Terminating contract of contractors in delayed projects a last resort — deputy minister

KUALA LUMPUR (July 18): The government has always taken steps to assist contractors to complete their projects, including allowing them to apply for the implementation of the Variation of Prices (VOP) clause to ensure the survival of contractors affected by rising prices of building materials.

Deputy Works Minister Datuk Arthur Joseph Kurup said the government understood the matter and any move to terminate the contract of contractors involved in delayed projects or "ailing" projects would be the last step taken by the government.

“The government really understands that among the main factors for project delays was rising building material prices. Besides the allowance of an extension of time, the VOP will ensure that termination is a last resort,” he said in the Dewan Rakyat on Monday (July 18).

He said this in reply to a supplementary question by Datuk Hasanuddin Mohd Yunus (Pakatan Harapan-Hulu Langat) on measures taken by the Ministry of Works in helping contractors facing having their services terminated due to delays in the projects carried out by them.

In his reply to the original question by Ahmad Johnie Zawawi (GPS-Igan), Joseph said that as of June 30, a total of 84 projects had been categorised as being delayed projects, compared with the 696 government contracts under construction by the Ministry of Works, or equivalent to 12%.

He said that apart from rising prices of building materials, other unforeseen factors also contributed to delays in completing the projects, such as disruption to the supply chain of building materials, a manpower shortage due to the implementation of the movement control order since March 2020, and floods in 2021 that also affected private projects.

The government previously agreed to implement the VOP to ensure that government projects were not affected and could be completed according to schedule.

“The conditions and method of calculating the VOP in this work contract are from Jan 1, 2021 until June 30, 2022. The list of building materials included in this circular is reinforced steel, crusher run, mild steel pipes (water and sewer pipes), and copper.

“To further ease the burden of construction industry players, the prime minister on July 14 added 11 more building materials in the implementation of the VOP, bringing the total to 15 approved building materials,” he said.