The Canadian Construction Documents Committee released a new version of its CCDC 2 Stipulated Price Contract in December. There will be a one-year overlap period in which the former version will remain available to allow parties to familiarize themselves with the new contract. The major changes compared to the previous 2008 version concern the following areas:
- A new Ready-for-Takeover Milestone;
- Early Occupancy by the Owner;
- Prompt Payment Legislation;
- Reimbursable Costs for Change Directives;
- Insurance;
- Indemnity and Waiver of Claims; and
- Relocation of clauses to Division 01.
Ready-for-Takeover Milestone
GC 12.1 introduces a new milestone into the contract. This was thought necessary to address a misalignment between substantial performance and the owner’s requirements for using the project.
Owners had been concerned that substantial performance triggered warranty periods, when they still lacked things like operations manuals without which they could not operate a plant, for example. The new GC 12.1 clarifies that all documents necessary for operation must be handed over before Ready-for-Takeover is achieved. This does not add extra work to contractors, who always had to deliver those things, it simply moves the dates for the achievement of contract milestones.
GC 12.1.1 lists the prerequisites for achieving Ready-for-Takeover:
12.1.1 The prerequisites to attaining Ready-for-Takeover of the Work are limited to the following:
.1 The Consultant has certified or verified the Substantial Performance of the Work.
.2 Evidence of compliance with the requirements for occupancy or occupancy permit as prescribed by the authorities having jurisdiction.
.3 Final cleaning and waste removal at the time of applying for Ready-for-Takeover, as required by the Contract Documents.
.4 The delivery to the Owner of such operations and maintenance documents reasonably necessary for immediate operation and maintenance, as required by the Contract Documents.
.5 Make available a copy of the as-built drawings completed to date on site.
.6 Startup, testing required for immediate occupancy, as required by the Contract Documents.
.7 Ability to secure access to the Work has been provided to the Owner, if required by the Contract Documents.
.8 Demonstration and training, as required by the Contract Documents, is scheduled by the Contractor acting reasonably.
Ready-for-takeover will become the trigger for things like delay claims, indemnity, warranty and waiver, but will not replace substantial performance as a trigger for release of holdback.
From now on, consultants will have to both certify substantial completion and confirm that ready-for-takeover has been achieved.
GC 12.1 clarifies that ready-for-takeover will not be delayed for reasons beyond the contractor’s control. The contractor must deliver a comprehensive list of items to be completed or corrected to the Consultant and to the Owner, together with a written application for ready-for-takeover for review. The consultant then has 10 days to decide whether the work is ready-for-takeover or not. The contractor and consultant will then establish a date for final completion.
As mentioned, holdback release is still triggered by substantial performance as per GC 5.4.
The Consultant must review the Work to verify the validity of the application for Substantial Performance of the Work and no later than 20 calendar days after receipt of the Contractor’s application make a decision on whether substantial performance was achieved or not.
Where the holdback amount required by the applicable lien legislation has not been placed in a separate lien holdback account, the Owner must, no later than 10 calendar days prior to the expiry of the holdback period stipulated in the lien legislation, place the holdback amount in a bank account in the joint names of the Owner and the Contractor.
Subject to prompt payment requirements, all holdback amount prescribed by the applicable lien legislation for the Work become due and payable to the Contractor no later than 10 Working Days following the expiration of the holdback period stipulated in the Act.
Early Occupancy by the Owner
The owner may take early occupancy of the work if the contractor agrees and the authorities approve. If the owner takes occupancy of a part of the Work before ready-for-takeover has been attained, that part of the Work which is occupied is deemed to have been taken over by the Owner as from the date on which it is occupied. The Contractor is then no longer liable for the care of such part as from this date, when responsibility shall pass to the Owner. Finally, the warranty period for that part of the Work shall start from the date on which it is occupied.
Prompt Payment
The “proper invoice” under the Act corresponds to the “payment application” of CCDC 2. Under GC 5.3.1, the consultant has 10 days after the payment application to make a decision, which provides for a buffer of another four days to meet the 14-day period under s. 6.4(2) of the Act.
The new GC 8.2 provides that nothing in the contract is deemed to affect the parties’ rights to resolve disputes by way of adjudication.
Article A-5 states that the owner’s payment obligations are subject to prompt payment legislation. Applications for payment must be submitted to the owner and the consultant simultaneously (GC 5.2.1), and must be based on the schedule of values that complies with the payment legislation (GC 5.2.6).
If the consultant certifies a different amount or nothing at all, the owner must issue a written notice to the contractor giving reasons. As per the Act, of course, certification is not a prerequisite to a payment obligation.
Part 5 of the contract clarifies that progress payments, release of holdback and final payment will all be subject to prompt payment legislation.
Reimbursable Costs for Change Directives
A new GC 6.3.7 clarifies what costs are recoverable when performing work attributable to a Change Directive. Such costs are now limited to the actual cost of a long list of items such as labour, products, equipment, subcontracts etc. inasmuch as those costs contribute directly to the implementation of the Change Directive.
Insurance
GC 11 and CCDC 41 were changed to make reference to the new ready-for-takeover date. Limits for general liability insurance, automobile and aircraft were increased from $5m to $10m per occurrence.
There a new insurance requirements for drones as well as contractors’ pollution liability with a $5m limit.
Indemnification and Waiver
GC 13.1 and 13.2 were changed to have ready-for-takeover as the trigger date. Under GC 13.1.2.3, neither party is liable to the other for indirect, consequential, punitive or exemplary damages.
Provisions Moved to Div. 01
A number of provisions were moved from CCDC 2 to Div. 01. This is more of a housekeeping change. The provisions moved are the definition of “provide”; GC 3.9 (documents at the site); part of GC 3.10 (shop drawings); GC 3.11 (use of the work); part of GC 3.12 (cutting and remedial work); part of GC 3.13 (clean-up) and GC 11.2 (contract security).
In Force Date
CCDC 2 – 2020 was released in December, but there will be a one-year overlap period in which the current version will remain available to allow parties to familiarize themselves with the new contract.
Other CCDC Documents
CCDC working groups are currently working on amending the construction management documents (5A and 5B) and the Design-Build contract (14) to reflect the changes made to CCDC 2. Those revised contracts, as well as CCDC 2MA – 2016 (Master Agreement between Owner and Contractor), are expected to be released later this year.