The New CCDC 2 Stipulated Price Contract – What You Need To Know!

By Shiksha Puri and Harp Khukh

In December 2020, the Canadian Construction Documents Committee (“CCDC”) introduced an updated version to the CCDC 2 Stipulated Price Contract (“CCDC 2 – 2020”). Most of the updates were made to complement the prompt payment legislation that was introduced in the Construction Act in 2019 and reduce the need for supplementary conditions. For more information on the prompt payment legislation and adjudication, please see our article in the Fall 2020 issue of The Voice Magazine. CCDC has indicated that it will continue to publish and issue stickers for CCDC 2– 2008 for one (1) more year to allow parties to acquaint themselves with the new contract.

The following are some of the key changes introduced in CCDC 2 – 2020:

1. CASH ALLOWANCES

The Consultant can now reallocate cash allowances to cover unexpected shortfalls, i.e. where the actual cost of the Work under a cash allowance exceeds the cash allowance amount, the Consultant can relocate any unexpended amount from other cash allowances to cover the shortfall. In such cases, the Contract Price will not change unless the actual cost under all cash allowance exceeds the total amount of all cash allowances in the Contract.

2. PAYMENT TERMS & RELEASE OF HOLDBACKS

The payment process has been updated to complement the recent prompt payment legislation. The fundamental changes to the payment terms and release of holdback under the CCDC 2 – 2020 include the following:

1. The Contractor’s payment application shall comply with the requirements of the prompt payment legislation, so that it is a “proper invoice” in accordance with the legislation;
2. The Contractor shall now submit all applications for payment to both the Owner and the Consultant at the same time, rather than just the Consultant;
3. The Consultant shall certify payment within ten (10) days of receipt of the payment application;
4. In the event that the Consultant certifies a different amount, or rejects the payment application or any part thereof, it is now the Owner as opposed to the Consultant who shall notify the Contractor of a rejection of the payment application or any part thereof by issuing a written notice of non-payment to the Contractor giving reasons for the revisions or rejection within fourteen (14) days of the receipt of the payment application; and
5. The Contractor shall provide evidence of compliance with worker’s compensation legislation and a CCDC 9A Statutory Declaration on the distribution of payment on all applications for payment.

3. CHANGE DIRECTIVE

CCDC 2 – 2020 clarifies that costs are only recoverable while performing work attributable to a Change Directive. It arranges the categories of costs considered in the valuation of Change Directives and provides a list of items such as construction equipment, labour, certain legal and auditing costs, project specific information technology, etc. for which costs can now be charged by the Contractor.

4. DELAYS

CCDC 2 – 2020 has updated the provisions of delay to differentiate between delays caused by the Owner, delays caused by stop work orders and delays caused by events outside of the Contractor’s control. If there is a delay in the performance of the Work due to a stop work order issued by a court or other public authority, then an extension of time is only permitted in situations where the Contractor cannot achieve Ready-for-Takeover by the date stipulated in the Contract. The provisions with respect to Owner caused delays and delays outside of Contractor’s control remain unchanged.

5. ADJUDICATION

CCDC 2 – 2020 now recognizes the role of adjudication under the new prompt payment legislation and a new general condition, GC 8.2 has been added. The new general condition provides that nothing in the Contract affects the parties’ right to resolve disputes through adjudication.

6. CONSTRUCTION SAFETY

CCDC 2 – 2020 has been updated and requires both the Contractor and the Owner to comply with the health and safety regulations and programs established at the Place of the Work.

7. READY-FOR-TAKEOVER

CCDC 2 – 2020 introduces a new completion milestone. This milestone is achieved when the Consultant confirms satisfaction of various conditions including:

1. The Consultant has certified or verified the Substantial Performance of the Work;
2. Occupancy permit is issued;
3. Final cleaning and waste removal is complete;
4. The Owner has been provided with any necessary operations and maintenance documents;
5. As-built drawings are complete and submitted;
6. Startup testing has been completed for immediate occupancy;
7. The Owner has been provided with secure access to the Place of the Work; and
8. The Contractor has scheduled any necessary demonstration and training.

CCDC 2- 2020 links most clauses like delivery date for the work, delay claims, indemnity, warranty and waiver to Ready-for-Takeover. However, substantial performance continues to remain the trigger for release of the holdback.

Going forward, the Consultant shall have to certify substantial completion and confirm that Ready-for-Takeover has been achieved.

The Contractor shall submit the application for Ready-for-Takeover to the Owner and the Consultant along with a list of items to be completed or corrected. The Consultant shall either confirm the date of Ready-for-Takeover or advise that the Work is not Ready-for-Takeover and provide reasons in writing within ten (10) days of receipt of the application.

8. EARLY OCCUPANCY BY THE OWNER

CCDC 2 – 2020 now allows the Owner to take early occupancy of all or a part of the work before Ready-for-Takeover has been achieved subject to the Contractor’s agreement and approval of the relevant authorities. In such cases, the warranty period begins on the date of early occupancy and the responsibility of the work passes to the Owner and the Contractor is no longer liable for the care of the part of the work occupied by the Owner. However, if the Owner takes occupancy of the entire work before Ready-for-Takeover has been achieved, the Contractor is not relieved from its responsibility to complete the Work in a timely manner.

9. INDEMNIFICATION AND WAIVER OF CLAIMS

CCDC 2 – 2020 ties the timing for indemnification and waiver of claim to the Ready-for-Takeover date instead of Substantial Performance of the Work. The Contractor and Owner’s indemnification obligations have been revised and are now limited to direct loss and damage and the parties are not liable to each other for indirect, consequential, punitive or exemplary damages.

10. DOCUMENT REVIEW

The Contractor’s obligation to review the Contract Documents and promptly report any error, inconsistency, or omission in the Contract Documents has been deleted and replaced with a new provision that requires the Contractor to report any error, inconsistency, or omission that it discovers, or that is made known to it only. It has also been made clear that the objective of review is only for the purpose of facilitating coordination of the Work.

This article is provided for information purposes only and does not constitute legal advice. For any questions or concerns, please contact Corestone Law at info@corestone.ca