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The International Conference on Administration and Business

ICEA - FAA 2009 14 15 NOVEMBER 2009 http://conference.faa.ro

The Faculty of Business and Administration University of Bucharest

The International Conference on Economics and Administration, Faculty of Administration and Business, University of Bucharest, Romania ICEA FAA Bucharest, 14-15th November 2009

ADVANCE PAYMENT: TO WHAT EXTEND IT SAVE THE CONSTRUCTION WORKS?


Abdul Aziz HUSSIN abdaziz@usm.my School of Housing, Building and Planning, Universiti Sains Malaysia, Malaysia Abdelnaser OMRAN naser_elamroni@yahoo.co.uk; School of Housing, Building and Planning, Universiti Sains Malaysia, Malaysia Abstract This paper seeks to determine that how far is the advance payment needed to ensure the smooth running of construction works. A questionnaire survey was used to carry out the study. The questionnaire consists of 10 factors that bring to the needs of advance payment in smoothing the construction works. The level of importance factors was measured and the relative importance of weights was ranked. The scope of study is limited to contractor firms, developer companies and consultants firms in the Penang Island, Butterworth (main land) and Taiping, Perak are located. The study found that, to prevent the delay of works is the main factor and to speed up the progress of works is the second most important factor by providing the advance payment in construction projects. The results were analyzed to rank the need of advance payment to ensure the smoothing of construction works. Based on the analysis of the ranking and intensity of the needs of advance payment in construction works, this paper suggest possible improvements that could be in order to increase the construction performance by providing the advance payment. Key words: Advance payment, smooth running, construction works, contactors firms, developer companies and consultants 1. Introduction As Malaysia progressively marches towards industrialisation, the role of the building industry is greatly enhanced, with the idea of transforming the aspirations and needs of people into reality. There is thus an urgent need to mass-produce quality housing that is affordable to all Malaysians. New and innovative approaches and technology are needed in the design and construction of houses to enable the nation to achieve this target (Ismail, 2001). In the Malaysian context, the governments policy on housing is that traditional building practices must he replaced by an industrialized building system (IBS), which could be seen on labour, cost and time of construction, and confer quality and durability (Ismail, 2001). Warszasski (1999), mentioned that the benefits of lBS when applied to a building process include savings in manual labour on site (up to 40-50 percent of the input in conventional construction), especially in skilled trades such as formwork, masonry, plastering, painting, carpentry, tiling, and pipe-laying (electrical and water supply). In addition, lBS is a faster construction process, meaning earlier completion of building projects. A clear understanding of the current status of IBSs will help to set housing programs under the 8th Malaysia Plan. The first step in any advance study on building systems and their technology should he initiated by determining the status quo (Badir and Kadir. 2002). One of the most important problems in the

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The International Conference on Administration and Business


ICEA - FAA 2009 14 15 NOVEMBER 2009 http://conference.faa.ro

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construction industry is delays. Delays occur in every construction project and the magnitude of these delays varies considerably from project to project. Some projects are only a few days behind schedule: Some are delayed by over a year. So it is essential to define the actual causes of delay in order to minimise and avoid delays in any construction project. The successful execution of construction projects and keeping them within estimated cost and prescribed schedules depends on a methodology that requires sound engineering judgment (Al-Moumani. 2000). The main objective of this study is to identify major factors of the need of advance payment in running construction works by using survey. The primary aim is to identify the perceptions of the different parties such as developer, consultant and contractor regarding the advance payment. 2. Literature review Payment is, from the Contractors perspective, the most important aspect of any construction project. From the Owners perspective, payment is the ultimate leverage to compel a Contractors performance. Advance payments are advances of money by the client of any project to a prime contractor before, in anticipation of, and for the purpose of complete performance under one or more contracts, They are expected to be liquidated from payments due to the contractor incident to performance of the contracts. Since they are not measured by performance, they differ from partial, progress, or other payments based on the performance or partial performance of a contract. Advance payments may be made to prime contractors for the purpose of making advances to subcontractors. According to Marzuki (1988), advance payment is needed by the contractor for their cash flows purpose. advance payment can help the contractor to relief the financing problem during commencement of constructions works. Next, according to Gading (1998) stated that cash flow is yen important to a contractor. Any delay of the payment will affect their cash flow and cause them difficulty in financing. Beside, this will also disturb the

smoothly of construction works because of unable to pay to sub contractor, workers, supplier and others, which will cause to delay of construction works. So, provide advance payment by the client or developer to contractor is seems like the advanced injection of financial resource to contractor for them to commence the construction works with more efficient. Robinson and Lavers (1998) have stated 3 purposes of advance payment given by the client to the project contractor as below: 1. Decrease the financial burden of the contractor. 2. Assist the contractor to face the difficulty of special mobilisation of project. 3. Assist the smaller size contractor firm or the newer able to competitive with the mature contractor firm. Normally, the advance payment will use by the contractor to purchase or pay for the rental of plant and equipment of construction and also to buy the construction material. Because of these, basically the client of the project will agree to assist the contractor by paying the advance payment with the amount partially of the contract price. In addition, an Advance Payment Guarantee is usually required where, under the terms of a Contract for the supply of equipment or services, an advance payment is to be provided to meet the Contractors mobilisation or other up-front costs. The amount of the advance payment is commonly somewhere between 10% and 20% of the Contract price. Advance Payment Guarantee uses where a developer makes an advance payment to a contractor and obtains a bank guarantee as security against that payment. The guarantee is payable on demand and contains optional wording for the value of the guarantee to reduce as interim payments are made under the contract. The Advance Payment Guarantee is almost invariably in an on-demand form, as in our document, with the Bank, which provides the Guarantee undertaking to repay the advance upon demand. Factors that Support the Needs of Advance Payment in Construction works. The factors of the need of advance payment can be listed according to how

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they operate contractually in the construction works in the following: To solve the financial problem. 1. To solve the problem of delayed payment. 2. To speed up the progress of works. 3. To prevent the delay of works. 4. For extra the works. 5. For the variation in quantity. 6. In risk management. 7. For changed conditions. 8. To ensure the quality of works. 3. To solve the financial problem The financial problem here is referring to the cash flow of a contractor firm. Cash flow is very important to a company in any industry. Without proper planning and well management of cash flow of any company will lead them to face failure in that particular business. Normally the client of the project never wants their contractor to face any cash flow problem as it will bring harm to their project as well. This might cause them need more cost and more time to complete a project. Sometimes the financial problems of a contractor firm is causing by the clients themselves. For instance, keep delay for the progress payment which might cause a smaller contractor firm runs out of money to precede his works. The client of a project is playing a very important role to assist the contractor when facing financial problems or present from it. As mentioned by Robinson and Lasers, advance payment can decrease the financial burden of a contractor, assist the contractor to face the difficulty of mobilisation of project and also assist the smaller size contractor firm to be more competitive in getting project. The financial factor is the most important factor when discussing about the need of advance payment in construction. The advance payment is needed to assist in financial resource of any contractor firm in order to ensure the smooth running of construction works. The financial resource is very important throughout the construction phases such as pre-construction and construction. Besides, it also gives financial protection to the contractor. The contractor does not carry the financial burden and shoulder the financing cost for the developer. But what is more crucial is that he does not carry the risks of the project not being successful or abandoned.

4. To solve the problem of delayed payment As we know, the problem of delayed payment from the client of the project to contractor is very common in construction industry nowadays. As we mention at the starting of this study, the payment is the most important aspect of construction project from the contractors perspective. Without the payment from the client after completion of any project, the contractor might face cash flow problem. More serious, the company especially that smaller contractor firm might close or bankrupt if the client keeps delay their payment or do not pay at all. According to the progress payment, the contractor will only receive the payment after they have completed their works. In condition, the architect has certified for the progress certificate. In other words, they have to use their own money at the moment of the construction works commence. Normally they will need a large amount of money at the beginning of project to purchase the construction plant and equipment or pay for the rental and also buying materials. Furthermore, they have to pay for their sub contractor after they have completed their works during the construction period. Next, they also have to pay for their management, labours and other expenses as long as the construction work is running. Clearly, the delay of progress payment will affect their cash flow or bring them to the financial problems. In addition, if the advance payment is offered by the client during the construction period then will assist them relief from the financial risk. As mentioned by Gading (1998), cash flow is very important to a contractor. Any delay of the payment will affect their cash flow and cause them difficulty in financing. Beside, this will also disturb the smoothly of construction works because of unable to pay to sub contractor, workers, supplier and others, which will bring to delay of construction works. So, advance payment by the client or developer seems like a very important financial resource to contractor for them to carry out construction works with more efficient and effective. 5. Speed up the progress of works If an owner directs a general contractor to finish a project ahead of the existing

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schedule in order to shorter, the construction period with the purpose of saving the construction time and also the cost indirectly, the needs of extra money is very obviously. In that case, the condition might he worked more efficient and effective if advance payment can be provided by the owner. I believe with the providing of advance payment, the contractor might put more effort in the construction management to achieve the target set by the owner. Another case, if the contractors work has been delayed due to the causes such as unforeseen conditions, economic conditions, natural conditions and also user changes, which can he considered as excusable delays, the contractor is then ordered to complete the project in accordance with the original completion schedule. The excusable delays are commonly called acts of God because they are not the responsibility or fault of any particular part. Most contracts allow the contractor to obtain an extension of time for excusable delays, but not additional money. Such as this case, the advance payment seems very need and important to the contractor. It is because with the advance payment, the contract can purchase more materials, install more machinery and increase labour in the construction site to speed up the delay works. These conditions can be considered as acceleration in the legal term. They are two types of acceleration: Actual and constructive. Actual acceleration occurs when the owner demands that the contractor complete the project ahead of the originally submitted completion schedule and constructive acceleration occurs when the contractor is delayed by some action, normally in change order, or by an owner or architects delay in reaching a decision on a question posed by the contractor. At this point, the general contractor can take the action to obtain reimbursement of cost caused by undue demands of the owner. For the acceleration case, the claims will only pay after certain period of the completion of construction works. If the owner then provides payment before the construction works, a contractor can attempt to get monetary relief because of the owners action. Moreover, the owner can take this opportunity to demand that the contractor complete the project according to the original contract schedule.

6. Prevention of work delays Generally, delays can be divided into three major types, namely: (i) Excusable and non-excusable; (ii) Compensable and non-compensable; and (iii) Concurrent. i. Compensable delays Compensable delays are those that are generally caused by the owner or its agents. The most common form of compensable delay is inadequate drawings and specifications, but compensable delays can also arise from the owners failure to respond in a timely fashion to requests for information or shop drawings, owners changes in design or materials, and owners disruption and or change in the sequence of the work. The contractor is entitled to both additional money and additional time resulting from compensable delays. ii. Von-excusable delays Basically, these delays are caused by contractors or subcontractors or materials suppliers, through no fault of the owner. The contractor might be entitled to compensation from the delaying subcontractor or supplier, but no compensation is due from the owner. Therefore, non-compensable delays usually result in no additional money and no additional time being granted to the contractor. iii. Excusable delays Excusable delays, also known as force majeure delays are the third general category of delay. These delays are commonly called acts of God because they are not the responsibility or fault of any particular party. Most contracts allow for the contractor to obtain an extension of time for excusable delays, but not additional money. iv. Concurrent delays If only one factor is delaying construction, it is usually fairly easy to calculate both the time and money resulting from that single issue. A more complicated hut also more typical situation is one in which more than one factor delays the project at the same time or in overlapping periods of time. These are called concurrent delays. Delay is a serious problem in the construction industry. It is costly for both

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owners and contractors. Owners lose money by missing out on potential revenues from the use of the project and through increased overheads for contract administration and supervision. Contractor losses are due to increase cost in overheads and tied-up capital. Hence, presenting the delays in construction projects is crucial. 7. Extra and Changes in the Work Construction contracts generally include a clause that gives the owner the right to order extras and changes. (For example. not to exceed 5% of the contract price). For the contractors protection, the owner should provide a time extension and payment for performing the change. Otherwise, the contractors have to compensate for the impact of the change and also on other work, if any. This can tie up contractor dollars and erode cash flow. As we know, must contractors do include time provisions for payments to the contractor for base contract work but not for extra work, It should he apparent that some changes will have a ripple effect, that is, changes that could bring work into a winter season, call for different equipment, or tie up equipment needed for another portion of the work. That ripple, or impact, from the change should be compensated for in addition to the direct costs of the changed work. Theoretically, an increase in contract completion time would mean that a request could made for reimbursement of the portion of the general contractors general requirements that is related to time. If the changes are going to extend the length of the job, the contractor could include the following as cost of the work: Additional supervision, additional field office expenses (including office trailer rental), added temporary utility costs, added sanitary control costs, cleaning costs, and in some cases additional project management costs. These can be considered as indirect costs to the change works. The extra and change works in a construction project sometimes might involve in large amount on additional cost, especially the construction of mega project. For a small size contractor firm or a general contractor firm with many projects on hand might facing cash how problem when there are a lot of changes in the construction works. In this situation, the developer actually can give a hand to them by providing advance payment. With one stone kills two birds: Help the contractors solves the financing problem and

also save themselves from the damages bring to the delays. 8. Variation in Quantity Many fixed-price contracts incorporate unit pricing. This entails the owners setting forth estimated quantities of materials needed to accomplish the work, into units. For example, the owner might estimate quantities of cubic yards of concrete poured, the quantities being a combination of materials and work. The entire contract could be unit priced, if the design is complete, the key is the degree to which quantities can be reasonably estimated. In complex projects, unit pricing becomes more difficult, the contractor generally takes more of a risk if unit pricing is used in such cases. Wrong estimates can result in substantial losses or in windfall profits for either party. If the actual quantity is significantly lower than estimated, the contractor may not be able to recover his fixed cost for the work. In other instances, he may be overly compensated. The contractor can lose his shirt, or come into a windfall profit. However, there are more fundamental problems with unit pricing when the idea was conceived; labour costs were a much lower percentage of the cost of construction work than now. Over time, labour has assumed a greater percentage of the cost of construction and is probably about equal to that of materials in many cases. This change is not always reflected in unit pricing. Sometimes a design change without a quantity change might affect labour costs significantly. For example, a design change could require a special finish on concrete that does not change the actual amount used, but does require much higher labour costs. That change should be compensated for in addition to the direct costs of the changed work. Normally the addition costs will only pay after the completion of works. Significantly, the advance payment is needed to the situation to ensure the smooth running of construction works. 9. Risk Management The construction industry is notoriously risky: much of the preparatory paperwork that precedes construction projects can be viewed as the formulation of risk allocation between the owner, the contractor, and the designer.

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9.1 The Owner The owner is taking the risk that his project will not get builds on schedule, that it will not get build for what he has budgeted, and that it will not be of the quality he expected. The owner naturally seeks to insure that these three factors will be satisfied, and he can accomplish more effective through the action of providing advance payment. In some cases, the owner has other risks to bear when the advance payment is provided. For example, the contractor just runs away with the advance payment without completing the construction works. Typically; however, an owner will seek to control whatever risks he can through his contract documents protection by the law. 9.2 The Contractor The contractor faces a multitude of risks. Among them are inflation, bad weather, strikes and other labour problems, shortage of materials, accidents, and unforeseen conditions at the construction site. Many of the risks posed by archaeological finds, environmental or other citizen opposition are shared by the contractor: Work stoppage can affect his allocation of men and materials, or present him from bidding other work. Ultimately, the contractor faces the possibility of losing a great deal of money or of being forced out of the business. Naturally, he too would like the advance payment to be protective of his interests. The owner usually has the upper hand here. He is the party who generates the advance payment Contractors, and to a lesser extend designers, merely react to these. In this, we hope to convince all parties that allocating or sharing risk fairly can ultimately save time and money for everyone, and get the job done on schedule for the least part overall cost. 10. Changed Conditions Historically, unforeseen subsurface conditions have caused many construction claims and have driven more than a few contractors into default. This important provision, sometimes referred to as a differing site conditions clause, is now part of the federal governments standard documents, as well as the AlA and FJCDC documents. A changed conditions or unforeseen site conditions might affect the cost of work. For example, such unforeseen ground conditions can necessitate the driving of longer piles or the use of more support steel than was

first planned. Both operations might disrupt and delay work, throw schedule out of kilter, and cost significantly more than a contractor could reasonably could expected. Although, the contractor denotes acceptance of the risk when he is signing of the contract documents. However, some are still gamblers at heart and prefer to take the risks, and along with that risk potential for a windfall profit. In the presence of a changed condition, the owner should provide an equitable means of paying the contractor for overcoming conditions that neither he nor the owner could have expected from the information available at the time the contract was prepared. A changed conditions or unforeseen site conditions are not a rare case in construction industry. Extra money is needed for the contractor to overcome the problem before the variation order can be claimed. The advance payment is needed to the contractor when facing such unexpected site condition. In this case, the owner of the project is the one who will appear to assist in smooth running of the project. 11. To Ensure the quality of works Advance payment is needed to ensure the quality of the construction works. It has to look from difference prospect. But in reality, sometimes it might be not practical. In the perspective of client or the developer on the quality, the problem of shoddy workmanship might be another headache problem after completion of construction works. Their buyers might keep complain on the defect matter such the finishing is poor and the building sometimes leaks or has cracks, and the materials used are of low quality and so on. Developers still realise that if they build houses that are of disputable quality, they may get into litigation with the buyers during the handing-over and since the buyers have not fully paid up, the developers are in a disadvantaged situation. The point of view from the developer, the advance payment will largely solve the problems shoddy workmanship. It is because they believe that the contractor will perform more efficient in construction such as will construct the project follows the specification in the contract. Moreover, they will pay more effort on the quality of the construction works as they receive the advance payment from the client which gives a mean to their financial protection.

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12. Methodology This section describes the procedure of data collection and the techniques used in the survey as below. 12.1 Sampling frame of the survey The sample included many building system companies. The questionnaire was distributed among go government bodies, main contractors, consultants and developers who were connected with construction projects. In order to accomplish this, we have contacted professional institutions, agents and government bodies. The questionnaire focused on either the Advance Payment is needed to ensure the smooth running of construction works and so forth. Most of the questions were of the closed type and were designed to elicit qualitative information. Codes were provided beside the questions so that respondents and enumerators could communicate in a convenient way. 12.2 Population and sampling size The sample was restricted to construction industry. The respondents were contractors, consultants (engineers and architects), and developers, who were involved in building construction projects. A total of 50 questionnaires were distributed by post and by hand. However, there are only 30 samples were collected from the survey. The sample was selected randomly. A simple random sampling procedure was employed to choose the sample. Out of the 30 questionnaire sampled, 37 per cent were from contractors, 40 per cent were from consultants, and 23 per cent from were developers. Ranking of the factors that support the need of advance payment in construction works. The respondents identified variables that they

perceived the advance payment is needed based on the questionnaire by responding on a scale from 1 (Agree) to 5 (Disagree). The fivepoint Likert rating scale was 1 = strongly agree, 2 = agree, 3 = average, 4 = not quite agree, 5 = strongly disagree. This scale was chosen to avoid neutral answers that do not provide information on very important or nonimportant issues. The mean score (MS) for each factor was calculated using the following formula: MS = /N (1 MS 5)

Mean score (MS), S is the score given to each factor by the respondents (Ranges from 1 to 5), and N is the total number of responses concerned. 13. Results and Discussion Advance payment is needed to ensure the smooth running of construction works. It can bring benefit to both developers and also the contractors. The developers can save themselves from the delay work and also might save time and ensure quality products. On the other hands, the contractor can decrease their financial burden, increase their cash flow and also able to face the mobilization of the projects. Hence, determining the factors that support the advance payment is needed in construction projects is crucial. Table (1) presents the results of the analysis of the items of the general factors that support the advance payment is needed in construction works. A total of 9 factors from different fields were ranked according to the ranking of their mean values.

Table 1. Presents the ranking of the advance payment supporter factors by the developer
Factor To solve the problem of delayed payment To solve the financial problem To prevent the delays of works For the extra work For the variation in quantity To speed up the progress of works In risk management For changed conditions To ensure the quality of works Total Mean Score Mean Score 2.6 3.2 3.3 3.5 3.8 3.9 4.0 4.2 4.3 32.8 Rank 1 2 3 4 5 6 7 8 9

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The Faculty of Business and Administration University of Bucharest

The total mean score of from the sample of the developer is higher than the contractor and the consultant. Table 2 presents the results of the supporter factors analysis of the developer on the importance of the advance payment in construction project with their ranking as a whole. Based on the mean score, the factors of to solve the problem of delayed payment and to solve the financial problem rank higher than others .The factors such as to ensure the quality of works, for changed conditions, risk management, to speed up the progress of works, for the variation in quantity, for extra work and also to prevent the delay of works seem are average agree of developer on the statement that the advance payment is needed to ensure the smooth running of construction works. In the developer point of view, the progress payment still would be the best choice for them to choose for the

payment in terms of advance payment and progress payment. The developer do not agreed that advance payment can ensure the quality of the project works. This is because the developers believe that it is a better way for them to monitor and control the project more efficient by progress payment. In other words, the contractor will only receive their payment after they have completed their works. That means the contractor have to perform better in time, cost and quality during the construction period in order to get their payment from the client. The ranking of the supporter factors on the advance payment is needed are varied from the consultant and contractor. This is may be caused by the developer as client they see things in different perspective and demand more from the contractor to perform a better job for them.

Table 2. Presents the ranking of the advance payment supporter factors by the contractor
Factor To prevent the delays of works To Solve the problem of delayed payment To solve the financial problem To speed up the progress of works For the extra work To ensure the quality of works For the variation in quantity In risk management For changed conditions Total Mean Score Mean Score 1.2 1.3 1.4 2.2 2.5 2.6 2.8 3.2 3.3 20.5 Rank 1 2 3 4 5 6 7 8 9

The total mean score of from the sample of the developer is the lowest among the 3 different fields. Table II presents the results of the supporter factors analysis of the contractor on the importance of the advance payment in construction project with their ranking as a whole. Based on the mean score, to prevent the delays of works and the financial problem factors such as to solve the financial problem and also to sole the delay of progress payment are the major factors in supporting the need of advance payment. In the contractor point of view, advance payment would be the best choice to choose for the payment as they like payment to be pre-paid. That is meaning they can get the payment before the completion the construction works or even before commencement of works. With the advance payment, the contractors will not facing

financial difficulties such as cash-flow problem. They can use the payment to purchase the plant and equipment and also to by the material during the commencement of construction works. They believe that they can perform better and more efficient in terms of time, cost and quality of the project with the advance payment, which has been given to them. The ranking for the factors of the agreement on the advance payment is needed in construction works are same as the consultant but different from the developer. The contractors are those people who are working on site and also are the one who dealing with day to day working process.

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Table 3. Present the ranking of the advance payment supporter factors by the consultants such as architect and engineer
Factor To prevent the delays of works To Solve the problem of delayed payment To solve the financial problem To speed up the progress of works For the extra work To ensure the quality of works For the variation in quantity In risk management For changed conditions Total Mean Score Mean Score 2.2 2.5 2.6 3.2 3.3 3.4 3.5 3.6 3.6 27.9 Rank 1 2 3 4 5 6 7 8 9

The total mean score of from the sample of the consultant is higher than the contractor but is lower than the developer. Table 11 presents the results of the supporter factors analysis of the consultant on the importance of the advance payment in construction project with their ranking as a whole. Based on the mean score, the financial problem factors such as to solve the financial problem and also to solve the delay of progress payment are the major factors in supporting the need of advance payment. Besides, the other factors such to ensure the quality of works, risk management and also to prevent the de1a of works are also the factors that supports the advance payment is needed in construction works. 14. Conclusions & Recommendations The important issue focused on in this study is to ensure the advance payment is needed in smooth running of construction works. The results of the analysis show that from a total of 30 respondents, 9 variables examined, separated into three different field, the contractor is the one category most supports to the advance payment is needed in construction works, followed by the consultant and the client or the developer is the one who are not so supports on that advance payment is needed in construction works. However, according to the finding of this study the financial factor still exists as the major supporter factor on the needs of advance payment in construction works. The next factor which supports the advance payment is needed to ensure the smooth running of construction works is to prevent delay of work, follow by speed up the

progress of work, risk management and to ensure the quality of works. The other factors such as for extra works, variation in quantity, changed conditions and the variation in quantity are considered as the factors that the advance payment is not so needed to ensure the smooth running of construction works by the three categories. Finally, the perspective on the needs of the advance payment is varied from difference fields such as contractor, developer and consultants. Generally, the contractor might prefer and support the statement of advance payment is needed to ensure the smooth running of construction works because the advance payment can help them to reduce the financial burden. Moreover, they can also perform better in construction works such as save the construction cost, shorten the construction time and improve the quality of work. While the developer not so agree as they prefer progress payment that they can control the progress and performance of the project better. Last but not least the consultant point of view is that the advance payment is needed varies from site to site and should depend on the ability and condition of the particular project. Based on the findings and discussions of the study, it is recommended that financial support especially the advance payment is a very important aspect to ensure the smooth running of construction works. Overall, the developer should accept the fact that advance payment is necessary in construction works. However, a well defined contract such as advance payment bon must be included in securing themselves or protection themselves from risk with the contractor.

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References
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