Post Construction Industry Payment and Adjudication Act 2012 (CIPAA): Satisfaction Level of the Contractor in Overcoming Payment Dispute

Seow, Wan Yeing (2018) Post Construction Industry Payment and Adjudication Act 2012 (CIPAA): Satisfaction Level of the Contractor in Overcoming Payment Dispute. Final Year Project (Bachelor), Tunku Abdul Rahman University College.

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Abstract

Construction industry plays crucial roles to achieve the vision of a fully developed nation by 2020 due to high contribution in both country development and country economic. However, payment issue includes late payment, non-payment and under payment has become barriers that hinder from achieving this vision. Consequences of payment issue could be disastrous due to long duration, huge parties involved and high quantum of payment. Severity of payment issue has attracted Government’s attention and CIDB tasked to formulate a solution to address this issue by introducing construction payment act, CIPAA. CIPAA was gazetted in 2012 and come into operation in 2014, which is relatively new to the industry. Therefore, this research aims to investigate the satisfaction level of the Contractor in remedying payment dispute to improve CIPAA and increase number of usage CIPAA by Contractors. In order to achieve aim of this research, three objectives has to identified including the reasons of enactment of CIPAA, benefits of CIPAA that meet Contractor’s satisfaction and drawbacks of CIPAA that cause dissatisfaction. This research adopted face-to-face interview with six numbers of Contractors after selected by using purposive sampling to ensure that they are familiar with CIPAA and provide recommendation to improve CIPAA. The area to perform data collection will be Kuala Lumpur, where more adjudication case held within this area. Literature review showed that the weakness of arbitration and litigation which unable to unable to fulfill criteria of time, cost and confidentiality simultaneously and severity of payment dispute in construction industry that attributed to the reasons of enactment of CIPAA. Interviewees agreed with literature review but they prefer to go for mediation or negotiation that is more potent in resolving payment dispute that achieve first objective of this research due to interviewees shared current practice in construction industry. Literature review showed benefits of CIPAA that overcome weakness of arbitration and litigation including speedier process, lower cost, high confidentiality and entitlement of suspension of work. Comparing with data collected from interviews, all benefits of CIPAA are not achieved Contractor’s expectation in overcoming payment dispute due to immature of operation of CIPAA but second objective has achieved because interviewees has given suggestion to improve CIPAA such as shorten the duration of adjudication process. Based on literature review to identify four drawbacks of CIPAA includes interim decision, difficulty to negotiate, inaccuracy of adjudication decision and prohibition of conditional payment. Comparing with data collected from interviewees, third objective has achieved due to interviewees are well acknowledge on CIPAA and give insight on problem when Contractor referring adjudication that capable to give informative suggestion to overcome weakness of CIPAA like intervention of Government or Local Authority to enforce adjudication decision to overcome problem of interim decision in CIPAA. In general, aim and knowledge gap of this research has been achieve and addressed because satisfaction level of the Contractor in overcoming payment dispute using CIPAA has identified. Half numbers of interviewees are satisfied with CIPAA because they acknowledge the CIDB intention to resolve payment dispute whereas another half numbers of interviewees are unsatisfied with CIPAA due to CIPAA is only effective to Nominated Sub-Contractor. To conclude, CIPAA has some room of improvements as expected by all interviewees.