Regulatory changes introduced by the Alberta government to ensure prompt payment for work on public works projects are being hailed as a step forward by contractors, manufacturers and suppliers in the ICI sector.
Bill 9, the Red Tape Reduction Implementation Act, 2023, amends 14 pieces of legislation across nine different ministries in an effort to provide greater legislative clarity and improve service delivery through digital solutions. It received royal assent in March and amendments will come into force on various dates.
Specifically, the legislation expedites implementation of the government’s mandate to extend prompt payment rules to public works projects. The Public Works Act has been changed so that the level of authority to make or amend regulations is transferred from the lieutenant governor in council to the minister.
“Bill 9 continues positive momentum to streamline processes to enhance the business environment,” explains Ken Gibson, executive director of the Alberta Construction Association (ACA). “ACA is very pleased that the government is responding to industry recommendations that will save money without compromising quality and safety of buildings.”
The Calgary Construction Association (CCA) is also applauding the move and thanked Alberta Infrastructure for hearing the industry’s concerns.
“The new legislation is a significant and symbolic action by the Government of Alberta because initial prompt payment rules did not apply to provincial government projects,” CCA said in a statement. “We anticipate that the changes will be a welcome nod to our members, subcontractors and skilled trades, who support and operate their business within the Alberta prompt payment system.”
The industry has been fighting for some time to get prompt payment rules applied to provincial public works projects.
Gibson said Bill 9 offers a first step that is in line with the short legislative session. A provincial election is slated for May 29.
“Without rewriting the Public Works Act, Bill 9 moved authority for regulatory changes under the Public Works Act from cabinet to the minister.”
He said the legislation provides a consistent statutory remedy across private and public projects and provides greater assurance of payment to contractors while reducing the risks factored into their bid prices.
Contractors had asked previously for a statutory guarantee to ensure they receive timely payment for work that is properly performed and invoiced. Amendments were made to the Builders Lien Act. However, the legislation only covered private-sector contracts and did not apply to provincial public works initiatives.
Under Infrastructure Minister Nathan Neudorf, “we’re now looking towards aligning public works projects with prompt payment conditions,” Gibson said.
Trevor Doucette, 2023 chair of the ACA, said the changes are a positive step forward.
“Keeping cash flowing on construction projects is the lifeblood of this industry and it’s really important to see some common ground between working with the provincial government and private industry,” he said.
In a statement, the ACA noted the infrastructure minister heard the construction industry and took action despite a short timeframe before the next election.
“True leadership is saying what you will do, and then doing what you say.”
Neudorf said in the video report that legislation amended the Builders Lien Act and added prompt payment provisions but didn’t cover public works projects tendered by the provincial government.
“The Government of Alberta is under the Public Works Act and we have brought forward some slight changes now and we look forward to further changes where the Government of Alberta will also be held to that high standard to make sure our payment is in a timely manner, so our partners in the industry can continue their great work with that certainty and to make sure their bills are paid on time.
“A lot of legislation we had in the past covers contracts, how general contractors, subcontractors, all align and deal with each other, but few pieces of legislation have actually required the owner to participate in that timely fashion.”
The government intends to continue to work on the changes, Neudorf said, and “we’re thankful to have stakeholders like the Alberta Construction Association at the table as we continue to develop that language.”
The legislation is the seventh red tape reduction bill introduced by the province. It affects a number of industries and sectors.
In addition to prompt payment, the changes are expected to encourage more businesses to bid on contracts for LRT projects in Calgary and Edmonton because it’ll provide greater clarity around provincial funding.
“Contractor costs to pursue these large projects can run into the millions of dollars,” said Gibson. “Greater certainty that projects are funded to proceed provides greater assurance to invest the resources in creating the bid.”