COVID-19 has created new challenges for the construction industry and further compounded existing issues facing all contractors. These new challenges of physical distancing, masking, overall scheduling of trades, antigen testing and vaccinations has been aptly and adeptly addressed directly on site. These are not issues that would have been considered as a regular part of work just 18 months ago, but they are now commonplace and all too necessary to operate.
The other matters that were existing and that have been thrust into the spotlight include the constant, and now pronounced, labour force shortages. The supply chain and the costs of materials and products have also taken a front seat in our daily discussions as we all contemplate how to procure the items and at what costs. And ultimately, the issue that rears its ugly head daily is that of contract language and how owners have forgotten that contractors need to be viewed as allies in these difficult times and not seen as a convenient scapegoat.
Now this is not a rant, but an observation from someone who gets to see a great deal of contract language and supplementary conditions from both public and private owners. Unfortunately, the public owners are so completely consumed with risk aversion that the language being tabled is beginning to resemble that of a dictatorship as opposed to an owner.
COVID-19 was the impetus for this transformation and it ushered in a new “logic” on the owner’s side of the equation. What was once deemed fair and equitable to all participants has come to mean only fair and equitable to the public owner. And clearly, this paradigm shift has been tabled to the detriment of the contractors.
Let’s take a step back for a moment and survey the landscape.
All things being equal, prior to COVID-19, the ICI construction industry was in a balance with the owners on most procurement matters. This is not to say that there were no issues, to the contrary, but they were not as prevalent nor as extreme.
What the pandemic did was polarize all procurement matters with a specific lens to only be fair to the owner without any consideration for the contractors. This “lopsided” procurement is causing former relationships to erode as well as increasing animosity between all of the players.
Let’s focus for a moment on the supply chain as a means to explain the unbalanced approach by the public owners.
COVID-19 had some unintended consequences by directly and indirectly causing the price for materials, manufacturing and completed products to escalate to previously unfathomable levels. Where in the past, the industry understood that there would always be a slight increase to material prices each year due to various contributors, but those increases were always rational and could be based on historical data. Along comes COVID-19, which shattered any historical data on which we could rely. With some commodities increasing upwards of 300%, the escalations would need to be dealt with differently and should have been viewed as an anomaly.
But the public buyers didn’t want to address these increases directly. Instead, they did all they could to avoid addressing the escalations and for the most part opted to say that all increases were the contractor’s responsibility. Contractors are not risk averse, but they are calculated with how they assume risk. Under no circumstances would a contractor willingly and blindly agree to the current conditions the industry is facing. And yet, the public owners somehow think that this is our fault and our responsibility.
Furthermore, tabling tenders with contract language and supplementary conditions that download all of the responsibility for COVID-19 onto the contractors does not solve the problem. Nor does setting completion dates that are far shorter than when the owner has been advised that products will be available. I have seen a number of tenders wherein all of the contractors in question tabled that the product could not be delivered until March 2022. So, a logical move would be to extend the completion date to a period of time after the delivery of the products. Instead, the owner insisted that the completion date must remain at December 2021. This makes absolutely no sense to contractors because all of the bidders are openly advising of a potential issue and how to rectify it. And yet, the public owner refuses to budge and instead digs in their heels, insisting that they know best. They are subsequently shocked when no contractors bid the work and come to the OGCA for explanations.
As our members know, the OGCA has embarked on a number of campaigns to appropriately deal with the supply chain issue by tabling contract terms that return the equation to that pre-COVID-19 balanced version. Requesting that public owners shorten validity periods to thirty (30) days, posting tender results within 24-48 hours and including escalation clauses, are all tools tabled by the OGCA to assist in rectifying these issues.
As the contract language continues to be onerous and one-sided, the OGCA will continue to table a balanced approach on how to properly deal with the current circumstances. And rest assured that the input on these solutions is generated and supported by our Board of Directors. Those steadfast volunteers are natural problem-solvers and are the ICI industry’s secret weapon. Their combined experience provides our Board with a synergistic effect in that there are few problems that this group has never encountered.
There is always a solution and the best way to reach that solution is with the industry working together on the COVID-19 issues in a balanced and fair approach. Ultimately, this approach will benefit all of the parties involved: the design professional, the contractor and most importantly, the owner.
Should anyone want to discuss COVID-19 issue or other contract matters, or if you require any assistance from the OGCA, please contact me directly at firstname.lastname@example.org or via phone at 905.671.3969.