PUTRAJAYA: Contractors of ongoing government projects as well as new ones will be given two interim progress payments a month starting immediately. 

The government has also agreed to allow an extension of up to three months for projects under construction, subject to conditions.

Second Finance Minister Tan Sri Nor Mohamed Yakcop said it was hoped that with these incentives, government projects could be completed as planned.

Nor Mohamed said in a statement that the government would remain sensitive to the problems and challenges faced by contractors due to the rising cost of construction materials. 

"To ensure that all government projects would proceed as planned, the government has also agreed to provide incentives relating to variations in the value of contracts following higher prices of building materials." 

For design-and-build projects, contractors are now allowed to make price variation claims. 

For conventional projects, he said the government had improvised the conditions of existing price variations. Under civil engineering works, the price variation conditions have been extended to cover 11 more items compared to five previously.

The additions include premix, sand, aggregate, water pipes, sewerage pipes, guardrails and fabric reinforcements.

The price variation methods will also cover mechanical and electrical works for all design-and-build as well as conventional projects.

Details on the implementation of the methods are contained in a Treasury circular which can be accessed at its website www.treasury.gov.my.

Deputy Prime Minister Datuk Seri Najib Razak had said existing government contracts would be revised to take into account the rising cost of construction materials.