Ontario’s Construction Act is set for its second round of changes with significant revisions to prompt payment and the adjudication process coming in October.
How two municipalities will deal with those changes was discussed during a session at the fourth annual Managing Risks in Construction Contracts and Projects conference at the Hyatt Regency in Toronto recently.
The Regional Municipality of Durham is adding staff to its works department to deal with the “big changes,” said Arend Wakeford, senior solicitor for the municipality.
“Right now if there is a dispute, the project team charged with the task of delivering the project gets sidelined into dealing with these disputes. It really gets disruptive to their work,” he told delegates.
He added payment scheduling will be on “a much more compressed (payment) timeline.”
“Maybe the adjudication is not going to be this tidal wave of work we fear,” he said, adding, however, that Durham is not prepared to be unprepared.
Wendy Law, deputy solicitor of municipal law for the City of Mississauga, is part of a team leading the Construction Act compliance project for the municipality. She said a civil engineer has been retained to help her team meet compliance and Mississauga is creating a new team for construction litigation in anticipation of new adjudication matters.
Under the act, payment of an invoice is required within 28 days of submission of a proper invoice, and the owner can only defer payment if it has given notice of a dispute within 14 days.
I anticipate our consulting costs on major projects will go up
— Arend Wakeford
Regional Municipality of Durham
“You can no longer say, ‘I won’t pay you until I get certification,’ ” Law said, adding the key challenge as of October will be maximizing efficiencies.
Is adding more staff the answer?
“Until we are in the regime” it is a “guessing game” on staffing needs, she said.
“I anticipate our consulting costs on major projects will go up…because the demands on them will be greater,” added Wakeford.
Law said Mississauga would like to see a draft invoice from contractors prior to the real invoice, “so we will get a head start…to go through what they have built.”
That also gives contractors time to adjust their invoice on submittal date.
“It’s about risk assessment,” she explained.
Law said Mississauga advocates for more pre-qualification because under the city’s design-bid-build tendering model, awards must go to the lowest compliant bidder. That bidder, however, may not have the best qualifications.
Wakeford said Durham is making a shift away from the tender model, which works best in road contracts, to an RFP model so “we are not just taking low bid.”
Low bid awards can save the municipality money in the short run, but they can result in significant costs later.
As an example, a few years ago Durham accepted a bid on a tender project that “was in the tens of millions too low,” Wakeford said.
In the end 40 or so liens were registered on the project, he told the audience.
RFPs are not perfect though.
The time to evaluate them can be “extremely onerous when compared to the tender model” he said.
While there is merit in pre-qualifying bidders, “you don’t want yourself in the position where that pool of acceptable bidders gets so small that the competition inherent in the process is lost,” Wakeford made clear.
Instead of liens being registered with the land registry office, the act’s revisions will require liens to be served on the municipal clerk.
“Municipalities are responsible for having reliable, up-to-date registries (an internal database)…so they are not making payments on a validly served lien,” Law said.
She said as of last July, in Mississauga, lien documents were shared through a common database between Mississauga’s four construction groups and its litigation personnel.
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