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Home Home Bulletin Is Late Or Non-Payment A Significant Problem To Malaysian Contractors?

Is Late Or Non-Payment A Significant Problem To Malaysian Contractors?

By: M.E. Che Mu naaim1,M.S. Mohd Dauurl", H. Abdul-Rahman'
      I.V Center for Project and Facilities Management
     Faculty of the Built Environment
     University of Malaya
     50603 Kuala Lumpur, Malaysia.
 
Some developed countries have drawn lip construction-specific statutory security of payment acts/ legislations typically known as Construction Contrac ts Act to eliminate poor payment  practices and to assist continuous uninterrupted construction works. Malaysia too cannot pretend not to have these problems. This paper presents findings of a study conducted amongst Malaysian contractors with the aims to determine the seriousness of late and non-payment problems; to
identify the main causes and effects of late and non-payment; and to identify ways to sustain the payment flows in the Malaysian cons truction industry. The study focused on contractual payments from the paymaster (government or private) to the cont ractors. The main factors for late and nonpayment in the construction industry identified from the study include: delay in certification, paymaster's poor financial management, local culture/nttuude, paymaster's failure to implement good governance in business, underpayment of certified amounts by the paymaster and the use of 'pay when paid' clauses in contrac ts. The research findings show that late and non-payment can create cash flow problems, stress and financi al hardship on the contractors .