Contractors seek review of public sector contracts and payment rules
Construction industry players say it is time for a review to the Public Sector Standard Conditions of Contract (PSSCOC) and the Security of Payment (SOP) Act to allow for a fairer allocation of risks to contractors and easier settlement of payment disputes. Photo: Reuters
SINGAPORE — Contractors here want the authorities to review the laws for the industry to ease the settlement of payment disputes and to have a fairer allocation of risks to them.
The issue was raised by industry veteran, Dr Jimmy Koh, during a seminar held by the Singapore Contractors Association Ltd (Scal) on Thursday (July 21) that was attended by some 250 participants.
Industry players pointed to two areas that need review: The Public Sector Standard Conditions of Contract (PSSCOC) and the Security of Payment (SOP) Act.
Dr Koh, who has been a contractor for 52 years, said that there were several legislative requirements that the industry has to face, such as the Building Control Act, Workplace Safety & Health Act, Professional Engineers Act and Architects Act.
Contractors also have to struggle with contractual terms, in particular those listed in the PSSCOC and other conditions of contract in private sector projects.
As it is, the construction industry is “already beset with problems and disputes”, Dr Koh said.
These include “unrealistic contract periods, tight manpower resources, delays, defect, payments and shifting of blame and responsibilities from one party to another”.
The PSSCOC, which was first published in 1995, allows a common contract form to be used in all public sector construction projects, and Dr Koh said it is time that the laws be reviewed because there have been many changes in the industry.
“A lot of developments have taken place and it’s about time we take a relook at them to see how to revise these documents,” he added.
The SOP Act aims to improve cash-flow in the industry by giving parties the right to seek progress payment for work that has been completed, and by providing fast and low-cost adjudication to resolve payment disputes.
Dr Koh said that the Act is drafted in “legalistic language”, which have resulted in contractors engaging lawyers.
“The lawyers (also) make it so legalistic (it) becomes a court hearing for many months, and the purpose to ease cash flow is lost during the process,” he added.
On the PSSCOC, Dr Koh said that under the Building Control Act, for example, the engineer is supposed to carry out soil investigation before designing the building.
However, the provision also states that the contractor is responsible for the verification of the accuracy of the soil investigation.
Since there is an overlap where two parties are responsible for the soil investigation, it could lead to disputes or delays in projects and litigations, he explained.
“It’s not to the advantage of the owner (of the project) because the owner eventually has to pay for the (soil) investigation and also the changes in the method of construction and the cost of the construction,” he added.
Scal president Kenneth Loo said that the association has set up two working groups comprising industry leaders who would advocate and propose changes to the PSSCOC and SOP Act.
These would then be submitted to the relevant authorities for their consideration.
