The sustainability of future projects carried out by construction companies will be seen if the Construction Industry Payment and Adjudication (CIPA) Bill 2011 pass into law.

According to industry sources in a report by The Borneo Post, the bill had already passed the first reading in Parliament, and the Act will have great impact in the construction industry, as it will help parties involved in the sector to regularise their cash flows.

Datuk Seri Michael Yam (pictured), President of Malaysia Real Estate and Housing Developers' Association (REHDA), said the CIPA Bill is intended to be ‘the oil to the cogs' by ensuring that projects are running smoothly.

"This is done by creating a quicker dispute resolution period especially on issues of payment of all value chain suppliers to facilitate smoother flow of working capital, thus avoiding disruptive work progress."

However, payment defaults had been the primary problem in the industry.

He noted that they "have heard predicaments on both sides here, some parties having had payment with held whilst other parties have had complaints of dissatisfaction as to the quality of service rendered - both are equally serious and ‘chicken-and-egg' issues."

"We hope that the Act would reinforce the discipline and diligence of all parties to respect the spirit of the contract and to plan better financially and practically," he added.

Under the CIPA Bill 2011, the Kuala Lumpur Regional Centre for Arbitration (KLRCA) will be designated as the official adjudication authority in the country. With this, the centre will establish competency criteria and standards required for an adjudicator in the country.

The Bill could be imposed by end-2012, and the key industries that would be under its jurisdiction would be predominantly mechanical, construction, oil and gas, engineering as well as telecommunications sectors.

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