a guide to the use of CCDC stipulated price contract

Transcription

1 20 20 a guide to the use of CCDC stipulated price contract

2 The Canadian Construction Documents Committee (CCDC) is a national joint committee responsible for the development, production and review of standard Canadian construction contracts, forms and guides. Formed in 1974 the CCDC is made up of volunteer representatives from: Public Sector Owners Private Sector Owners Canadian Bar Association (Ex-Officio) *The Association of Canadian Engineering Companies *The Canadian Construction Association *Construction Specifications Canada *The Royal Architectural Institute of Canada *Committee policy and procedures are directed and approved by the four constituent national organizations. Comments and inquiries should be directed to: The Secretary Canadian Construction Documents Committee Albert Street Ottawa, Ontario K1P 5E7 Tel: (613) Fax: (613) CCDC guides are products of a consensus-building process aimed at balancing the interests of all parties on the construction project. They reflect recommended industry practices. Readers are cautioned that CCDC guides do not deal with any specific fact situation or circumstance. CCDC guides do not constitute legal or other professional advice. The CCDC and its constituent member organizations do not accept any responsibility or liability for loss or damage which may be suffered as a result of the use and interpretation of these guides. CCDC Copyright 2008 Must not be copied in whole or in part without the written permission of the CCDC.

3 TABLE OF CONTENTS A GUIDE TO CCDC CONTRACT FORMS: What is the CCDC The Use of CCDC Contract Forms CCDC Contract Forms Adapting the CCDC Contracts Administrative Procedures Relationship to Division 1 General Requirements of the Specifications A GUIDE TO THE USE OF CCDC : The Agreement Between Owner and Contractor Provisions in the Agreement Between Owner and Contractor Article A-1 The Work Article A-2 Agreements and Amendments Article A-3 Contract Documents Article A-4 Contract Price The Definitions Standard Construction Document CCDC Article A-5 Payment Article A-6 Receipt of and Addresses for Notices in Writing Executing the Contract The General Conditions GC 1.1 Contract Documents GC 2.1 Authority of the Consultant GC 2.2 Role of the Consultant GC 2.3 Review and Inspection of the Work GC 3.2 Construction by Owner or Other Contractors GC 3.8 Labour and Products GC 3.9 Documents at the Site GC 3.10 Shop Drawings GC 4.1 Cash Allowances GC 4.2 Contingency Allowance GC 5.1 Financing Information Required of the Owner GC 5.2 Applications for Progress Payment GC 5.3 Progress Payment GC 5.4 Substantial Performance of the Work GC 5.5 Payment of Holdback upon Substantial Performance of the Work GC 6.1 Owner s Right to Make Changes GC 6.2 Change Order GC 6.3 Change Directive GC 6.4 Concealed or Unknown Conditions GC 6.5 Delays GC 6.6 GC 7.1 GC 7.2 GC 8.1 GC 8.3 GC 9.1 GC 9.2 GC 9.4 GC 9.5 GC 10.1 GC 10.2 GC 11.1 GC 11.2 GC 12.1 GC 12.2 GC 12.3 Claims for a Change in Contract Price Owner s Right to Perform the Work, Terminate the Contractor s Right to Continue with the Work or Terminate the Contract Contractor s Right to Suspend the Work or Terminate the Contract Authority of the Consultant Retention of Rights Protection of Work and Property Toxic and Hazardous Substances and Materials Construction Safety Mould Taxes and Duties Laws, Notices, Permits, and Fees Insurance Contract Security Indemnification Waiver of Claims Warranty Notice to Users of CCDC Governed By the Civil Code of Quebec FURTHER REFERENCES

4 A GUIDE TO CCDC CONTRACT FORMS CCDC standard documents are products of a consensus-building process aimed at balancing the interests of all parties involved in construction projects. They reflect recommended industry practices. Readers are cautioned that the guides do not deal with any specific fact, situation or circumstance. CCDC guides do not constitute legal or other professional advice. The CCDC and its constituent member organizations do not accept any responsibility or liability for loss or damage which may be suffered as a result of their use or interpretation. This guide is intended to assist Owners, Contractors and Consultants. While this guide does not provide advice on every provision of CCDC , many of which are self-explanatory, it explains all key provisions. The guide will avoid restating the wording of general conditions and listing what is obvious in the contract. Cross-references indicate key interrelationships within the contracts. The discussion and annotations cannot be comprehensive, as it is simply not possible to anticipate all circumstances. WHAT IS THE CCDC? The CCDC is a national joint committee responsible for the development, production and review of standard Canadian construction contracts, forms and guides. Formed in 1974, the CCDC is made up of volunteer representatives from: *Association of Canadian Engineering Companies *Canadian Construction Association *Construction Specifications Canada *Royal Architectural Institute of Canada Public Sector Owners Private Sector Owners A member of the legal profession (Ex-Officio) All CCDC documents carry the endorsement of the *four constituent national organizations and all CCDC representatives including all owners. THE USE OF CCDC CONTRACT FORMS Why Use CCDC Documents? They are relied upon as familiar industry standards. They provide balance, uniformity and standardization for bidding and contracting procedures. They respect the interests and preserve the rights of all parties involved in a construction project by equitably allocating risk to the party most able to manage it. They are developed in a collaborative environment that allows for the serious consideration of the rights, interests and obligations of all parties. Balanced contracts reduce the risk of claims and disputes, avoiding needless expense and loss of time to the construction process. They recognize legal precedents established by the courts. CCDC

5 Copyright All CCDC documents are protected under copyright law. The use of any CCDC form or content without the consent of the CCDC infringes on this copyright. A seal must be affixed to all CCDC contract forms to ensure the integrity of the document. The seal emphasizes that the CCDC document has not been altered. The absence of the seal constitutes an illegal use of a CCDC contract form. Understanding the Contract Forms Users of CCDC contract forms should understand that: they establish a particular set of relationships between the participants to the construction process; and while they are widely applicable, where project specific adaptation is necessary, they may be supplemented. (refer to CCDC Bulletin 7) Consultants may assist the Owner and the Owner s legal counsel in establishing the terms of the Owner-Contractor documents but should not take responsibility for the legal content and sufficiency of these documents. Capitalized terms in the CCDC contract forms are titles of numbered articles and referenced paragraphs, subparagraphs, or clauses; or are titles of other published CCDC contract forms; or are defined terms. Capitalized terms italicized are defined and carry a specific meaning and application under the contract. CCDC contract forms have important legal consequences. Consultation with a lawyer familiar with the construction industry is recommended, so that users have a full understanding of the meaning of the document provisions. CCDC contract forms also have important insurance provisions drafted to accommodate an evolving insurance market. It is highly recommended that advice on insurance matters be obtained from insurance professionals properly qualified and licensed to do so. The insurance provisions in CCDC are significantly different from past versions. CCDC CONTRACT FORMS The CCDC publishes four standard construction contract forms: CCDC 2 Stipulated Price Contract CCDC 3 Cost Plus Contract CCDC 4 Unit Price Contract CCDC 18 Civil Works Contract (Visit the CCDC web site for additional information All these forms are designed for execution by the Owner and the Contractor. All require that the Owner has engaged a Consultant (an Architect or Engineer licensed to practise in the province or territory of the Place of the Work), to prepare the Contract Documents and to administer the Contract. 2 CCDC

6 The CCDC contract forms: recognize the need to protect and preserve the interests and rights of both parties in a fair and equitable manner; incorporate current standard practices and procedures used in the industry; clearly define the appropriate roles and obligations of the Owner, Contractor and Consultant; are intended for use in any jurisdiction within Canada; can be used for large or small projects and new construction or renovation work, in both the private and public sectors; and are kept current in an evolving insurance market. The CCDC contract forms are recognized for clarity and simplicity of language and are drafted in a style intended to be easily understood by the parties, using terms and expressions familiar to the industry. Words such as "reasonable" and "promptly" are often used throughout CCDC They are used to describe the manner in which one of the parties to the Contract must act in relation to the other party with respect to a task to be performed or a decision to be made. Determination of what is "reasonable" will depend on the nature, purpose and circumstances of each case. The word is used when a party is required not to be unreasonable, not to be unnecessarily adversarial in the decision required to be taken, not to act improperly in the context of the action being addressed, and where some degree of flexibility is warranted. The intent behind the word "prompt" and the expression "reasonable time" is to require the parties not to delay in taking the required action thereby causing a delay in the performance of the Work, or not to cause further deterioration, or an extension, of an unfortunate event or situation. These are used in circumstances where imposing a specific time limit would be impractical in cases where so much would depend on the context and the circumstances. In the typical construction project, the Consultant is not a party to the Contract. The Consultant has a separate agreement with the Owner. The CCDC contract forms are consistent with standard forms for the Owner-Consultant agreements, e.g. RAIC 6 (architects) and ACEC 31 (engineers). A consistent set of terms is used and the responsibilities and obligations of the various parties are carefully co-ordinated. It is important to confirm that the Consultant s roles and responsibilities in the Owner/Consultant agreement are compatible with those in CCDC contract forms. The CCDC contract forms are divided into three sections called: Agreement Between Owner and Contractor Definitions General Conditions The Agreement contains blanks that must be filled-in by the parties in order to complete those provisions which are unique to the particular Work and Project. The Agreement section of each of the various CCDC contract forms is distinct to reflect its specific pricing method. The Definitions establish a specific meaning for terms used repeatedly throughout the CCDC contract forms. Defined terms are highlighted throughout the forms by capitalizing the first letter and italicizing them. CCDC

7 The General Conditions of the Contract are the part of the Contract Documents that set forth the rights and responsibilities of the parties and define their relationships. The General Conditions include those provisions which, to the greatest extent possible, have a consistent application to all CCDC contract forms as well as to any project on which they are used. With the introduction of CCDC 41 CCDC Insurance Requirements, the insurance provisions of the general conditions (GC11) are easily updated to reflect current insurance market coverages. The same follows for the mediation provisions of the general conditions (GC8.2) with the introduction of CCDC 40 RULES FOR MEDIATION AND ARBITRATION OF CONSTRUCTION DISPUTES. ADAPTING THE CCDC CONTRACTS A key value of CCDC contract forms is that many of their users (architects, engineers, contractors, subcontractors, and owners) have become thoroughly familiar with their provisions, have confidence in their fairness, and recognize their format at a glance. Even if CCDC contract forms were to be transcribed verbatim (instead of using the printed document) this very important value would be lost. A copyright seal must be used on all CCDC contract forms to be executed from printed electronic versions. The use of a copyright seal is intended to demonstrate that the CCDC contract form is authentic, accurate and unaltered with the exception only of additions or modifications as may be set forth in supplementary conditions. CCDC contract forms are an accumulation of the experience, thought, and talent of architects, engineers, owners, contractors, and subcontractors. They, and others, have been ably assisted by legal counsel and insurance and surety advisors and there is a long history of judicial precedents based on the language used in the documents. Persons intending to substitute their own provisions for those in the original CCDC documents should obtain expert advice. Modifications may cause the Owner, Consultant, Contractor, or Subcontractor to unintentionally assume unnecessary or inappropriate responsibilities or risks. Furthermore, modifications may weaken the relationships among the documents provisions or between the documents and the other project agreements with which they should be co-ordinated. Unnecessary and improper modifications to CCDC standard contract forms can create serious problems. These may take the following forms: 1. Introduction of subject matter already addressed in the text of the standard form which may cause conflict or uncertainty. 2. Introduction of subject matter more appropriately dealt with elsewhere (e.g. in the Instructions to Bidders or in the technical specifications). 3. New or replacement wording that is clearly designed to undermine the fundamental nature of the CCDC Standard Contract Forms or the equitable balance of rights and obligations of each party. 4. Variations which do no more than re-state or paraphrase the standard text in the author s own words. 4 CCDC

8 The CCDC appreciates that certain Owners or market sectors, as a matter of public policy, local conditions or project-specific particulars, may with legitimacy seek to amend or customize a CCDC contract form. The CCDC issues these precautions to the four concerns noted above: 1. The CCDC standard contract forms General Conditions, Definitions and Agreements are interrelated. Before introducing any new or amended subject matter, it would be prudent to review the forms thoroughly to ensure that the subject is not already addressed. 2. Experienced industry participants anticipate and conduct their business operations based upon familiar document structures with clearly separated (but integrated) components. Changing that order may introduce confusion and increase the costs of document preparation, bidding and contracting. 3. A biased and inherently one-sided form of construction contract would likely deter most contracting parties; reduce (if not eliminate) competition, especially from those who are more experienced and qualified; change the balance of risk; increase costs; and be difficult for any Consultant to administer fairly and professionally. Furthermore, such a contract may not be upheld if tested in court. 4. In addition to those already noted above, altering the standard wording presents a variety of risks chiefly because the CCDC contract forms have: (a) (b) (c) compatibility with the standard wording, notes and responsibilities of such critically interrelated industry documents as agreements between Clients (Owners) and Architects or Engineers, construction subcontracts, and construction administration forms; compatibility with standard wording, terms and forms of industry acknowledged insurance policies and surety bonds; and, especially an accumulated history of use and interpretation by the courts. In order to indicate how to complete some of the blanks provided in the Agreement section or if, due to particular circumstances, it becomes necessary to adapt the text of a CCDC contract form for a specific instance, the preferred method of effecting such adaptations is through the use of Supplementary Conditions. The CCDC Bulletin 7 provides additional information on the use of supplementary conditions with CCDC standard contract forms. ADMINISTRATIVE PROCEDURES Detailed administrative procedures established by the Owner or Consultant for the administration of the Contract need not be included in Supplementary Conditions. Such procedures are appropriately the subject of the administrative procedures sections of Master Format 1 Division 1 General Requirements of the Specifications. 1 Master Format (Master List of Section Title and Numbers) is a copyright publication prepared jointly by Construction Specifications Canada (CSC) and the Construction Specifications Institute (CSI) U.S.A. CCDC

9 RELATIONSHIP TO DIVISION 1 - GENERAL REQUIREMENTS OF THE SPECIFICATIONS Some of the General Conditions in CCDC deal with subject matter normally identified in Division 1, General Requirements of the Specifications (e.g. GC 3.13 CLEANUP). In order to establish a standard procedure, they have been included in the General Conditions. They also inter-relate with other provisions in CCDC 2. If you decide to delete such work-related provisions from the General Conditions, you must delete the clause in its entirety and refer to the appropriate specification section. The provisions of paragraph in GC 1.1 CONTRACT DOCUMENTS outline the priority of documents to resolve conflicts within the Contract Documents. Placing work-related items into the Specifications that were previously contained in the General Conditions may lead to a different result than intended under GC General requirements for such items as barricades, progress photographs, field offices, temporary utilities, supervisory requirements and similar matters should be identified and dealt with in Division 1 of the Specifications. 6 CCDC

10 GUIDE TO THE USE OF CCDC THE AGREEMENT BETWEEN OWNER AND CONTRACTOR CCDC The Agreement Between Owner and Contractor (Agreement) contains provisions that relate specifically to the Work and which shall be completed or filled-in by the contracting parties to: identify the date of the Agreement; identify the name of the Work; identify the parties to the Contract, i.e., the Owner and Contractor; identify the Consultant; describe the Work to be performed by the Contractor; identify the location of the Place of the Work; state the Contract Time; list the Contract Documents and any negotiations agreed to in writing between the parties; state the Contract Price, Value Added Taxes, and total amount payable; state the method of payment, holdback, and name of the chartered lending institution whose prime rate will be used to determine the interest rates applicable to the Agreement; record the addresses of the Owner, Contractor, and the Consultant for the purposes of the delivery and receipt of Notices in Writing; identify the language of Contract, if applicable; attach copies of the latest revision at the time of bid closing of CCDC 40 Rules for Mediation and Arbitration of Construction Disputes and CCDC 41 Insurance Requirements; and provide for the formal execution of the Agreement by the parties. ADAPTATION OF THE AGREEMENT Bidders should be advised of any amendments to the articles of the Agreement in the Instruction to Bidders. These amendments shall be incorporated into the Agreement of CCDC 2 by either revising the face of the Agreement form prior to signing the Agreement or by adding a supplementary condition for each amendment. PROVISIONS IN THE AGREEMENT BETWEEN OWNER AND CONTRACTOR DATE The date of the Agreement is the date on which both parties execute the Agreement or a date agreed by both parties if they are unable to sign at the same time. PARTIES Use the correct legal names of the Owner and Contractor and include a designation of the legal status of both parties when identifying the parties to the Contract. ARTICLE A-1 THE WORK Identify the name of the Work and, where applicable, the Project. Where a contract reference number is to be used by the Owner, it should be stated as well. CCDC

11 Identify the Consultant. If the Contract is to be administered by someone other than the person who prepared the Contract Documents, identify the Consultant who will administer the Contract. Identify the commencement date and the date for Substantial Performance of the Work. This constitutes the Contract Time referred to throughout the Contract Documents. ARTICLE A-2 AGREEMENTS AND AMENDMENTS Explicitly identify in writing all negotiations, representations or agreements, if any, which the parties wish to be binding as part of the Contract by listing them in ARTICLE A-3 CONTRACT DOCUMENTS. ARTICLE A-3 CONTRACT DOCUMENTS This provision requires the parties to list all documents which are to comprise the Contract. The purpose of listing the Contract Documents is to describe, in totality, the scope of the Work, schedule, negotiated items, and all other agreements between the Owner and Contractor that form the basis of the Contract. In addition to the Agreement, the Definitions, and the General Conditions, the listing should always include the following: Supplementary Conditions (if applicable); Specifications, including a listing of contents with section numbers and titles, number of pages, and date; Material finishing schedules; Drawings, giving drawing number, title, date, revision date or mark; Addenda, giving title, number, date; and Other pertinent information documents, as appropriate. It may be appropriate to identify pertinent information documents, such as geotechnical reports, site surveys of existing structures, photographs, and investigative reports, as Contract Documents. The primary reason for including these information documents would be to allow the Contractor to rely on the data contained therein; thereby avoiding the Contractor s cost of duplicating the Owner s investigations. This would allocate to the Owner the risk associated with actual conditions that may differ from what was represented to the Contractor in such information documents at the time of bidding. However, the decision of whether or not to include any such information documents as Contract Documents remains with the Consultant and Owner. The mediation/arbitration and insurance provisions of the contract are outlined in CCDC40 RULES FOR MEDIATION AND ARBITRATION OF CONSTRUCTION DISPUTES and CCDC 41 CCDC INSURANCE REQUIREMENTS respectively. A copy of the latest revision of both documents at time of bid closing should be downloaded from the CCDC web site ( and attached to the contract for ease of reference. The documents listed below are not normally included as a part of the Contract Documents: Invitation and Instructions to Bidders which state the conditions relative to the bid invitation and submission, respectively; Bid submitted by the successful bidder; and Labour agreements. 8 CCDC

12 Normally, the Invitation and Instructions to Bidders have served their purpose once the bids have been received; therefore, the Contract Documents in CCDC do not include such bidding requirements. When information contained in these documents is to be included as part of the Contract Documents, they should be listed under ARTICLE A-3 CONTRACT DOCUMENTS. This may include such supplementary bid information as a list of subcontractors, alternative prices, or itemized prices. However, it is recommended that special conditions, progress schedules, and labour agreements be set out in the appropriate sections of the Specifications, not in the Supplementary Conditions. If, after submission of bids, the parties to the Contract agree to changes, this information, or reference to documents containing this information, should be included under Article A-3. ARTICLE A-4 CONTRACT PRICE As in all CCDC contract forms, in CCDC , the Contract Price does not include Value Added Taxes. ARTICLE A-5 PAYMENT In paragraph 5.1, where lien legislation does not apply to the Place of the Work or where the lien legislation governing the Place of the Work does not require a prescribed rate of holdback, fill in the applicable rate. Paragraph standardizes the interest due on overdue accounts. The interest of two percent above the prime rate is proposed as the standard for the first 60 calendar days. If the amount is still unpaid after 60 calendar days, the interest will be increased to four percent above the prime rate to compensate the Contractor for extra costs due to delayed payment. To avoid showing a bias toward or against any particular bank, the name of the lending institution is left blank, to be determined and filled in by the parties. The rate of interest to apply on overdue accounts is stated as an annual rate to avoid the application of Section 4 of the Federal Interest Act. Section 4 of that Act provides that, where interest is payable on a written or printed contract at a percentage for a period less than a year, 5% per annum is the maximum interest recoverable unless the contract contains an express statement of the annual rate. The intent of paragraph is to apply the interest at the rate and in the manner prescribed by paragraph in the event that either party fails to make payments as they become due under the terms of settlement of any dispute. When interest is included in the final settlement of any dispute, it is recommended that the terms of settlement clearly indicate that the settlement amount includes all interest so that paragraph is satisfied. ARTICLE A-6 RECEIPT OF AND ADDRESSES FOR NOTICES IN WRITING CCDC recognizes the delivery of Notice in Writing by regular post in a manner akin to the Ontario s Rules of Civil Procedure which provide that a document is deemed to have been received by the party to whom the notice is addressed 5 calendar days after the date of mailing. CCDC

13 In the case where one of the parties disappears, or absolutely refuses to take delivery of a registered letter or of a letter delivered by courier or hand, the Ontario Rules also provide that a document is deemed to have been received by the party to whom it is addressed on the fifth day after its transmission by ordinary mail to the address supplied by this party. Recognizing the need to cope with such circumstances, CCDC also provides this method for sending Notices in Writing, which it believes the parties would use only as a last resort. A Notice in Writing may also be transmitted by facsimile or provided that during transmission no indication of failure of receipt is communicated to the sender. EXECUTING THE CONTRACT Proper Contract execution or signing is essential to formalize the agreement reached between the parties. To avoid signing procedures which cause problems and to standardize procedures, the following procedure is recommended: the authorized representatives of both parties must sign and seal the Agreement portion of the Contract Documents (seal not required in the Province of Quebec); in the absence of any special requirement by the Owner, individually securely bind the professionally sealed Specifications and Drawings; and the authorized signing representative for each party then should sign on each copy of the Specifications and Drawings though it is not necessary that every sheet be initialled. Sign three sets of Contract Documents in the manner suggested above; one set to be retained by the Owner, one to be retained by the Contractor, and one for the Consultant. Each party should ensure that all Contract Documents are signed by the person authorized to sign on their behalf. Execute the Contract as soon as possible after the award. CCDC recommends that all contracts be executed in the presence of the Owner and the Contractor. Where this is not practical, the parties must ensure that the Contract Documents are fully executed and that each of the parties is provided with an executed set of the Contract Documents. 10 CCDC

14 DEFINITIONS THE DEFINITIONS CCDC The Definitions section of the CCDC contains those terms and phrases which carry a specific meaning when used in the Contract Documents. Defined words throughout the CCDC Agreement, Definitions and General Conditions are capitalized and shown in italics. Bid and Contract Documents should consistently use these terms since they have a definite meaning and application under the contract. Other terms may have a different connotation. The Definitions section in CCDC may be expanded by supplementary conditions to provide additional definitions to suit the particular needs of the Work, e.g. tenant, special consultant, and government agency. Do not modify, nor delete, any of the specific CCDC definitions, as they are used throughout the contract and any modification thereof will cause confusion, conflicts or misunderstandings. Abbreviations, technical terms, and references should be identified in the Specifications or the Drawings and not added as Definitions. CCDC

15 THE GENERAL CONDITIONS CCDC The General Conditions in CCDC set forth the specific responsibilities, obligations and rights of the parties, as well as the respective roles of the Owner, Contractor and Consultant. The General Conditions contemplate a single construction contract for a specific Project. However, they may be used in multiple contracts for the same Project. If a Project is to be constructed under multiple contracts, separate contracts should be awarded using the applicable CCDC contract forms, all of which should have co-ordinated General Conditions. In these circumstances, the Contract Documents must clearly define the limits of responsibility for each Contractor performing Work on the Project. CONTENT OF THE GENERAL CONDITIONS The General Conditions of the Contract are standardized contractual provisions describing the rights, responsibilities, and relationships of the Owner and Contractor under the construction Contract. General Conditions bring a level of consistency to construction contracts. Contractors bidding a project will concentrate on the adaptations to the standard General Conditions without having to examine the entire document each time they bid. Administrative, procedural and temporary facility requirements are properly excluded from the General Conditions and are more appropriately located in Division 1 - General Requirements of the Specifications. Administrative processing of Shop Drawings, details concerning time scheduling, clean-up, testing, temporary facilities, and similar work are also typically handled in Division 1. ADAPTATION OF THE GENERAL CONDITIONS General Conditions may not be all-inclusive and, therefore, the use of Supplementary Conditions may be necessary to complete Owner-Contractor contracts. Changes to the General Conditions must be set out in a separate section of the General Conditions called the Supplementary Conditions. Changes to the actual printed text of the General Conditions should not be made by crossing out and inserting text. Please note that reproducing the text with the incorporated modifications included is a copyright infringement. Adaptations must be brought clearly and emphatically to the attention of the bidders so that they can readily appreciate what is being changed. This will avoid misunderstandings and subsequent disputes. Supplementary Conditions must identify the particular CCDC contract form being modified. A statement to this effect at the beginning of the Supplementary Condition section will serve this purpose. Supplementary Conditions may also be necessary to modify the relationships among the parties when multiple prime construction contracts are awarded, when projects are fast-tracked, or when the basis for Contractor s compensation is not simply a stipulated price. Supplementary Conditions often include provisions relating to payments, retainage, insurance, and other matters of a contractual nature applicable to the specific Project. 12 CCDC

16 COMMENTS ON SPECIFIC GENERAL CONDITIONS OF CCDC PART 1 GENERAL PROVISIONS GC 1.1 CONTRACT DOCUMENTS This General Condition sets out the intent of the Contract Documents and the hierarchy of each type of document in the event of conflicts between them. Paragraph Consultants should carefully check that the Contract Documents agree with the hierarchy of documents and the definitions of Specifications and Drawings. Any document included in the Contract Documents that is not specifically mentioned in paragraph should have its order of priority established by a Supplementary Condition. CCDC40 RULES FOR MEDIATION AND ARBITRATION OF CONSTRUCTION DISPUTES and CCDC 41 INSURANCE REQUIREMENTS are considered part of the General Conditions within the hierarchy of Contract Documents. The following is an example of amending GC 1.1 to give an order of priority to an additional document: In the GENERAL CONDITIONS section of CCDC In GC 1.1 CONTRACT DOCUMENTS, paragraph Add the following sentence: Document xxx, dated September 3, 2008, has priority over material and finishing schedule (Note: The content of the above example is not a recommendation of CCDC) Paragraph Where a limited number of sets of Contract Documents will be issued to the Contractor without cost, the number of sets to be provided should be stated as a Supplementary Condition along with the terms for obtaining additional sets. It is good practice that the information on the addenda be incorporated into the set of construction drawings. The following is an example of amending the number of copies of documents the Contractor will receive free of charge and the cost for additional copies. In the GENERAL CONDITIONS section of CCDC In GC 1.1 CONTRACT DOCUMENTS, paragraph Replace this paragraph by: The Contractor will be supplied with 20 sets of the Contract Documents without charge. Additional sets shall be provided at a cost of $ 50 per set of Specifications and of $ 60 per set of Drawings. (Note: The content of the above example is not a recommendation of CCDC) PART 2 ADMINISTRATION OF THE CONTRACT These General Conditions define the role, authority and responsibility of the Consultant as established in the Consultant s separate agreement with the Owner. CCDC

17 GC 2.1 AUTHORITY OF THE CONSULTANT The Consultant is not a party to the Contract between the Owner and Contractor; as such, there is no contractual relationship between the Contractor and the Consultant. GC 2.2 ROLE OF THE CONSULTANT This General Condition describes the role of the Consultant. When the Consultant s services or responsibilities defined in the Owner-Consultant Agreement differ from those listed in CCDC such differences in responsibilities or services, as stated in the Owner-Consultant Agreement, must be identified in a Supplementary Condition; compatibility is essential. The following is an example of amending GC 2.2 to let the Contractor know what additional responsibilities or services the Owner has assigned to the Consultant: In the GENERAL CONDITIONS section of CCDC GC 2.2 ROLE OF THE CONSULTANT, paragraph Replace this paragraph by: The Consultant will provide at the Place of the Work a Project representative to assist in carrying out the Consultant s responsibilities. The Project representative will be stationed at the site, in an office provided by the Contractor, and will be responsible for assisting the Consultant in the administration of the Contract. The Project representative will perform... (complete with additional tasks or responsibilities assigned to the Project representative and specify any limitations of authority) (Note: The content of the above example is not a recommendation of CCDC) Paragraph In accordance with GC5.3 PROGRESS PAYMENT, the consultant is required to promptly inform the Owner of the date that the Consultant received the Contractor s payment application. This ensures that the Owner is aware of the responsibility to make a payment within the next 20 calendar days. Paragraph It is good practice for the Consultant to inform both the Owner and the Contractor of the anticipated time that will be necessary to make an interpretation or finding. Paragraph The Consultant and the Contractor should establish dates when the Consultant is to supply the Contractor with certain Supplemental Instructions, such as the colour finishing schedule and the keying schedule. GC 2.3 REVIEW AND INSPECTION OF THE WORK Paragraphs and These clauses provide a default position related to testing, inspections, and the provision of material and samples for testing. The intent of this default position is to require that the Contract Documents explicitly identify those tests, inspections and sampling requirements that are to be paid by the Contractor. Some examples include requiring the Contractor to sample and test concrete for compliance with various performance and strength criteria and to provide samples of Products for compliance testing by other testing authorities. In each of these situations, the Contract Documents would have to state that the Contractor should pay the costs of the sampling and testing. 14 CCDC

18 The intent of the statement related to tests or inspections designated by the laws or ordinances of the Place of the Work is to cover requirements of various authorities having jurisdiction. Some examples include: regulatory inspections by building authorities; electrical inspections of installed facilities; Construction Equipment compliance inspections; and environmental compliance of construction methodologies. PART 3 EXECUTION OF THE WORK GC 3.2 CONSTRUCTION BY OWNER OR OTHER CONTRACTORS When the Owner awards more than one contract for the construction of the Project or performs part of the Work required for the Project using the Owner s own forces, the obligations of the Owner and Contractor are identified in the provisions of GC 3.2. Should the Owner elect to perform work using the Owner s own labour forces on the Project, the Contract Documents should contemplate such circumstances to avoid jurisdictional disputes and establish responsibility for health and construction safety at the Place of the Work, temporary facilities, workers compensation, property damage, insurance, and other related costs and responsibilities including access, storage of equipment and materials, and use of construction equipment. Paragraph Without identifying the requirements in the Contract Documents, the Contractor is only obligated to cooperate in the review of schedules and identify deficiencies that affect the Work. Paragraph The Contractor s obligation to co-ordinate and schedule the Work with the work of other contractors or of the Owner, applies only if they are identified and the specifics are clearly outlined in the Contract Documents. GC 3.8 LABOUR AND PRODUCTS If the Owner decides to provide some items this should be clearly noted in the Contract Documents, so that the Owner may obtain full advantage of any reduction in overall cost. In such cases, care should be taken to clearly establish who will be responsible for matters such as transportation, taxes, handling, on-site storage, and protection. GC 3.9 DOCUMENTS AT THE SITE If there is a need for other documents or reference material to be available at the site, these should be indicated in Division 1 of the Specifications. Should the Owner or Consultant require that the Contractor keep a record of deviations from the Contract Documents in the actual construction of the Work, these should also be outlined in Division 1 of the Specifications. GC 3.10 SHOP DRAWINGS Should the Consultant s or Owner s requirements call for a significant deviation from the manner of processing Shop Drawings outlined in this General Condition, the process should be outlined in Division 1 of the Specifications. CCDC

19 PART 4 ALLOWANCES GC 4.1 CASH ALLOWANCES Paragraph Where precise details of certain portions of the Work are unknown at the time of calling bids, the bidders may be required to include a cash allowance in the bid price. Paragraph When the actual cost exceeds the specified cash allowance, the excess amount has to be adjusted to cover increased overhead and profit for the Contractor. This adjustment is to include amounts for overhead and profit as set out in the Contract Documents. No adjustment is made for decreased overhead and profit where the actual cost is less than the specified cash allowance. The Contract Price, not the cash allowance, includes the overhead and profit for all the allowances specified. The Contract Documents shall carefully define the scope of work and the method of determining costs associated with each of the specified cash allowances. This is to ensure that no overlap occurs between the specified work and the cash allowance work. Cash allowances do not include any Value Added Taxes payable by the Owner to the Contractor. Cash allowances may cover for example: installation by Contractor of Owner supplied Products; Contractor s cost to supply Products, with the cost of the installation being included in the bid price; the Contractor s cost to provide (supply and install) a Product; and inspection and testing by third parties. During the course of the Work, when the actual cost of each specified cash allowance becomes known, the Contract Price must be adjusted by a separate Change Order for each cash allowance to record the difference between the cash allowance and the actual amount payable to the Contractor. As soon as possible after award of the Contract, the parties should review the nature and scope of each cash allowance so that the Contractor can incorporate the work of the cash allowance in a timely and orderly manner. GC 4.2 CONTINGENCY ALLOWANCE The Contingency Allowance, when specified, is the fixed amount specified in the Contract Documents which the Contractor carries to cover increases in cost for changes in the Work. As these changes are not defined, the Contractor cannot be expected to know, in advance, the overhead cost requirements. Therefore, work performed under a contingency allowance is evaluated as set out in GC 6.2 CHANGE ORDER or GC 6.3 CHANGE DIRECTIVE (see discussion under GC 6.2 and GC 6.3). 16 CCDC

20 PART 5 PAYMENT GC 5.1 FINANCING INFORMATION REQUIRED OF THE OWNER The Contractor is entitled to ask the Owner to furnish reasonable evidence that financial arrangements have been made to fulfill the Owner s obligations under the Contract. Acceptable evidence might include a construction loan commitment, a lender s set aside letter, a credit report, a corporate resolution or governmental appropriation, or other similarly positive documentation that the Owner has financing in place to complete the construction. CCDC 12 PROJECT FINANCIAL INFORMATION provides a standard format for this information. The Owner is obliged, upon request, to reconfirm such evidence from time to time as the Project proceeds. Since the Contractor s decision to accept the Owner s information is a business decision, the Consultant is not called upon to make findings (see GC 2.2.7) under this specific General Condition. GC 5.2 APPLICATIONS FOR PROGRESS PAYMENT For an example of an application for payment form, refer to CCDC 24 A Guide to Model Forms and Support Documents. The Contractor should advise all Subcontractors and Suppliers of any payment application requirements including the time by which they are to submit their progress billings so that the Contractor may include them in the Contractor s application for progress payment. Subcontractors should be requested to submit their progress billings to the Contractor in the same form and detail as the Contractor s application for payment. CCDC contracts require a Contractor to provide a Statutory Declaration only with the Contractor s application for payment of the holdback amount as referenced in GC Upon payment of the first progress payment, the Owner may require that the Contractor issue a Statutory Declaration stating that all accounts for labour, subcontracts, Products, Construction Equipment and other indebtedness which may have been incurred by the Contractor and for which the Owner might in any way be held responsible have been paid in full, except for amounts properly retained as a holdback or as an identified amount in dispute. A properly completed signed and sealed form CCDC 9A Statutory Declaration ( serves this purpose. The CCDC Bulletin 21 provides additional information on Statutory Declarations. GC 5.3 PROGRESS PAYMENT Upon application by the Contractor, the Consultant issues certificates for payment to the Owner. For an example of a progress payment certificate form, refer to CCDC 24 A GUIDE TO MODEL FORMS AND SUPPORT DOCUMENTS. CCDC

21 The Consultant must promptly inform the Owner of the date of receipt of the Contractor s application for payment and remind the Owner of the Owner s responsibility for payment to the Contractor. The consultant should also advise the Owner of the approximate amount of the progress payment at this time. If the Consultant determines that the amount claimed is not properly due and cannot approve the application as presented, the Consultant must immediately advise the Contractor and endeavour to clarify the differences. If there is no agreement, the Consultant should amend the amount, issue a certificate for the amended amount and notify the Contractor, in writing, of the amendment. Failure of the Consultant to issue a certificate indicating amounts due within 10 calendar days after the receipt of the original application or failure of the Owner to pay within 20 calendar days after the Consultant s receipt of the Contractor s application for payment can result in a work stoppage or termination of the Contract as outlined in GC 7.2 CONTRACTOR S RIGHT TO SUSPEND THE WORK OR TERMINATE THE CONTRACT. GC 5.4 SUBSTANTIAL PERFORMANCE OF THE WORK Specific administration procedures concerning submittals and close-out procedures to achieve Substantial Performance of the Work need to be specified in the Contract Documents. When determining if Substantial Performance of the Work has been achieved, the Consultant must act in accordance with the lien legislation prevailing at the Place of the Work. GC 5.5 PAYMENT OF HOLDBACK UPON SUBSTANTIAL PERFORMANCE OF THE WORK Where the expression holdback amount is used in CCDC , it means the statutory holdback required by the lien legislation and not, for example, a deficiency holdback. Where such legislation does not apply, then holdback amount means the holdback required in accordance with such other legislation, industry practice, or such other provisions which are agreed to between the parties. The CCDC 9A Statutory Declaration form must have a copyright seal applied to each and every completed form. PART 6 CHANGES IN THE WORK GC 6.1 OWNER S RIGHT TO MAKE CHANGES Changes may be required because of a change in the Owner s requirements, site conditions, emergencies, or in government regulations. Changes in the Work may affect Contract Price, Contract Time, or both. Any change in the Work should be covered under a Change Order or a Change Directive or, if such is not achievable, by separate contract or purchase order. The basic principles stated below govern the change to the Work process in CCDC : The Contractor shall not perform any changes in the Work without written authorization from the Owner; 18 CCDC

22 Two methods are provided in CCDC for the Owner to supply this written authorization: the Change Order and the Change Directive; A Change Directive can only be used to order changes that are within the general scope of the Contract Documents; A Change Order may be used for changes that are within or outside the general scope of the Contract Documents; The Contractor is under no obligation to carry out a change in the Work which is outside the general scope of the Contract Documents; and Only a Change Order can be used to carry out a change which deals solely with the Contract Time. Procedures for substitutions are not addressed by CCDC Therefore, unless provision is made for substitutions by Supplementary Condition or in Division 1 of the Specifications, none are allowed except by Change Order or by Change Directive. Changes near the end of the Work that would postpone the completion date and create unreasonable delay in achieving substantial performance and its consequences, including the release of the holdback amount, should be handled by change orders, separate contracts or purchase orders, not by change directives. The Owner should consult with legal counsel and insurance and surety advisors before this is done. 6.2 CHANGE ORDER The Change Order is used when the Owner and the Contractor agree on a change in: the Work; Contract Price, or on the method to adjust it; or Contract Time. As the Contractor is under no obligation to carry out a change to the Work which is beyond the general scope of the Contract Documents, the agreement by the Owner and Contractor on price and time, as stated above, also serves to confirm the Contractor s agreement to perform the change. When a change is contemplated, the Consultant notifies the Contractor in writing, as early as possible, providing any revised Specifications and Drawings necessary to fully describe the change. The proposed change notice may be given using the standard form the Proposed Change that is provided in CCDC 24 A GUIDE TO MODEL FORMS AND SUPPORT DOCUMENTS. The Contractor, through the Consultant, promptly provides a submission to the Owner describing the effect of the change on Contract Price and Contract Time. The submission from the Contractor should include a cost breakdown and that breakdown should identify the cost of delays and the cost of suspending the work, where applicable. The Contractor should state a reasonable length of time that the submission will remain open for evaluation and acceptance. If any work affected by the proposed change is in progress or is to start shortly, the Owner must consider whether the work affected should be stopped. If so, the Owner should stop such work by issuing a Change Directive, whether the proposed change that causes the stop order is approved or cancelled at a later date. CCDC