Contractors air their problems with tendering and contract documents
December 5, 2011
By Canadian Consulting Engineer
Evidently consulting engineers are not the only ones who are having problems with construction contracts. While engineers are concerned about being asked to take on too much liability, contractors are just as concerned about that and a...
Evidently consulting engineers are not the only ones who are having problems with construction contracts. While engineers are concerned about being asked to take on too much liability, contractors are just as concerned about that and a host of other issues.
At Construct Canada in Toronto on Thursday, December 1, Clive Thurston, president of the Ontario General Contractors Association, led off a panel discussion on Project Tendering and Delivery by saying that “this is the worst year OGCA has seen over tendering and contracting issues.” He said that he has seen more problems come across his desk this year than over the last three years combined.
In particular, Thurston said, contentious requirements in the contracts were being included through addenda at the last minute. Just that morning, Thurston said, someone had shown him a contract where an addendum had been added that asked the general contractor to indemnify the owner and consultants “for anything.”
But Thurston wasn’t giving a one-sided argument. For example, he said that incomplete construction documents are a “huge” problem, but the reason, he said, is because owners won’t pay the consultants enough to prepare complete drawings. He suggested that because the contractor is often only working with documents that are 70% complete, the remaining 30% is guesswork which leads to change orders and delays. Owners should pay the architects and engineers to do full drawing sets, he said.
Another problem the contractors are facing is a lack of professionals to act as construction managers and superintendents. While the government is focusing on the lack of trades people and investing in college trades programs, “What we need are professionals,” Thurston said. One contractor had to go to Ireland to recruit professionals.
Other problems that Thurston says that contractors are facing:
– Unreasonable timelines for projects.
– An unfair bidding process where owners go for the lowest bid: “I have never seen so many owners ignoring their own requirements,” he said.
– Competition from international companies, but with an uneven playing field. The foreign companies are backed by their own governments and foreign banks, and yet they are given the same weight in the competition process. The foreign firms have no trade union agreements.
– Reverse auctions. These are already being played out in western Canada and are coming to Ontario, Thurston said.
– Workmen’s compensation insurance rates. These will be increasing in the next three to five years to an extent that will affect business.
– Legislation such as that related to the HST, accessibility requirements and violence in the workplace, that is imposed without help on how to implement it.
– “Bundling” of projects. This practice makes sense sometimes, such as when projects are on a related site, Thurston said. But it is a poor idea when it involves bundling five or six unrelated projects across a province simply because the owner can get a better price. Thurston predicted that this practice could put the smaller, local architects, engineers and contractors out of business.
– Requests for an “overwhelming” amount of detailed information in tenders. OGCA supports requiring the names of the prime subtrades, but “not all subtrades.”
– Poorly worded clauses and conditions in the contracts.
– Late bids being allowed.
On a positive note, Thurston was pleased that the Construction Design Alliance of Ontario has been set up to lobby the provincial government and provide education and training.