Since taking full effect on October 1, 2019, The Construction Act has made significant changes to fundamental elements of Ontario’s design and construction industry, specifically those dealing with liens and lien rights, holdbacks, payment timing, and resolution of project disputes. Despite parties not being able to contract out of the Act, there appears to be a lack of consistency in its application in contracts across the broader design and construction industry.
To understand how the Act is currently being used, the Construction Design Alliance of Ontario (CDAO) launched a survey in partnership with Bramm Research Inc. to understand the impact of the Act on the province’s design and construction economy and how provisions are currently being implemented. Sixteen associations from various construction-aligned industries participated in the survey from November 1, 2021, to December 9, 2021, with over 530 survey completions.
In total, 77% of public projects consistently include Construction Act provisions, while the survey respondents only report the same for 53% of private projects. Of those who do not always see Construction Act provisions in contracts, almost half (47%) say that the projects don’t warrant reference to the Act.
Almost all firms (91%) said there had been no noticeable change in litigation exclusions/ reprisal clauses since the introduction of prompt payment. Most surveyed firms would consider adjudication (77%). The main reasons for not considering adjudications were the assumed adverse relationship effects (42%) and time/ money costs (36%).
Despite parties not being able to contract out of the Act, there appears to be a lack of consistency in its application in contracts across the broader design and construction industry. This can impact lien rights, prompt payment provisions, access to timely dispute resolution and surety and insurance requirements, all of which can influence cash flows, project overheads and overall market competitiveness.
Over the next 6 months, the CDAO will be sharing the findings to generate awareness for the use of The Construction Act, 2019.