ENHANCING LEGAL MECHANISMS TO ADDRESS PROJECT PAYMENT ISSUES ENCOUNTERED BY SMALL AND MEDIUM-SIZED CONTRACTORS IN MALAYSIA

Abstract

Persistent payment problems remain a significant obstacle to the financial stability of industry participants, especially small and medium-sized contractors. Initially, the Construction Industry Payment and Adjudication Act 2012 (CIPAA 2012) was introduced with the primary aim of establishing a mechanism for swift dispute resolution through adjudication, while encouraging regular and timely payments. Apart from CIPAA 2012, litigation and alternative dispute resolution (ADR) methods are also available, which are more commonly utilised and familiar to small and medium-sized contractors. Hence, this research endeavoured to explore whether CIPAA 2012 and other legal mechanisms suit the needs of small and medium-sized contractors operating in the Malaysian construction industry. This study has employed qualitative methods, specifically semi-structured interviews, as the means of data collection. These interviews were conducted with contractors who belonged in either the small category (G1-G3) or the medium-sized category (G4-G5). The findings of this study have unveiled various avenues for enhancing the current legal mechanisms. Notably, a compelling suggestion has emerged to establish a dedicated legal tribunal responsible for addressing small payment disputes. The outcomes of this research could significantly contribute to our comprehension of how CIPAA 2012 and other legal mechanisms could positively impact the capacity of small and medium-sized contractors to effectively resolve their payment-related disputes.