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Why Almost all Construction contacts are late in completion and how to rectify this phenomena?

 

My purpose of writing this article is to share with fellow contractors and investors of my experience in the construction contracting industry.

In the early 1970s, when I was Secretary General of the Master Builders Association Malaysia, I made a research and I found out that almost all construction contracts in Malaysia were late in completion.

In 1963 when I first became a Chartered Civil Engineer, I was very interested in the profession and I always read the monthly journal of the Institution of Civil Engineers, UK.

I came across an article about the Institution’s research on the late completion of contracts. In fact, the Institution sent out council members to visit several construction sites in every capital city of every country in the British Common Wealth. The study showed that almost all construction schedules were late in completion and it also listed the reasons for the delay.

The reasons for the late completion are as follows:

  1. The open tender system is often the main cause. In order to secure a contact, the contractor has to submit the cheapest price and also fulfil all the terms and condition of the contract. He has to complete the contract within the stipulated completion time which is not his preferred time for completion of the project.
  2. In order to submit the cheapest price, the contractor has to be very optimistic. He must assume that he can easily get all the labour and materials he requires. He also must assume that he can overcome all the unforeseen construction difficulties. He also must assume that God will surely help him with good weather. In actual practice, almost all the assumptions will not come true and as a result the construction is delayed.

How to avoid late completion of contracts?

  1. The owners of the project must employ experienced consulting engineers who have designed similar projects before so that they know what are the usual pitfalls and how to overcome such difficulties in the construction.
  2. All the contractors must be prequalified based on both their financial and technical abilities. If any contractor who has not done similar work before, he cannot be qualified to tender. But any contractor who has not done similar work before, can be qualified if he has completed contracts valued more than 1.5 times the estimated value of the project.
  3. Before the contract is awarded to the potential contractor, the consultant must examine the contractor’s programme in detail. The contractor must submit a weekly work schedule. During construction the consultant must hold weekly meetings with the contractor to examine his weekly progress. If the progress of work is late, the consultant must insist the contractor write his construction method to catch up the lost time. Following this out strictly, the completion can only be late by a week.
  4. The consultant must insist the contractor write out his construction method in detail to avoid delay.
  5. The consultant must also examine the contractor’s list of construction equipment to see that they are suitable and adequate.
  6. The consultant must also make sure that the contractor can procure all the material on time. If there are certain material to be imported from overseas, the contractor must order early to avoid delay.

I will ask the Master Builders Association Malaysia to organise a seminar for me to talk on how to complete construction contracts on time.

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