Edward (Ted) G. Betts
Partner
Head of Infrastructure and Construction Group
Article
For the first time since 2008, the Canadian Construction Documents Committee (CCDC) published a modified CCDC 2 (2020) Stipulated Price Contract.
The new CCDC 2 updates the standard form contract to catch up with recent prompt payment and adjudication changes in Ontario (and soon other provinces). It also introduces a number of other changes to both reflect more recent trends in contracting and to otherwise streamline the contract.
This Building Brief article provides a brief summary of some of these changes, with references to the corresponding paragraphs of the CCDC 2. Fortunately, most of the familiar section numbers of the CCDC suite of contracts have been preserved. Look for a Gowling WLG webinar on the CCDC 2 in 2021.
In this article, terms defined in the CCDC 2 are used.
While the payment process has not changed fundamentally, it has been refined in response to recent prompt payment legislation in Ontario and anticipated to soon become law in several other provinces. Updated payment terms under the revised CCDC 2 include the following:
Adjudication is now expressly referenced throughout the CCDC 2 (2020). A new GC 8.2 – ADJUDICATION has been added, clarifying that adjudication is a separate path of dispute resolution that does not affect and is not affected by alternative dispute resolution processes, such as mediation and arbitration.
The CCDC 2 (2020) introduces new milestone Part 12 – OWNER TAKEOVER together with a new concept of "Ready-for-Takeover" and "early occupancy"
The all-encompassing concept of "Ready-for-Takeover" refers to the Substantial Performance of the Work where there is a lien legislation that contains such definition, and where there is not (as for example, in Quebec legislation or where the term does not apply).
The prerequisites for attaining Ready-for-Takeover are outlined under the new GC 12.1 – READY-FOR-TAKEOVER, as follows:
The achievement of Substantial Performance of the Work (if defined in applicable lien legislation) and the issuance of an occupancy permit are mandatory to attain Ready-for-Takeover. If the completion of the remaining prerequisites are delayed as a result of conditions reasonably beyond the control of the Contractor, or by agreement between the Owner and the Contractor, Ready-for-Takeover must not be delayed.
The Contractor must submit its application for Ready-for-Takeover to both the Owner and the Consultant, together with its list of items to be completed or corrected. Within 10 days of receipt of the 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.
The CCDC 2 (2020) also now provides for early occupancy of all or part of the Work before achievement of Ready-for-Takeover. Early occupancy can occur only if the Contractor agrees, acting reasonably, and, in any case, subject to prior approval by relevant authorities.
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. As of that date, the responsibility for the care of the part of the Work that is occupied will be passed on to the Owner and the warranty period for the occupied parts will start. In the event the Owner occupies the entirety of the Work prior to it being Ready-for-Takeover, the Contractor is not relieved from any responsibility from completing the Work in a timely manner.
The CCDC 2 (2020) now recognizes that the Contractor will be responsible for overall health and safety on the Project, even when the Owner brings on other contractors by deleting old GC 3.2.2. However, CCDC 2 (2020) also now requires both parties to comply with health and safety regulations. Thus, the Owner is now also responsible for ensuring compliance by its other contractors and its own personnel with the health and safety precautions and programs of the Contractor.
The CCDC 2 (2020) refines and organizes in categories the costs that can be charged in the valuation of a Change Directive. In GC 6.3, the Contractor can now charge for the following costs:
However, the Contractor can no longer charge for (i) wages of personnel engaged in review of shop drawings, fabrication drawings and coordination drawings; and (ii) wages of personnel engaged in the processing of changes of Work.
The pricing mechanism for subcontract amounts must now be approved by the Owner, and deposits will not be claimable if they were lost as a result of negligent acts or omissions of the Contractor.
The reallocation of unexpended cash allowances to cover shortfalls is now permitted under the CCDC 2 (2020). As a result, an increase in the Contract Price will only occur when the actual cost under all cash allowance exceeds the total amount of all cash allowances under the Contract. Likewise, the net amount of any unexpended cash allowance, after providing for any reallocations, will be deducted from the Contract Price. [GC 4.1]
The CCDC 2 (2020) now further distinguishes between delays caused by the Owner, delays caused by stop work orders, and delays caused by events outside of the Contractor's control. In GC 6.5.2, if there is a delay in the performance of the Work due to a stop order issued by a court or other public authority, then an extension of time is permitted, but only where the Contractor cannot achieve Ready-for-Takeover by the stipulated date in the Contract. GC 6.5.1 (Owner-caused delays) and GC 6.5.3 (delays outside of Contractor's control) are unchanged.
Timing for indemnification claims [GC 13.1] and waivers of claims [GC 13.2] are now tied to the date of Ready-for-Takeover instead of the date of Substantial Performance of the Work.
The revisions to indemnification now limit indemnification to direct claims, expressly excluding any liability for indirect, consequential, punitive or exemplary damages. The CCDC 2 (2020) also clarifies that there is no limit on third party claims of any kind. [GC 13.1.2.3]
Various provisions in the CCDC 2 (2020) have been deleted and/or streamlined, including:
Many users of CCDC contracts have developed their own sets of amendments and supplementary conditions to the CCDC standard form contracts. These will need to be reviewed and updated, both for conformity with the new definitions and concepts and also for some of the section references which have changed.
CCDC will continue to publish and issue stickers for the 2008 version for one year. They will also recognize and re-issue already purchased stickers for the 2020 version if you prefer.
As CCDC has done in the past, after amending and updating the CCDC 2, it will be updating the other contracts in its suite of contracts, including CCDC 3 – Cost-Plus Contract, CCDC 5B – Construction Management Contract – For Services and Construction, CCDC 14 – Design-Build Stipulated Price Contract, and other commonly used contracts.
Gowling WLG will be hosting a webinar on the new form of CCDC 2 contract in 2021. Be sure to sign up for our mailing list to be invited to this free information session.
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