Payment issues in telecommunication infrastructure project

Abstract

Payment is the core of any economic transaction. In construction, payment considered as the ‘lifeblood’ of the industry. Payment is a monetary consideration and exchanged for the performance or work done. Payment issues in the construction industry is a global phenomenon and it is not new in construction industry. Payment issues will cause severe cash flow problems and ‘domino effect’ on the entire construction value chain. As a subdivision in construction industry, telecommunication infrastructure project also facing the same issues relating to payment. The duration of the construction work is short but payment issues still occurred even though the works has been completed. The aim of this research is to assess the payment issues in telecommunication infrastructure project. The objectives were established to identify the causes, effects, remedies and action taken by the contractors in mitigating the payment issues. Data collected through questionnaire forms distributed to the employers and contractors, interview with expert opinions, contractors and analysis of the relevant documents. These data were analyzed using Percentage Frequency Distribution and Relative Important Index (RII). The RII for all the factors and group of categories was computed to rank the factors. Based on the findings, the parties have different views relating to the causes, effects, remedies in payment issues that leads to payment issues. Full Turnkey Contractors prefer to use negotiation approach during the event of payment defaults instead of other methods of alternative disputes resolution. Furthermore, negotiation was chosen as a solution most probably to maintain a ‘good rapport’ to avoid being ‘blacklisted’ by the employers and continuously received a new project by the employers. Surprisingly, the feedback received from the contractors that majority of them received the payment claims within the time stipulated in the contract. Hence, based on the feedback, further investigation has been made found out that the cause of the payment issues in telecommunication project is non-issuance of Purchase Order (PO) as condition precedent for the Contractors to submit payment claims to the employers.