Warning to contractors: read the fine print

Contractors bidding on several federally funded projects in the Yukon should make sure they won't be on the hook if the construction goes past deadline, says the Canadian Construction Association.

Contractors bidding on several federally funded projects in the Yukon should make sure they won’t be on the hook if the construction goes past deadline, says the Canadian Construction Association.

The industry group issued a rare warning last month to contractors bidding on government projects paid for by two economic stimulus funds because of the March 31, 2011 deadline Ottawa has slapped on the spending.

Contractors could be held liable if the projects created by the Infrastructure Stimulus Fund and the Knowledge Infrastructure Fund go past that deadline, says the association’s president Michael Atkinson.

“Our concern with this whole area right now is you could be stimulating the legal fraternity rather than the economy through these programs,” he said.

Some municipalities across the country have put provisos in their contracts holding the contractors liable if a project loses its federal money by going past deadline, said Atkinson.

“We’re hearing different reports from across the country,” he said. “It’s difficult to tell because a lot of this money is only coming out now.”

Governments that openly address the deadline issue are not the problem, he said. What the association fears are contracts that don’t mention the deadline and the legal wrangling that would ensue between contractors and their clients.

“If that completion date is not met, because of any act or omission on (the contractor’s) part, it’s normal then for the owner to look to the client to seek damages,” he said. “And in the case of these projects, it could well be the loss of funding.”

A brief survey of several Yukon projects funded under the programs could not conclude whether the contracts discussed liabilities in the case of a deadline breach.

But they are subject to another of the association’s worries – the slow roll-out of work to contractors.

“While the federal government was relatively quick getting the mechanisms in place to have projects approved in these programs, there are some situations where the projects have been slow to get out to tender,” said Atkinson.

Most of the Yukon projects haven’t even been tendered yet.

A $7-million bundle of highway and building contracts was the first allotment to be announced under the Infrastructure Stimulus Fund in the Yukon in May last year. The biggest project in the announcement, a $2.3-million rebuild of the Nordenskiold River Bridge, will be tendered in the next three weeks, said Jennifer Magnuson, a spokesperson for the Department of Highways and Public Works.

The bridge is pre-fabricated and putting it in place will begin in August and finish in September, she said.

“We are confident the project will be done in time,” she said.

Magnuson did not know whether the contract will address liability in case the deadline is breached.

Some of the other money in that bundle is being administered by the Yukon Housing Corporation, which has its own set of contracts, she said.

The stimulus program was also used to fund half of the $648,000 renovations at the Guild Hall.

Design work is currently being prepared and the renovations should be ready for the Guild’s fall season later this year, said Cathrine Morginn, a communications co-ordinator with the Department of Community Services.

The contract should be tendered in the next month, said Al Macleod, president of the Guild Hall Society.

He wasn’t able to confirm whether the contract addressed liability by press time.

A third chunk of money from the program is going toward $600,000 in upgrades to Annie Lake Road, Fish Lake Road and Jackson Lake Road.

The contractors for the road projects will be those included in the department’s standing offer agreements, said Magnuson.

The scheduling for the road work has not been done, she said.

Once again, she didn’t know what the projects say about liability.

And finally, there are two construction projects being done under the Knowledge Infrastructure Fund, another program with the March 31, 2011 deadline.

Yukon College won approval to have two campus expansions funded with $2 million from the fund in May last year.

The design work for the Pelly Crossing campus has been finalized, but the construction contract won’t be ready until May this year, said Wayne Coghill, Yukon College’s director of administration services.

Ketza Construction has won a bidding process to build the Dawson City campus, but the details haven’t been hashed out, he said.

There is the possibility of a legal fight over damages should the deadline be reached, said Coghill. If that happens, a standard process of ascertaining blame will take place and damages will be awarded.

While most of the projects are small, the association feels the programs are risky because most of the projects haven’t yet begun.

The Parliamentary Budget Officer released a report on April 12 with similar worries.

Spending from the Infrastructure Stimulus Fund will reach its apex in July this year, according to the fund’s Performance Update.

Of the 3,913 projects approved under the fund, 36 per cent of programs did not submit a progress report for the update.

And of the 2,518 that did submit progress reports, only 17 per cent were finished.

And that’s with a third of the program’s time frame having already elapsed.

Contact James Munson at

jamesm@yukon-news.com

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