Tuesday, September 13, 2005

Construction Contract Act - Another Fallacious Control mechanism

The Works Ministry is proposing to the Parliament to enact the Construction Contracts Act aimed at regulating the country's construction industry. The Act is targeted to ensure that those that have undertaken Government contracts do not put their private interests ahead of the nation (presumably). Samy Vellu, the minister, said he expects to deal with the matter speedily to enable the Bill to be tabled in Parliament soon.

The Act is expected to play a crucial role in laying down the basic principles of the construction contracts and is expected to address the all important issues of payment.

Apparently, this initiative originated from the Construction Industry Development Board (CIDB), mooted at a move towards zero-payment default through the statutory provisions. CIDB is expected to convene a separate forum to further discuss issues related to the Construction Industry Payment and Adjudication Act.

The initiative is full of idealism and you can observed that it lack pragmatism.

Why is it so? Well, if the government is determine to ensure prompt and efficient payment system, they can do so without the need of statutory control. It is all about administrative control and system integration of the works ministry, relevant project-sponsors and financial authorities (EPU and Treasury).

If the government is looking into ways to control and monitor the private sectors payment system, then the Act will be fallacious and absurd. Private sector payment system is mulled with complexities as the payment system is inter-twained with the financial resource availability and viability, lender's support system and behaviors, investment and economic policies and barriers, and are equally subjected to market supply and demand situations and the forces that drives the economy.

On the contention by Samy Vellu and CIDB that this Act will ensure that those contractors undertaking government contracts do not put their private interests ahead of the nation, I just cannot see how the Act could provide such mechanism of control. It sounds like a chimera in the brain of the proposers. I wonder they understand what is a chimera!

The first absurdity of the proposal is that it is mooted by an institution which has over the decades failed to serve it's primary objective and mission. CIDB is by virtue, an institution that is supposed to built the system to promote and inculcate competency and capability of the contractors such that they will become competent and be able to compete and benchmark themselves with the international competitors.

What's the similarity between CIDB and Socso?

Both institution are being run using public and corporate contributions and their efficiency are second to none - none accountability, none transparency, none of them are responsible as when things go wrong, they always have someone to blame except themselves.

Both have history of abuses and incompetencies.

Over the decades, CIDB had collected billions of dollar in contributions from the contractors and so far, the records showed that their only achievement is to negotiate projects in India that had benefitted a few Class A contractors. Other than this, they had conducted several seminars and workshops for the contractors but of which these contributing contractors will still required to pay to attend those seminars.

Yet today, we are hearing of another set of initiatives that presumably is mooted to provide construction system efficiency and improvement. Would this initiative work and achieve the objectives it has set out to do? I am suffering from paranoia. If the institution had failed in its original setup, could anyone feel confident that it had the capability to turnaround others?

The key words to describe it - fallacy, preposterous, farcical, glibness, frivolous, hogwash, ignoramus, imbecile, inane, inept, klutz, ludicrous, vaxatious, pedantic and most of all, they are schleps.

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