By Khairie Hisyam
The outstanding ‘material contractual obligations’ that have been delaying the final certification for klia2 include submitting certifications and warranties for the airport, said Malaysia Airports Holdings Bhd (MAHB).
In an emailed response to KiniBiz, MAHB said that the main contractors — the UEM Construction Sdn Bhd-Bina Puri partnership — are currently undertaking some of its material obligations under the contract, although these are yet to be completed.
“(This) includes but not limited to the completing of existing scope of works, rectifying defective works, carrying out testing and commissioning works, as well as submitting complete testing and commissioning reports, operation and maintenance manuals, warranties and certifications,” said MAHB.
These works are attributed to the delay on MAHB’s part in issuing the certificate of practical completion (CPC) for klia2, which would be the final certification and mark a handover of responsibility for the airport from the contractors to MAHB.
However the CPC for klia2 is overdue as it is normally issued before the CCC, claimed Bina Puri executive director Matthew Tee.
When asked where the UEMC-Bina Puri joint venture’s status regarding the issuance of the final certification, Tee said the question should be posed to MAHB instead as it is the airport operator’s prerogative.
In construction works, contractors are normally bound by a defects liability period which begins after the CPC is issued, during which the contractor may be asked to fix any defects which appear after the final certification is issued, ie after the building has been handed over to the customer.
However, if the defects were present before the CPC issuance, they would normally be fixed before the CPC is given.
‘Warranty began in April’
Last Monday deputy transport minister Abdul Aziz Kaprawi said the warranty period for klia2 began on April 17, when MAHB received the certificate of completion and compliance (CCC) for the airport.
“The CPC is a contractual issue between contractor and building owner. MAHB will only issue the CPC if the contractor complies with the contract,” Abdul Aziz was quoted as saying last week. “The terminal is very huge, it is a RM4-billion job. So there are probably many aspects that they have to redo or repair. For example, the apron issue. The contractor is doing rectifications now.”
The CCC, issued prior to klia2’s opening on May 2 this year, is a statutory certificate issued under the Street, Drainage, and Building Act 1974 and it covers only technical issues relating to health, safety, and essential services as per local authorities’ requirements.
On the other hand, the CPC is a “certificate issued contractually by Malaysia Airports when it is satisfied that all works have been completed to its satisfaction, meeting all the requirements of the contract”, said MAHB previously.
The delay in issuing the CPC concerns works involving the UEMC-Bina Puri joint venture only, said MAHB to KiniBiz.
The issuance of the CPC normally signals the transfer of responsibility of a building from the contractor to the owner. This is usually accompanied by the return of the contractor’s performance surety. For klia2, news reports place the value of the main contractors’ performance bond at RM45 million.
As the turnkey contractor for klia2, UEMC-Bina Puri undertook the main package of the airport’s construction, worth RM1 billion, which was the terminal building. Its mandate included the design, construction, commissioning, and maintenance of klia2’s main terminal building, a satellite building, a sky bridge, and piers.
Bina Puri is a 40% partner in the UEMC-Bina Puri joint venture.
Other contractors involved in the airport’s construction include Gadang Holdings Bhd and WCT Bhd who built the earthworks; KUB Bhd which built the runway; Eversendai Corp Bhd which handled structural steel works for klia2’s contact piers; as well as two other private companies — Berjaya Land unit Cergas Jati Sdn Bhd and Japan’s Nippon Road (M) Sdn Bhd, the latter built the klia2’s aprons.
‘Public happy with klia2’
When asked whether MAHB previously told the UEMC-Bina Puri partnership that it is satisfied with what they have delivered, Tee said the public had been very happy with klia2 bar several issues such as the shortage of travelators — which raised complaints as passengers at the airport had to walk further — as well as settlement issues on the parking apron.
The settlement issue raised another concern recently when a video of flooding on the parking apron surfaced recently, showing workers scooping water into the drain with pails.
Among others the delay in the CPC issuance had also raised the question of whether the liquidated ascertained damages (LAD), which MAHB seeks to impose on the turnkey contractors for failing to meet the June 15, 2013 delivery deadline, will be higher than previously thought.
Last week MAHB had reiterated its intention to impose the LAD on UEMC-Bina Puri for missing that deadline, though negotiations are still ongoing.
“We are in continuous dialogue with MAHB and (while) the issue is not resolved (yet), (we) hope that both sides can come to a ‘common’ understanding,” Bina Puri’s Tee was quoted as saying last week.
In a previous regulatory filing, MAHB said the LAD was imposed beginning June 16 at a rate of RM199,445.40 per day. Up until klia2’s opening on May 2, a total of 320 days had passed, meaning that the total damages come to RM63.82 million.
However last week Deputy Transport Minister Abdul Aziz said that the LAD is unrelated to the CPC and is only calculated up to the date the CCC is obtained — April 17 this year.
This means that the LAD, if imposed, would only apply for 306 days, bringing the total amount to RM61.03 million.
Going by the UEMC-Bina Puri partnership’s 60:40 equity, UEMC would be liable for RM36.62 million, while Bina Puri would have to pay the remaining RM24.41 million should the LAD is fully imposed.
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