BQS 0318 PP2 Seminar - Presentation Slide

1. PROFESSIONAL PRACTICE 2
PANG KAI YUN 0319802
SIM CHIA TING 0320932
WAH YUN CHEN 0319115
SECTIONAL COMPLETION AND PARTIAL
POSSESSION BY EMPLOYER

2. Partial Possession By Employer (with consent)
What is Partial Possession?
● Premature or early occupation of parts or sections of the works before
practical completion.
● Clause 16.0 provides for this type of situation where the Employer wishes to
take possession of certain sections of the works before the whole Works is
completed.
● The part taken over is called the “Occupied Part.”

3. Partial Possession By Employer (with consent)
Why Partial Possession?
a) Business pressure
- current demand and price is good so they need to start business or
production. (eg: factory, shopping mall)
b) Commercial reasons
- commencement date of Works has been delayed so the need to
complete early, thus take partial possession for some sections

4. Partial Possession By Employer (with consent)
How to take Partial Possession?
a) Under Clause 16.0, the employer must comply with the following:-
i) To give written notice of intention to take partial possession to contractor
ii) The partial possession occurs before practical completion.
iii) The employer to identify part to be taken over.
iv) That the contractor has given his consent.

5. Partial Possession By Employer (with consent)
Contractor’s Consent for Partial Possession
Clause 16.1 prohibits the Contractor from unreasonably withholding or delaying
consent. However, the Contractor is not bound to give consent for partial
possession.
The Contractor may withhold consent by reasons of:
a) When partial possession may give rise to safety and health issues, or
b) When partial possession may materially disrupt the regular progress of the
remaining works
c) Where there is non-payment issue for work done.

6. Partial Possession By Employer (with consent)
Certificate of Partial Completion
Clause 16.1(a) requires the Architect to issue the Certificate of Partial Completion
within 14 days of taking partial possession of the Occupied Parts.
The Certificate of Partial Completion shall state the following:-
a) Date of partial possession
b) Must have layout plan to identify or demarcate the occupied part
c) Estimated value of the occupied part

7. Partial Possession By Employer (with consent)
Contractual Effects of Partial Possession
a) Practical Completion
- Under clause 16.1(b), practical completion of the Occupied Part shall be
deemed to have occurred on the date of taking over the Occupied Part.
b) Defects Liability Period (DLP)
- The DLP is deemed to have commenced on the date of practical
completion of the Occupied Part by the Employer.

8. Partial Possession By Employer (with consent)
Contractual Effects of Partial Possession
c) Liquidated Damages
- Under Clause 16.1 (c), Liquidated damages shall be reduced by the ratio
of the estimated value of occupied part to the contract sum.
d) Retention Sum
- Under Clause 16.1(d), the Architect is required to:
1. issue a payment certificate to release half the amount of Retention
Fund in the ratio of the estimated value of the Occupied Part
2. issue payment certificate within 14 days after the issuance of the
Certificate of Partial Completion

9. Partial Possession By Employer (with consent)
Contractual Effects of Partial Possession
e) Certificate of Making Good Defects (CMGD)
- Under Clause 16.1(e), where all defects in the Occupied Parts have been
made good, the Architect shall issue a CMGD.
f) Release of Second Moiety of Retention
- Under Clause 16.1(f), the Architect shall issue a certificate for the release
of the remaining amount of the Retention Fund for the Occupied Part
within 14 days after the issue of CMGD of the same Occupied Part.

10. Partial Possession By Employer (with consent)
Item Not Affected by Partial Possession
a) Works Insurance
i) Clause 20.A.1 states that ‘the Contractor shall keep such works so
insured notwithstanding any arrangement for ……. partial possession’.
ii) Clause 20.B.1 and 20.C.1 contain similar provision as for Clause 20.A.1.
iii) The total sum insured of the above provisions is that the parties’
insurance obligations remain unaffected.
iv) The respective parties remain obliged to insure and keep the works
insured to the ‘full value’, there being no reduction for the value of the
Occupied Part.

11. Partial Possession By Employer (with consent)
Item Not Affected by Partial Possession
b) Performance Bond and Final Certificate
i) Clause 37 for Performance Bond does not indicate any deduction or
reduction of the bond value after partial possession.
ii) Clause 30.0 for Final Certificate are not affected by the partial possession
since there is only one Final Certificate issued.
iii) Hence, it can be inferred that both the Performance Bond and the Final
Certificate are to remain unaffected by the issuance of Certificate of
Partial Completion.

12. ● If the Employer takes partial possession of the Occupied Part without the
Contractor’s consent, the Employer is in culpable breach of
contract.
● Clause 16.2 is a provision which caters for the common practice
where the Employer does, or is forced to take over parts of the works before
practical completion without the Contractor’s consent.
Partial Possession by Employer (without consent)

13. Restrictions on employer’s Rights to take partial possession without
consent
1) Employer has no absolute rights.
- The contract placed certain restrictions on the Employer’s rights to do so.
Pursuant to Clause 16.2(a) may take partial possession provided three
pre-conditions are met:-
a) The completion of Works have been delayed by the contractor
b) A Certificate of Non-Completion has been issued by Architect
under clause 22.1
c) Such entry and partial possession of the Occupied Part do not
unreasonably disturb the regular progress of the Contractor’s
remaining works or adversely affect the safety and health
issues.
Partial Possession by Employer (without consent)

14. Restrictions on employer’s Rights to take partial possession without
consent
1) Employer has no absolute rights
- For Clause 16.2 (a) to be applicable, it may be implied that the Certificate
of Non- Completion (CNC) is still operative and the Contractor is liable for
liquidated damages.
Partial Possession by Employer (without consent)

15. Restrictions on employer’s Rights to take partial possession without
consent
2) Employer’s Rights limited by the Contract
a) Clause 16.2 uses the phrase ‘without prejudice to any other rights and
remedies which he may possess under the contract’. This limits the
Employer’s right to those under the contract only and in the process
excludes his common law rights.
b) Clause 16.2 makes it clear that the procedural and contractual effect of
clause 16.2 are equally applicable as those under clauses 16.1(a) to (f).
Clause 16.1 and 16.2 deal essentially with the same circumstance, separated only
by issue of the Contractor’s consent.
Partial Possession by Employer (without consent)

16. The provision of Clause 16.3 govern the Contractor’s duties following partial
possession by the Employer, whether with or without contractor’s consent.
1) Contractor to remove his site facilities, equipments, plants, materials, etc
from Occupied Part upon receipt of A.I
2) It is implied that the Architect must prescribe a definite time for removal from
the Occupied Part and this should be a reasonable time frame.
3) However the contract is silent on consequences of non-compliance by
contractor with Architect’s written instruction to remove such items.
4) It is also silent on remedies available to employer for such non-compliance by
the Contractor.
Procedures following Partial Possession (with or without consent)

17. Different Commencement Dates
● The Date of Commencement under Clause 21.1 assume that the whole of the
Site be handed over to the Contractor on such date.
● If this is not possible, the Employer may want to plan for different sections of
the Site or phases to be handed over on different dates. In this case, this
information must be properly documented and made known to the Contractor
in the Contract so that he can price accordingly.
● The details of the different commencement dates must be recorded in the
Appendix to PAM contract as Sectional Commencement Date under Clause
21.2, together with the demarcation layout showing the different sections.
Sectional Commencement Dates and Sectional Completion Dates

18. Different Commencement Dates
Sectional Commencement Dates and Sectional Completion Dates

19. Different Commencement Dates
● This clause is useful where the site is big or where piling works are carried out
under a separate contract. Completed piling areas can be handed over to the
building contractor to start work.
● Sectional Commencement has the following advantages:
1) Save time - overlapping of construction activities being carried out by
different contractors on the same site
2) Improve cash-flow - Build according to sales and demand.
Sectional Commencement Dates and Sectional Completion Dates

20. Different Completion Dates
● The Sectional Completion Dates under Clause 21.3 can arise regardless of
whether the Site was handed over to the Contractor as a whole or in sections.
Employer may planned for completion of certain sections for business or
commercial reasons, such as phase completion of apartments to improve
cash-flow.
● The details of the different completion dates must be recorded in the
Appendix to PAM contract, together with the demarcation layout showing the
different sections.
Sectional Commencement Dates and Sectional Completion Dates

21. Contractual effect of Sectional Completion
● Same as in Partial Completion:
1) Practical Completion and Defects Liability Period (clause 15.0)
2) Extension of time (clause 23.0)
3) Liquidated Damages (clause 22.2)
4) Release of Retention Sum (clause 30.6)
● Apply to each section of the work as though it is a separate and distinct
contract.
Sectional Commencement Dates and Sectional Completion Dates

22. QUESTION

23. QUESTION 1:
Explain the differences between Sectional Completion and
Partial Possession in PAM 2006.

24. ANSWER:
Sectional Completion Partial Possession
Agreed before signing of the contract Not agreed before signing of the
contract (happened during the
construction)
Under clause 21.0 in PAM 2006 Under clause 16.0 in PAM 2006

25. QUESTION 2:
Under what circumstance can the Employer take partial
possession of the site? Please explain for both partial
possession with and without consent from the Contractor.

26. ANSWER:
Under Clause 16.0, the employer must comply with the following:-
1. To give written notice of intention to take partial possession to contractor
2. The partial possession occurs before practical completion.
3. The employer to identify part to be taken over.
4. That the contractor has given his consent.

27. ANSWER:
Partial possession with consent from the Contractor:
● Under clause 16.1, the contractor cannot unreasonably delay or withhold such consent.
Partial possession without consent from the Contractor:
● Under clause 16.2, the Employer may take partial possession provided three
pre-conditions are met:-
a) The completion of Works have been delayed
b) A Certificate of Non-Completion has been issued by Architect under clause 22.1
c) Such entry and partial possession of the Occupied Part do not unreasonably
disturb the regular progress of the Contractor’s remaining works or adversely
affect the safety and health issues.

28. QUESTION 3:
Explain the contractual implications of partial possession
and the items not affected by it.

29. ANSWER:
Contractual implications of partial possession:
1. Practical Completion - clause 16.1(b)
2. Defects Liability Period (DLP) - clause 16.1(b)
3. Liquidated Damages - clause 16.1(c)
4. Retention Sum - clause 16.1(d)
5. Certificate of Making Good Defects (CMGD) - clause 16.1(e)
6. Release of Second Moiety of Retention - clause 16.1(f)

30. Item Not Affected by Partial Possession:
a) Works Insurance
i) Clause 20.A.1 states that ‘the Contractor shall keep such works so
insured notwithstanding any arrangement for ……. partial possession’.
ii) Clause 20.B.1 and 20.C.1 contain similar provision as for Clause 20.A.1.
iii) The total sum insured of the above provisions is that the parties’
insurance obligations remain unaffected.
iv) The respective parties remain obliged to insure and keep the works
insured to the ‘full value’, there being no reduction for the value of the
Occupied Part.
ANSWER:

31. Item Not Affected by Partial Possession:
b) Performance Bond and Final Certificate.
i) Clause 37 for Performance Bond does not indicate any deduction or
reduction of the bond value after partial possession.
ii) Clause 30.0 for Final Certificate are not affected by the partial possession
since there is only one Final Certificate issued.
iii) Hence, it can be inferred that both the Performance Bond and the Final
Certificate are to remain unaffected by the issuance of Certificate of
Partial Completion.
ANSWER:

32. ADDITIONAL QUESTION

33. QUESTION 1:
After the employer has taken possession of the Occupied
Parts, the Architect shall issue the Certificate of Partial
Completion within how many days? What should be stated in
the Certificate of Partial Completion?

34. Under clause 16.1(a), the Architect shall issue the Certificate of Partial Completion
within 14 days of taking partial possession of the Occupied Parts.
The Certificate of Partial Completion shall state the following:-
a) Date of partial possession
b) Must have layout plan to identify or demarcate the occupied part
c) Estimated value of the occupied part
ANSWER:

35. QUESTION 2:
Under clause 16.1, the contractor cannot unreasonably delay
or withhold such consent. Under what circumstances will the
contractor withhold such consent?

36. The Contractor may withhold consent by reasons of:
1) When partial possession may give rise to safety and health issues, or
2) When partial possession may materially disrupt the regular progress of the
remaining works, or
3) Where there is non-payment issue for work done.
ANSWER:

37. QUESTION 3:
Whats should the contractor do if the employer takes
possession of the Occupied Part, whether with or without
contractor’s consent?

38. Under clause 16.3 govern the Contractor’s duties following partial possession by
the Employer, whether with or without contractor’s consent.
1) Contractor to remove his site facilities, equipments, plants, materials,
etc from Occupied Part upon receipt of Architect’s written instruction.
2) It is implied that the Architect must prescribe a definite time for
removal from the Occupied Part and this should be a reasonable time
frame.
ANSWER:

39. THANK YOU!