1. Get pre-construction survey report done by building surveyor or architect. Normally done by renovating party (some due to authority requirement) but you can do your own or share the cost, as long both parties agree on to it being the existing condition. This can avoid dispute later, whether the defects are existing or due to the neighbour's construction.
2. Renovating neighbour shall be responsible to repair your property any damage, major or minor, unavoidable or not, as long as resulting from their works. Normally house built more than 6 months or 1 year should not have anymore settlement, unless neighbour do digging or majlis do excavation of infra upgrading works outside your house. Also could be soil settlement due to new load from extension part.
3. Piling is not the advisable solution for extension work to an existing terrace house due to risk of cracking adjoining neighbour's house (your house). You may like to get other's opinion on this.

1. roughly 1 to 1.5k. Building Surveyor, Architect or Engineer. Company more expensive than individuals offering the same service. Which municipality is your property? Because some municipality eg. DBKL requires the dilapidation report to be submitted by person doing renovation.
2. In the beginning, no need lawyer, unless you are required to sign some legal documents. In the plan to be approved by local authority, the owner is required to declare 'Saya mengaku untuk bertanggungjawab terhadap sebarang kerosakan bangunan lot/jiran bersebelahan akibat dari kerja'kerja pembinaan yang dijalankan" and sign. Thus if your property is damaged by neighbour's construction, you can first ask the neighbour to repair. If the neighbour does nothing, then you can complain to the local authority who may or may not issue stop work order. If the neighbour still does not heed, then only you get a lawyer to write letter of demand.
3. well that is only one of the issue. you can't stop them using the type of foundation especially if approved by the local authority, and you can only caution them. There are other potential issues like intrusion of privacy, their property blocking view and sunlight, water draining to your side of property, or even unfinished/unplastered/unpainted wall surface on your side of property. the workers may even climb on top of your roof, place materials on top of your roof and in some of the worst cases even erect scaffold in your property.