CIPA to ensure sustainability in the construction industry
by Justin Yap justinyap@theborneopost.com. Posted on February 22, 2012, Wednesday
Datuk Seri Michael Yam, Malaysia Real Estate and Housing Developers’ Association president
KUCHING: The implementation of the recently ‘approved’ Construction Industry Payment and Adjudication (CIPA) Bill 2011 will reveal the ‘true’ sustainability of projects undertaken by any construction company in the future.
According to industry sources, the bill had already gone through the first reading in Parliament on December 1, 2011 and the Act would have tremendous impact as it would help parties involved in construction to regularise their cash flows.
Malaysia Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri Michael Yam told The Borneo Post that the CIPA Bill aimed to be ‘the oil to the cogs’ by ensuring that there was proper cash flow to ensure that projects were running smoothly.
“This is done by creating a quicker dispute resolution period especially on issues of payment of all value chain suppliers to facilitate smoother flow of working capital, thus avoiding disruptive work progress,” he added.
Payment defaults had been the main issue of disputes in the industry.
“We have heard predicaments on both sides here, some parties having had payment with held whilst other parties have had complaints of dissatisfaction as to the quality of service rendered – both are equally serious and ‘chicken-and-egg’ issues.
“The CIPA Bill, which we understand will bring about the statutory adjudication process, operates on a ‘pay first, argue later’ stand – which has the intention to allow work done to be rewarded, whilst also allowing further contention on the work quality to be discussed later on,” said Yam.
According to him the CIPA Bill would play a major role in creating order in the payments processes, the details of which would be clearer once the regulations has been ironed out and finalised.
“Once both parties are equal in the eyes of fairness, we do not foresee any major issues to result – except that the parties involved need to be educated on their rights and responsibilities as detailed in the new laws.
“We hope that the Act would reinforce the discipline and diligence of all parties to respect the spirit of the contract and to plan better financially and practically.”
Under the CIPA Bill 2011, Kuala Lumpur Regional Centre for Arbitration (KLRCA) had been appointed the official adjudication authority in Malaysia. As such, the centre was responsible for the setting up of the competency standards and the criteria required for an adjudicator in Malaysia.
The Bill was expected to be implemented towards the end of 2012 and the key industries that would be under its jurisdiction would be predominantly construction, mechanical and engineering, oil and gas as well as telecommunications sectors.
“The property development sector is a combined effort of developers, contractors, professionals and other service providers that need to work efficiently with the others to deliver the final product,” he added.
