on fixed terms. Payments to employees, to the Canada Revenue
Agency and to their provincial workers’ compensations scheme are
recurring and cannot be delayed. In an effort to account for such
risk, they price projects higher than usual and draw more heavily on
contracts earlier on in a project so that money remains to cover lean
periods during the later stages of a job.
Clearly, something has to be done.
CCA summit focuses on payment issues
The Canadian Construction Association (CCA) held its annual
industry summit on Sept. 29, 2015 with the exclusive aim of exploring
the various issues that surround cash flow and payment
concerns in our industry. This was a first for the national association.
Normally, the summit agenda covers a range of industry issues.
Yet, as Chairman Anibal Valente indicated in his opening remarks,
payment problems have become so deeply rooted – and have such
far-reaching consequences – that the time has come for a focused
discussion on the subject.
The 125 summit participants were split into groups that cut
across traditional industry lines. General contractors shared tables
with subtrades, suppliers, designers, lawyers and representatives
CCA
from the CCA’s board of directors and its partner associations. The
idea was to bring each stakeholder’s perspective to the conversation
in order to develop as complete a record as possible. The members
of the CCA board would then be asked to use that data to inform further
decision-making.
Canada’s cash flow and payment challenges
The session began with a discussion of the various cash flow and
payment challenges that exist for prime contractors, subcontractors
and suppliers. Participants were also asked to identify common
needs and expectations. Everyone agreed that timely payment
is a problem in the industry and they cited a variety of reasons for
this trend. Some argued that the root of the problem is mechanistic.
By themselves, concepts such as holdbacks, change orders, bureaucracy
and constrained schedules create only tiny ripples in the payment
process, but together they combine to form huge waves that
topple boats.
Others saw cultural factors as the source of delays. Consultants,
at times, act overzealously in the interests of owners. They scrutinize
even the finest details of payment draws and reject anything that
may appear to be remotely out of hand. Also, a “me first” mentality is
“By themselves, concepts such
as holdbacks, change orders,
bureaucracy and constrained
schedules create only tiny ripples
in the payment process, but
together they combine to form
huge waves that topple boats.”
ALEXMILLOS & GANZALESS/SHUTTERSTOCK.COM
saskheavy.ca | Quarter 1 2016 | Think BIG 31
/SHUTTERSTOCK.COM
/saskheavy.ca