Construction Business | February/March 2021 Vol. 18 No. 2

February/March 2021 Vol. 18 No. 2

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WILLIAM DONNELLAN, IRL CONSTRUCTION | INFRASTRUCTURE INSURANCE, BONDING, SURETY

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Inside February/March 2021 | Vol. 18 No. 2

06 Connections William Donnellan, owner of IRL Construction, is a young entrepreneur who has taken his passion for construction and turned it into a successful business.

PUBLISHER

MANAGING EDITOR CONTRIBUTING WRITERS

Dan Gnocato dang@mediaedge.ca Cheryl Mah Liezl Behm Gia Bogetti Samantha Cunliffe

09 Feature Project

Paul Hollingworth Graham McIntosh

The new $775 million McLoughlin Point Wastewater Treatment Plant is the Capital Regional District’s largest infrastructure project.

Kip Skabar Peter Williams

B.C./ALBERTA SALES

Dan Gnocato Tel: 604.549.4521

PUBLISHED BY

Industry Focus 14 Insurance, Bonding, Surety Improving Surety Bonding Experience COVID-19 and Surety Markets Deposit Protection Insurance

17 Infrastructure Examining Alternative Project Delivery Expanded Mandate for Infrastructure BC Infrastructure Spurs Construction Activity

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Cover Photo McLoughlin Point Wastewater Treatment Plant. Photo courtesy of CRD.

Construction Business is British Columbia and Alberta’s construction magazine. Each issue provides timely and pertinent information to contractors, architects, developers, consulting engineers, and municipal governments throughout both provinces. Complimentary copies are sent bi-monthly to all members of the Architectural Institute of B.C., B.C. Construction Association, B.C. Roadbuilders and Heavy Construction Association, Consulting Engineers of B.C., Construction Specifications Canada — B.C. Chapter, Greater Vancouver Home Builders’ Association, B.C. Ready-Mixed Concrete Association, Independent Contractors and Businesses Association of B.C., Urban Development Institute of B.C. and Vancouver Regional Construction Association.

Editor’s Note

Living with Uncertainty

B

.C. restrictions on social gatherings and events have been in place since November and uncertainty continues to impact our lives. Unable to see family and friends has been extremely tough. Vaccines have arrived but rollout has been slow with supply delays and shortages.

There are also new variants of COVID-19.

The global pandemic roller coaster ride carries on. And I’ve never enjoyed roller coasters.

While we continue to live in uncertainty, the overall outlook for construction remains favourable. Mega resource projects, a long list of major infrastructure projects and government stimulus spending is keeping B.C. construction active.

William Donnellan, owner of IRL Construction, expects 2021 to be his busiest year despite

COVID-19 challenges. Since arriving in Vancouver in 2009, he has built a thriving construction company as well as a successful hospitality business. At 38 years old, he is showing what passion and persistence can achieve.

For our feature project, we take a look at the largest infrastructure project in the Capital Regional District’s history — the $775 million McLoughlin Point Wastewater Treatment Plant.

The project required a small army to put together the complex components, including the largest HDPE outfall in North America. The new plant brings the region’s wastewater treatment up to today’s environmental standards, ensuring future needs are met. With its seaside location and design, it is also probably one of the most beautiful wastewater plants.

The focus on infrastructure continues inside this issue with a discussion on the need for strong technical advisory on project delivery; Infrastructure BC’s expanded mandate and a report on two high profile public projects.

Our annual insurance, bonding and surety feature shares insights on improving surety bonding, the surety market, and deposit protection insurance.

Cheryl Mah Managing Editor

BFL CANADA Construction and Real Estate Insurance, risk management, and surety bond brokers For more information contact: BFL CANADA Insurance Services Inc. 1177 West Hastings Street, Suite 200 Vancouver, BC V6E 2K3 T. 778-329-4179 construction@bflcanada.ca

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February/March 2021

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Connections

PASSIONATE

PURSUIT

BY CHERYL MAH

The North Shore Wastewater Treatment Plant is scheduled to complete in 2024.

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February/March 2021

Connections

Iona Island Wastewater Treatment Plant

William Donnellan is a true entrepreneur with a passion for construction. Originally from Galway Ireland, he began his apprenticeship in carpentry at the age of 17 and by the time he was 22 had established his own construction company.

“I’ve been in construction since I was a toddler. My dad and his side of the family were all in the construction industry and I grew up in it,” says Donnellan, who came to Vancouver in 2009 on a working holiday visa and never left. “I just fell in love with the city. It’s so beautiful here — the mountains, nature and great people.”

His first job was with Jacob Bros Construction on the Granville Street Reconstruction project for the 2010 Winter Olympics. He then went on to work on projects at UBC for Contech Construction.

In 2011, Donnellan founded IRL Construction as a one man show and quickly built it from the ground up to a team of three and then 15. Today, the company has more than 60 full-time employees. In three short years, his company went from $50,000 to $5 million in annual construction volume.

“Being self-employed is never easy. But I’m a big believer if you put in the best you can — the best will come back to you,” he says. “I absolutely love construction and don’t regret one moment.”

His decision has paid off. IRL Construction is flourishing with strong industry relationships built on the company’s values of integrity, reliability and loyalty (what IRL stands for).

With an office in Vancouver and Ireland, IRL Construction specializes in timber framing and concrete forming, working in in the commercial, residential and institutional markets.

Donnellan explains the company is essentially comprised of three divisions: skilled labour hire, special projects under $5 million, and certified safety training.

“I saw a huge opportunity — what I call skilled labour hire or temporary skilled labour. So we supply the skilled trades to sites to fill the labour shortage gap. Our workers are trained, have their own tools, vehicles and it’s turned out to be a huge success,” he says, noting the majority of their workforce are carpenters and apprentice carpenters.

A good example of the company’s skilled labour hire services was when they were called to help out on the UBC Brock Commons Tallwood House project which required extra framing carpenters. “That was a very special project as the tallest wood frame building when it completed,” says Donnellan, who remains hands on, splitting his time equally between the office and jobsites.

The company’s first major project was the wastewater treatment plant in Dawson City. Other noteworthy projects since have been the Seaforth Armoury upgrade, Kitsilano Elementary School and the Baffin Island Airport.

IRL Construction has found steady work with several wastewater treatment plant projects including the ones on Annacis Island and Iona Island. The company is currently involved with the $775 million McLoughlin Point Wastewater Treatment Plant, doing the concrete work on the Arbutus Attenuation Tank for NAC Constructors.

“We’re also working with Acciona on the North Shore Wastewater Treatment Plant.

There is a lot of concrete formwork for these plants and we seem to have found a niche,” says Donnellan, adding 95 per cent of work is from repeat clients.

Donnellan expects 2021 to be his busiest year despite the challenges of the COVID-19 pandemic. “Our sales this year will be the best yet but our costs have also increased,” he says,

citing extra costs for safety measures in the office and on jobsites as well as materials doubling in price such as lumber and plywood. Lumber prices hit record levels this past summer after many mills reduced production temporarily due to the pandemic.

And as if running a busy construction company wasn’t enough, Donnellan has also turned his love of hospitality into a successful business. He opened Donnellan’s Irish Pub in 2017, followed by the purchase of Shamrock Bar & Grill. A third bar will be opening in Gastown this May. “I’ve always had the love for the Irish pubs and restaurant industry — also in my blood because of my mom’s side of the family,” he says.

“We build out our own bars in the city and we want to continue to do more of that.”

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7

Connections Top: UBC Brock Commons Tallwood House, Bottom: Seaforth Armoury

Donnellan’s many accomplishments have not gone unnoticed. He was honoured in 2017 with the VRCA’s U40 Award of Excellence, which recognizes an individual under 40 who has made a significant contribution and has demonstrated leadership potential and a commitment to the advancement of the construction industry. “I was shocked and I was so honoured to receive it,” he recalls.

The company has also been recognized with awards for best immigrant entrepreneur, community impact and apprenticeship training.

“We do a lot of apprenticeships for new and young workers,” he says. “We really need to encourage more people to get into construction — there’s so much opportunity. All I’m seeing is growth and demand and with the amount of people going to retire, it’s a huge construction labour concern.”

Giving back to the community is another priority for Donnellan. He is an avid supporter of charities, not-for-profit organizations, food banks and teams. “We’re big in giving back and donating our time to the community,” he says. “If you support your community, they will support you.”

IRL Construction marks its 10th anniversary this year. Donnellan says he is surprised at how far they’ve come in such a short time but credits it all to a hardworking team including his wife and business partner Laura.

“I have to pinch myself sometimes — when I think what’s happened in 10 years since I came here in 2009 with a few hundred dollars in my pocket,” he says. “I believe It’s all about relationships and surrounding yourself with the right people.”

So what’s next for the 38-year-old?

“My dream is to get into development and start building custom homes in the near future,” he says. “And we are also actively looking for more restaurants and pubs.”

Outside of work, Donnellan enjoys spending time with his wife and two sons.

He also enjoys equestrian, going to the gym and playing hurling (the national sport of Ireland).

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www.langleyconcretegroup.com 8

Langley_Concrete_November_2020.indd 1

CONSTRUCTION BUSINESS

February/March 2021

2020-12-17 2:42 PM

Feature Project

FIRST CLASS TREATMENT

BY CHERYL MAH

February/March 2021

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9

Untreated sewage from seven municipalities will no longer be discharged directly into the ocean thanks to a new multi-million dollar, state-of-the-art treatment plant in Greater Victoria.

The McLoughlin Point Wastewater Treatment Plant in Esquimalt, part of the $775 million Capital Regional District (CRD) Wastewater Treatment Project, is treating the equivalent of 43 Olympicsized pools of waste or 108 megalitres of wastewater daily. The plant provides one of the highest levels of wastewater treatment through a three stage process.

The facility will serve more than 320,000 residents in the municipalities of Victoria, Esquimalt, Saanich, Oak Bay, View Royal, Colwood and Langford and the Esquimalt and Songhees Nations.

Funded by all three levels of government, the project is the largest infrastructure project in CRD history and consists of three main components: • The McLoughlin Point Wastewater Treatment Plant (WWTP), which provides tertiary treatment to the core area’s wastewater; • The Residuals Treatment Facility (RTF) located in Saanich at the Hartland Landfill; and • A conveyance system (pipes and pump stations) to carry wastewater and residual solids.

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Construction on the project began in the spring of 2017 with the plant coming into service in December 2020, completed in time to meet both provincial and federal wastewater regulations. In 2012, new regulations required the CRD to have a treatment plant up and running by the end of 2020.

“This project has been years in the making and I’m very pleased we are meeting our regulatory requirements to treat wastewater. This is the largest infrastructure project in the region’s history and is a demonstration of our commitment to protect our ocean and our environment,” says Colin Plant, CRD board chair.

Completion of the massive project required a small army of contractors from B.C., Canada and the U.S. At the peak of construction, more than 650 people were working on the project at 24 construction sites.

One of the biggest challenges on the project was laying the large amount of pipes through congested urban areas. More than 35 km of pipes were installed to carry wastewater and residual solids.

In addition, a cross-harbour undersea pipe from Ogden Point in Victoria to McLoughlin Point in Esquimalt was installed in 2018,

February/March 2021

to connect the Clover Point Pump Station to the McLoughlin Point Wastewater Treatment Plant.

It took nine months to drill a one kilometre-long tunnel under the harbour, six weeks to assemble and weld 78 pieces of steel pipe sections together on Niagara Street, and three days to pull the one kilometre pipe through the tunnel. At its deepest, the harbour crossing is more than 60 metres below the ocean floor.

“It was a very complex horizontal directional drill across the Victoria Harbour by Michels,” says Jeremy Klarenbach, Graham project director. “There was a significant amount of community engagement in the community of James Bay to allow us to execute the work in the neighbourhood.”

Minimizing disruption to the public as well as surrounding marine life at the site required careful planning and monitoring.

Construction teams had to overcome a variety of challenges associated with a project of this scope and scale including a global pandemic.

“We were in the heart of finalizing construction when we encountered COVID in March 2020,” says Klarenbach, noting the main impact was with some delivery delays. “However we were able to accelerate portions of the work to be completed on time.”

MCLOUGHLIN TREATMENT PLANT Delivered as a design-build project, the treatment plant in Esquimalt, outfall and harbour crossing was built by Harbour Resource Partners, a consortium including AECOM Canada, Graham Infrastructure, HDR, SUEZ, Graham Capital and Michels Canada.

Feature Project

The McLoughlin Point outfall is the largest solid wall high-density polyethylene (HDPE) outfall installed in North America.

Situated oceanside along a prominent rocky shoreline, the striking design of the treatment plant by HDR respects the natural setting and incorporates the highest standards of design, materials and aesthetics.

“The location is second to none. The finished project is probably the most beautiful wastewater treatment plant,” says Klarenbach.

The 75,000-sq-ft treatment facility features a multi-level green roof, and the 25,000-sq-ft operations and maintenance building is constructed to LEED Gold standards. Heat recovery from the wastewater will be used to heat buildings on the site.

Energy consumption is expected to be at least 20 per cent less compared to modelled baseline.

With the site located in an earthquake and a tsunami zone, the facility is built to post-disaster standards and is protected with tsunami walls.

The wastewater system is controlled and monitored 24/7.

“The construction of the plant itself was on a very small site for a project of that size. The logistics to manage materials and people were very complex,” notes Klarenbach.

Treated effluent is discharged into the ocean through a new 2 km long, 2,250-mm DR26 pipe — the largest solid wall, high density polyethylene (HDPE) outfall in North America.

The project was constructed in two segments. The first was a 120 m long inshore segment, constructed with steel pipe by ‘wet exit’ microtunneling through bedrock, minimizing disruption to the environment. The 1,800 m long offshore segment consisted of the solid-wall HDPE pipe installed by float and sink. It was sunk to a depth of 60 metres with the

help of 350 concrete ballast weights spaced 4-6 metres apart, each weighing approximately 11,400 kg.

The pipe was fused and fitted out in Nanoose Bay by Vancouver Pile Driving (VPD) before being towed to the Victoria Harbour. Despite heavy tides and weather challenges, the pipe was successfully installed over a 30 hour period in July 2019.

“With lots of marine traffic, the project required careful and close coordination to plan, schedule and deploy the pipe,” says Robert Windecker, VPD vice president, adding collaboration with the Nanoose First Nation (Snaw-NawAs) to use their land for deployment was also key to the project.

The record setting HDPE outfall earned a 2020 Canadian Consulting Engineering Award of Excellence and the 2019 Canadian Project of the Year from The North American Society for Trenchless Technology.

RESIDUALS TREATMENT FACILITY Once sewage has been treated at the plant, the leftover solids are pumped through a 19-kilometre pipe to the RTF for a complete transformation.

Harbour Resource Management Group was selected to design, build, finance, maintain and operate the residuals facility. Partners include Maple Reinders, Bird Construction and Synagro Capital. Construction began at the Hartland Landfill in spring 2018. The facility is comprised of six buildings and features state-of-the-art odour abatement systems.

The facility has the capacity to treat more than 14,000 dry tonnes of residuals per year, turning them into Class A biosolids, a high-

quality by-product suitable for beneficial reuse, including as a source of renewable energy.

The process uses an anaerobic digestion followed by thickening, dewatering and a drying process. The fluid bed dryer is the first of its type in Canada and the second in North America. Biogas generated during the digestion process will fuel the dryer.

FINAL WORK Final work remains to be completed on the Trent Forcemain by Jacob Bros with completion expected in spring 2021. The 1.9km pipe will run from the intersection of Chandler Avenue and St Charles Street connecting to the Clover Point Pump Station. The project will increase the capacity of the system and reduce wet weather overflows.

Jacob Bros project manager Andrew Kuzmanovic reports about 79 per cent of all pipe is installed as of January. “We are installing the most difficult portion of 1600mm HDPE on the Ross Bay segment now,” he says, noting remaining work includes restoring the Ross Bay Seawall and tie-in connections.

Construction of the underground Arbutus Attenuation Tank by NAC Constructors is also expected to wrap up in the spring.

Victoria was the last major coastal community in North America to pump raw sewage into the marine environment. The new plant brings the region’s infrastructure in line with today’s environmental standards and ensures CRD can meet the future needs of the growing region.

February/March 2021

CONSTRUCTION BUSINESS

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SPECIAL ADVERTORIAL FEATURE

Innovation In Engineered Netting Systems Tatras Group develops new solutions for industrial environments

The maintenance of old structures is becoming increasingly complicated by new regulations. Rehabilitation projects now face tighter governance from environmental and safety organizations, adding new layers to navigate for those tasked with asset management. Yet, these restrictions have driven innovation, pushing Tatras Group to develop cutting-edge solutions that allow work to move forward freely.

“We are taking over the environmental responsibility.

We’re taking on that environmental problem from the shoulders of the general contractor,” said Michal Brondel, CEO, Tatras Group.

It is not uncommon for major projects to be brought to a halt by unexpected ecological factors. When the BC Ministry of Transportation and Infrastructure launched its plan to restore the Ironworkers Memorial Bridge in Vancouver, it was a bird that dictated the construction schedule. The Pelagic Cormorant is a sea bird protected under the provincial Wildlife Act, preventing work from being conducted within 50m of a bird or its nest. This posed a significant problem for the proposed bridge rehabilitation project. Tatras is no

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stranger to this environment. As a rope access company, they have worked on bridge restoration projects across B.C. They saw a clear solution and had the access methods to deliver it.

The Tatras team had just completed debris netting installation on the City of Vancouver’s Granville Bridge.

Working with engineers and biologists, they designed a new netting system that prevents the birds from entering the structure when they migrate to BC. This avian exclusion netting allows construction to continue beyond the narrow window between nesting seasons. Made from a UV stabilized polyethylene, the net stands up to the marine environment and blends into the bridge.

February/March 2021

But, it is their cutting-edge installation methods that have attracted attention. Across all their engineered netting services, they offer a non-damaging installation option. This system does not require alterations to the bridge. Rather than drilling into the structure, they design and manufacture custom clamps and magnets to support the net. Once removed, there is no trace of it being there. This system improves upon standard netting options, where every aspect is assessed for strength and wind loading capacity, and each section custom-made to ensure a tight and seamless fit. In many cases, both bird netting and debris netting are installed on the structure. All backed by a custom maintenance package and annual inspection plan.

“We’re the first ones on site, and our access solutions allow us to safely manage the space prior to the arrival of subcontractors,” said Oskar Michalak, COO, Tatras Group.

A structure like the Ironworkers Memorial Bridge presents its own challenges. Even with everything preplanned, accessing work locations can be both hazardous and time-consuming. Tatras keeps everything in house by providing a crew of rope access professionals. This technical team is employed fulltime to install netting systems on structures across the country. They are familiar with the unique environment, the installation process, and the complications of the work. This crew contributes high-angle access methods that allow work to be completed both safely and efficiently, all while ensuring low impact on traffic and pedestrians in the navigation channels below. This experience has contributed to Tatras’ excellent safety record, founded on safety procedures that have earned them the sought after B.C. Construction Safety Alliance COR certification.

“By combining engineering, manufacturing and installation, we can offer new solutions that allow major projects to be conducted along an efficient timeline,” said Brondel.

While they pilot new netting systems in Vancouver, Tatras sees huge potential for engineered netting systems to be deployed across Canada. Beyond bridge rehabilitation projects, they look to highways and canyons for new opportunities to innovate. Meanwhile, their building restoration division provides further remediation services for commercial buildings and structures. This presents a complete solution to a diverse range of rehabilitation projects. And it may be this comprehensive approach that is leading them to find new answers in hard to reach places.

Insurance, Bonding, Surety

Improving Surety Bonding Experience

BY PAUL HOLLINGWORTH

4. Don’t use short-term loans to buy long-term assets. Variable rate, revolving lines of credit

I

t’s always best to know someone’s agenda before hearing whatever he or she has to offer.

From a bonding company perspective, we’re in business to make money, and the proven recipe to do this is simple but difficult: be very selective in our clientele, and grow with them over decades by remaining both competitive and disciplined.

For each $1 received, sureties guarantee between $125 and $400 of construction work. Bond companies have more to lose by the failure of a contractor than any of its business partners left behind, but confidence and therefore support also grows over time. It’s an unusual relationship, these bonds “cover” other parties, and bond premiums are paid by the project owner either directly or indirectly. A surety opens doors, but it can’t make a bad job profitable or replace a lawyer. However, the owners of construction firms and their sureties are the most motivated parties for that construction company to be successful, over as many years as its people want to operate.

After seeing the habits of thousands of contractors, we’ve found that the most successful ones have developed these ones: 1. Build equity in the business. Business owners need to balance competing advice from their accounting firms and sureties about leaving profits in the business. Don’t underestimate the return of reinvesting in the construction business, and the tax and risk exposures outside the business eventually. Under-capitalized contractors settle for unfavourable terms in disputes compared to ones with enough cash in the bank. By building equity over time, contractors with superior construction records and balance sheets control 14

CONSTRUCTION BUSINESS

the surety relationship, not the other way around.

This includes tangible equity well beyond 1/10th annual revenue (less for general contracting).

2. Pick a surety broker partner that matches your values, and have frank discussions with him/her. Effective surety brokers know what it

takes to ensure predictable, low-touch support and improve terms such as rates, the indemnities or guarantees required to secure the facility, and the leverage of support relative to the balance sheet — and they are open with you about all issues. Touch base with your broker about once a month, even if it’s for five minutes, and don’t stay with brokers that are unable or not forthcoming with you in occasional conversations that could be awkward. A surety broker — or underwriter — that doesn’t tell you about actions that reduce your negotiating position in the bonding business is like a dentist that gives you candy.

3. Separate financial reporting from getting the bonds you need. Typical bond facilities

require an annual package of financial information and a little less information on a quarterly basis. There is a correlation between surety losses and the age of information used to make bond decisions, therefore this connection is tracked internally, and bond underwriters are evaluated on this, among other criteria. If you make it part of the business routine to send these updates five times a year, perhaps in combination with bank reporting, it takes the chore out of it.

More importantly you won’t be asked to compile it while you’re working on a tender estimate or putting together contract documents. Leave bidding to just bidding.

February/March 2021

usually have monthly borrowing covenants that could cause unexpected and unwanted changes that cannot easily be solved without selling a large asset. This creates more risk so terms with bonding companies, and other creditors, are less favourable.

5. Know when to bond your subs. There are many long-term, successful partnerships between contractors and subcontractors, but keep in mind that only the restaurant business has more insolvencies than the construction industry, and some things are outside the control of your best trades, such as not getting paid for another project, or the departure or incapacity of top people. If you elect to get a bond from your sub, the cost is roughly 1-1.5 per cent of the subcontract. But as you know, unqualified subs or ones going through an unknown crisis are usually not worth the savings in terms of a lower quote, and no bond premium.

6. Ask your bond company to show you what they do with your information. You’re

entitled to copies of your underwriter’s analysis of financial statements and work on hand reports.

Get them and review them with your broker.

Financial statements are backward-looking, work on hand reports are forward-looking, and bond companies extract several types of information out of both that at least one expert called a “dashboard” of the business, which could be very interesting to you.

7. Meet your bond underwriter once a year.

Most contractors will ask its surety to take a leap of faith at some point, such as an unusual opportunity, or in spite of a bad year. We build uncertainty and caution into bond accounts that we haven’t met for a while, and bond underwriters get behind the ones that they know. Take an hour a year with your bond underwriter so he or she sees what’s important to you, and they will figure out how to support your plans. Better yet, take him/her to a job site.

Bonding companies get criticism for too much financial focus, so show us the rest.

We’re in unprecedented times, so although we should be transparent about proven success factors, we have embraced change and innovation.

Paul Hollingworth is vice president, surety at Intact Insurance based in Edmonton, overseeing surety for Alberta, Saskatchewan and Manitoba. He has been underwriting construction bonds for 29 years.

Insurance, Bonding, Surety

COVID-19 and Surety Markets

BY GRAHAM MCINTOSH

W

hile we are all no doubt extremely tired of hearing the acronym, particularly during the second surge, COVID-19 presents challenges for the surety industry.

How contractors respond to those challenges will go a long way to ensure relationships remain healthy, and maximum surety support can be maintained.

On a global basis, the surety market was valued at US$ 16.04 billion in 2019 and is projected to reach US$25.18 billion by 2027. It is expected to grow at a compound annual growth rate of 6.4 per cent during 2020-2027.

While of course much smaller, the Canadian market has also seen, and is expected to see further, growth with results over the past few years indicative.

While the industry remains healthy for the most part, surety underwriters must now consider pandemic-related risks on a backdrop of a recession, the severity and length of which is unknown. These related risks are for the most part outside the contractor’s control. They are difficult to quantify and evaluate. While not limited to, these include labour shortages, supply chain disruptions, reduced productivity due to safety measures, uncertainty over subtrade performance and in some instances, additional uncertainty over the owner’s ability to pay, particularly in the retail and tourism sectors.

Sureties support both single jobs and aggregate work programs that are, often, multiples of net worth. Projects can also run for two years or more. In most instances, the only security held is an indemnity agreement that states, among other things, the indemnitors will make the surety whole in the event of a valid claim under a bond. An interesting credit risk profile.

Surety underwriting is both a science and art. It involves a rigorous evaluation of creditworthiness and the ability of the contractor to perform without incurring a loss and indeed claims under both performance and labour and material bonds. While each surety is unique with respect to underwriting standards and may disfavour one sector of the industry over another due to experience, there are some common underwriting principals.

Many are familiar with the three Cs of underwriting: Capital — does the contractor have the financial wherewithal to carry a project and overall work program to completion? Can the contractor carry multiple holdbacks and absorb losses on a project? Due to many factors including productivity, unforeseen work conditions and subtrades, not all projects make money.

Capacity — does the contractor have the experience, management systems, equipment and overall resources in place to successfully complete their backlog? And finally, Character — is the operation run fairly and with integrity? Will the owners and other management identify actual or potential problems and communicate these to the surety?

A fourth C which is related to character is communication. At a minimum, annual meetings, albeit virtual at this time, should be taking place. No underwriter can obtain a satisfactory comfort level with the contractor’s operation and character without them. This is especially true in a stretch situation. Suretys want to set up a programme that will meet the contractor’s needs. The last thing they like are surprises and last-minute requests that are not within normal parameters either with respect to job size, location or scope.

As noted above, while remaining profitable, the industry is tightening, and any contractor can now expect additional new questions and to provide more details. While not limited, these will include: • What federal and provincial relief programs have you availed yourself of if any?

• Is there a COVID-19 strategy and business plan in place? Are there safety protocols in place with respect to both the field and office?

• Capital levels and contingency plans. Are you reducing overhead, furloughing or laying off employees?

• Banking relationships, operating facilities, margin requirements and covenants — have these been stressed tested to determine operational parameters and additional funding needs. Assess overall relationship with credit providers.

• Access to funds to pay for ongoing operations. These could include repatriating funds lent to related entities, shareholder injections etc.

• Is your construction lawyer reviewing contracts — the performance bond points directly to the terms of the contract?

• What contractual provisions are there for force majeure and delays related to COVID-19?

Other changes occurring in the marketplace due to COVID-19 relate to surety bond placement, both at the tender stage and the provision of final bonds. With concern over physical distancing, closed or reduced staffed offices, and general distancing requirements, some owners are opting for electronic or e-bonds.

There are several vendors in the market that provide online software solutions and services. The Surety Association of Canada has noted for the process to be effective, the provision of e-bonds must meet several requirements: • Integrity of Content: assurances that the document received is the true document executed and the content has not been changed or altered.

• Secure Access: Restricting the access to the document to those authorized to view and/or download it.

• Verifiability and Enforceability: All parties are assured the document was executed by the parties identified and that it is enforceable in law.

Having used e-bonds on numerous occasions, the automation of the process provides many benefits including the ease and economy of transmission, reduced chance of errors and instantaneous delivery.

COVID-19 and possible future pandemics present many challenges to the construction community and surety industry. But with challenges comes opportunity. Be prepared, engage with your surety, and embrace technology.

Graham McIntosh is senior vice president, construction services group at Aon Risk Solutions.

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Insurance, Bonding, Surety

Deposit Protection Insurance

BY PETER WILLAMS

E

very year a significant amount of new home transactions are pre-sales. This is especially true in the multi-unit markets around our province’s urban centres.

Pre-selling gives developers a level of revenue certainty, gives banks comfort that the product has committed buyers and from that, allows construction financing to flow once agreed upon sales targets are achieved. Pre-selling a significant amount of the total units has become a standard practice in the market.

Despite the obvious benefits to the developer, uptake on the product was slow at first. It took some time for all stakeholders to become familiar with and comfortable with this new form of project financing. There was a learning curve.

Now we can say, DPI is mainstream and a box to be checked for most brokers arranging the capital stack for their developer clients.

For the developer, the economic benefits are compelling. They will save the spread between the annual premium rate of the DPI and the costs of

“The underwriting process of DPI follows a similar path to that of the other lender(s).”

Prior to 2005, all funds received as deposits for purchases of homes had to be held in trust until the project was completed and unit delivered to the new homeowner. Millions of dollars sitting idly in trust accounts for years while projects came out of the ground and were eventually completed.

What changed on January 1, 2005 were sweeping changes to the Real Estate and Development Marketing Act. The changes allowed developers to now use those Pre-Sale Deposit Funds to pay for direct project costs for the projects themselves.

This was a landmark change and allowed all that hard earned capital to be put to work building the project it was earmarked to buy. Makes sense and the changes were embraced by the industry.

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capital of the debt replaced by the deposits. The savings are significant every year until project completion and the unit turned over to the homeowner. For the banks the credit ratios are improved and some projects on the line may move forward with the improved financial metrics.

To apply, we recommend the developer use an experienced broker to assist in putting together the information. The information itself is fairly straightforward with most of it mirroring what the developer has already provided the primary lender.

This along with a questionnaire and construction lending agreement is generally what is required to move forward. The underwriting process of DPI follows a similar path to that of the other lender(s).

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This includes reviewing the viability of the project from a financial perspective. Examining the overall budget and proformas, along with key credit metrics, are important in determining the financial wherewithal of a project. This is done in conjunction with reviewing the developer’s overall financial strength and project experience.

The development team is an important factor when a project is reviewed for DPI. This includes the project lenders, general contractor, subtrades, architect, consultants (structural, geotechnical, building envelope, mechanical, electrical), lawyer, marketing firm, mortgage and insurance brokers.

A strong development team assists in mitigating the challenges that arise on projects. This provides stakeholders with an increased level of confidence that solutions are found swiftly and implemented effectively.

As with all forms of construction, issues can arise during the different stages of the building process. The construction approach to that risk is assessed at the outset. This includes the developer’s project experience and key staff if they’re selfperforming. If an arm’s length general contractor or construction manager is hired, the merits of the form of contract are considered (fixed price vs construction management). Subtrade risk is an important factor, as the quality of subtrades can have a substantial impact on a project and its schedule. Contract performance risk and subtrade payment risk can be further mitigated and managed through construction bonding.

Performance and labour and materials bonds are an important tool developers can utilize to manage construction risk and control major cost components.

Your broker’s experience is important through the underwriting phase and ultimately in the facility agreement you ink with the DPI provider.

Some of the key aspects of your facility are the security provided, the premium charged and the deposit release terms. The earlier funds are released, the sooner economic benefits are realized and for longer. Once terms are agreed upon and finalized, security is then drafted up in conjunction with the lenders in the capital stack. When the security is finalized, funds can then flow into the project according to the agreed upon release terms.

The savings are substantial and the product has evolved into an important and mainstream component of development financing. It’s a competitive and dynamic market out there and your broker will guide you through the process and ensure you get the best deal. .

Peter Williams is manager, surety at Trisura Guarantee Insurance Company.

Infrastructure

Examining Alternative Project Delivery The increased need for strong technical advisory

BY KIP SKABAR

Neptune Terminals Overpass Extension is an approx. 56m curved main span that was installed using accelerated bridge construction techniques in 2019 and required close collaboration with the port authority, contractor, terminal operators, and their stakeholders.

W

ith 2020 behind us, the outlook for coming years is positive for many infrastructure sectors across British Columbia. Our port authorities are reporting at par or better in terms of trade volumes; the province is moving forward with a host of capital investments; federal recovery plans are in place, and the B.C. construction industry is busy despite the continuing pressures of a global pandemic.

Also, a surge of smart mobility technologies is emerging along the West Coast and worldwide, which will surely change the landscape of transportation networks in the future and offer efficiencies across our supply chains. The balance of economic strength in Western Canada appears to be shifting in B.C.’s favour, at least for infrastructure in the short term, which means an increased volume of projects coming online in our backyards that require sound technical advice to meet our client’s strategic objectives. In particular, we need to continue to evaluate project risks carefully to make informed, timely decisions — to support our growing economy and ultimately for the future betterment of our communities.

We have observed an interesting local trend over the years — more and more projects of various sizes and complexities are moving away from conventional design-bid-build delivery, the historically tried and tested means of implementing infrastructure improvements.

Owners are favouring alternative procurement delivery methods for certain types of projects.

This requires a detailed understanding of risks and

the ability to adapt to different types of models as part of the specialized experience required to serve owner’s project needs in today’s market.

Reasons for the shift in delivery method vary from a growing desire for added price certainty, to accelerated timeframes in meeting funding deadlines or providing opportunities for design and construction innovation to add value — and all of these objectives can be met, when applied to the appropriate project with an acceptable risk profile and buy-in from stakeholders. However, alternative project delivery also has challenges that require a breadth of experience and judgement to navigate.

Ultimately, it all comes down to managing risk and there is obviously a host of factors that contribute to the process. The key is to ensure that our engineering industry is providing owners with the sound technical advice required to make good decisions at each step along the path of project development — often making impactful decisions at an early planning stage of a development where the design progress may be limited. It is our duty to inform owners of our past experiences so we can learn and grow together, and partner with specialized project teams that are built to deliver exceptional projects while also meeting stakeholder requirements.

By having seismic specialists, bridge experts, highway designers, transit planners, drainage engineers, environmental scientists, regulatory experts, port planners, traffic engineers, and sustainability specialists all at the same table together with the owner and their expert team

of lawyers, stakeholder representatives and commercial advisors, we can all work together to move towards a common vision.

A concerning issue that we have observed recently is the ability to come to terms with contractors regarding acceptable risk transfer, which requires considerable market sounding and commercially confidential meetings prior to the bid, among other key steps. Even after considerable efforts ahead of the procurement phase, we are sometimes still facing unexpected circumstances that further test how much our technical teams have done their homework. There is no universal solution, as every project has different conditions that need to be reviewed carefully by qualified professionals.

But in the words of Jim Collins, “with the right people on the bus sitting in the right seats”, we can help owners “take the bus to some place great”.

Whether we are talking about a regional highway bridge replacement like the Highway 37 Nass River Bridge or Highway 1 Quartz Creek Bridge in the north, or two high volume interchange projects such as the Highway 97 Boucherie and Westlake Interchanges in the interior, a port terminal grade separation on the north shore like the recent Neptune Overpass Extension, or a major marine terminal development like RBT2 in Delta, having a deep bench of technical specialists at your disposal to provide timely service in answering the tough questions is critical to making the right decisions.

Each project has its own unique risk profile with competing stakeholder interests, and each project may use a different procurement method, but in the end we are all working to improve infrastructure together for the safe movement of goods and people — and we need to do it sustainably in meeting the owner’s objectives.

Kip Skabar, P.Eng., P.E., ENV SP, is business centre practice leader, BC Transportation at Stantec Consulting Ltd.

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Infrastructure

Expanded Mandate for Infrastructure BC

I

n December 2020, it was announced that Partnerships British Columbia Inc. changed its name to Infrastructure BC Inc. The name change is a result of an enhanced mandate the organization now operates under.

Infrastructure BC is a self-sustaining organization operating on a fee for service basis, governed by a board of directors and reports to the British Columbia Minister of Finance as its sole shareholder. Infrastructure BC works primarily with ministries and agencies of the Government of B.C. Infrastructure BC also has a history of working for other Canadian jurisdictions including the Government of Canada, the governments of Saskatchewan, Newfoundland and Labrador, Nunavut, the Yukon, and municipal governments in B.C. Infrastructure BC acts as an interface between public sector entities and private sector companies in the procurement and delivery of complex capital projects. Infrastructure BC’s services include project planning (business case), procurement advice and management, design and construction advisory, contract administration, and project communications support.

As part of the organization’s enhanced mandate, Infrastructure BC will provide information about approved projects, as well as those projects in early stages of planning that may not receive government approval. This will be in the form of an information brochure updated each spring and fall, which will allow the design and construction industry to better plan and compete on projects.

While the province of British Columbia has a large number of projects in all sectors at varying values, the BC Major Infrastructure Project Brochure focuses on projects greater than $50 million. The first edition of the BC Major Infrastructure Projects Brochure was released in December 2020. This inaugural edition focuses on major capital ministries and BC Hydro and may not capture all projects. It is anticipated that as the brochure grows, future editions will be looking to more comprehensively capture projects.

Infrastructure BC is also now responsible for more formally collecting lessons learned from different phases on major capital projects and applying these lessons to future projects.

“The rebranding to Infrastructure BC is one that better reflects who we are as an organization.

The construction environment of today requires a broad spectrum of procurement options.

Infrastructure BC will assist government and

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The Lions Gate Hospital Redevelopment, Phase 3 Acute Care Facility Project, will start construction in 2021 and complete in 2024.

Infrastructure BC History Infrastructure BC is an organization of 39 people, with offices in Victoria and Vancouver. Infrastructure BC staff are engineers and individuals with professional accounting and financial qualifications who have extensive expertise and experience in planning, procuring, financing and managing capital projects.

Operating since 2002, working with owners, the British Columbia crown agency has led 64 completed projects procurements throughout Canada with a combined value of $22.3 billion.

project owners in selecting the best delivery model to build complex projects such as highways, bridges, schools, and hospitals,” states Mark Liedemann, Infrastructure BC’s president and CEO. Responding to market capacity, “Infrastructure BC continues to examine and implement innovative procurement models such as Progressive Design Build and most recently issued a project request for qualifications to be delivered via an Alliance contract model,” explains Liedemann. “The Alliance contract model is a collaborative form of contracting where private and public sector work together towards a common goal with the emphasis on shared risks and incentives. Increased importance is placed

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on the people involved within the alliance; the right people and culture are essential in an Alliance contract model.”

Infrastructure BC is currently managing eight projects in procurement. The delivery models for these projects include Alliance, Progressive Design Build, Design Build, Design Build Finance, and Construction Management.

“Many factors affect the ability to successfully achieve procurement schedule targets including changing government priorities, client timelines, external economic environment, market capacity, stakeholder engagement, and election cycles at all levels of government,” says Liedemann.

Infrastructure

Infrastructure Spurs Construction Activity

BY CHERYL MAH

A

cross Canada, governments at all levels have prioritized infrastructure investment to stimulate economic recovery from COVID-19. In the 2020 budget, the B.C. government made capital commitments totalling $22.9 billion over three years — the highest level of capital spending ever recorded.

Several multibillion-dollar infrastructure projects will ensure the B.C. construction industry stays busy including two high-profile transportation ones: the $1.4 billion Patullo Bridge replacement across the Fraser River and the $2.8 billion Broadway SkyTrain extension in Vancouver. Transportation Investment Corporation (TI Corp) is leading the delivery of both projects on behalf of the Ministry of Transportation and Infrastructure.

Site work has begun on the Broadway Subway Project, a 5.7 km extension of the Millennium Line, from VCC-Clark Station to Broadway and Arbutus, with six new stations. The design-build contract was awarded to the Broadway Subway Project Corporation, an Acciona-Ghella joint venture in September 2020.

Current work includes some building demolition to make space for the new station entrances, and laydown areas for storage and staging. The first buildings scheduled for removal are on the 100 block of East Broadway and 2500 block of Main Street for the future Mount Pleasant Station. All demolition work is to be completed by the end of April, in preparation for the start of station construction.

A key component for this project is traffic management, which runs along one of Vancouver’s busiest corridors, according to executive project director Lisa Gow at TI Corp.

“Unlike the Canada Line, it’s not intended to be cut and cover. There will be some surface disruption at each end of the line at Arbutus and Great Northern Way. There will be excavation at station locations from the surface but phased decking will be put in place. The objective is to ensure there are four lanes of traffic at all times,” said Gow, who was a speaker at the Transportation Conference 2021 hosted virtually by ACEC-BC. Upcoming construction activities will include the tunnel portal and elevated guideway near Great Northern Way, with tunnelling to begin in 2022. Two tunneling boring machines will bore parallel 6m diameter tunnels to Arbutus. The station boxes will be excavated before the TBM machines arrive, said Gow. Great Northern Way will be the first station built, and Arbutus will be the last station built.

For the design of the stations, opportunities for integration were explored. The station at Cambie Street will be fully integrated with the Canada Line’s existing Broadway-City Hall Station where passengers can transfer underground between the two lines.

“At South Granville, PCI is building a new commercial building. They will build the South Granville station box and our contractor will do the station fit out. This is the first fully integrated station in B.C.,” noted Gow. “The design of most of the stations has been done to allow for future developments to do overbuilds over the station head houses.”

Although the Broadway subway project was well underway when COVID-19 hit in 2020, it still created anxiety and the province had to adapt to the market’s willingness to take on fixed price risk.

“During COVID, we ask bidders to be specific about where they felt they can manage the risk and where they cannot manage the risk,” said Gow. “We ultimately reached a balance with proponents taking on known risks and the province taking on future risks related to changes in health orders, inability to get materials and unforeseen COVID related risks.”

The pandemic has also changed community engagement. The Broadway line has more than 2,000 stakeholders and the normal engagement methods such as public open houses and in person meetings weren’t possible because of the pandemic, noted Gow, requiring more focus on social media and providing more information on websites.

“Major projects require adaptation, innovation and communication,” she said, crediting the construction industry for stepping up and keeping the project on track. “Everyone’s learned to be creative during COVID.” The global crisis similarly impacted the Pattullo Bridge Placement project, according to Wendy Itagawa, executive project director, TI Corp.

“We awarded the contract and then COVID hit,” she said. “We had to adjust pretty quickly and switched to virtual and online — not just with our internal team but stakeholders and municipalities. It was a challenge to implement quickly.”

Itagawa said the construction team did a “superb job of implementing protocols” with the onset of COVID and the project has been able to progress despite the “new normal.”

Fraser Crossing Partners led by Acciona was awarded the contract in February 2020 to build the new four-lane cable stayed bridge that is a key connection between Surrey and New Westminster.

The design includes dedicated pedestrian and cyclist lanes, separated from traffic, that will improve safety for all road users and encourage active transportation options. The bridge will be built to allow for potential future expansion to six lanes. The design uses two in-river piers instead of the six piers of the existing bridge.

The new bridge will be built to modern safety and seismic standards, located upstream of the rail bridge and the existing Pattullo Bridge, said Itagawa, pointing out key considerations include working in and around the Fraser River (marine traffic, underwater noise) and building in highly urban areas (minimizing disruption and traffic management).

The project also focuses on integration with each municipality so “many urban design features are being incorporated including boulevards, landscaping, street furniture and wayfinding,” said Itagawa, adding environmental permitting is a big component of this project which required extensive consultations.

Subject to final permitting, major construction in the Fraser River is scheduled to begin over the coming months. When the new bridge opens in 2023, work will begin on the demolition of the existing structure.

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Legal File

Force Majeure Clauses in Contracts

BY SAMANTHA CUNLIFFE AND LIEZL BEHM

S

ince the beginning of the COVID-19 pandemic, one issue that has garnered attention in contracts is the applicability of force majeure clauses and whether they can apply to provide relief, given how COVID-19 has impacted the ability of many parties to perform their obligations under their contracts.

Briefly, a force majeure clause aims to allocate the risk of non-performance or delayed performance due to intervening events which are beyond the control of the parties. In a construction project, a classic example of a force majeure event is a flash flood that impacts a construction site such that the contractor’s ability to continue to construct is significantly impaired or rendered impossible. Depending on whether or not there is a force majeure clause in the contract (and the nature of such clause), the contractor may be entitled to relief from nonperformance or delayed performance (usually through some combination of time and/or monetary relief).

Force majeure clauses vary widely, with some common formulations as follows: 1. No force majeure clause — parties are generally not relieved from their obligations under a contract notwithstanding an intervening event beyond their control, even if it significantly impacts or renders impossible their ability to perform.

2. Broad and vague force majeure clause — these generally state that parties are not liable for failure to perform contractual obligations due to an event of force majeure, without any corresponding definitions or parameters, leaving it to the parties to determine what does and does not constitute a force majeure entitlement.

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— these specifically list out the events that fall within the scope of a force majeure event (including things such as acts of terrorism, war, labour disputes, strikes and pandemics) and clearly outline the parameters around a force majeure claim.

3. Detailed force majeure clause

Unsurprisingly, even in contracts where force majeure events are clearly defined, many of these definitions do not directly address a global pandemic. Where there are broad and vague force majeure provisions, there has been uncertainty as to whether these would include a global pandemic.

This has led to the question of whether COVID-19 can be “shoehorned” into a pre-existing force majeure clause and in turn grant relief to the requesting party.

COVID-19 AND FORCE MAJEURE When determining whether or not a party has a force majeure claim due to COVID-19, the party must first determine whether COVID-19 “fits” within the parameters of the force majeure construct in the relevant contract. We have seen the most successful claims for force majeure events due to COVID-19 when the force majeure event definition includes pandemics, government action, public health emergency or communicable disease outbreak. If the contract only has a broad and vague force majeure clause, the parties will likely have to discuss whether or not COVID-19 constitutes a force majeure event.

Once it has been determined that COVID-19 constitutes a force majeure event, the claiming party must then generally show that it is impossible for it to perform its contractual obligations and that the consequences of COVID-19 were beyond the reasonable foresight and skill of the parties at the

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time the contract was entered into. In addition, force majeure clauses usually contain a number of requirements with which the party seeking the benefit of the provision must comply, including: 1. Notice — written notice provisions are included to ensure certainty if a party invokes its right to rely on a force majeure event for non-performance or delayed performance. This notice must be given following the occurrence of the triggering force majeure event and failure to provide notice within the stipulated time period can void the right to make a claim.

2. Reasonable Steps — the claiming party must take reasonable steps to prevent the event from occurring in the first place. In the context of COVID-19, reasonable preventative steps could include quarantine protocols, increased sanitation and policies with respect to travelling, remote work capabilities or seeking guidance from public health officials.

3. Mitigation — the claiming party must mitigate the effects of the force majeure event, so far as possible, and remedy the situation in good faith, with due diligence.

KEY TAKEAWAYS Whether or not a party will be entitled to a force majeure claim due to COVID-19 will depend on the nature of the force majeure framework in the contract. To the extent there are no force majeure provisions, a party’s ability to claim force majeure relief will be challenged. If there are force majeure provisions, a party’s ability to claim (and likelihood of a successful claim) will be dependent on the nature of the relevant provisions. Prescriptive force majeure definitions that include “public health emergency, pandemic, and communicable disease outbreak”, for example, are more likely to accommodate a COVID-19 claim. It will then be incumbent on the claiming party to demonstrate that its contractual duties are impossible to perform due to COVID-19 and that the effects of COVID-19 were unforeseeable at the formation of the contract. Once this has been proven, there are often additional requirements the claiming party must follow to achieve the benefit of force majeure.

In such an uncertain time, entities negotiating construction contracts should be mindful of force majeure clauses and may need to engage in negotiation with their counterparties to ensure that COVID-19 risk is properly shared and addressed.

Samantha Cunliffe is a partner, business law group, and Liezl Behm is associate at McCarthy Tétrault LLP.

Legal File

The Grey Area of Pre-Construction Work

BY GIA BOGETTI

U

nder the Builders Lien Act (BLA), a contractor is afforded a statutory right to file a builder’s lien against an owner’s property in order to secure unpaid accounts for work performed and/or materials supplied to an improvement. But at what stage of the project does that right materialize? And, if the BLA doesn’t apply, what should a contractor be doing to protect their bottom line?

While the answers to those questions are useful considerations for any good business practice, they have taken on a whole new level of importance in light of the COVID-19 pandemic. With ongoing uncertainty concerning health restrictions and the economic impact on businesses, project interruptions and cancellations remain an increased risk within the industry. This article seeks to provide answers to those two nagging questions and to provide contractors with some direction on how to navigate project agreements moving forward.

1. Is there a right to file a builders’ lien?

The key terms in determining that answer are defined in the BLA as follows: • “work” means “…work, labour or services, skilled or unskilled, on an improvement…”; • “materials” means “…movable property that is delivered to the land on which the improvement is located and is intended to become part of the improvement, either directly or in a transformed state, or is consumed or used in the making of the improvement, including equipment rented without an operator…”; and • “improvement” is loosely defined to include “…anything made, constructed, erected, built, altered, repaired or added to, in, on or under land, and attached to it or intended to become a part of it, and also includes any clearing, excavating, digging, drilling, tunnelling, filling, grading or ditching of, in, on or under land.”

As succinctly put by Master Harper in the recent BC Supreme Court decision, Shelly Morris Business Services Ltd. v Syncor Solutions Limited, 2020 BCSC 2038 (Shelly Morris), where there is “... no improvement … there can be no lien.”

Although the contractor in Shelly Morris — Syncor Solutions Limited (“Syncor”) — had provided pre-construction services to Shelly Morris Business Services Ltd. (SMBS) for office renovations (including site visits, design work, issuing tender document to subtrades, and ordering materials from sub-trades) before COVID-19 interrupted, and ultimately

terminated, the project, no improvements were ever made to the SMBS properties.

After several attempts to realize payment, Syncor filed builder’s liens against the Shelly Morris properties, and Shelly Morris sought a court application to have the liens removed.

Unfortunately for Syncor, because no improvements were made to the properties before work on the project was terminated, the court determined that the contractor’s services did not fall under the Builders Lien Act and ordered that the liens be removed.

It is, however, worth noting that, had on-site construction begun, the pre-construction work would have been lienable (see for example Chaston Construction Corp. v. Henderson Land Holdings (Canada) Ltd. (2002), BCCA 357, where the court stated that, where there is a valid builder’s lien, “the definition of services for which they are entitled to claim should include all the work in connection with an improvement, whether or not the work was done prior to the commencement of the construction”).

2. Mitigating risk before a builder’s lien can be filed

Where the right to file a builder’s lien has not been triggered, an unpaid contractor has to rely on a contractual claim to seek payment. Unlike a builder’s lien, a contractual claim is unsecured — if the other party goes bankrupt or insolvent, that debt could be subordinate to creditors with secured interests over the debtor’s assets. This could potentially be a big risk for a contractor, especially for a project that requires a significant amount of pre-construction or initial off-site construction work.

In assessing the risks related to accepting a certain project, the contractor should turn their mind to the following questions: A) Is there a fixed start date for construction on the project? If so, is that date likely to

be affected by any new restrictions and regulations relating to the pandemic?

This question should take into consideration the nature of the project (essential versus nonessential), the current level of case numbers within that community, and whether any new announcements are expected.

B) How much pre-construction and/or off-site work is required before construction can begin on-site?

C) Can any piece of the on-site construction begin prior to or concurrently with the preconstruction?

Once some improvement has been made to the premises, a builder’s lien can be filed for unpaid work relating to that improvement, even if some of that work was preconstruction.

D) Is the owner likely to be financially affected by the COVID-19 pandemic, increasing the risk of unpaid invoices?

When negotiating the contract on a project, language is important. If payment is to occur at specific milestones in the project, that first milestone should come before on-site construction.

Additionally, a contractor should pay special attention to any force majeure clauses — which are becoming increasingly encompassing in light of the pandemic — which may inadvertently suspend, or even cancel, the other party’s obligation to pay for work already completed prior to the force majeure event. The only thing worse than needing to rely on a contractual claim to enforce payment for services, is having a contract whose terms have not yet triggered an obligation for the other party to pay.

Gia Bogetti is a solicitor with Forward Law LLP in Kamloops, B.C. She specializes in contract preparation and review.

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Industry News

RUSSELL ZIRNHELT LEADS LEDCOR CONSTRUCTION DIVISION Ledcor has named Russell Zirnhelt executive vice president of construction and leader of the division. He takes over from Peter Hrdlitschka, long-time president of the construction division, who will begin his retirement while staying on as a senior advisor.

“Working for Ledcor for almost 30 years has been the defining achievement of my professional career,” said Hrdlitschka. “Leading the building construction division has been an unforgettable experience, working with many wonderful people, building amazing structures and helping develop our communities along the way. I’m very proud of what we accomplished together and forward to continuing to mentor, coach and advise the group for the foreseeable future.”

The change in leadership comes at a time with Ledcor taking on larger and complex projects and growing in eastern Canada markets, according to Tom Lassu, president of Ledcor Industries Inc. “Russell is a strong advocate for innovation, sustainability, new technologies, and inclusion and diversity initiatives. His insight and forward-thinking approach will help us continually enhance and expand our market leadership with safety, quality, and efficiency always at the forefront,” said Lassu.

Zirnhelt joined Ledcor in 2010, and most recently served as chief business officer for Ledcor building construction. Previously, he was Ledcor’s chief operating officer, infrastructure development.

“I am excited to have the opportunity to lead Ledcor’s building construction division and continue building lifetime clients as a market leader in safety, quality, and innovation,” said Zirnhelt. “We have the best people in the market working on complex, industry-leading projects for many brand-name clients.

The opportunities for value enhancements are immense.”

BUILDING BENCHMARK BC RELEASES FIRST REPORT The first Building Benchmark BC annual report has been released, offering insights from energy and emissions data on hundreds of properties according to building type, use, and location.

In this first report, building owners and managers pledged to submit building performance data on 765 individual properties. As a result of pandemic-related delays and reprioritization, ultimately data was received for 534 properties, or 70 per cent of pledged buildings.

Collectively, the submitted properties to date represent 1.9 million square metres of conditioned floor space.

The data allows building owners and managers are gaining a deeper understanding of their energy use while getting out front of upcoming carbon requirements. The City of Vancouver, a Building Benchmark BC participating jurisdiction, has already committed to requiring annual energy reporting starting in 2023 and regulate emissions from existing large commercial buildings starting in 2025.

Building Benchmark BC launched on January 21, 2020 as a pilot initiative of local governments organized by the OPEN Green Building Society.

ECONOMIC RECOVERY FUNDING FOR CLIMATE CHANGE Several communities in B.C. will be benefiting from more reliable roadways and local jobs as a result of funding from StrongerBC: BC’s Economic Recovery Plan. The new $20.7-million Climate Adaptation Program features a range of projects throughout the province that will increase the resiliency of the highway network and help lessen the adverse effects of climate change.

The ongoing COVID-19 pandemic has highlighted the need for the transportation network to be reliable to help ensure people in rural communities can get to medical facilities quickly, and so first responders, medical personnel, and medical supplies can get to communities in a timely manner.

The program features projects that will mitigate and address the effects of climate change in more than 60 locations.

Projects include riverbank erosion protection, creek channel training, culvert upsizing, flood protection works, slope erosion protection, and avalanche system maintenance.

B.C.’s total provincial response to the COVID-19 pandemic is $10 billion.

22

CONSTRUCTION BUSINESS

February/March 2021

PCL TEAM SELECTED FOR ST. PAUL’S HOSPITAL PCL Construction has been selected to build the new St. Paul’s Hospital at 1002 Station Street in Vancouver. The selection of PCL Construction follows an extensive evaluation of two teams shortlisted in the fall of 2019 to design, build and partially finance the new hospital.

Construction is expected to begin early this summer and completion is expected in late 2026. The PCL team includes HDR Architecture Associates and Stantec Architecture.

The first phase of the St. Paul’s redevelopment project is building a new core hospital. Phase 2 is expected to include a clinical support and research centre.

Future development opportunities will be confirmed upon completion of the Station Street rezoning.

St. Paul’s Hospital will continue to operate at full capacity at its current site on Burrard Street until the new hospital is fully operational and ready to welcome patients.

VRCA CALLS FOR 2021 NOMINATIONS Project nominations for the Vancouver Regional Construction Association (VRCA) 2021 Awards of Excellence are open. The gala, taking place October 19, 2021, will allow the industry to showcase its commitment to quality and professionalism.

A panel of judges appointed by the board of directors of VRCA will review all project submissions. VRCA will contact all companies after May 3, 2021 to schedule a virtual presentation with the judges. These presentations will take place between May 17 — June 25, 2021.

Last year’s competition was postponed due to COVID-19 and resulted in the 2020 project nominations being moved forward to 2021. The Awards of Excellence Judging Committee has decided it will evaluate the 2020 project nominations separately from those received in 2021.

Three Silver Award winners for each of 2020 and 2021 will be selected in 15 project categories for their use of innovative techniques, new materials, and/or exceptional project management. At October’s Awards of Excellence gala, one Silver Award winner from each category, and for each of 2020 and 2021, will be chosen as the Gold Award winner.

The project nomination submission deadline is 5:00pm on Monday, April 12, 2021.

STANTEC COMMITS TO CARBON NEUTRAL As part of its continued commitment to industry-leading sustainable practices, Stantec pledged to carbon neutrality by 2022 as a first step in achieving netzero operations by 2030 across its entire global footprint. In doing so, Stantec continues to demonstrate leadership in aligning itself to the most ambitious aim of the Paris Agreement — to limit global temperature rise to 1.5°C above preindustrial levels.

Specifically, Stantec has committed to set science-based emissions reduction targets, for all three scopes, in line with 1.5°C emissions scenarios. Furthermore, Stantec has committed to a long-term target to reach net-zero emissions by no later than 2030 in line with the criteria and recommendations of the Science Based Targets initiative.

Stantec anticipates achieving carbon neutrality — beginning with reported 2022 emissions — by meeting emission-reduction targets and addressing remaining emissions through the purchase of renewable energy certificates (or the country-level equivalent) and certified carbon offsets.

Carbon neutrality is recognized as an interim step towards the net-zero goal. To meet its net-zero commitment, the organization plans to transition offset purchases to options that directly produce renewable energy or reduce carbon. That transition is anticipated to rely on a combination of traditional and innovative pathways that connect directly to Stantec’s client work and technical expertise.

Stantec’s Innovation Office will fund employee-driven research and business solutions that will not only serve as a strategic resource in reducing Stantec’s carbon emissions, but also those of its clients.

Wilson M. Beck Insurance Services Inc. “General Insurance & Contract Bond Brokers” ~ Serving the construction industry ~ ~ Personal, auto & ICBC fleet insurance ~ ~ Commercial insurance ~

BURNABY 303-8678 Greenall Avenue Burnaby, BC V5J 3M6 Tel: 604.437.6200 Toll Free: 1.888.437.1100

KELOWNA 107-2040 Road Kelowna, BC V1Y 9N7 Tel: 250.763.3840 Toll Free: 1.888.292.6202

CALGARY 640-1414 8th Street SW Calgary, AB, T2R 1J6 Tel: 403.229.2060 Toll Free: 1.855.229.2002

Constructive Advice — Superior Service www.wmbeck.com

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