Following a lengthy and industry wide consultative process, the Canadian Construction Documents Committee (CCDC) has recently issued a new CCDC 2 (2020) Stipulated Price Contract. The revised CCDC 2 has attempted to address some of the more significant changes that have taken place in the construction industry since its last version published in 2008.
As an example, as prompt payment and adjudication comes into play across the country there was a need to update CCDC 2 to better align the commonly used contract document with industry practices and legislated requirements.
This Building Brief article highlights some of the more important changes, with references to the corresponding paragraphs of the new CCDC 2.
Ready-for-Takeover and Early Occupancy
CCDC 2 (2020) introduces a new completion milestone in Part 12 – OWNER TAKEOVER including the concept of "Ready-for-Takeover" which is viewed as far more practical than the previous concept of substantial performance of the work as relied upon in most lien legislation.
The prerequisites for attaining Ready-for-Takeover are outlined under the new GC 12.1 – READY-FOR-TAKEOVER, as follows:
- The Consultant has certified or verified the Substantial Performance of the Work;
- Evidence of compliance with the requirements for occupancy or occupancy permit;
- Completion of final cleaning and waste removal, as required by the Contract Documents;
- Delivery of operations and maintenance documents to the Owner, as required by the Contract Documents;
- Completion and provision of to-date as-built drawings on site;
- Startup testing completed for immediate occupancy, as required by the Contract Documents;
- Secure access to the Place of the Work has been provided to the Owner; and Demonstration and training, as required by the Contract Documents, has been scheduled by the Contractor, acting reasonably.
The achievement of Substantial Performance of the Work 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 will 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.
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.
Valuation of Change Directives
CCDC 2 (2020) refines and categorizes the costs that can be included in the valuation of a Change Directive in GC 6.3.
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 the new GC 6.5.2, an extension of time is permitted if a stop order issued by a court or other public authority causes a delay in the performance of the Work, 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 the Contractor's control) are unchanged.
Prompt Payment and Adjudication
Prompt payment will be applicable in jurisdictions where prompt payment legislation is in effect as a result of the requirement in CCDC 2 to comply with applicable laws including Payment Legislation a defined contractual term.
Adjudication is now expressly referenced in 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 other alternative dispute resolution processes, such as mediation and arbitration.
Indemnification and Waiver of Claims
The timing for indemnification claims [GC 13.1] and waivers of claims [GC 13.2] is 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 only to direct claims, expressly excluding any liability for indirect, consequential, punitive or exemplary damages. CCDC 2 (2020) also clarifies that there is no limit on third party claims of any kind. [GC 18.104.22.168]
CCDC 2 (2020) deletes GC 3.4.1 which made the Contractor responsible for reviewing Contract Documents and promptly reporting to the Consultant any error, inconsistency or omission that was discovered. It is now clear that the Contractor reviews the Contract Documents only for the purpose of facilitating co-ordination and execution of the Work. [GC 1.1.3]
Anyone using CCDC 2, or supplementary conditions based on CCDC 2, as well as any subcontract and supply templates, should be reviewing and updating their contracting suite of documents in order to ensure both conformity with the new definitions and concepts and the CCDC section references which have changed. We would be pleased to assist you with this important task.
Gowling WLG will be hosting a webinar on the new form of CCDC 2. Feel free to sign up to receive legal updates and invitations to this and other webinars.