September 9, 2010

Contractors race to meet infrastructure stimulus deadline

SHANNON MONEO

correspondent

VANCOUVER

With little more than half a year left to complete Infrastructure Stimulus Fund projects, alarm bells are ringing across the country as contractors and owners race to meet the March 31, 2011 deadline.

“There is some concern projects have been delayed through no fault of anyone,” said Michael Atkinson, president of the Canadian Construction Association (CCA).

In Ottawa, where Atkinson is based, road projects may go beyond the deadline, but because the City of Ottawa got such a good deal on many jobs, it intends to pay for what isn’t covered federally.

In fact, to take advantage of the shared funding scheme, Ottawa’s 2010 city budget for roadwork doubled, Atkinson noted.

“None of my neighbours want to talk to me anymore. There’s so much roadwork right now in Ottawa,” he said.

Concern about overdue projects has surfaced most notably in downtown Toronto, where June’s G20 summit gridlocked the core for many days, in effect halting construction, and in Saskatchewan, where severe spring/summer rainstorms disrupted everything from upgrading storm sewers to seeding crops.

Municipal politicians in Saskatchewan say there are more than 30 projects valued at $36 million that might not be completed by the March 31 deadline.

Exceptions may be made for Saskatchewan projects, but that would be done on a case-by-case basis.

According to Infrastructure Canada, if a project is not completed by March 31, 2011, the federal government will not fund any costs incurred past that date.

Nor will the federal government claw back contributions made up to March 31, 2011, even if the project is not completed, provided the municipality commits to completing the project at its expense as soon as possible.

Federal funds are paid on the basis of the work completed.

Once provinces and territories start incurring eligible costs, they submit a claim to the federal government.

Infrastructure Canada will pay its share of eligible costs within 30 days of receiving completed claims.

The 10 per cent holdback is released once a declaration of substantial completion is received and, where required, a financial audit is conducted.

The speed at which the federal funds flow depends on when these claims are submitted.

Atkinson admitted it wouldn’t be fair to give carte blanche to all projects that run the risk of not meeting the deadline. It would be a slap to the companies that worked hard and juggled staff in order to meet targets.

Yet, risk-averse owners have already been building-in methods to cover themselves if the deadline isn’t met.

Some municipalities have made it clear in their tender documents that contractors have to provide liquidated damages.

In Windsor, municipal documents for a large sewer and water project did just that.

When faced with such a financial threat, some contractors are deciding not to bid or else increasing bid prices, Atkinson said.

“Decisions are being made as we speak to price a job based on the amount of risk a contractor is being asked to assume,” Atkinson said.

“It’s managed by throwing money at it.”

To warn its members, in February, the CCA issued a “Cautionary Note to Contractors,” advising contractors to consider whether projects had realistic and achievable completion dates.

It also cautioned contractors to be aware to what degree they would be held liable if they didn’t meet the contracted schedule.

Other methods being used to meet deadlines include scaling back projects or not proceeding in the way originally envisioned, Atkinson added.

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