By Clive Thurston
Special to Ontario Construction News
During my time working in the construction industry, which goes back to the 80s, the discussion over the value of using Canadian Construction Documents Committee (CCDC) contracts has been a repeating theme — one that continues to provide fodder for those wishing to increase their own business by professing to write their own and better contract forms.
Those who know my history know that I am not shy when it comes to commenting on the work of the CCDC committee and its constituent partners, working to try and make it better, even if that has meant challenging the status quo.
Recently, I read a social media post by a prominent lawyer who expressed his dislike of CCDC contracts and preferred that his clients use him to procure their own contract.
In my opinion, having standardized contracts produced by the experts who comprise the CCDC committee, is a benefit to the industry. The committee’s work is vetted by numerous stakeholder organizations across the country, including owners, and this makes for a far more equitable contract than one produced for and by one segment of the construction process.
There is no disagreement that the documents are not perfect. They are reached through a consensus process by a lot of hard-working volunteer professionals. They work, sometimes for years, to develop a product that can be used nationally.
That in itself creates the potential for some weaknesses, and while there are gaps in the documents, the truth is that they provide a solid and understood foundation upon which buyers and suppliers of design and construction services can build a workable and successful contract to deliver their projects.
Objections raised as reasons for not using a standard CCDC document include:
“Standard forms are never really standard and contain supplementary conditions. Leading to the need for excessive drafting, is time-consuming and costly” to the point the writer referred to this as “legal gymnastics” and I quite agree.
The level to which some have gone to rewrite a standard CCDC contract is nothing short of an overwhelming gymnastic feat that is both unnecessary, unwarranted, costly to an owner, and will likely result in disputes; beginning with the tender itself.
For many years, the argument was that these contracts were written in favour of the general contractor and put owners at risk. That is hard to support when one realizes that the contract is meant to be a balance and that the committee members, and those that consult with them to develop these documents, come from all stakeholder groups including the owners.
A great deal of time and effort goes into recognizing the rights of all sides. Do they get it perfect? Of course not, and I would suggest that no lawyer can write a perfect contract and get it right every time, that is just the human factor.
Is it realistic to accept that any one individual is knowledgeable enough to outweigh the combined expertise of those who participate in creating CCDC contracts and document?
Any contract will face the need to use supplementary general conditions (SGC) and that is a simple reality. The issue is how those SGC are developed and used.
A second objection is: “Using CCDC contracts leads to more negotiating of the contract consuming time and being expensive”.
If one uses a CCDC document properly and develops supplementary conditions to fill the gaps that we know exist and to address issues specific to a project, rarely do the supplementary general conditions exceed a few pages. Nor are they any problem for contractors and trades who are bidding the project.
Most tenders I have seen and worked on start with a CCDC contract that has a clearly defined set of SGC attached to the package. This saves time and money as those involved, trades, generals, and consultants, need only focus on the SGC as they are all familiar with the standard conditions in a CCDC document.
Problems arise through bad habits like supplementary general condition creep, where problems discovered on a previous project result in SGC being developed to address those issues. The problem is they get carried on to future projects and in some cases have no relevance to the current project.
Then there are SGC recommended prior to tender to address risk and supposedly protect the owner. Often these are so one sided that bidders refuse to accept them, don’t bid, or submit higher prices. Some bidders add what I call the “aggravation fee” to cover the expected disputes.
In my past role at the Ontario General Contractors’ Association (OGCA), we negotiated with many owners and were very successful in working with them in coming to an agreement that reduced most supplementary conditions to a few pages, thus ensuring they received compliant bids and sufficient bidders.
To fill the gaps in these documents in Ontario the OGCA and the Ontario Association of Architects (OAA) developed a list of supplementary conditions to address some gaps in the CCDC contracts. The evidence showed that this approach did not create a problem, did not result in additional costs for owners, but in fact reduced, almost to the point of nonexistence, issues with tenders between the consultants and contractors.
It particularly addressed issues with architects who may have been influenced to include more supplementary conditions than necessary, but with the OAA support, the number of clauses that would have resulted in unnecessary negotiation and confrontation were reduced.
Agreements were reached in several specific sectors including school boards, municipalities, and others to develop specific language that they required to address their risk.
One of the most successful one was a guide for Ministry of Health projects including hospitals and long-term care facilities, where the relevant associations worked on effective contract language.
The Ministry adopted the recommendations into its operating policies, changing the construction procurement environment. Before the standardized CCDC and SGCs, virtually every tendered hospital project was over-budget and in many cases the bidders qualified their bids. Once the guide agreements were reached, the evidence shows we rarely, if ever, had any further issues with Ministry of Health projects.
Communication, collaboration and working together within the industry is not only more efficient it is, in my opinion, far cheaper and far more successful.
A third argument against CCDC contracts is: “Somehow the project team was going to have a problem reading, managing, and understanding a template of 30 to 50 pages or more of detailed and technical changes to that document.”
There is no question that one of the problems in the industry is a lack of understanding by those who procure design and construction services on how the uniquely Canadian system works.
Canada’s procurement system for design and construction is unique in the world. It has its own set of rules, as well as an extensive legal pedigree defining how it should be done and how to maintain a fair, balanced, and reasonable system.
We all know that it started with Ron Engineering and proceeded from there. One of the problems I consistently saw was the fact that many of those procuring our services did not understand Ron Engineering and the law that developed from it over the years. Once they did understand that, and understood how the system worked, and problems and issues became far fewer.
There is nothing wrong with CCDC contracts. What is needed is better education and training in understanding the unique Canadian systems for which these contracts have been designed.
I have always found that when you can work together directly with an owner and they can sit at the table with the industry and understand our side of the issue and we, most importantly, can then understand their side of the issue, then there is no deed for massive SGCs. Further, provincial, and local construction associations can be of great assistance to owners mediating disputes with their members thus avoiding the need for legal services.
To repeat a previous point, SGC are not an issue if developed specifically to fill gaps in the CCDC, are specific to the type of project, are kept to a minimum, and provided separately to the CCDC document.
I believe the evidence supports the need for trust between the parties, with clear communication, which will lead to a collaborative relationship that will result in successful projects. CCDC documents fulfil this need.
Those who would like to generate a great deal of business by always knocking that which has existed for many years and proven itself to work, in my opinion, do a disservice to their clients and the industry. The reality is CCDC contracts provide the strongest, and best understood by all parties, foundation upon which to build your contracts.
In short, CCDC contracts work.
Clive Thurston is the OGCA‘s former president. He can be reached at (416) 399-2250 or email clive@thurstoncs.com.