International Construction Law Review
CHANGE AND RELATED COSTS MANAGEMENT— SOME OBSERVATIONS FROM SINGAPORE*
DR PHILIP C F CHAN
Associate Professor, Department of Building, School of Design and Environment National University of Singapore
I. ABSTRACT OF PAPER
The respective concerns of the contractor and the owner as regards the financial consequence of changes are well articulated by Emeritus Professor Justin Sweet in his book Legal Aspects of Architecture, Engineering and the Construction Process
. The contractor is worried that his “poor administration practices relating to changes will impede [his] cash flow and unduly burden [his] financial planning” and that “unexpected changes may place a drain on [his] resources”. On the other hand, the owner “fears that bidders of questionable honesty and competence will bid low on a project with the hope that clever and skillful postaward scrutiny of the drawings and specifications will be rewarded by assertions that requested work is not required under the contract and a loose changes mechanism will generate claims for additional compensation” that will “expose [him] to large overruns that may seriously disrupt [his] financial planning and capacity”.
In a publication by the Construction Industry Research and Information Association (CIRIA) entitled, Managing Project Change: A best practice guide
, issued in 2001, the role of the form of contract and its payment terms on behaviour of the project team was examined and some recommendations for best practice concerning the contents of the contract were made. In Hudson’s Building and Engineering Contracts
, I N Duncan Wallace, QC, did indicate that by careful drafting of the contract, it is possible that “Ideally, in the interests of administrative clarity and to avoid confusion, some ‘variation order’ or ‘change order’ or other terminology should also be used to distinguish between those situations and instructions which may entitle a contractor to compensation or additional payment and those which will not”. He gave the example of Singapore’s SIA private sector post-1980 contract, which expressly negatives additional payment for “directions”.
This paper examines three Singapore examples where the contract terms dictate the identification of change orders that are entitled to payment and the resolution of any dispute concerning the entitlement of payment; and the time for payment. The Public Sector Standard Conditions of Contract (PSSCOC) for Construction Works, 2004 Edition, used in public sector projects, is examined in particular for its latest amendments which were
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Change and Related Costs Management
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