Driver Trett Digest Issue 21 03.2021 - Flipbook - Page 29
DIGEST | ISSUE 21
social distancing requirements at the workplace, etc. Such delay and disruption
have undoubtably led to reduction in productivity and caused further delay to project
completion dates resulting in additional costs being incurred by contractors.
Productivity loss is not always easy to establish and evaluate, and the effects on a
construction programme can often be overlooked until much later in time.
There are a number of established methodologies for measuring productivity loss,
e.g. measured mile analysis, earned value analysis, programme analysis, to name
a few.
However, in order to run a meaningful analysis, sufficient and accurate
contemporaneous records and data are a necessity. In addition, such records
are vital for establishing the causation between disrupting events and the
resultant productivity losses.
MALAYSIA GOVERNMENT INITIATIVES TO MITIGATE THE ECONOMIC,
SOCIAL AND INDUSTRIAL IMPACT OF THE COVID-19 PANDEMIC
On 23 October 2020, the Government of Malaysia gazetted an act which will be
in effect for two years, titled “Temporary Measures for Reducing the Impact of
Coronavirus Diseases 2019 (COVID-19) Act 2020” (“COVID-19 Act”).
Section 7 of the COVID-19 Act provides that, between 18 March 2020 and 31
December 2020 (the period was subsequently extended by the Minister for Works to
31 March 2021), if any party whose contract falls under the categories listed below,
is unable to perform its contractual obligation due to the measures prescribed,
made or taken under the Prevention and Control of Infectious Diseases Act 1988,
the aggrieved party or parties to the contract cannot exercise their rights such as
imposing liquidated damages under the contract.
LIST OF CATEGORIES OF CONTRACTS
1.
2.
3.
4.
5.
6.
7.
Construction work contracts or construction consultancy contracts and any
other contract related to the supply of construction materials, equipment or
workers in connection with a construction contract.
Performance bond or equivalent that is granted pursuant to a construction
contract or supply contract.
Professional services contract.
Lease or tenancy of non-residential immovable property.
Events contracts for the provision of any venue, accommodation, amenity,
transport, entertainment, catering or other goods or services including, for
any business meeting, incentive travel, conference, exhibition, sales event,
concert, show, wedding, party or other social gathering or sporting event, for
the participants, attendees, guests, patrons or spectators of such gathering
or event.
Contract by a tourism enterprise as defined under the Tourism Industry Act
1992 [Act 482] and a contract for the promotion of tourism in Malaysia.
Religious pilgrimage-related contract.
However, Section 10 of the COVID-19 Act also provides that Section 7 shall not
invalidate any contract terminated, performance bond forfeited, damages received,
any legal proceedings, arbitration or mediation commenced, judgment or award
granted, and any execution carried out for the period from 18 March 2020 until the
publication of the Act, i.e. 23 October 2020.
While the Act has attempted to allow relief for contractors in circumstances where
the inability to perform their contractual obligations is through no fault of their own
but by events arising from the pandemic, it remains unclear as to the method or
amount of relief that contractors will be able to secure.
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In view of the above, it therefore seems
that if a contractor can prove that it
was unable to perform its work due to
the observance of the Prevention and
Control of Infectious Diseases Act 1988
between 18 March 2020 and 31 March
2021, the Employer or Client may not
be able to invoke its contractual rights
even if the project has been delayed.
Notwithstanding this, it goes without
saying that for a contractor to rely on the
COVID-19 Act to avoid having imposed
liquidated damages levied against it or
being terminated due to project delay,
the contractor will have to substantiate
with evidence that the delay was due
to events related to or to have close
proximity to the observance of the
Prevention and Control of Infectious
Diseases Act 1988. In addition, the
contractor will have to demonstrate
that the related delay events have
impacted their work programme and
the contract completion date, despite
their best efforts to reduce or mitigate
the delays caused by COVID-19 related
factors.
CONCLUSION
The Malaysian COVID-19 Act pertains
to a wide range of different types
of contracts including contracts
executed only by a brief letter of
award, purchase order, etc., even when
such contractual documents contain
insufficient provisions to deal with the
unprecedented and complex COVID-19
pandemic situation.
Any party who is unable to perform
their contractual obligations due
to the impact of their observance
of the Prevention and Control of
Infectious Diseases Act 1988 can
now seek relief under the COVID-19
Act. Notwithstanding this, the onus
of proof of such claims still lies with
the contractor. Good record keeping,
e.g. detailed daily, weekly, monthly
reports, updated working programme,
notices, etc. will play a big role in
contractors being able to substantiate
such claims. Ultimately the success
or otherwise of a claim is often in
proportion to the quality and extent
of the contemporaneous records that
were kept.
1. On 16 March 2020, Malaysia Prime Minister announced the movement control order under the Prevention and Control of Infectious
Diseases Act 1988 and the Police Act 1967. The MCO effective date was on 18 March 2020 and ended on 3 May 2020.
2. CMCO started from 4 May 2020 and ended on 9 June 2020. A relaxation of regulations to prepare for reopen of the national economy.
3. EMCO or stricter order for 14-days duration would be implemented to specific locations where a large cluster of Covid-19 positive
cases was detected.
4. RMCO was started after CMCO ended on 9 June 2020. Subsequently another stage of CMCO 2.0 was announced to take effect on 14
October 2020 due to spike of COVID-19 positive cases in the country.
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