One of Alberta’s construction industry leaders is pleased with recent changes to provincial legislation that introduces new prompt payment regulations.
“Industry experts from the membership contributed to the development of prompt payment here in Alberta, so we’re looking forward to implementation,” said Alberta Construction Association (ACA) executive director Ken Gibson.
The Government of Alberta’s Prompt Payment and Construction Lien Act, formerly known as the Builder’s Lien Act, is now in force and imposes rules around timing of payments as well as creates a streamlined adjudication process for disputes related to payment or work performed as an alternative to parties going to court.
Under prompt payment owners are mandated to provide payment to contractors within 28 days of receiving an invoice for construction services and requires those contractors who receive payment to subsequently pay their subcontractors within seven days.
The new legislation does not apply to public works projects, public-private partnership (P3) projects with the Alberta government or federal projects or operations and maintenance work that doesn’t involve an improvement to project lands.
“The current pay regime came as an amendment to the Builder’s Lien legislation, so the various exceptions or exclusions relate to the fact that they are currently not covered under the Builder’s Lien legislation. Federal contracts are covered under federal legislation and public works projects are covered under the Public Works Act, so for this go-around of prompt payment the amendments were to the Builder’s Lien legislation,” Gibson said.
Gibson said the Alberta construction industry would like to see prompt payment extended to public projects and “we’ll continue to try to bring that about.”
He added the need for prompt payment legislation has been growing for several years and termed the new legislation a “good first step” but that public works is the next area that should be addressed.
“There’s significant work that is performed by the Government of Alberta that falls under the Public Works Act, so we do need to address that. We need some greater clarity around milestone payments because the province is utilizing the P3 financing, not just for projects funded under the Public Works Act but projects that actually do fall under the Builder’s Lien legislation, so there’s a lack of clarity around how to address milestone payments, which is typically how P3 contracts are structured,” he said.
Gibson added progress in other jurisdictions such as Ontario, Saskatchewan and Nova Scotia towards prompt payment helped but the Alberta legislation was created specifically for the needs of the province.
“Having a sort of a reasonably consistent framework in which industry operates across Canada makes a lot of sense, but I would compliment the Alberta government and Alberta industry. It is a made in Alberta solution that has been developed here. There was great collaboration between government and industry and we hope to see that collaboration continue,” he said.
The new act applies to all private construction contracts in Alberta created on or after Aug. 29, 2022. Current contracts that extend past two years must become compliant with the new rules by Aug. 29, 2024, an Alberta government release stated.
The original legislative changes were passed in Alberta’s fall 2020 and spring 2021 sessions and are now in force.
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