Assessing the Effectiveness of CIPAA 2012 in Resolving Late Payment Disputes Among Small and Medium-Sized Subcontractors in Malaysia

Lim, Douglas Lik Phang (2026) Assessing the Effectiveness of CIPAA 2012 in Resolving Late Payment Disputes Among Small and Medium-Sized Subcontractors in Malaysia. Final Year Project (Bachelor), Tunku Abdul Rahman University of Management and Technology.

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Abstract

Late payment remains one of the most persistent issues in Malaysia’s construction industry, disproportionately affecting small and medium-sized subcontractors. To address this challenge, the Construction Industry Payment and Adjudication Act (CIPAA) 2012 was introduced as a statutory mechanism to facilitate faster resolution of payment disputes. This study evaluates the effectiveness of CIPAA from the perspective of SME subcontractors. A qualitative research design was adopted, involving semi-structured interviews with seven subcontractors (CIDB Grades G1–G5) and one main contractor (Grade G7). Thematic analysis was applied to examine subcontractors’ awareness of CIPAA, challenges in enforcement, and factors influencing the decision to pursue or avoid adjudication. The findings revealed that five out of seven subcontractors (71%) had little or no knowledge of CIPAA, while only one had direct experience using it with consultant support. Four subcontractors (57%) highlighted enforcement difficulties, including judicial reviews and compliance delays, and six subcontractors (86%) identified financial costs and fear of blacklisting as key deterrents to filing claims. Nevertheless, the study found that professional support and potential procedural reforms, such as the two-tier adjudication system suggested by the main contractor, could strengthen the accessibility and effectiveness of CIPAA. Overall, the study contributes both academic and practical insights by highlighting gaps in awareness, enforcement, and affordability, while offering targeted recommendations for subcontractors, industry bodies, and policymakers to improve CIPAA’s implementation