While not yet law, prompt payment for the construction industry in Manitoba is getting an enthusiastic welcome from the province’s builders.
“We’re really happy in general with this legislation and the contents of the legislation. It’s something we’ve been asking for years and years and years,” said Darryl Harrison, director of stakeholder engagement and advocacy with the Winnipeg Construction Association.
So far, Bill 38, an amendment to the Builders’ Liens Act, which would introduce prompt payment, has received first reading.
“We’re definitely excited in the direction that the province is heading with first reading happening. Bill 38 is something that, unequivocally, the construction industry supports,” Shawn Wood, executive director of the Construction Association of Rural Manitoba, told the Journal of Commerce.
“We’re happy that the Government of Manitoba has made the priority to implement prompt payment. It’s nice to see their commitment to ensuring that contractors of all sizes are paid promptly,” said Teri Urban, health and safety manager with Parkwest Projects Ltd., on behalf of Merit Manitoba.
The amendment follows what Harrison referred to as the “28, seven and seven” formula established by the introduction of prompt payment in Ontario.
This means an owner needs to pay a general contractor within 28 days of receiving an invoice, the GC then has to pay their subcontractors within seven days of receiving payment and the subcontractors need to pay any of their subcontractors within seven days of receiving their part of the payment.
Wood said the bill amendment addresses the major concerns he had with prompt payment.
“The bill covers the issues off very well with giving specific timelines for proper invoicing and the timeline within which people have to be paid; and that covers everybody,” Wood said.
“It’s positive that the onus isn’t just on the general contractor but on the owner and the subs to pay any of their subs. That covers the whole spectrum and I think it will be beneficial.”
But there is one aspect of the bill that is currently lacking.
“There’s definitely more work to be done on adjudication – what adjudication will look like and the entity that will look after it,” said Harrison, a thought also shared by Wood.
Harrison said the industry in Manitoba has been following how prompt payment is implemented in Saskatchewan and could see the Manitoba government taking some cues from them on how to structure disputes.
“Saskatchewan has the Saskatchewan Construction Dispute Resolution Office which seems to have broad involvement of people in the industry. So, contractors, subcontractors, I believe consultancy groups as well are involved to make sure that adjudications are done in a competent and swift manner,” Harrison said.
“That’s what we’re expecting here. The current bill allows for one of two things: either a government employee to be the nominating authority, which I presume to be a short-term fix, and after that an entity that would then look after adjudication.”
Urban emphasized the importance of the adjudication structure. As most construction companies are small subcontractors, when a pay dispute arises they are often unable to afford exorbitant lawyer fees to fight for their pay.
“With the adjudication process that will come with it, it’s a very simple way for everyone to ensure that payment is made,” said Urban.
She pointed out two major sources of construction projects in the province have been left out of the bill.
“The big missing piece is that Manitoba Hydro and Manitoba Transportation and Infrastructure will not be bound through the legislation to the terms of the prompt payment regime.”
But Urban said she takes comments from the government in good faith that the two organizations will be held accountable and eventually be bound by legislation.
“Minister (James) Teitsma, from the Consumer Protection and Government Services department, has written a letter of assurance to the construction industry indicating that Manitoba Hydro and Manitoba Infrastructure, although they aren’t able to comply per the Builders’ Liens Act, will still have to follow the rules of prompt payment,” she said.
“This is something that ministers have done with other bills in the past. So, it’s a temporary measure until the full modernization of the Builders’ Liens.”
It’s been roughly a 12-year push by the industry to bring prompt payment to Manitoba, said Wood.
In that time, it has come forth in one legislative form or another several times and has yet to be passed. Despite this shaky history, Wood, Urban and Harrison said they are confident it will happen this year.
“This is the first time throughout this process, since 2018, that I’m positively optimistic that we’re going to get to the final goal that’s good for everyone,” Urban said.
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