Following an incredibly lengthy, industry-wide consultative process, the Canadian Construction Documents Committee (CCDC) has recently published a new CCDC 2 (2020) Stipulated Price Contract. This is the first time that this common form of stipulated price contract used within the Canadian construction industry has been modified since 2008. The revised version thus attempts to address some of the more significant changes that have taken place across the industry since the publication of the previous version.
For example, the majority of updates made to the CCDC 2 were added to match prompt payment legislation that has either been introduced or planned in several Canadian provinces, including Ontario and Alberta. It also includes a number of other key changes designed to reflect more recent trends in contracting and otherwise streamline the contract process. Although the CCDC will continue to publish and issue stickers for the CCDC 2 – 2008 Stipulated Price Contract for one more year, it’s important for owners and contractors to make themselves aware of these changes ahead of time.
In this article, we highlight some of the major changes introduced by the CCDC 2 (2020) Stipulated Price Contract. If you need any further assistance understanding these changes, we encourage you to reach out to one of the Montreal contractor attorneys with Cotney Canada.
The CCDC 2-2020 Stipulated Price Contract (2020) introduces a new completion milestone through the concept of “Ready-for-Takeover.” Previously, completion of work was set as an achievement of “substantial performance” pursuant to the applicable lien legislation. Instead, “Ready-for-Takeover” will be achieved when various conditions are confirmed to have been met, including:
- Achievement of “substantial performance” certified or verified by the consultant
- Completion of startup testing for immediate occupancy as required by the contract documents
- Delivery of required operations and maintenance documents to the owner as required by the contract documents
- Completion of final cleaning and waste removal as required by the contract documents
- Evidence of compliance with the requirements for occupancy or occupancy permit
- Completion and submission or delivery of to-date-as-built drawings on site
- Secure access to the place of work has been provided to the owner
- Demonstration and training has been scheduled by the contractor
The contractor must submit their application for Ready-for-Takeover to both the owner and the consultant with a list of items to be completed or corrected. Then, within 10 days of receipt of this application, the consultant must, in writing, either confirm the date of Ready-for-Takeover or advise that the work is not Ready-for-Takeover and provide reasons why.
Prior to achievement of Ready-for-Takeover, the CCDC 2 (2020) provides for early occupancy of all or part of the work. However, early occupancy can only occur if the contractor agrees, is acting reasonably, and the relevant authorities approve. Where the owner takes occupancy of all or part of the work, the part of the project that is occupied will be deemed to have achieved Ready-for-Takeover as from the date of occupation. From such date onward, the warranty period will commence and the contractor will cease to be liable for the case of such part.
Prompt Payment and Adjudication
As previously discussed in the introduction to this article, prompt payment and mandatory adjudication legislation is being enacted across Canada in an effort to alleviate perceived payment delays down the construction period. As such, the CCDC 2 (2020) introduces the definition for “Payment Legislation” to reflect the applicable payment legislation that has been introduced across many Canadian provinces which governs payment under construction contracts. Some of the major changes made to reflect the updates to the prompt payment legislation include the following:
- Holdbacks may be released annually for multi-year projects
- In order to complete a payment application, evidence of compliance with workers’ compensation legislation and a declaration by the contractor as to the distribution of amounts previously received by the owner by use of a CCDC 9A is required
In addition to the above changes, adjudication is now expressly referenced in CCDC 2 (2020), by providing that any dispute between the parties may be resolved by adjudication as prescribed by the applicable legislation. If you have a dispute that’s moving towards adjudication as a result of failure to receive payment, get in touch with one of the Montreal construction lien lawyers for any legal assistance you may need.
In addition to the updates made to the CCDC 2 (2020) Stipulated Price Contract, the CCDC has also made changes to CCDC 41 —CCDC Insurance Requirements to be incorporated by reference into the Stipulated Price Contract. Below, we cover just a few of the changes made to the CCDC 41 —CCDC Insurance Requirements:
- Increased required insurance coverages for general liability insurance, automobile insurance, and manned aircraft and watercraft liability insurance from five million dollars to ten million dollars
- Distinction created between a manned aircraft and an unmanned aerial vehicle
- New category introduced for contractor’s pollution liability insurance, with a minimum of five million per occurrence for bodily injury, death, and damage to property
Owners and contractors should review the CCDC 41 — CCDC Insurance Requirements carefully in order to determine if additional insurance requirements should be incorporated into their project.
We are closely monitoring the progress and use of these CCDC documents and recommend that all construction professionals with an interest in the Canadian construction industry keep a close eye out for further updates. It’s very likely that some of these changes will appear in newer versions of other CCDC documents. It’s not uncommon for owners and contractors that commonly use the CCDC 2 Stipulated Price Contract to develop their own set of supplementary conditions for their project. These modifications may include allowing parties to terminate, suspend, or proceed with other dispute resolutions if a dispute on the same subject matter is referred to adjudication or specify certain types of contract security. However, any supplementary conditions used for the CCDC 2 should be reviewed with a Montreal construction dispute lawyer and updated to conform with this updated contract form as soon as possible.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.