March 19, 2009

Canadian Construction Association

CCA continues push to limit contractor liability on federal projects

VINCE VERSACE

staff writer

The Canadian Construction Association plans to continue its efforts with Ottawa to establish some kind of limit on a contractor’s liability when working on a federal project.

“Currently, for a small contractor, like some of our members, if something goes wrong, they might as well hand over the keys to the truck,” said Michael Atkinson, president of CCA, in an interview at the association’s annual conference.

“We want to find a manageable level which does not expose contractors to effectively unlimited liability.”

This issue is one CCA has pursued with the federal government for over six years without much headway being made, said Atkinson.

The fact the government is a self-underwriter leaves anyone working on one of their projects responsible for a potential loss and exposes their full assets.

This situation greatly differs from working on a private sector project since the private partner would have insurance as well.

Compounding the issue is that if a contractor wants to determine the amount of liability insurance they might need on a federal project, they need specific information about risks they may face — information which is not readily available, said Atkinson.

Ottawa does not provide contractors with information such as the value of the buildings and its contents to be renovated in its requests for bids.

Currently, thanks to changes made to CCDC2 in February, 2008, a contractor’s liability insurance limits have been updated. Under general liability insurance, the minimum liability insurance coverage and maximum deductible were increased to $5 million and $5,000 respectively. Also, under “broad form” property insurance, the minimum property insurance coverage and maximum deductible were increased to “1.1 times contract price” and $5,000 respectively.

The federal government has informed CCA that it cannot simply impose contactor liability limits and that any changes must come through the Treasury Board.

Atkinson noted that Defence Construction Canada is willing to look at finding some kind of solution, but Public Works and Government Services Canada is not interested, he added.

Atkinson said this leaves the situation at a bit of an impasse until further meetings with the federal government in late March and April.

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