Key factors leading to disputes in the final account closing of construction projects in Malaysia
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Abstract
The construction industry in Malaysia has been facing challenges with disputes in the final account closing in construction projects, which has become a significant concern for industry stakeholders. These disputes often arise due to various factors, making resolving them essential, especially since they can adversely affect construction projects’ cash flow, productivity and reputation. This study aimed to examine the key factors that influence the occurrence of disputes in the final account closing stage of construction projects in Malaysia. A questionnaire survey was conducted to collect quantitative data from construction industry professionals to elicit their agreement on the various contributing factors to final account closing disputes. The data collection included G7 contractors, private clients and quantity surveying (QS) consultants in order, which were identified through a comprehensive literature review. In total, a number of 257 complete responses were gathered. This study found eight key factors that significantly contributed to disputes that hindered the prompt settlement of final accounts in construction projects. The factors were (1) delay in the evaluation and preparation of final accounts, (2) the complexity of variation claims, (3) approval issues related to variation work, (4) disagreements on the valuation of variation works, (5) poor record keeping, (6) late submissions of final claims, (7) disagreements on the valuation of final accounts and (8) cost overruns. Considering that the identification of these key factors is crucial to formulating appropriate strategies to minimise or resolve disputes in the final account closing process, this study is expected to provide information and assist construction stakeholders in adopting effective project management practices throughout the construction process. Accordingly, this reduces the likelihood of disputes and ensures the successful closing of the final account in construction projects.
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