Ontario Construction News staff writer
The Ontario Precast Concrete Manufacturers’ Association (OPCMA) has drafted revisions to its contract that will “level the playing field” for precast companies, says Tony Bombini, president of the association.
The new contract targets some of the problems the precast industry has been experiencing, primarily focused around construction delays.
“It will help stabilize the industry since so many companies have come and gone with the unfair practices from the past, and it will help the construction industry by providing a stronger precast industry with more stability and qualified manufacturers with more long-term players,” says Bombini.
The new contract aims to deliver association members a range of guarantees related to projects, including:
- The subcontractor shall make applications for payment together with a WSIB clearance certificate disclosing no outstanding levies and a sworn statutory declaration regarding the payment of sub-subcontractors and suppliers on or before the 25th day of each month (herein called the submission date) to the contractor for due processing. The amount claimed shall be for the value, proportionate to the amount of the subcontract, of subcontract work performed up to the last day of the month. The contractor shall pay the subcontractor in accordance with Part I.1 of the Construction Act.
- The contractor shall advise the subcontractor of the date of each application for payment or invoice given to the owner containing the subcontractor’s work immediately upon giving such application for payment or invoice to the owner.
- Should the contractor fail to make payments to the subcontractor as they become due under the terms of this subcontract or in an award by an adjudicator, arbitrator or court, interest at the rate of four per cent per annum above the prime rate shall become due and payable on such unpaid amounts. The interest shall be compounded monthly. The prime rate shall be the rate of interest quoted by the Royal Bank of Canada for prime business loans as it may change from time to time.
- In the event the subcontractor price is less than $25,000, excluding Value Added Taxes, the contractor shall pay 25 per cent of the subcontract price at the time this subcontract is entered into or order is placed and the balance shall be paid at the time of delivery.
The revised contract also includes a range of measures to resolve disputes. Fees and payment stipulated in the revised contract are not uncommon, says Bombini.
“There are many industries that charge these fees and they don’t even make a custom product. Our industry provides custom-made products that require many upfront costs. In the past we have had many jobs delayed or cancelled and we have been unable to recover any of our upfront costs after spending months and even years on projects on hand. This will help tremendously since the upfront costs are spent when a project is given the green light to proceed.”
Delayed work can have a significant impact on additional projects a precast company may have booked, says Bombini, adding that once the work begins, little can be done to speed it up to get to the next job. Delays, therefore, are created down the line. The revisions won’t resolve all project delays and related compensation, but they will, as he says, level the playing field by being fairer and more transparent.
The association represents seven members, and concerns of not getting paid because of delays and other factors have caused serious financial problems for some precast companies. If the situation is not addressed, it could result in fewer companies resulting in less competition and higher construction costs, says Bombini.
Construction demands across the province, and especially in the Greater Toronto Area (GTA), are likely to increase demand for related work, including precast provision. Major projects include subway and light rail transit construction, as well as ongoing work at the Ontario Power Generation Darlington nuclear refurbishment project.
Project delays have caused the association’s members financial headaches, and the revisions are structured to address those concerns, continues Bombini, to ensure they get paid as do other industries. If someone books a seat on a plane, for instance, and misses the flight, the airline still gets its money.
“ A precast company would have the same problem filling the space in the plant that was reserved for a project that never comes in or is late.”
The precast industry, says Bombini, has been very unstable because of the practices in the construction industry.
“The proposed changes to the contract will make everything more transparent and allow contractors, developers, owners and all users to understand the industry better and have stronger manufactures with better quality and more stability in the industry.”