RELEVANCY OF MODEL TERMS OF CONSTRUCTION CONTRACT FOR SUBCONTRACT WORK

Abstract

In Malaysia, there is no standardized form or terms for domestic subcontract. A domestic subcontract is procured directly by the main contractor to carry out part of the work for which the main contractor has undertaken under the main contract. In this case, the need for subcontracting, the terms of the subcontract and the choice of a subcontractor are left to the commercial discretion of the main contractor. Problems arising from the usage of non-standard form are getting more serious. In 2007, the Malaysian Construction Industry Development Board (CIDB) entrusted with the responsibility to address pertinent issues and problems faced by the industry drafted and issued the Model Terms of Construction Contract for Subcontract Work. Based from the literature based research and qualitative method, it was found that payment is the highest major contribution to the critical subcontracting issues and problems faced when using non-standard form. Apart from that, based from the case analysis, Model Terms have the ability to minimize the problems faced when using non-standard form.

Keywords: Model Terms of Construction Contract, Subcontract, Subcontractors, Standardized Form, Payment Issues