This month, the Singapore Building and Construction Authority (BCA) released the much awaited 7th edition of the Public Sector Standard Conditions of Contract for Construction Works (PSSCOC 2014).
First published in 1995, the PSSCOC was a commendable effort by the BCA to standardise the terms and conditions for all public sector construction projects. Prior to that, public sector construction projects were invariably tendered on the basis of standard forms drafted for the respective statutory bodies, such as the Housing and Development Board (HDB), JTC Corporation or Singapore Public Works Department (PWD) forms. Now into its 19th year, the PSSCOC is considered by those in the building and construction industry as a necessary point of reference for the industry’s standard practices and risks profile for public sector construction projects.
The PSSCOC comes in a suite comprising two main contract forms (for construction works and for design and build projects), a set of standard conditions for nominated subcontract, together with their supplements including templates for form of tender, articles of agreement and performance guarantee. In this note, we have adopted capitalised terms adopted in the PSSCOC 2014.
Like its earlier editions, the PSSCOC 2014 keeps pace with developments in the industry. For this round, it introduces 5 key amendments to the Standard Conditions.
Noise Pollution (Clause 11.1)
Construction works requiring supervision at night between 6 pm and 8 am, on Sundays or public holidays, are prohibited subject to the Superintending Officer’s written permission. This is in line with the Environmental Protection and Management (Control of Noise at Construction Sites) Regulations (Cap. 94A) (Regulations), although the extent and period of prohibition are wider than those set out in the Regulations: the Regulations only set the maximum permissible noise levels for construction work in terms of decibels between 7 pm and 7 am, except for construction work near hospitals, homes for the aged sick and residential buildings.
Severe Haze Conditions (Clause 14.2(b))
‘Severe haze conditions’ are specified as an event which entitles a Contractor to an extension of time alongside ‘exceptionally adverse weather conditions’. The Contractor remains responsible for demonstrating its delay impact notwithstanding the Contractor’s due diligence and efforts in avoiding it. No doubt, this amendment was introduced to address the effects of the perennial haze conditions in Singapore caused by regional forest fires. In particular, the haze condition in June 2013 saw PSI (pollutant standard index) readings in Singapore scale a record high of 401.
The lack of any definition of ‘exceptionally adverse weather conditions’ and ‘severe haze conditions’ is in our view intended to allow public sector employers some latitude to self-regulate in this respect. Typically, one would find prescriptive guidelines drafted into the Specifications or other Contract documents which refer to historical data from meteorological stations. That said, some guidance from the relevant governmental agencies would have been welcomed. In addition, aligning ‘severe haze conditions’ with ‘exceptionally adverse weather conditions’ in Clause 14.2(b) and not force majeure in Clause 14.2(a), could suggest that the draftsman was less inclined to consider ‘severe haze conditions’ a force majeure event. (For the law on force majeure in Singapore, see the Singapore Court of Appeal’s decision in Holcim (Singapore) Pte Ltd v Precise Development Pte Ltd and another application  SGCA 1).
Registered Subcontractors (Clause 30.2)
The Contractor is required to ensure that all subcontractors it directly appoints for the Works are registered with the BCA or other government registration body at the time of such appointment. This amendment could have arisen to deal with rising incidences of non-registered subcontractors undertaking construction works for public sector projects who escape BCA’s radar.
Material Price Fluctuation (Clauses 33.1 and 33.3)
The Contract must incorporate an adjustment methodology based on BCA’s published material price indices for concrete and steel reinforcements. It will be recalled that prior to the PSSCOC 6th edition in 2008, allowance for material price fluctuations was merely addressed by an option module. Since then, such allowance for fluctuations has become a default provision under Clause 33.
The latest amendment refines the fluctuation mechanism by requiring a more transparent regime for adjustment with reference to the material prices indices published by the BCA and an adjustment methodology. In practice, it is expected that such adjustment methodology should inform Contractors how to compute materials price difference between the tender closing month and the delivery month and provide further procedures for documenting the order and delivery of such materials. (For an example of a price adjustment methodology adopted in international contracts, see Clause 13.8 of the Conditions of Contract for Construction published by the FIDIC, 1st Edition 1999.) The Superintending Officer retains the right to ascertain the adjustment after receipt of the Contractor’s submission.
In the event the Contractor is in delay, it has also been clarified that there would be no upward or downward price adjustment for materials delivered after the Time for Completion or any extension thereof. In this respect, the Contractor’s bottom-line for material prices is protected.
Compliance with Prevailing Laws (Clause 38)
An insertion of a new boilerplate provision requires both parties to the Contract to comply with prevailing laws, albeit in an indirect way. It states that nothing in the Conditions (meaning the PSSCOC and any Particular Conditions) is to be interpreted as authorising any act that is prohibited by any written law.
Considering that the PSSCOC 2014 has been published almost 6 years after its last edition in 2008, frequent users of the PSSCOC would have expected a more robust set of amendments. One of the hot topics which could have received more attention is whether there are other ways to encourage and reward the Contractor’s initiatives in improving productivity to counter the over-reliance on foreign labour. Readers should also anticipate the next edition of the PSSCOC for design and build projects.
While the amendments introduced by the PSSCOC 2014 are likely to receive a warm reception by the industry, the devil remains in the drafting details of the rest of the Contract documents.