1. be the life-blood of the construction industry.

1.      Introduction to project title

The
construction industry plays a significant role in Malaysian economy. The Malaysian economy achieved 6.2
percent of Gross Domestic Product in 2017. It was the strongest growth in over
3 years. (Tradingeconomics.com,
2018) Besides, construction industry create a multiplier effects to other
industries including transportation, financial services, manufacturing and etc.
Although the construction industry is deemed as a matured industry in Malaysia,
however it is perplexed with much problems. (Azman et al., 2014) One of the main problems that
drawn the society’s attention is dispute between the parties.

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Construction
industry is brimming with competitiveness and complexity environment due to the
parties involved work together with different perspective. Parties involved
from various professions have their own goal and each one anticipate to make
their own benefits from it. Thus, conflicts are inevitable. If the conflicts
are not handled well, it will escalate into disputes. (Cakmak and Cakmak, 2013)

 

Disputes
in construction industry can be defined as a problem or disagreement between
the parties involved and cannot be handled by the project manager. Disputes can
be damaging and expensive. It can be caused by one simple reason and further
lead to a substantial set of interrelated complicated disputes.(Mahamid, 2016)
It may cause of adversarial relationship between the parties involved.

 

Payment,
not unexpectedly, has always been the main subject of dispute. (Kennedy et al.,
2005) Payment issues are an old age problems as pervading in Malaysian construction
industry. Contractors and parties in construction industry complain either
payment is delayed or not getting paid by the employer. Late payment and
non-payment issue in the construction industry are considered as a critical
factor of significant concern to all the parties involved in construction industry.
Late and non-payment will cause cash flow problems especially to contractors. Thus,
a smooth cash flow can ensure the project delivery on time and the achievement
of the quality required.

This
paper identify
the causes of disputes due to late or non-payment in the construction project.
Besides, the study also focuses on the causes of late or non-payment in the
construction project and identifies the possible resolution to resolve the
issue of late or non-payment.

 

2.      Problem Statement

Disputes are one of the vital
problems which hindered the successful completion of a construction project. It
also stated that payment not unexpectedly, has always been the main subject of
dispute. (Hasmori et.al)

Payment has been said to be the
life-blood of the construction industry. Yet there remains a continuing problem
of delayed and non-payment in the Malaysian construction industry calling for
the entire delivery chain. (Ameer Ali, 2005) Payment
issue has been identified as the main subject of construction disputes. (Azman et al., 2018)

 

Although there are mechanisms
provided in many standard forms of construction contracts dealing with payment
from the client to the contractor, yet there remains a chronic problem of late
and non-payment issues in the Malaysia construction industry.(Ameer Ali, 2005) It is common to find that a
contractor and sub-contractor threaten to suspend the work under the contract
until the payment is paid by the client. (Murdoch and Hughes,1996)

 

It has to be noted that the
construction payment blues have domino effects on the payment chain of a
construction project. (Davis Langdon & Seah Consultancy, 2003) As an
illustration, late payment due to the main contractor by the client will also cause
the delay of the payment due to the sub-contractor by the main contractor as
pay when paid provision is allowed in the contract documents. Due to this
situation, late or non-payment can possibly lead to a formal dispute
resolution.

However, the
construction industry is always in dispute prone one. It is therefore common
for the claimant pursuing his claim for works and services rendered to meet
with a cross claim instead for defective work, delayed completion etc. So
payment is always postponed until the resolution of the dispute. (Cheng, 2018)

 

 

3.      Research Aim

The aim of this
research is to minimize the occurrence of the construction dispute due to late
or non-payment in the Malaysia construction project. Besides, it also aim with
the purpose of raising the awareness of the importance of payment on time in
order to ensure the construction project to be completed in term of time, cost
and quality.

 

4.      Research Objectives

·        
To identify the cause of late or non-payment in
construction project.

·        
To investigate the effect of late or non-payment in
the construction project.

·        
To identify the possible resolution to resolve the
issue of late and non-payment in construction industry.

 

5.      Key Questions

·        
What are the causes late or non-payment in
construction project?

·        
What are the effects of late or non-payment in construction
project?

·        
What are the possible resolution of late or
non-payment in the construction project?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.      Importance

In a construction project, there  is always unexpected issues cropped up during
construction. Late payment or non-payment by the employer to the contractor is
a critical issue that drawn the attention by the contractors. Late payment by
the employer will bring an huge impact to the contractors especially the
contractors with small capital.  Furthermore, it also create negative chain
effect to others parties such as suppliers, sub-contractor and end users. Thus, payment on time by the employer to the
contractor can enhance the possibility of  the project delivered on time with the quality
required.

 

 

7.      Literature Review

The literature
review of this study will conduct the definition of dispute and late or
non-payment in the construction project. Besides, causes of late or
non-payment, effects of late or non-payment and the possible resolution to
resolve the issue of late and non-payment in Malaysia construction industry.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8.      Research Methodology

 

9.      Limitation / Scope of Study

This research is focused on the contractors which are
registered under CIDB with the Grade 1 to Grade 7.In addition, the respondents
in this research are the contractor which located in Kuala Lumpur area, other
states are not included.

 

10.  Proposed Contents

Chapter 1: Introduction

In this chapter, the background overview of the dispute will be
explained. Besides, late payment and non-payment issue encountered by the
contractor in construction industry will be briefly discussed along with the
problem statement, aims and objectives, scope and limitation of research and
rationale of study.

Chapter 2: Literature Review

In chapter two, it will focus in outlining the
secondary data from existing literature such as journals, researches,
government publication and etc. Furthermore, the definition of terms stated in
the title, overview of dispute due to late or non-payment and causes and
effects of late or non-payment which gathered from the existing literature will
be discussed.

 

Chapter 3: Research Methodology

Chapter
3 describes the design and method of research to achieve the research
objective. With the steps and methodology, it able to provide a guideline to
this research. Research process, questionnaire design, data collection and data
analysis will be explained in order to lead the way till the achievement of the
research objectives.

 

Chapter 4 : Data Collection and Analysis

In this chapter, the result will be collected and
analyzed in order to reach the research objectives of the research. The result
and data from the questionnaire will be analyzed and explained in order to
reach the objectives.

 

 

 

Chapter 5: Conclusion and Recommendation

This chapter will summarize and conclude the
research findings, problems statement 
and solution and recommendation for the research.