March 15, 2008
Recent changes to standard form construction documents
By Robert Kennaley
McLauchlin & Associates
Those of you who have bid to perform work in the industrial, commercial or institutional sectors, or in relation to subdivisions or custom-built homes, will be familiar with “CCDC” contracts and with the standard (or “master”) format for specifications.
Changes are being made to each of these types of construction documents of which you should be aware. This month, we will deal with the changes to a commonly used “CCDC” standard form, the CCDC 2 Stipulated Price Contract. Next month, we will address the changes to the form of standard specifications generally issued by architects and/or engineers as part of a bid package.
CCDC stands for the Canadian Construction Documents Committee. The committee is comprised of representatives of owners, contractors, architects and engineers. The committee’s goal is to create standard form contracts, guides and forms for use in the construction industry. Standard form contracts produced by the committee include the stipulated (or fixed) price contract, the cost-plus contract, the unit-price contract, the design-build stipulated price contract, the design-builder/consultant contract and the civil works contract.
In addition to standard form contracts, the committee produces a number of guides, which provide valuable information in relation to both the contracts and other issues, such as construction insurance, bonds in construction, project financing and bidding and tendering. Also, the committee provides documents for use in the construction industry, including statutory declarations as well as standard forms for bid bonds, labour and material payment bonds and performance bonds.
Each of these documents is defined by a number (for example the stipulated price contract is CCDC 2 while the guide to construction insurance is CCDC 21). It is important to note that each of these documents is also copyrighted by the committee. Users must accordingly pay for their use.
In addition to these copyrighted documents, the committee also produces a number of bulletins which provide information on a number of construction issues and processes, including applications for payment, construction warranties, product guarantees and insurance in the construction industry. These bulletins are free, and can be found (along with other information, such as how to order the standard documents) online at www.ccdc.org.
Tender documents will generally incorporate a CCDC standard form by reference. Before discussing the changes to the CCDC 2, we will review how this works. When asking contractors to submit a price for the work, the tender documents will generally advise the bidders that the form of contract will be, for example, the CCDC 2 standard form. A copy of the actual contract will not be included in the bid package. The bidders are expected to understand the terms and conditions of this contract. The bidders are then often advised that the standard form contract will be amended by ‘supplementary general conditions’. It is therefore important that contractors who are bidding to perform this work understand, firstly, what the terms and conditions of the standard form are and, secondly, how those terms and conditions are changed by the supplementary general conditions.
In addition, as we have discussed in other articles, subcontractors who are bidding for a portion of the work will often be told that the terms and conditions of the ‘Prime Contract’ will apply to their subcontracts. Accordingly, subcontractors should understand both the terms and conditions of the standard form and the extent to which these terms and conditions are changed by supplementary terms and conditions.
All of the above suggests that both contractors and subcontractors who are bidding to perform work in relation to projects which will use the CCDC 2-2008 standard form of contract should understand how this new form differs from the CCDC 2 form which has been in place for 14 years.
The indemnification clauses in the standard form are also changed to limit the liability of the Owner to the Contractor, and vice versa, to the limits of those parties’ insurance coverage. The waiver of claims clauses are also changed so that time starts ticking on the waiver period, for both the Owner and the Contractor, at the same time (the date of Substantial Performance).
In addition, the contract includes a new provisions in relation to mold. These provisions outline the responsibilities of the parties in that regard and details of the procedures which apply in the event that mold is observed or reasonably expected at the place of work. Similarly, the contract provides new provisions which outline the responsibilities of the parties and the procedures to be followed in the event that historical artifacts or fossils are discovered during construction.
Finally, the contract also provides more detailed procedural steps to be followed in the event that the contractor wishes to make a claim for additional payment. The new form of contract is also changed to allow the Owner to pay within 20 days (instead of 15 days) from the contractor’s application for payment.
If you are going to be bidding for work on projects in which the CCDC 2-2008 standard form contract will be used, you are encouraged to order a copy of that contract for yourself so that you are aware of the changes going forward. You are also encouraged, if you have not already done so, to take advantage of some of the other guides, forms and bulletins produced by the committee.
Robert Kennaley practices construction law in Toronto and Simcoe. He speaks and writes regularly across North America. He can be reached for comment at 416- 368-2522, or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice in relation to any particular fact situation. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.
McLauchlin & Associates
Those of you who have bid to perform work in the industrial, commercial or institutional sectors, or in relation to subdivisions or custom-built homes, will be familiar with “CCDC” contracts and with the standard (or “master”) format for specifications.Changes are being made to each of these types of construction documents of which you should be aware. This month, we will deal with the changes to a commonly used “CCDC” standard form, the CCDC 2 Stipulated Price Contract. Next month, we will address the changes to the form of standard specifications generally issued by architects and/or engineers as part of a bid package.
CCDC stands for the Canadian Construction Documents Committee. The committee is comprised of representatives of owners, contractors, architects and engineers. The committee’s goal is to create standard form contracts, guides and forms for use in the construction industry. Standard form contracts produced by the committee include the stipulated (or fixed) price contract, the cost-plus contract, the unit-price contract, the design-build stipulated price contract, the design-builder/consultant contract and the civil works contract.
In addition to standard form contracts, the committee produces a number of guides, which provide valuable information in relation to both the contracts and other issues, such as construction insurance, bonds in construction, project financing and bidding and tendering. Also, the committee provides documents for use in the construction industry, including statutory declarations as well as standard forms for bid bonds, labour and material payment bonds and performance bonds.
Each of these documents is defined by a number (for example the stipulated price contract is CCDC 2 while the guide to construction insurance is CCDC 21). It is important to note that each of these documents is also copyrighted by the committee. Users must accordingly pay for their use.
In addition to these copyrighted documents, the committee also produces a number of bulletins which provide information on a number of construction issues and processes, including applications for payment, construction warranties, product guarantees and insurance in the construction industry. These bulletins are free, and can be found (along with other information, such as how to order the standard documents) online at www.ccdc.org.
Standard forms updated occasionally
Perhaps the most commonly used standard form CCDC Contract is the Standard Form CCDC 2 Stipulated Price of Form. Over the years, the document has gone through a couple of revisions, the original being CCDC 2-1982, followed by CCDC 2-1994. Recently, the committee has released CCDC 2 – 2008.Tender documents will generally incorporate a CCDC standard form by reference. Before discussing the changes to the CCDC 2, we will review how this works. When asking contractors to submit a price for the work, the tender documents will generally advise the bidders that the form of contract will be, for example, the CCDC 2 standard form. A copy of the actual contract will not be included in the bid package. The bidders are expected to understand the terms and conditions of this contract. The bidders are then often advised that the standard form contract will be amended by ‘supplementary general conditions’. It is therefore important that contractors who are bidding to perform this work understand, firstly, what the terms and conditions of the standard form are and, secondly, how those terms and conditions are changed by the supplementary general conditions.
In addition, as we have discussed in other articles, subcontractors who are bidding for a portion of the work will often be told that the terms and conditions of the ‘Prime Contract’ will apply to their subcontracts. Accordingly, subcontractors should understand both the terms and conditions of the standard form and the extent to which these terms and conditions are changed by supplementary terms and conditions.
All of the above suggests that both contractors and subcontractors who are bidding to perform work in relation to projects which will use the CCDC 2-2008 standard form of contract should understand how this new form differs from the CCDC 2 form which has been in place for 14 years.
Insurance requirements change
First, under the new standard form CCDC 2, the contractor’s general liability insurance requirements are increased from two to five million dollars, with a corresponding increase in the deductible from $2,500 to $5,000. In addition, the contract language is changed to make clear the extent to which the Owner and Consultant may recover under the Contractor’s general liability insurance policy.The indemnification clauses in the standard form are also changed to limit the liability of the Owner to the Contractor, and vice versa, to the limits of those parties’ insurance coverage. The waiver of claims clauses are also changed so that time starts ticking on the waiver period, for both the Owner and the Contractor, at the same time (the date of Substantial Performance).
Warranty clauses amended
The clauses dealing with warranty have also been changed. A new provision has been added to require that extended warranties (generally obtained in relation to a specific product — for example roofing materials) must be issued directly to the benefit of the Owner, not the Contractor. The Contractor has no extended warranty obligations beyond providing the warranty to the Owner.In addition, the contract includes a new provisions in relation to mold. These provisions outline the responsibilities of the parties in that regard and details of the procedures which apply in the event that mold is observed or reasonably expected at the place of work. Similarly, the contract provides new provisions which outline the responsibilities of the parties and the procedures to be followed in the event that historical artifacts or fossils are discovered during construction.
Finally, the contract also provides more detailed procedural steps to be followed in the event that the contractor wishes to make a claim for additional payment. The new form of contract is also changed to allow the Owner to pay within 20 days (instead of 15 days) from the contractor’s application for payment.
If you are going to be bidding for work on projects in which the CCDC 2-2008 standard form contract will be used, you are encouraged to order a copy of that contract for yourself so that you are aware of the changes going forward. You are also encouraged, if you have not already done so, to take advantage of some of the other guides, forms and bulletins produced by the committee.
Robert Kennaley practices construction law in Toronto and Simcoe. He speaks and writes regularly across North America. He can be reached for comment at 416- 368-2522, or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice in relation to any particular fact situation. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.