An updated version of the construction industry’s flagship standard contract document, Canadian Construction Documents Committee (CCDC) 2, is expected to hit the street by early next year.
Contract Law
An updated version of the construction industry’s flagship standard contract document, Canadian Construction Documents Committee (CCDC) 2, is expected to hit the street by early next year.
Last published in 1994, the document is the standard stipulated price contract between an owner and prime contractor.
It was updated by volunteers from CCDC’s constituent organizations; the Canadian Construction Association (CCA), the Association of Consulting Engineers of Canada, the Royal Architectural Institute of Canada (RAIC) and Construction Specifications Canada.
CCDC chair Walter Strachan, a principal in CBCL Ltd. Consulting Engineers of Halifax, said the revisions were required to keep pace with change in the industry.
The new version incorporates changes related to insurance requirements, indemnification, waiver of claims, warranties and payment. There are also new provisions related to mould.
“Contracts are a moving target,” said Strachan, who has sat on the committee for a decade as a representative of Construction Specifications Canada and took over as chair last month.
The document, which will number more than 30 pages, has been endorsed by all four constitutent associations.
“There were a lot of expectations in the industry that the document was coming out, and not just from the contractors’ perspective,” said CCA president Michael Atkinson. “I think this is a better document for owners as well.”
Endorsement comes in the wake of a late August meeting of the Construction Industry Consultative Committee (CICC), composed of the chief elected and operating officers of CCDC’s member organizations.
Officials were anxious to resolve an impasse with the RAIC over dispute resolution provisions which was delaying publication. CICC came up with a plan to solve the impasse.
Strachan, who estimated that CCDC volunteers spent more than 1,000 hours working on the revisions, said that issue was merely “the latest in a series” of items that needed to be addressed.
“It’s more of a matter of sawing things off,” he said. “There’s always going to be a new issue.
“The question is whether that issue can be considered for the next edition or is it critical for this edition.”
The document, the single most utilized standard contract form in the Canadian construction industry, is used by public contracting authorities, including provincial and municipal governments as well as the private sector.
“There is only one major hurdle that has to be overcome in revising the document, and that is reaching consensus,” Strachan said.
“That is both a curse and a blessing. It is a curse because it sometimes takes a very long time to achieve consensus.
“It is a blessing because CCDC 2 is a unique document, drafted by architects, engineers, contractors and specifiers.”
The CCDC is a national joint committee responsible for the development, production and review of standard Canadian construction contracts, forms and guides.
Established in 1974, it has representation from owners as well as the four associations.
Changes to Canadian Construction Documents Committee 2
Insurance Requirements:
(1) The recommended policy limits for general liability insurance is increased from $2,000,000 to $5,000,000 in recognition of today’s court judgments; accordingly the deductible is increased from $2,500 to $5,000.
(2) Clear wording to confirm coverage of the Owner and the Consultant under the Contractor’s General Liability policy with respect to claims arising out of the Contractor’s operation excluding liability arising solely from their own negligence. In light of the volatile insurance market, the new CCDC 2 will now only contain the general insurance requirements with reference to the new CCDC 41 ‘CCDC Insurance Requirements’ for such details as limits, deductibles, emerging exclusions, etc. CCDC 41 is a ‘live’ document that can be readily amended to reflect changes in the insurance market.
Indemnification:
The clauses are rewritten based on the mutual obligations between the Owner and the Contractor. CCDC 2 recommends a monetary limitation on liability in respect of direct claims between the Owner and the Contractor; the amount will be subject to whether the claim is covered by insurance. In respect to claims made by third parties for direct loss, the obligation to indemnify is without limit.
Waiver of Claims:
The clauses are rewritten to establish the concept of mutual waivers of claim. The waiver period limit for both the Owner and the Contractor occurs at the same time and will be triggered by the date of Substantial Performance of the Work.
Warranty:
A new provision has been added to clarify that extended warranties shall be issued by the warrantor to the benefit of the Owner and that the Contractor’s responsibility with respect to extended warranties shall be limited to obtaining them from the warrantor.
Payment:
The 1994 edition of CCDC 2 specifies that the Consultant will issue a certificate of payment within 10 days following the Contractor’s application for payment and that the Owner will pay within 5 days from the Consultant’s certificate. The new CCDC 2 will allow the Owner to pay within 20 days (instead of 15 days) from the Contractor’s application of payment.
New provisions to CCDC 2
Mould:
Outlines the responsibilities of the parties and the procedures to apply in the event that the presence of mould is observed or is reasonably suspected at the place of the work, whether the mould is found to be toxic or not.
Claims: Addresses the procedural matters related to the making of a claim for any kind of additional payment.
Artifacts and Fossils:
Outlines the responsibilities of the parties and the procedures to be followed in the event that artifacts or fossils are discovered.
Source: Canadian Construction Association
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