A framework on mitigating contractor’s claim on loss and expense due to extension of time / Nor Hidayah Yahya

Construction claims on Loss and Expense in construction projects are common yet can
be mitigated in several ways. At the heart of the matter, it is often the question of
identifying the causes that lead to Extension of Time (EOT) and Loss and Expense (L
& E), exploring awareness and the understanding of this issue with respect to the Public
Work Department (PWD) as the critical issues and challenges faced by clients in
mitigating contractors’ L&E claims due to the EOT. Therefore, by answering all of the
highlighted issues above, mitigation measures on Loss and Expense were identified.
The research aim is to develop a framework on the appropriate mitigating measures of
contractor’s claim on L&E claims due to EOT in public projects. While the research
objectives are To investigate the causes of contractors’ claims on loss and expense due
to the EOT during the post-contract stage in building projects , To identify the level of
knowledge and understanding of PWD professionals in claiming for L&E in PWD
projects. By identifying the level of knowledge and their understanding levels, then
again, department easy to identify which part to overcome and manage the weakness
and problems. To analyse the suitability and appropriateness of the proposed mitigating
measures in dealing with the claims for L&E to ensure fairness to both the contractors
and the government. However, there is still limited information regarding claims for
L&E in Malaysia towards developing a framework for mitigating L&E claims in the
PWD. The methodology adopted a detailed review of the relevant literature, followed
by industry-professionals in the PWD regarding the causes of EOT and L&E. The data
collected were then analysed. The key findings were that the causes of EOT in the
Malaysian construction industry include contractor’s poor site management, inadequate
contractor experience, client’s finance & payments for completed work, problems with
subcontractors, shortage of materials, slow decision making, waiting time for approval
of tests and inspections, lack of communication between parties, and change orders.
Besides, case studies involving school projects in Selangor, Putrajaya, and Kuala
Lumpur during the post-contract stage. As such, by identifying the causes of both EOT
and L & E, the mitigation measures of L&E have been established. The key factors of
mitigation of L&E are identified as follows due to design stage factor, construction
stage factor and other factors. So that, by identifying the mitigation factors of L & E ,
the framework of mitigation of L&E was established. The purpose of establishing this
framework on mitigating L&E, the department will be ready to deal with contractors’
claims. Besides, the significance of the study in PWD, the improvement will get better
in terms of decision making, project management and minimize the unimportant
additional cost to the projects So that, government will save lots of money with this
control L&E cases. Finally, potential areas for further research were identified and
recommended, which include mitigation of L&E for documentation wise mitigation
L&E in Infrastructure works especially during the design stage. These two (2) areas
are not covered in this research.