March 29, 2006

Pre-purchasing not without its perils

Authors hope document is adopted by CCA this year

PATRICIA WILLIAMS

staff writer

The trade contractors council of the Canadian Construction Association (CCA) is putting the finishing touches to a document detailing the perils of pre-purchasing equipment and materials for construction projects.

Council secretary Doug Hotston said the intent is to educate owners and tendering authorities “of the inherent risks and consequences” associated with this practice, which is a longstanding issue in trade contractor circles.

“Qualified trade contractors feel they are in the best position to provide the total package,” Hotston said in an interview with Daily Commercial News. “That means labour, equipment and materials.”

The document, currently in the draft stage, was prepared by a council task force in consultation with the Mechanical Contractors Association of Canada (MCAC), which also has a stake in the matter.

“Pre-purchasing of mechanical equipment has been an issue in our sector for many, many years,” said MCAC president Richard McKeagan, whose association represents some 1,000 firms, both contractors and suppliers.

“If there is a reason to do it, and sometimes there is a good reason for owners to pre-purchase equipment, we hope to include some constructive suggestions to assist with that process.”

The document spells out various potential risks associated with pre-purchasing — among them incompatibility of materials and equipment with other systems, failure to comply with requisite codes, scheduling problems and warranties.

“Assuming responsibility for warranty provisions is one of the greatest risks that a pre-purchaser of equipment or material can assume,” the document says.

The document cautions that the decision or need to pre-purchase equipment or materials should be based on an assessment of the total net value-added to the project, including risks and consequences.

“Any decisions based solely on achieving pricing or scheduling advantages should therefore not be made in isolation.

“A thorough analysis of all associated factors and costs that can contribute to a correct pre-purchasing decision is recommended.”

To ensure a pre-purchasing decision contributes “maximum net value to the successful outcome of a project,” a checklist of practices and steps is provided to assist in all phases leading up to and during project implementation.

“Trade contractors realize that there may be the odd time when it is absolutely necessary for equipment or materials to be pre-ordered or pre-purchased,” said Hotston, the CCA’s director of industry technology and trade services.

“So we have included a checklist of what we consider the proper procedures that should be followed in this eventuality.”

The trade contractors council has forwarded the draft document to the CCA’s standard practices committee for review and additional consultation, if necessary.

“We’d like to see this issued as a CCA document, not as a council document, because obviously, there is more credibility if it is adopted by the CCA as a whole,” Hotston said.

The document will be tabled at the association’s board of directors meeting in June.

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