The trend of the Malaysian construction industry is to just get the job done first & do the paperwork later. This leads to the problem of closing the contract when the final payment is to be made.
So this is the main cause why we normally have disputes at the end when closing the accounts.If the contractor is good, he may have a good record keeping which he could reproduce at the time that particular issue is being resolved. Normally measurements, photographs, letters of instruction, new works BQ, calculation of rates (for items which do not have a BQ rate) etc are needed as proof. With everything in place, then only can the variations or remeasurements be approved.
By the time the contract final account is being processed, sometimes the staff might have moved on to other projects, making it more difficult to get some of the data needed for computations - this again sometimes lead to ambiguity of calculations/ or worst if the contractor makes up his own records just to support other documents. This sometimes leads to additional cost to the project.
So the best solution is to educate all parties involved to follow the contract ( as stated in the contract documents - to submit the necessary paperwork within the stipulated times) - so that when it is time to do the final account, everything becomes easy.
Naturally the impact of disputes could be summarizes as follows:-
1. Delay in client closing the project - sometimes causing them not being able to bid for new projects - as the existing ones have not been settled. A good track record of clients performance also improves their capability of handling more projects in the future
2. Funds not being spent as planned within the financial year - sometimes this creates allocation problems in the following financial year
3. The contractor not getting his money in time - this may lead to problems in his own financial planning
4. The contractor not being able to tender or participate in new tenders - as the records shows that his existing project is still incomplete -Sometimes the contractor's track performance records being affected.
In summary, if we follow the clauses in the contract documents, these disputes during closing of final account could be minimised