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Seminar makes connections between construction trends and law

Dan O'Reilly
Seminar makes connections between construction trends and law

In a far-reaching three-hour-long session at Construct Canada, a panel of six representatives from a range of professions connected the dots between new developments and issues in construction and their legal ramifications.

“We’re looking at current trends in the construction world with a legal connection,” said moderator Glen Ackerley, partner with WeirFoulds, in explaining the objectives of the Construction Law Update seminar.

Included in the umbrella of topics were building information modelling (BIM), modular construction, legislative changes such as the implementation of adjudication in Ontario, insurance and bonding issues, and integrated project delivery (IPD).

Leading off the seminar was Markku Allison, vice-president strategy and innovation at Chandos Construction Ltd. and an architect with extensive experience in IPD.

In this delivery system the various project partners including the architect, other consultants, the contractor and the various subtrades all sign one agreement and work collaboratively throughout the construction process. Under what is known as the “validation” period, they scope out the project to determine what can built according to the owner’s budget, he said.

Allison delved deeply into IPD’s various technical and planning layers. But the basic thrust of his message was that its collaborative approach outperforms other project delivery models. To back that up, he presented several case studies co-authored by the American Institute of Architects and the University of Minnesota documenting significant cost and time savings.

Similarly, Andrea Lee, a partner with Glaholt LLP and a specialist in construction law, highlighted the benefits of using Building Information Modelling to detect design flaws which, otherwise, could potentially lead to disputes and/or litigation.

Under the IBM (Institute of BIM) BIM Contract Appendix, which was developed in 2014 to assist owners, contractors, and consultants become more familiar with the overlapping of disciplines and information, there are clauses dictating the use, the responsibilities of the various project partners and ownership.

Partially based on the American Institute of Architects’ own appendix, it has reduced the amount of litigation over BIM-specific issues, said Lee. In an interview after the seminar, she stressed there may have been disputes or litigation in projects where BIM was used, but that it wasn’t germane to the disputes.

Touching on the impact and reach of BIM, she showed the audience a slide illustrating its global use. Still, as delineated by the University of Toronto’s second annual BIM Survey which generated almost 400 respondents, there are many barriers to wide spread adoption in Canada, including a resistance to change by the construction industry.

Judging by the comments of another speaker, the Canadian construction industry is also feeling its way in embracing another innovation — that of modular building where units, rooms, and other components are pre-built in a repetitive process in a factory and then transported and erected on site.

Showing a video of the rapid-paced erection of a hotel in the United Kingdom, EllisDon senior counsel Bruce Karn said the advantages of modular construction include costs and time savings, less material waste, an easier quality monitoring process, and reduced inconvenience to the public because of the shorter construction schedule.

But he also qualified those remarks by underscoring the legal considerations including the potential impact of lien rights and whether the factory trades would also conduct the follow-up onsite warranty work.

“Modular contractors may hire their own workers and that the provisions of the Construction Act will still apply,” said Karn, in replying to a question about the impact on progress draws and holdbacks.

Although not referenced in his talk, ED Modular, a 100 per cent owned subsidiary of EllisDon, opened a modular manufacturing facility in Mississauga, Ont. in early December.

An overview of the two-phased changes to the new Construction Act and how to prepare for them was delivered by Howard Krupat, partner at DLA Piper (Canada) and a member of the provincial government’s advisory committee for the review of the act.

The key changes which came into effect on July 1, 2018 include constructions lien modernization, including mandatory holdback releases, new trust accounting rules and surety bonds on public projects. Prompt payment and adjudication provisions were implemented on Oct. 1 of this year.

“There are three versions of the act that may apply to a given construction project, depending up how it fits within the transition provisions.”

There are contracts governed by the old Construction Lien Act, contracts governed by the lien modernization provisions, as well as contracts governed by both the lien modernization provisions and the prompt payment and adjudication ones, he cautioned.

Following Krupat to the podium was the project manager for Ontario Dispute Adjudication for Construction Contracts (ODACC), the authority responsible for administering and overseeing the adjudication of construction disputes in Ontario. Carina Reider outlined its mandate and listed the steps construction industry members have to follow if they’re considering becoming an adjudicator.

A sobering assessment of the state of the insurance and bonding industry and the impact on Canada of contractor insolvencies was offered by the final speaker.

“2018 was a disaster for the surety industry,” said Gregory Petrela, president and managing partner, Petrela, Winter & Associates. He cited the bankruptcies of Italian contractor Astaldi, U.K. construction giant Carillion — which he characterized as the company “too big to fail, failed” — and Bondfield Construction in Ontario. Alberta’s economic difficulties also led to number of contractor insolvencies.

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