International Construction Law Review
PSSCOC AND CAUSES OF CONSTRUCTION DELAYS IN SINGAPORE AND FOUR SELECTED ASEAN COUNTRIES
SUI PHENG LOW
Professor, Department of Building, National University of Singapore
JUN YING LIU
Associate Professor, Department of Construction Management, Tianjin University
AND IMY TAN
Research Assistant, Department of Building, National University of Singapore
Abstract
The study reviewed the causes of construction delays in the four ASEAN (Association of Southeast Asian Nations) countries of Indonesia, Malaysia, Thailand and Vietnam. A survey was conducted to identify the common causes of construction delays in Singapore. These causes of construction delays in Singapore were then compared with those in Indonesia, Malaysia, Thailand and Vietnam, and to draw lessons therefrom. A review of the Public Sector Standard Conditions of Contract (PSSCOC) for Construction Works was completed in relation to the more common causes of construction delays identified in Singapore and how contractors should refocus on the extension of time provisions in clause 14 of the PSSCOC to cater for the more commonly occurring contractor-related causes of construction delays. While the provisions for managing extension of time judiciously arising from construction delays are already well provided for in the PSSCOC, contractors should pay heed to some of the more commonly occurring causes of construction delays identified in this study to avoid their corresponding pitfalls. This should then pave the way for the smoother progress and better working relationships among all parties in the building project.
Keywords: Construction delays; PSSCOC, Singapore, Indonesia, Malaysia, Thailand, Vietnam.
Introduction
It is a common occurrence for construction projects not to be completed on time. This phenomenon is so serious that even the completion of a project close to the stipulated schedules is an exception and not a norm. The effects of delay in a construction project does not just simply mean that the client gets his completed building at a later time, but it can also have adverse impacts on the cost, quality and safety of the project, which, when combined together, are the usual set of determinants for how successful a construction project is (Faridi and El-Sayegh, 2006).
In many economies around the world, the construction industry makes a significant contribution to the Gross Domestic Product (GDP). In the developed economy of the United Kingdom (UK) and the developing economy of the United Arab Emirates (UAE), for example, the industry contributes about 10% to 14% to the GDP, respectively. In the Asia and Oceania region, for countries like Singapore, Malaysia, Korea, India, China, Australia and New Zealand, the industry’s contribution to the GDP is at a steady level of 3% to 8% from the year 2000 to the year 2004. In Hong Kong especially, when all the aspects of construction, including its management, and the maintenance of buildings and estates are taken into consideration, the contribution to GDP could come close to a quarter of the GDP. Hence, the concern of how undesirably influential the effects of construction delays are, cannot be limited to just the industry alone, but should also be extended to the nation’s overall economy as well (Faridi and El-Sayegh, 2006).
In recent years, the industry has seen a tremendous increase in the value of construction projects. This could be attributed to the increased design complexity and the increase in the physical size of the structure to be built. Although faced with such increases, the industry is not usually given a generous proportionate increase in project duration at the same time, given the turbulent nature of the global economy. The structure that is to be built may bring in huge revenues for the commissioning organisation today, but the case may not stand true for tomorrow.
Thus, the construction projects of today could be said to be on the fast track approach generally. With this fast track approach, it is necessary to identify the relevant causes of construction delays so that the project can be completed in time for the commissioning organisation to reap maximum benefits out of it. Coupled with the need to pinpoint delay factors in construction projects so that a nation’s overall economy would not be affected, there has been no lack of research into the reasons for not completing a construction project on time. This is especially so for the developing economies within the Southeast Asian regions where rapid economic development in recent times has brought about a boom in the construction sectors of the Southeast Asian nations. But due to one reason or another, the construction sectors of the relevant nations seem not well prepared enough to receive the boom, and issues of construction projects running beyond their targeted completion dates arise every once in a while.
With the aim of Singapore learning from neighbouring Southeast Asian countries, the purpose of this study is to examine the similarities and differences of their construction industries in the context of construction project delays and then looking into ways the construction industries of these countries can learn to lessen the impact of significant causes of delays that they face. This will be carried out by first examining related publications on the construction industries in Indonesia, Malaysia, Thailand and Vietnam, all of whom are members of the Association of Southeast Asian Nations or ASEAN. The scope of this part of the research is limited to examining the significant factors that cause construction project delays in these four nations. Hence, the first objective of this study is to:
After the various causes of construction delays in these four countries have been identified, the next part of the research will proceed to identify the causes of construction delays in Singapore. Other than using the factors that have significant influence on construction completion time in the industries of Indonesia, Malaysia, Thailand and Vietnam, the significant causes of delay in Hong Kong, Jordan, Kuwait, Saudi Arabia, the United Arab Emirates (UAE), Nigeria, the United States of America (USA) and Turkey would also be reviewed and identified. This is necessary to capture as comprehensively as possible, similar drivers of construction delays that Singapore shares with these countries outside the Southeast Asian region. Together with the information gathered from the first part of the research, a survey would be conducted to assess the situation in Singapore. The second part of the study would be to examine the similarities and/or differences relating to causes of construction delays between Singapore’s construction industry and that of Indonesia, Malaysia, Thailand and Vietnam. Hence, the second objective of the study is to:
Observations from the results of the survey would be explained using inferences from related studies completed in other countries, as well as relative to the provisions for extension of the time for completion provided for in the Public Sector Standard Conditions of Contracts (PSSCOC) for Construction Works in Singapore. The final part of the study and third objective of the study is thus to:
PSSCOC and the time for completion
The Public Sector Standard Conditions of Contract (PSSCOC) for Construction Works is the de facto standard form of building contract used by public agencies in Singapore. First introduced in 1995, it is now into its Fifth Edition when republished in December 2006 by the Building and Construction Authority (BCA, 2006). Clause 14 of the PSSCOC deals specifically with time for completion which is relevant in the context of this study.
More specifically, clause 14.1 of the PSSCOC requires the contractor to complete the works or any phase or part of the works within the time or times for completion stated in either the Letter of Acceptance or the Appendix, as the case may be. The PSSCOC spells out the situations under which an extension of the time for completion may be considered by the Superintending Officer upon application by the contractor. Clause 14.2 states that the time within which the works or any phase or part of the works is to be completed may be extended by the Superintending Officer either prospectively or retrospectively and before or after the time for completion by such further period or periods of time as may reasonably reflect delay in completion of the works which, notwithstanding due diligence and the taking of all reasonable steps by the contractor to avoid or reduce such delay, will or might be or has been caused by any of the following events:
Clause 14.2 of the PSSCOC goes on to stipulate that the contractor shall not be entitled to any extension of time where the instructions, or acts of the employer or the Superintending Officer are necessitated by or intended to cure any default of or breach of contract by the contractor and such disentitlement shall not set the time for completion at large.
Following clause 14.2 which provides for “Extension of the Time for Completion”, consequential provisions for “Expediting Progress of Works” and “Liquidated Damages” are set out in clause 15 and clause 16 of the PSSCOC, respectively.
Contractually speaking, ample provisions have been made in clause 14.2 of the PSSCOC to cater for events which merit consideration for extension of the time for completion. It is, however, unclear if these provisions have been encountered more often in practice than provided for contractually in the PSSCOC. For this reason, a comparative study of what clause 14.2 of the PSSCOC provides for and what the industry encountered in reality would shed some light on what are the more common causes of construction delays faced by contractors. In this context, the causes of construction delays in Singapore would be benchmarked against those reported in the other ASEAN countries of Indonesia, Malaysia, Thailand and Vietnam.
Causes of construction delays in Indonesia
Although Indonesia’s main source of national income is derived primarily from its manufacturing and service industries, the growth of its construction industry has not been neglected as the latter has the ability to encourage growth in the other industrial sectors (Hillebrandt, 1985). Hence, although the construction industry’s contribution to Indonesia’s GDP is only 5.5% in 1993 (Davis Langdon & Seah, 1994), Kaming et al. (1996) noted that, if improvements are made in the construction industry in terms of time and cost performance, the country as a whole would benefit from the enhancement.
To effect such improvements, Kaming et al. (1996) polled 31 project managers working in high-rise construction projects on what they perceived were variables that are likely to cause time overruns in their projects in Indonesia. After receiving the importance and frequency indices from these respondents, Kaming et al. (1996) then worked out the severity index of the delay variables. The 10 most severe delay variables are presented in Table 1.
TABLE 1: 10 MOST SEVERE DELAY VARIABLES IN INDONESIA
| Delay variables | Severity index | Rank |
|---|---|---|
| Design changes | 0.91 | 1 |
| Poor labour productivity | 0.65 | 2 |
| Inadequate planning | 0.55 | 3 |
| Materials shortage | 0.52 | 4 |
| Inaccuracy of materials estimate | 0.51 | 5 |
| Inaccurate prediction of craftsmen production rate | 0.49 | 6 |
| Skilled labour shortage | 0.43 | 7 |
| Locational restriction of the project | 0.40 | 8 |
| Equipment shortage | 0.33 | 9 |
| Inaccurate prediction of equipment production rate* | 0.33 | 10 |
| * Factor is ranked tenth due to lower frequency index. (Source: Kaming et al., 1996.) |
It is worth noting that unlike the usual categorising of delay factors into separate groups according to the parties that are able to control their occurrence, the variables grouped by Kaming et al. (1996) were such that a variable does not refer to just one delay factor only if one tries to attribute this to the party that could be responsible for controlling the variable. Instead, this can comprise of a group of related factors bound by the same variable. For example, the top ranked variable of “design changes” covered issues pertaining to variations which are ordered under the instructions of the client, or these may be due to poor initial buildability design, of which the source responsible would be the consultants. There are also variables that may be grouped under a single category considering the fact that there is a common party who is responsible. Taking the unconventional grouping of the variables into consideration, it is therefore necessary to determine the actual translations of the delay variables into delay factors that would be included in the survey questionnaire for Singapore. Such translations are shown in Table 2 for Indonesia.
TABLE 2: TRANSLATION OF DELAY VARIABLES INTO POSSIBLE DELAY FACTORS FOR INDONESIA
| Delay variables | Possible delay factors |
|---|---|
| Design changes |
|
| Inadequate planning |
|
|
|
| (Source: Kaming et al., 1996.) |
Causes of construction delays in Malaysia
The construction industry has been an important pillar in the fast-developing economy of Malaysia in recent years when the country emerged from the shadows of the Asian financial crisis from 1997 to 2000. As Sambasivan and Yau (2007) have observed, in the year 2005, the construction sector accounted for the employment of about 600,000 workers and contributed a near 3.3% to Malaysia’s GDP in the same year. With the huge volume of construction activities in Malaysia, Sambasivan and Yau (2007) deemed it necessary to examine the drivers of construction delays in the Malaysian construction industry, especially so since it was observed that about 17.3% of 417 construction projects initiated by the government were more than three months into the delay period in the year 2005.
Causes of delays were classified under different categories according to the party related to the factors. Besides human related factors, Sambasivan and Yau (2007) also grouped major causes of delays as material-related, labour-related, contract-related, contract relationship-related, and external factors. Through the quantitative analysis of a questionnaire survey, Sambasivan and Yau (2007) identified the top 10 most important causes of delay in the Malaysian construction industry. 200 survey questionnaires were sent, with a response rate of 75% being achieved.
Table 3 shows that out of the 10 most important causes of delays, more than half can be linked to contractors. This is similar to another study by Alaghbari et al. (2007) where 78 responses from building systems companies in Malaysia on the same issues found that half of the causes of delays among the top 10 causes, were attributed to contractor-related causes of delays.
TABLE 3: 10 MOST IMPORTANT CAUSES OF CONSTRUCTION DELAYS IN MALAYSIA
| Causes of delay | Category | Relative Importance Index (RII) | Rank |
|---|---|---|---|
| Improper planning | Contractor | 0.815 | 1 |
| Site management | Contractor | 0.813 | 2 |
| Inadequate contractor experience | Contractor | 0.783 | 3 |
| Finance and payments of completed works | Client | 0.780 | 4 |
| Subcontractors | Contractor | 0.771 | 5 |
| Shortage in materials | Material | 0.771 | 6 |
| Labour supply* | Labour | 0.757 | 7 |
| Equipment availability and failure | Equipment | 0.755 | 8 |
| Lack of communication between the parties† | Contract Relations | 0.755 | 9 |
| Mistakes during construction stage | Contractor | 0.753 | 10 |
| * Factor is ranked seventh due to lower percentage of respondents indicating it as extremely important. |