The Canadian Construction Association (CCA) has issued a revised guide to dealing with problematic contract conditions that focuses on collaborative solutions rather than provoking standoffs with owners, explains the association’s president.
An Association Guide to Dealing with Onerous Contract Conditions, released May 15, is intended to assist CCA partner associations during the bidding process.
CCA president Mary Van Buren explained the update was timely given that project bidding is expected to enter a complex new era as owners attempt to incorporate the complications of the COVID-19 pandemic into bid documents.
“One of our jobs is to advocate for fairness in contracts and this guide has been around for quite some time so we thought it was timely related to COVID-19 where we are starting to see some more onerous conditions and language,” said Van Buren.
“We thought it was a good time to update and refresh our associations on how they can help out their members with potentially unfair clauses.”
The guide was adapted from the Ontario General Contractors Association’s publication Guide to Dealing with Onerous Supplementary General Conditions.
The CCA recommends using the CCDC Division 00 guide to procurement and contracting requirements, published in 2018, for project bids where warranted but as the new onerous conditions guide points out, owners sometimes are looking to address specific new issues and so bidders end up finding unpalatable language inserted into the bid documents.
Other situations where owners may deviate from the standard are when they are dissatisfied with industry standards regarding balance of risk or similar matters without fully understanding the implications of defying them, or when owners may be using unqualified staff to procure a project, the guide explains.
The CCA suggests that contractors faced with troublesome language should inform their provincial association. The association should then review the documents with a focus on ensuring risks are allocated fairly, particularly in financing, payment provisions such as holdback, indemnification, schedules, changes and insurance, among other bid scopes.
Then, based on the initial review and the feedback from bidders, the association should prepare a list of the issues at hand and suggest remedies — though stopping short of instigating measures that would be perceived as interfering with the bidding process itself, Van Buren cautioned.
She said COVID-19-era contracts will introduce such added complexities as the costs related to PPE, productivity loss and supply chain disruptions, and now possibly interruptions related to racial unrest.
“When we are seeing what is happening in the U.S., not just COVID-19 but the racism and what is happening there, what does that mean for Canadian manufacturers in the construction industry who rely heavily on imports from the U.S.?” she asked.
“These are all things that can’t be anticipated but can lead to tensions between contractors and owners, who are otherwise trying to deliver a great project.”
Education and engagement with the various participants all learning from each other is the best approach to preventing roadblocks, Van Buren suggested.
The guide suggests associations should conduct educational presentations, run courses and host forums on best practices in bidding and contracting issues, based on standard CCA/CCDC documents. All stakeholder groups should be invited to participate.
“We can play an important educational role and we do play an educational role with owners,” Van Buren said.
“In some cases, some owners have had a lot of retirements so there are not necessarily the same years of expertise in contracting, so there can be a gap, and we can help with that.”
Another strategy the guide recommends is to develop a business case-style fact sheet that owners can access that outlines how onerous contract clauses will end up costing them more than fair and balanced ones.
For example, fewer contractors and subcontractors will bid on projects, decreasing the competitiveness of bids.
“The goal is always collaboration, we work really hard on that,” said Van Buren.
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