Reinstate price variation clause in contracts, builders urge govt

Master Builders Association Malaysia president Foo Chek Lee (left) with vice-president Oliver H C Wee.

PETALING JAYA: Contractors want the government to reinstate a clause in project agreements to protect them from fluctuating prices of construction materials.

“We appeal to the government to reinstate the price fluctuation clause for building materials into all construction contracts.

“In recent tenders and ongoing projects, the contracts do not have this clause,” said Master Builders Association Malaysia (MBAM) president Foo Chek Lee.

This would mean, he added, that if the cement price goes up, there would be an adjustment in the price in government contracts to reflect this.

Foo hoped both the public and private sectors would reintroduce the clause in their contracts to “stabilise” construction costs.

He said this would reduce the impact of market fluctuations on contractors working on both government and private jobs.

Azman Yusoff, from the Bumiputera Contractors Association Malaysia, said the clause should be reinstated to protect the interests of contractors.

“It should be reintroduced because prices in the market are unpredictable,” he told FMT.

On another issue, Foo said disputes in the construction industry had been rising because of cash flow problems affecting companies.

He added that factors such as slow payments, differing expectations on the quality of the finished work and imbalanced provisions in some of the contracts had caused this rise in disputes.

As a result of all this, the association is launching the MBAM Mediation Service to help resolve such disputes.

He said currently parties in a contract could seek legal redress but this might be expensive and take a long time.

He said the mediation service — carried out by trained mediators — would ease the burden on the construction industry courts, which had been seeing an increase in dispute cases being filed since 2017.

Currently, there are three specialised construction courts to hear construction industry disputes, two in Kuala Lumpur and one in Shah Alam.