Comparison between construction contract used for governmnet projects in Indonesia and Malaysia

Abstract

Standard forms of contract have been used widely in construction industry in the world. PWD 203A (Rev.2007) is one of Malaysian standard forms of construction contract for building and civil projects for public work. In contrast Indonesia still do not have a standard form of construction contract unless for government project where a regulation for Standards and Guidelines for the Procurement of Construction Services which was published by Ministry of Public Work of Indonesia (Permen No.43/2007) that has been in use. The important thing is that the standard form of contract are drafted based on its construction practices, circumstances, nature of politic and culture of the society. It is presumed that there are some similarities and differences of its provisions, term and conditions since Malaysia and Indonesia have similar cultural roots while having a different legal basis. The main objective of this research is to compare the PWD 203A (Rev.2007) and the Permen No.43/2007 and find out how far the similarities and differences on the terms and conditions of the both forms. Hopefully in the future can be used to develop and improve the current standard of government‟s contract for construction industry as well as to identify the disputes earlier and minimize it. The focus on the comparative study is on the selected clauses which are considered as dispute area in construction industry i.e, Payment to Contractor, Variation, Delay and Extension of Time, Dispute Resolution, Termination of Contract and Contractor. This is a descriptive study which is combine literature analysis and interview techniques. The research found that in general there are more similarities than differences between the two forms. The system of administration of contract between PWD 203A (Rev. 2007) and Permen No.43/2007 is significantly different. Under PWD 203A (Rev.2007), Advance Payment not expressly stated and there is no remedies for late payment by the employer as well as Pemen No.43/2007. PWD 203A (Rev.2007) also provide detail procedure in dispute resolution than Permen No.43/2007. Moreover PWD 203A (Rev.2007) does not provide clause for determination of contractor own employement due to default by the employer. In general the Permen No. 43/2007 provides flexibility to the contract administrator in the management of the contract. Upon the analysis of selected clauses, there are some provisions that can be used to develop and improve the current regulation for standards form of contract or to draft the standard form of contract in Indonesia.