Clive Thurston
Special to Ontario Construction News
The construction industry in Canada stands apart from its global counterparts, shaped by a unique procurement system and a history of legal precedents that date back to pivotal changes in 1981. This distinctiveness has given rise to opportunities and challenges, especially as the sector grapples with increasing risks, evolving litigation scenarios, and a system under attack.
At the heart of Canada’s construction industry lies its unique procurement system. This framework governs how projects are tendered, contracts are managed, and risks are mitigated. Unlike other nations, Canada’s system is deeply rooted in legal precedents, including landmark cases like the 1981 Ron Engineering decision. These have helped shape a robust yet intricate environment for construction procurement. This uniqueness has also made it a target for circumvention, introducing complexities that many industry stakeholders struggle to navigate.
As the legacy of judicial decisions grew building on to the 1981 Ron Engineering Decision many challenges have arisen to avoid what the courts were trying to do which in my opinion was to first and foremost, to develop and support a fair and balanced procurement environment for the Design and Construction industry.
Some still believe the need to have an edge over the process, as a result we have seen an erosion of procurement integrity. The Canadian procurement system, once celebrated for its clarity and fairness, faces new threats and challenges stemming from attempts to bypass established norms, resulting in increased claims, disputes, and inefficiencies.
Risk Mismanagement is a reoccurring issue, the failure to properly assess and manage risks by many stakeholders, from owners to contractors, who enter agreements without fully understanding the contractual obligations. This often leads to costly litigation, which disproportionately affects public sector projects funded by taxpayer dollars.
A significant number of disputes could be avoided if stakeholders took the time to thoroughly review and understand the tender documents and contracts. As an industry veteran I have always promoted three cardinal rules for procurement,
- Ensure you have all the documents then Read them,
- Read the documents.
- Read all of the documents.”
This simple yet overlooked principle remains the cornerstone of effective risk mitigation.
Construction is more than a series of transactions; it’s about building trust and maintaining reputations. In an industry where a contractor’s or client’s reputation can determine their success, understanding the nuances of procurement and contract management is crucial. A failure to do so not only will jeopardize individual projects but risks eroding the confidence that has long defined the Canadian construction landscape.
The latest challenge to our system is the Negotiated Contract a system designed to circumvent the Contract A & B process in or industry.
Recently I partnered with Annik Forristall of McMillan LLP to present a short webinar on these issues, access this through the following link.
Rising to these challenges requires a unified industry voice to learn more on Navigating the Complexities of the Tendering Process, Project Success Through Risk Assessment and Contract Management, Update in Construction Law, and much more. I encourage you to attend the upcoming Building Show December 4 -6 at the Metro Convention Centre.
