM2006 and Its Impact on Contractors

Ong, Jia Jie (2021) An Assessment on Variation Order and Extension of Time Clauses in PAM2006 and Its Impact on Contractors. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Variation order and Extension of Time are the frequent issues that will always happen during construction project in Malaysia. In order to deal with these issues, standard form of contract such as PAM Contract 2006 (With Quantities) has included the provision regarding Variation order and Extension of Time which stated the duties and responsibilities for each contracting parties. However, there is still risks regarding Variation order and Extension of Time in PAM 2006 form that will jeopardize the benefit of Contractors. Thus, this paper presents the findings of risks of terms and conditions regarding Variation order and Extension of Time in PAM 2006 form that faced by contractors such as insufficient of explanation of claimant for Variation order and Extension of Time. This study also reveals that there will be 3 types of effects that will faced by the contractors in the event of risks of provisions for Variation order and Extension of Time in PAM 2006 form which are cost related effects, time related effects and organization and its reputation related effects. This paper further determines the possible solutions that can be adopted by contractors in order to mitigate the effects in the event of such risks such as negotiations, proper risk management and alternative dispute resolution (ADR). In a nutshell, this study is playing vital role in assisting contractors to identify the potential risks that will seriously affect their benefits in claiming for Variation order and Extension of Time and provided some solutions which may help contractors to mitigate the effects to some extent.