What are CCDC Construction Contracts?
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. Over the years, CCDC has developed a series of standard construction contracts for use across the country, including well-known standard contracts for traditional project delivery models such as design-bid-build (“DBB”) under CCDC 2, design-build (“DB”) under CCDC 14 and construction management (“CM”) under CCDC 5A/5B. They have now developed the CCDC 30.
Introducing the CCDC 30 – Integrated Project Delivery
In 2018, CCDC released CCDC 30 – Integrated Project Delivery (“CCDC 30”), its newest standard contract for the implementation of integrated project delivery (“IPD”) on a project-wide basis by owners, architects, contractors and other related parties on Canadian construction projects. IPD as a project delivery model aims to address common issues inherent to traditional project delivery models such as DBB, DB and CM by emphasizing collaboration amongst project members to reduce inefficiency, costs and disputes that can occur during construction projects. While many members of the Canadian construction industry have employed IPD principles as part of in-house project management teams for several years, the lack of a standard contract for the use of IPD on a project-wide basis has been a barrier to adoption of IPD on a broader scale. CCDC developed CCDC 30 in order to expressly address this void in its collection of standard contracts and facilitate the use of IPD on a project-wide basis by Canadian construction industry participants.
What are the key features of CCDC 30?
The defining feature of CCDC 30 is the joining of the owner of a construction project (the “Owner”) with all key parties involved in the design and construction of a project (the “Design/Construction Team”) under a single, multi-party contract and the reciprocal waivers of (most) claims against each party in relation to the project. The Owner and Design/Construction Team work collaboratively throughout a defined four-phase approach to delivery of a project:
- the “Validation Phase”;
- the “Design/Procurement Phase”;
- the “Construction Phase”; and
- the “Warranty Phase”.
Subject to certain exceptions or amendments to the CCDC 30 by way of supplementary general conditions, the CCDC 30 general conditions provide that:
- following collaborative budget and estimating exercises throughout the Validation Phase and Design/Procurement Phase, a final target cost is established (the “Final Target Cost”).
- based on the Final Target Cost, all Design/Construction Team members pre-agree to a collective (potential) profit for their design and construction of the project (the “Risk Pool”) and are apportioned a proportional share of the Risk Pool.
- at the end of each of the Construction Phase and Warranty Phase, proportional disbursements of Risk Pool amounts are made to Design/Construction Team members, unless:
- following the Construction Phase of the project, the final estimated cost of the project including any yet-to-be performed warranty work (the “Estimated Final Cost”) exceeds the Final Target Cost, the Estimated Final Cost in excess of the Final Target Cost is set off against amounts remaining in the Risk Pool;
- following the Warranty Phase of the project, the final actual cost of the project following performance of any warranty work (the “Final Actual Cost”) exceeds the Final Target Cost, the Final Actual Costs in excess of the Final Target Cost are set off against amounts remaining in the Risk Pool; and
- if either the Estimated Final Cost and/or the Final Actual Cost exceeds the Final Target Cost by more than the total amounts allocated to the Risk Pool, the Design/Construction Team must still finish the project, although the Owner will only compensate them for work at pre-determined actual construction costs, excluding any markup or profit (the “Reimbursable Costs”).
Why use a CCDC 30?
In theory, CCDC 30 has two primary goals:
- incentivize Design/Construction Team members to work collaboratively in order to control project costs throughout the Construction Phase preserve each member’s respective share of the Risk Pool; and
- mitigate the risk to the Owner of cost-overruns and delays by limiting liability to the Design/Construction Team members for only Reimbursable Costs once the Risk Pool has been depleted.
Whether these goals can be achieved in practice remains to be seen. BC Housing, in partnership with the City of Vancouver and Vancouver Coastal Health, have committed to be the first IPD project in British Columbia using CCDC 30 for a proposed mixed-use development on city-owned land in East Vancouver. Depending on the experience using CCDC 30 there, the use of CCDC 30 and IPD project delivery models on a project-wide basis could become increasingly prevalent in British Columbia in coming years as public and private infrastructure proponents seek ways to mitigate the risks of cost-overruns and reduce delays commonly experienced during construction of interdisciplinary, multiparty projects.
How can we help with your CCDC 30 project?
The IPD project delivery model that forms the foundation of CCDC 30 represents a marked departure from the conventional allocation of benefits and risks present during any construction project under CCDC’s other standard form contracts for DBB, DB or CM project delivery models. Each party must be actively involved in the planning of a project and understand its role within the CCDC 30 contract.
If you are planning to participate in a construction project that plans to use or already uses a CCDC 30 contract, our construction lawyers can help you. Whether you are a contractor, consultant, supplier or sub thereof, having a lawyer review the contract prior to signing can help explain the IPD project delivery model underlying CCDC 30 and review key terms to ensure that your business does not assume any undue risk in participating in the project.
We provide a range of legal services in relation to CCDC and other construction-related contracts. Whether it is drafting, reviewing, consulting or negotiating on your behalf, we can help you get the most out of your participation in a construction project.
Contact one of ATAC Law’s lawyers today to discuss any questions regarding CCDC 30 or other CCDC contracts.
