Construction Business

January/February 2017 Vol. 14 No.2

Evergreen Line PM 40063056

Chris Atchison, BCCA president | Infrastructure | Roofing Bonding, Insurance, Surety

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Inside 06 Connections

Meet Chris Atchison, the new president of the B.C. Construction Association. He is excited about his new role and looks forward to building relationships with members and stakeholders alike.

January/February 2017 | Volume 14 No 2

PUBLISHER

MANAGING Editor Contributing writers

08 Feature Project

Dan Gnocato dang@mediaedge.ca Cheryl Mah Rob Adamson Michael Atkinson Adrian Benoit

The Evergreen Line is an 11 kilometre extension to the existing SkyTrain system in Metro Vancouver, connecting the Tri-cities to the existing SkyTrain system, regional bus network, and West Coast Express.

David Hughes MaryAnne Loney Robb Lukes Steve McConnell Jeff McLellan Leslie Peer

Industry Focus

John Singleton Bob Sloat

14 Infrastructure

Alberta’s Gateway to the World Getting Green Infrastructure Right Infrastructure Funding Delays

Doug Wells

B.C./ALBERTA SALES

20 Roofing

PUBLISHED BY

Achieving Quality in Roofing Largest Timber Roof in North America Energy Retrofits of Building Enclosures

23 Bonding, Insurance, Surety Contract Risk Management Strategies Good Times, New Risks Minimizing Liability Risk

Departments 04 Message from the Editor 26 The Legal File

Bad Debts and Worthless Investments Bid Shopping: Rights and Remedies Assuring Insurance

30 Industry News

Dan Gnocato Tel: 604.549.4521 ext. 223

PRESIDENT Kevin Brown vancouver office 2221 Hartley Ave. Coquitlam, B.C. V3K 6W9 Tel: 604.549.4521 Fax: 604.549.4522 Toronto office 1000-5255 Yonge St. Toronto, ON M2N 6P4 Tel: 416.512.8186 Fax: 416.512.8344 Copyright 2017 Canada Post Canadian publications mail sales publication agreement no. 40063056 — ISSN 1710-0380 Return all undeliverable Canadian addresses to: Suite 1000 — 5255 Yonge Street, Toronto, Ontario, M2N 6P4

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Cover Photo

The Evergreen Line has seven new stations that feature extensive use of glass and wood. Photo: Andrew Latreille / Courtesy: Perkins+Will

February 15 & 16, 2017

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.

November 8 & 9, 2017

March 21 & 22 2017

Editor’s Note

Industry Leadership

T

he B.C. construction industry is humming along at a steady pace and another strong year is expected for 2017.

More good news comes with the harmonization of building codes across municipalities (except for Vancouver) that will reduce red tape and cost of business. The change is one the industry has been advocating for some time and will become a reality this December.

Making sure the province’s $8 billion construction sector remains prosperous rests partly on the many construction associations that advocate on behalf of their members and provide support on important issues.

It is an interesting time for the industry with many of the associations in B.C. undergoing leadership transitions. It means saying goodbye to familiar faces and welcoming new ones. One

of those new faces is Chris Atchison, who takes over from Manley McLachlan as president of the B.C. Construction Association. With 20 years of association management experience, Atchison is looking forward to engaging with members, industry stakeholders and regional association leadership teams to make sure the industry remains strong and vibrant.

For our feature project, we take a look at the construction of the challenging and complex Evergreen Line. Opened in December, 2016, the rapid transit line connects the Tri-cities to the existing SkyTrain system, regional bus network and West Coast Express. The 11km expansion of Metro Vancouver’s rapid transit line not only improves transportation options but is expected to stimulate mixed-use development in surrounding communities.

Other features inside this issue focus on insurance, bonding, surety, roofing and infrastructure. Federal infrastructure funding announcements have sparked much optimism across the country but the actual rollout of those funds has been slow. The Canadian Construction Association has expressed concerns regarding the March 18, 2017 deadline for projects and is advocating for an extension.

Cheryl Mah Managing Editor

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Connections

Change and Opportunity Meet the new BCCA president

By Cheryl Mah

W

hen the British Columbia Construction Association (BCCA) president Manley McLachlan announced his intentions to retire, the board of directors didn’t have to look very far for his successor.

Chris Atchison, who joined BCCA in 2015, threw his hat into the ring of potential candidates and was successfully named incoming president.

“When the position became available, I felt it was the right next step for me and an opportunity to contribute back to this province and the workface that I deeply care about,” says Atchison, who served as provincial manager of the Skilled Trades Employment Program (STEP).

McLachlan was at the helm of the association for 13 years and under his leadership, BCCA has developed many important provincial programs and services. Atchison is well aware that he has some big shoes to fill.

“Manley has been an outstanding leader of the association for more than a decade. I am fortunate that he will stay on in an advisory capacity to me until the end of March to facilitate the transition and introductions to the people I need to get to know,” he says.

Since Atchison officially assumed his position in January 2017, he has been on a whirlwind “meet-and-greet” tour around the province to get to know members, industry stakeholders and regional association leadership teams.

Headquartered in Victoria, BCCA is an employer-based construction association that is comprised of the four regional associations in the province: Vancouver Regional Construction Association, Vancouver Island Construction Association, Southern Interior Construction Association and Northern Regional Construction Association. It represents more than 2,000 businesses active in the industrial, commercial, institutional and multi-family residential sectors.

“Right now I’m firing on all cylinders to make sure I meet everyone that I need to while also taking time to meet with my internal staff,” adds Atchison, who oversees a team of about 15.

“This is a tremendous organization and I want to continue the good work that has been done.”

Atchison brings 20 years of association management experience to the position with an extensive background in employment and labour market programs. But it was a serendipitous path that got him into the association management business.

Born in Prince Rupert, Atchison grew up in a family with roots in the commercial fishing industry. He worked as a commercial fisherman in his late teens and early 20s which helped to

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pay for university. After graduating from the University of B.C. with a Bachelor’s degree in international relations, he and his wife moved to Victoria where he worked for a couple of different organizations involved in training and workforce programs.

Then in 1998, he joined ASPECT (The Association of Service Providers for Employability and Career Training) as provincial contractor manager before eventually becoming chief operating officer in 2004.

“The big emphasis within that organization is on workforce development and strategies to help people to find meaningful work and keep meaningful work,” says Atchison. “I had a wonderful board there but after 17 years, it was time to make a change and move onto the next chapter of my life.”

And that change came in the form of an opportunity to join BCCA as provincial manager of STEP. Created in 2006, the program focuses on finding trained and ready-to-work candidates for construction employers with jobs to fill.

STEP’s programs have placed more than 10,000 British Columbians into skilled trades jobs.

“I was well aware of the STEP program — a long serving program for meeting the needs of British Columbians in a sector that is so vital to the economy… so I embraced the opportunity to work with the outstanding team at BCCA,” he says.

Atchison takes over as president at an interesting time in the construction industry when three of the regional construction associations have also undergone leadership transitions. Rosalind Thorn (BCCA North) retired in 2015 and this year, Greg Baynton (VICA) and William Everitt (SICA) will also be leaving their positions.

January/February 2017

“It’s a changing of the guard but those strong leaders have all surrounded themselves with good people and boards to pass along the knowledge and to continue the good work,” says Atchison. “I look forward to working with their successors. Change brings new energy, new ideas… that will help us serve the industry and make it as strong as it can be.”

Working with the regional construction associations to ensure strong benefits to membership and productive collaborations across the province is a primary goal. “We need to work in harmony for the best interest of the construction sector and as the overarching voice for the industry, we need to be reflective and respective of all of our members and regions,” he says.

Other focuses include advocacy, promoting construction as a career, safety and procurement practices.

“I want to make sure that the processes in procurement continue to be open, fair and transparent,” says Atchison, noting expansion of the procurement platform BidCentral will remain a priority.

The B.C. built technology has been in operation since 2009 and is now the largest online construction marketplace in the province.

“We see BidCentral as the platform of choice for the future of the industry,” says Atchison. “It is an innovative tool for the way business can and should be done in the sector. I’m very excited about continuing the service and it gives me encouragement about the future of procurement and best practices in bidding.”

An aging workforce (two thirds of B.C.’s construction workforce is over the age of 45) will require continued aggressive recruitment

Connections

of people into the industry. The demographic trends and a projected increase in construction activity are forecast to create a 15,000 worker shortfall by 2025.

“We need to continue to cultivate ways to encourage youth to consider the industry as a career of choice…to be inclusive to groups that are currently under represented including our indigenous populations and new Canadians,” he says.

Attracting women to the trades is also key and the industry has been doing a good job at it, continues Atchison, but more needs to be done to “keep them advancing their careers in the trades and for women to really find a home in construction.”

Some good news is that BCCA’s latest workforce survey shows that high school graduates entering construction trades training programs within one year of graduation is improving.

When the BCCA first began calculating this number in 2013 it estimated that 1 in 93 students went from Grade 12 into trades training.

In 2016 that number has improved by 35 per cent to 1 in 69. While this is a positive trend, much more needs to be done to address the looming labour shortage.

“In order to meet the most conservative labour shortage projections in this sector, we’re going to need that number down to less than 1 in 10. We have some work ahead of us on this challenge,” notes Atchison.

As for the outlook for construction, Atchison does not anticipate any slowdown with public infrastructure investments, in particular, continuing to drive work and optimism in the province.

“Residential and commercial remain robust in the Lower Mainland and on Vancouver Island and I’m still positive about potential LNG final investments,” he says.

Outside of work, Atchison actively contributes to his community. He is chairman of the

Sandra Schmirler Foundation, a national charity that has raised millions for newborn intensive care units. He is also president of the Victoria Minor Hockey Association and the head coach of the South Island Royals.

“I have a real passion for coaching hockey and being a positive influence. I see many crossovers in the development of youth through sport and team play that prepares them for success in the workforce,” says Atchinson, who has a son and daughter both playing hockey.

January/February 2017

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Feature Project

Improving Regional Transportation

By Cheryl Mah

C

onstruction of the single largest transportation infrastructure project for the Tri-Cities in Metro Vancouver is complete. The long awaited Evergreen Line opened to the public on December 2, 2016. The project links the communities of Port Moody, Coquitlam and Burnaby for the first time through rapid transit with a direct connection to the existing Millennium Line.

With the 11km Evergreen extension, Metro Vancouver’s SkyTrain system is now the longest fully automated and driverless rapid transit system in the world at 79.5km.

“It’s a once in a lifetime to be involved in a project like this from beginning to end. I feel tremendously proud and I’m excited to see how it will change people’s lives, especially in the Tri-Cities,” says project director and CEO of Partnerships BC Amanda Farrell, who has been a part of the Evergreen Line project team since 2007.

The scope of work included seven stations, elevated and at-grade guideways, a 2 kilometre bored tunnel, power substations, train-operating systems and roadworks as well as a vehicle-storage and light-maintenance facility.

The project will fully integrate into the existing SkyTrain system, linking directly to the Millennium Line, with connections to the Expo Line, Canada Line, the West Coast Express and regional bus networks. It not only provides more 8

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transportation choice for the Tri-Cities but is also spurring residential and mixed-use development along the line.

“The project promotes compact, livable dense urban centres and you can see that already happening, especially in Coquitlam. It’s quite transformative,” says Farrell.

EGRT Construction consortium was selected to build the rapid transit infrastructure on a fixed price, performance based contract for $889 million. The consortium includes SNC-Lavalin, Graham Building Services, International Bridge Technologies, McMillen Jacobs Associates (formerly Jacobs Associates Canada) and MMM Group.

Major construction on the project began in February 2013 after months of preparatory work.

The estimated number of direct and indirect jobs generated during construction is 8,000.

“Despite all the challenges, the team did an incredible job. The contract called for a 43 month construction period and the job was completed in 46 months. When you consider the technical challenges with the tunnelling, it’s really an extraordinary achievement,” says Farrell, adding that the procurement was structured around the tunnel risk and any extra costs are covered by SNC-Lavalin, emphasizing the project was completed on budget.

Of the many engineering and construction highlights, the drilling of the single under-

January/February 2017

ground tunnel from Port Moody leading into Coquitlam was the most complex and technically challenging.

THE TUNNEL Southwest Contracting completed the three phases of shoring and excavation to establish the launch pit for the tunnel boring machine in December 2013. Excavation removed close to 22,000 cubic yards and shoring requirements included 635 anchors totalling 19,304 feet, 66 reinforced secant piles and 86 unreinforced soldier piles. The main tunnel boring activity began in March 2014.

The massive 10-metre diameter tunnel boring machine (TBM) named Alice, after Canada’s first female geologist, finished drilling the tunnel, starting east of Barnet Highway in Port Moody to south of Kemsley Avenue in Coquitlam, on November 27, 2015.

“The whole tunnel boring exercise was challenging and took lot longer than expected,” says Farrell. “In order to catch up with the schedule, they put a fibre optic cable outside of the tunnel and moved trains to the other side of the tunnel so they could continue testing and commissioning...so that when the tunnel was fitted out, everything else was ready to go.”

McMillen Jacobs Associates (MJA) was the engineer for the geotechnical and structural design for the tunnel, including coordination on

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portal interfaces and internal structures within the tunnels and design of the segmental lining in the tunnel.

The Evergreen Line features a single tunnel that fits both the northbound and southbound rail tracks along a side-by-side configuration, which had time and cost saving benefits.

“The use of a single bore tunnel eliminated the need for cross passage construction in challenging ground conditions,” notes Andrew McGlenn, MJA project manager and engineer of record.

An innovative feature of the tunnel is the use of steel fibre reinforced concrete for a one-pass segmental lining system with seismic design requirements. MJA developed an invert and dividing wall system (separating the inbound and outbound tracks) that did not impose high stresses in the lining.

“The invert design proved to be cost effective, was placed — installed in a short amount of time and provided a soft interface with the lining which helps to deal with seismic stresses,” explains McGlenn.

The many challenges related to the tunnel included ground conditions with very abrasive glacial soils; difficult portal locations, especially for the launching portal which was adjacent to a major roadway and residential areas; and a steep uphill gradient for a portion of the tunnel.

The project required extensive interaction and coordination with several stakeholders (mu-

nicipalities, the province, CPR, etc.) and regular communications with communities adjacent to the work zones.

“The overall schedule was very aggressive....3.5 years to complete 11km of LRT extension so pressure was on from the get-go.,” says MCGlenn. “It was a very demanding but thrilling experience.”

BIG CONCRETE BOX Another project highlight was the construction of the Inlet Centre Station. The station has two entrances on either side of the intersection at Barnet Highway and Ioco Road with the station platform built underneath the Ioco Bridge. To

build the station, crews had to construct a portion of the station guideway and platform underneath the Barnet Highway.

Instead of extensive night work and road closures using a standard construction method, crews pushed a 4,000 tonne concrete box under the Barnet Highway over the November long weekend in 2013. The concrete box was the largest of its kind in North America at 15 metres wide, seven metres high and 50 metres long.

Crews used 30 hydraulic jacks to slowly push the massive structure under the highway, setting a record for the largest structure ever jacked in Canada.

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Feature Project

“This would have normally required a series of night closures over months and months ....but it was done all in one weekend,” says Farrell. “It was a very innovative construction approach which is not common in Canada but has been used in Europe.”

Crews worked around the clock and the Barnet Highway was re-opened Monday evening eight hours ahead of schedule.

Unstable soil conditions also required engineers to come up with alternative solutions. One solution was a ground improvement technique called soil mixing for the at grade guideway con-

struction. This involves the use of a large drill to auger into soft soils, break up the ground and then mix in cement. Soil mixing was used as part of at grade construction between Clarke Street and the existing rail line in Port Moody as an alternative to pile driving.

Innovations were key on this project to mitigate the unexpected delays to the schedule, according to Farrell.

The Evergreen Line is expected to carry 70,000 passengers daily by 2021, reducing traffic congestion in the rapidly growing TriCities.

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January/February 2017

Funding for the project is a partnership between the Government of Canada, the Government of British Columbia and TransLink. Now that construction is complete, TransLink is responsible for operating the extension.

“A project of the size and complexity of Evergreen is the result of a lot of hard work on the part of our partners and those who worked daily on making this new transit line a reality,” says Peter Fassbender, B.C.’s minister responsible for TransLink. “This project is another example of the commitment our government has made to improve transit services in the Lower Mainland.”

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Infrastructure

Alberta’s Gateway to the World Building airport infrastructure to meet growth

By Rob Adamson

A

ir traffic is growing at an unprecedented pace. New technology and social change have driven Canadian airports from the traditional way of serving air passengers to more sophisticated service models. More than ever before, flexible design and the pursuit of maximizing operational efficiency are critical measures of success.

Things are changing — and fast.

At the forefront of this change is YYC Calgary International Airport (YYC), which recently opened its new green field international terminal in Calgary, Alberta.

Opened since October 2016, the new international terminal becomes part of the overall system of Calgary International Airport. Designed and built over an eight year period, the terminal is approximately two million square feet of building area — more than doubling the airport facility — and functions as an important hub for trans-border and international travel. It has a state-of-the-art baggage handling system, is highly automated in terms of passenger processing and operates Canada’s first ‘callto-gate’ system.

Emerging trends in sustainability, passenger experience and efficiency directed the strategic design process for this project. The outcome is a state-of-the-art facility that is well positioned to support YYC’s reputation as Alberta’s gateway to the world.

Sustainability

The implementation of airport sustainable design initiatives is in no doubt important to 14

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effectively responding to the realities of today’s business environment. However, it is equally important to ensure that any sustainable design strategy applied has the ability to sustain performance on a number of fronts. A truly holistic approach for sustainability, one that will serve as a benchmark for environmental stewardship, is one that leverages the synergies that exist in multiple performance areas — such as environmental, economic, operational and service performance.

At YYC, a series of sustainability workshops were undertaken to assist the design team in shaping the design of the project.

One of the outcomes of these workshops was to establish a Sustainability Framework for The Calgary Airport Authority, the operator

January/February 2017

of the airport, which could be applied to the project and to evaluate the viability of green design features being considered for inclusion.

The final product included important design techniques such as: geothermal heating and cooling systems, high performance building envelope, displacement ventilation, co-generation and light harvesting.

The result is a highly sustainable and deeply green building which focused on the structure’s skin and on the mechanical systems working together as a total building system.

Creating a Sense of Place More and more, airports are becoming extensions of the communities and regions they serve. Specifically designed with the use of local

Infrastructure

The airport incorporates Canada’s first call-togate system; a concept which revolves around a central seating area. Streamlined processes and an intuitive passenger flow allow guests to reside in the central area, while enjoying various seating options, shops and service locations. Travelers receive regular information updates and their gate is posted a few minutes before boarding.

This model also supports the local economy through compelling retail environments.

Efficiency & future proofing

materials such as Rundle Stone from Canmore, Alberta, Dialog incorporated Alberta’s iconic lakes and blue skies into design decisions. The ample light created from the daylight harvesting features and abundance of Alberta sunshine, along with fantastic views, take full advantage of landscape features, providing guests with a grounded sense of place. As part of the airport’s Themeworks program, The Calgary Airport Authority also commissioned a variety of pieces from Canadian artists that complement these spaces, while highlighting the nature and beauty of the city and region.

Passenger Experience The airport experience has dramatically evolved over the past 15 years. Expedited security screening options and a focus on creating comfortable spaces with plenty of amenities has changed the airport experience. In addition to lowering ticket costs, the aviation industry is focused on growing revenues by improving service. This new era puts passengers first — blending ease and efficiency with amenity and connection.

Enabling guests to navigate the often complex airport environment was paramount to YYC’s design.

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Find helpful resources at worksfafebc.com/health-safety

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January/February 2017

At YYC, trans-border traffic peaks in the morning while international traffic peaks in the afternoon. To increase efficiency, YYC developed a “multi-level, sector segregated” strategy which separates sectors by stacking them. Stacked gates can be shared due to the offset peaks, reducing the number of overall gates required by 40 per cent and the gross floor area reduced by 32 per cent.

Conclusion

The result is a terminal that leads in environmental stewardship, focuses on passenger experience as a key driver, explores ways to further connect YYC to global markets and develops the terminal of the future in terms of flexibility and operational efficiency.

Rob Adamson is principal at Dialog and leads the firm’s airport design group.

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Infrastructure

Getting Green Infrastructure Right

By Robb Lukes

G

reen infrastructure (GI) is an umbrella term for infrastructure that delivers benefits to urban development through the ecosystem services that natural systems, like plants and soils, provide.

GI’s benefits include reducing the urban heat island effect, improving air quality and beautifying urban spaces, but one of the core design function of GI is stormwater management.

Watershed research over the past 30 years has made a solid case for GI as the best available tool for: preserving and improving water quality, aquatic habitat and fisheries; reducing downstream erosion, flooding and related property damage; and adding capacity and resiliency to aging municipal sewer systems in a changing climate. The most common stormwater GI tools are bioretention, bioswales, green roofs and permeable pavement.

Most Canadian cities now have GI pilot programs but the shift toward making GI a standard practice is well underway. Vancouver plans to capture 90 per cent of runoff with GI in its newly adopted Rainwater Management Strategy; Victoria is incentivizing GI through its new stormwater utility; Calgary and Edmonton are incorporating the latest in green infrastructure design into their stormwater guidance.

Western Canada has world class examples of GI from the absorbent country lanes in Vancouver to Calgary’s parkland bio-retention facilities.

However, the industry can, for every success, also point to an example of a failed or dysfunctional GI practice: an eroded bio-retention cell, an infiltration trench that never drains, or uneven permeable pavement.

The problem is not unique to this region. The Center for Watershed Protection conducted a survey of 72 GI projects in Southern Virginia’s James River Watershed. Each of the GI projects as constructed was compared to the municipally approved stormwater design plan. The evaluation found 47 per cent were observed to have one or more deviations from the site plan, many in ways that significantly impaired the required performance.

The most common deviations were: • p oor vegetation coverage and health; •m issing or improperly constructed pretreatment devices; • u ndersized detention volumes; • s oils clogged with construction sediment, were over-compacted, or did not meet specification; and • i nlets and outlets incorrectly constructed, resulting in flows bypassing or short-circuiting the practice.

GI practices are an integral part of the urban form and require a different approach to construct. GI sites require attentiveness throughout the construction process as to location, intended function, protection from sediment clogging and over-compaction. The stabilization of the contributing subcatchment is critical to the success of GI features. Also critical are proper installation of their unique outlet configurations and use of specified materials. If GI designs continue to be improperly constructed, GI will be stuck with a poor reputation among the public and decision-makers. Therefore, it is critical that designers, contractors and inspectors understand the purpose of GI practices as a new form of stormwater management.

Planning for Success Designers need to consider construction sequencing in their designs. Erosion and sediment control plans need to include sequencing and sediment management instructions that protect infiltrating practices from compaction and clogging. Often stormwater management features are constructed first, used as sediment traps during construction, then cleaned out when construction is complete. GI should be installed last, or if that is not possible, then sites should be covered and protected during construction.

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January/February 2017

Tendering for Success Mandatory pre-bid meetings that include outlining the GI projects’ unique function and requirements have proven to be successful in attenuating nonserious bidders and attracting qualified contractors to the project. Other useful methods include using a pre-qualification process and requesting prime contractors to furnish a list of projects completed with references.

Good GI construction means good on-site erosion and sediment control.

Consider including a contract requirement for the resident engineer or site supervisor to have certification from the International Erosion Control Association. Also, a separate line item for emergency erosion and sediment control in the contract allows the contractor to respond quickly to unexpected field conditions with assurance of being paid for their additional work.

Maintenance work under contract warranties is often an afterthought.

GI practices require regular maintenance and inspection, particularly during the establishment period for the vegetated practices. The contract needs to explicitly define these requirements and highlight them at the time of bidding. Higher warranty payments or sureties may help ensure the work is done. Another approach is to tender a separate landscape contract that covers planting, establishment, watering as necessary, plant material warranties, inspections and maintenance of the practices.

Build for Success Communication may be the most important tool for successful GI construction. GI’s purpose, unique materials, special sequencing and potential pitfalls need to be discussed at pre-construction and periodic coordination meetings. The critical GI information must move through all project phases and reach sub-contractors.

Up-front precautions can save contractors from costly delays, fixes and reconstruction. Some materials like bio-retention soil may require special testing to meet specifications. Lab testing should be done well before the material is brought to the site to avoid having to replace installed soil or delay work for new batches to be mixed and tested. Monitoring and maintaining on-site erosion and sediment control will prevent having to replace clogged practices later.

Constructing a bio-retention cell will one day become as standardized and commonplace as constructing a curb ramp. As we work toward that, it is in everyone’s interest to put the extra effort into planning and building better and more functional GI projects. We all want to build projects that will work over the long term to enhance our cities and protect our creeks, rivers, lakes and coasts.

Robb Lukes, P.E., stormwater project manager at Kerr Wood Leidal Associates Ltd., has 12 years of experience in stormwater management policy, planning, design and construction.

Infrastructure

Infrastructure Funding Delays

By Michael Atkinson

T

he federal government has announced unprecedented investment to renew Canada’s aging public infrastructure.

However, there have been delays in rolling out the funds to get the much needed projects off the ground and the deadline for Phase I is approaching fast. The Canadian Construction Association (CCA) has expressed concerns regarding the March 18, 2017 deadline to several government ministers and is advocating for extension.

Since 2000, successive federal governments have invested considerable dollars in supporting the efforts of provincial and municipal governments to renew Canada’s public infrastructure.

The most recent federal contribution was announced this fall when Justin Trudeau’s Liberal government dedicated an additional $35 billion to infrastructure, bringing the total federal investment over the next 11 years to $186 billion.

When provincial-municipal leveraging is added, more than $300 billion will be spent by all three levels of government to modernize Canada’s aging core infrastructure. In addition to these funds, the federal government has also committed nearly $32 billion to the renewal of federal assets including infrastructure in parks, small-craft harbours and federal buildings across the country.

Lack of Progress With so many numbers floating around, it is not surprising that many CCA members are increasingly confused by all these announcements, particularly since most members have seen precious little of this announced investment translate into tangible projects at the local level. In fact, the Parliamentary Budget Office (PBO) recently released a rather scathing report critical of the federal government for its lack of progress in rolling out these funds across the country. According to the PBO, 3,866 projects have been identified for funding at a value of $4.6 billion.

Of those, only 1,682 projects valued at $333 million are expected to be completed by March 31, 2017. This means that the remaining 1,461 projects valued at $3 billion will be completed

by March 31, 2018. How and when the remaining $7.4 billion of the $11.9 billion announced as part of Phase I will be allocated remains a mystery, which is particularly troubling since many of the projects funded under Phase I must be substantially completed by March 31, 2018.

Where’s the Hold up?

To begin, the addition of new money and the decision on the part of the federal government to change the leveraging requirements precipitated the need for new framework agreements with all

the provinces and territories. As is often the case, negotiations took longer than anticipated and the last of these agreements were only signed in late summer of 2016. As a result, many of the projects approved for construction were not tendered due to delays in the design and engineering phase.

Complicating matters further has been the slow pace at which some provinces have submitted projects to the federal government for approval. Again, given the federal funding requirements, it is not surprising that the due diligence

... many of the projects funded under Phase I must be substantially completed

by March 31, 2018. on the part of provincial and municipal governments have contributed in part to the delays in obtaining funding approvals. As familiarity with the process improves, many of these delays should be eliminated.

Finally, though it is easy to fault the federal government, and most certainly appropriate for delays in tenders for improvements to federal assets, it must be remembered that the federal government with respect to most co-funded projects is simply a funding agent. The federal government is not the tendering authority so it

does not control the pace at which projects are ultimately tendered. In the case of water and public transit projects, it is for the most part municipal governments that dictate the pace of construction, so other than the deadline for substantial completion, the federal government has no tools to expedite the tendering process on the part of other levels of government.

Advocating for Extensions While CCA appreciates the need to expedite construction, the use of the federal deadline has in some cases forced municipal tendering authorities to attach severe liquidated damages penalties to many of the Phase I projects.

With so much additional Phase I work yet to be awarded, this could force many contractors to build into their price additional labour or risk premiums, thereby increasing prices and reducing the amount of infrastructure purchasable from these fixed budgets.

CCA has expressed concerns regarding the deadline to several government ministers and continues to advocate for a reasonable extension for projects that experience unavoidable delays or are required to use unrealistic project schedules to satisfy the federal substantial completion deadline of March 31, 2018.

Michael Atkinson is the president of the Canadian Construction Association. If members are aware of projects that should receive a reasonable extension, please contact Bill Ferreira of CCA at bferreira@cca-acc.com.

January/February 2017

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Roofing

Achieving Quality in Roofing

By Doug Wells

I

n the past, quality control in roofing construction generally consisted of the foreman being an experienced roofer who took pride in his work. These foremen usually had 15 plus years working with hot asphalt, a predominant roofing application at the time and most of the crew had an equal amount of experience. SBS asphalt membrane roofing systems were becoming common as were single ply membranes such as PVC and EPDM. Inspectors were often old roofers that understood how materials performed over time and were able to quickly identify problems with design or workmanship and help resolve them immediately in the field. If the roof didn’t leak, it was a good job!

It’s not that simple anymore. Roofs today are expected to be cost effective, energy efficient, durable, long lasting, environmentally sustainable, safe and aesthetically pleasing… and have documentation to back it up. Today’s roofing designers need to be on the leading edge of product evolution and well versed in all relevant codes and standards. The level of oversight and accountability has increased ten-fold and proper design and quality control throughout the project is paramount to ensure success. Both quality assurance and quality control is needed to create a quality management plan.

The roofing crews have changed significantly.

The industry is increasingly dominated by better educated younger workers without the wealth of experience. New materials are introduced to the market regularly and companies are applying numerous roof types. While you might find some highly experienced applicators for certain materials, it is more common to have a “Jack of all Materials”. With litigation risks high and safety being a major factor, today’s foremen are required to provide a far greater level of documentation and oversight than ever before, so are often unable to provide the same level of site supervision as the good old days. Consequently, installers rely on detailed drawings and specifications, manufacturer’s instructions, product specific certification training and third party roof inspections. The need for quality control is greater than ever.

Quality assurance starts with the manufacturers, with factory testing, third party performance verification testing and better installation instructions and training. Manufacturers now provide dedicated technical representatives that assist designers in specifying products correctly and follow that up with quality control in the field on manufacturer warranted projects.

Roofing inspectors and consultants have changed as well. In an increasing number of 20 construction business

cases, architects and building envelope engineers are providing roofing consulting services; however they often lack the experience with the installation methods and materials possessed by the traditional “seasoned roofer turned consultant or inspector.” Given the migration to documented quality assurance and code compliance that engineers and architects excel at, the trend is likely to continue and bring quantifiable benefit to the project.

That said, it behooves everyone to leverage the knowledge and expertise of the traditional roofing consultants and inspectors that deal with roofing as a primary task.

The quality assurance observers (aka roof inspectors) perform site reviews and generate reports which form the third level of quality control. In the ideal scenario, these are highly experienced roofers or others that have received additional training on the duties of a roof observer (inspector), attend the site on a part time but daily basis and work with the contractor to develop site specific detail solutions in accordance with the design intent.

This collaboration on site has a tremendous impact on the final quality of the installation.

There appears to be a trend in the industry to assign junior engineers or technologists to the role of inspecting roofs. While there are benefits to the engagement of these younger professionals in controlling quality, they generally lack handson experience and have not formed the ability to effectively resolve issues immediately on site, resulting in lost opportunity to impact quality. Understanding the skills of the roofing consultants and inspectors and ensuring that they match the

January/February 2017

project complexities is a very important owner responsibility; one size does not fit all.

In addition to building envelope design professionals registered with APEGBC and AIBC, there are organizations such as RCI Inc., that offer the designations of RRO (registered roof observer) and RRC (registered roof consultant).

More and more owners and managers are requiring quality control be managed through an established professional. There are ASTM standards for roofing inspections and in our market RCABC Guarantee standards set out additional requirements and recommendations for a prudent frequency of roof inspections. The industry as a whole must understand and work within these guidelines.

The varying levels of experience and skill discussed above, combined with newer materials, insurance costs, liability exposure and the trend of the owners to have all these items quantifiably managed have resulted in a greater need for quality control. While there is a cost associated to providing the appropriate level of consulting and inspection services, the costs associated with leaks, failures, injuries and other deficiencies are typically much greater. These various groups need to work together to achieve a successful project and create a culture of quality now demanded in the industry.

Doug Wells, RRO, is the roofing design manager at IRC Building Sciences Group and sits on the board of directors for the RCI Inc., Western Canada Chapter. Doug has been a QAO for more than 10 years with 27 years in the roofing industry.

Roofing

Largest timber roof in North America Calgary’s Rocky Ridge Recreation Facility is not a typical recreational building design

by Adrian Benoit

N

estled in the rolling foothills of the northwest corner of Calgary, Rocky Ridge Recreation Facility is a regional hub of physical activity and a multipurpose gathering place for the community. Inspired by the rolling hills and ribbon horizon of the foothills region, the soft curving undulations of the building create an open and integrated facility connecting the natural features of the site with the activity inside.

The physically diverse site bridges itself between the developing northwest Calgary and the rural life of Rocky View County. A large hill in the northeast corner of the site, the highest natural elevation in the city limits, is complemented with a wetland in the opposite corner. Linking to the regional pathway system, the Rocky Ridge site provides interpretive trails throughout for active and passive recreation opportunities.

The aim of this facility is to provide the northwest edge of Calgary with essential health and wellness services. It will provide a place for gathering, for community programs, for health and wellness opportunities and child care services. Being located on the edge of the city presents the facility with the opportunity to express its natural surroundings, integrating itself with the landscape.

Conceptually, the approach for Rocky Ridge Recreation Facility is to create a low, horizontal building form that is stitched into the landscape expressing and complementing the natural contours of the site. The goal was to have a recreation facility that was different from the traditional model of a recreation facility where the different athletic programs are contained in a closed box. The result is a facility that is connected and active, where all opportunities are visible and obvious. A major organizational driver for the 280,000 square foot facility is a grand public

concourse that overlooks activity areas and provides visual access for spectators to the aquatics, gymnasium and ice functions. A library, visual arts component and a 250 seat community theatre are arranged around this active concourse to create a compact plan that promotes interactions between users.

All program elements of this building are set beneath a unifying curved, undulating roof structure that links the spaces together and responds to their individual height requirements.

The roof shrink wraps the interior programs, expanding the volume over the areas where extra height is required and lowering where it isn’t needed. The curvilinear organic plan tightly and efficiently wraps the program, reducing the amount of circulation space required and resulting in an exterior wall area comparable to a building roughly half its size.

In order to execute the conceptual and technical intent of Rocky Ridge Recreation Facility, glulam was selected as a primary structural component for its economic and aesthetic merits. The geometric complexity of the project required the use of a structural material that had the ability to be customized at a comparably low economic cost to other structural approaches. In addition, the glulam allowed a maximized spatial volume of each space by exposing the structure without compromising aesthetics.

Though the glulam allowed for customization, a challenge throughout the process was to optimize and simplify the design to ensure the project could meet the budgetary requirements.

A repetitive structural beam with a common radius was aligned along a radial grid and uniquely positioned along the grids to accommodate the organic plan and undulating height requirements. A single parapet detail was developed for

the perimeter envelope able to accommodate the changing geometry of the roof as well as the deflection movement of the wood structure. Parametric modeling software was implemented to adjust the formal geometry and optimize the dimensional deviation between the radial glulam beams and the structural roof deck bridging between them. In addition, the software was used to calculate the compound curvature of the sacrificial lamination layers of the glulam beams and produce surface profiles used by the glulam fabricators’ CNC machinery.

With around 30,000 square feet of glulam contained within the facility, Rocky Ridge Recreation Facility contains the largest timber roof in North America. The rigorous rationalization of the building form and structure allowed for Rocky Ridge to be completed within budget parameters originally developed based on a “typical” recreation facility design.

Rocky Ridge Recreation Facility makes an architectural statement rooted in the regional landscape while incorporating sustainable innovations to ensure environmental responsibility.

Targeting LEED Silver, Rocky Ridge consists of a reconstructed wetland equipped with a variable control structure, managing the water levels to help sustain vegetation growth and proper reconstruction of existing habitats. In addition, a 160 kW cogeneration (combined heat and power) unit will reduce the reliance on the existing power grid, resulting in reductions in emissions while providing opportunities for heat recovery benefits within the facility.

Adrian Benoit, M.Arch., Architect, AAA, MRAIC, LEED AP, is an associate with GEC Architecture and the design architect on Rocky Ridge Recreation Facility.

January/February 2017

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Roofing

Energy retrofits of building enclosures

By Leslie Peer

T

he need for renewal of building enclosures or components occurs over the service life of a building, because the functional service life of enclosure components is shorter than the economic life of many buildings. When the time for this type of renewal approaches, owners are faced with a variety of decisions about the timing, methods and economics of the renewal work, not least the selection of new components and assemblies for the renewed building enclosure.

Among the engineering and architectural decisions to be made in designing a building enclosure retrofit are those related to energy performance and these include thermal comfort, heat loss, heat gain and solar gain. These relate to quality of life in the building, as well as the cost of overall energy use and greenhouse gas emission (GHG). Enclosure performance metrics govern energy transfer out of the building and thereby operating costs of the building.

Engineering performance targets such as uncontrolled air leakage rates across the enclosure, amount and effectiveness of insulation layers and thermal performance of windows are selected. Then products are selected from the variety available in the market to match the specified performance.

Energy codes in Canada to date have typically emphasized efficiency related to payback of capital investment relative to operating costs, however codes in development will emphasize reduction in energy consumption and GHG emissions per square metre of enclosed floor space. Further incentives to improve energy performance of buildings may be provided by increasing costs of energy and carbon consumption.

There are almost no provincial or national financial incentives for increasing the energy efficiency of building enclosures, beyond those that would be selected on a cost benefit basis by indi-

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construction business

vidual owners. Some utilities provide incentives in order to modify consumer behaviour among their client base. There is no national energy code that deals with renewals in existing buildings. A version of the NECB for renovations may be contemplated and there are few requirements in the current building codes that invoke energy related performance measures during renovations beyond the ‘don’t make it worse’ clauses in ASHRAE 90.1. In this landscape, owners look for guidance from their consultants to assist with technical re-construction options and associated cost, benefit and payback forecasting when it comes to energy performance of building retrofits.

The interval between renovation cycles is typically long, in the order of 40 years or more, and the costs associated with renovations are high, not only in dollar costs but also in terms of occupant disruption. There is a strong incentive to optimize the value of a building enclosure renovation, since the enclosure is part of the street presence of the building, affects the occupant comfort levels and affects leasing costs through maintenance and energy demands. Maintaining a competitive presence in a market may require enclosure performance of older buildings that exceed those of new buildings in order to maintain competitive leasing position. The marginal cost of increasing air tightness and insulation levels and the thermal performance of window elements is small compared to the overall cost of a renovation project. The marginal cost of increasing the performance often has a shorter payback than the primary renovation work.

If the economic life of a good quality building enclosure renovation is 50 years, the economic landscape could change dramatically over the enclosure’s service life. As an example, some buildings from the mid-1970s with double glazed curtain walls are still providing appro-

January/February 2017

priate performance today, while single glazed installations from that era are considered to be uncomfortable and inefficient.

In heating dominant climate zones, methods of improving energy efficiency via building enclosure systems include increasing air tightness of the enclosure and decreasing thermal conductance through the enclosure components.

Many renovations now include a component for improving energy performance, maximizing the opportunity offered while the building is being renovated to improve comfort and performance for the next phase of the building’s life. Even if the building is being partially renovated, improving performance over a series of renovations can be planned and is effective given a comprehensive strategy.

Building robust air barriers involves adding structurally supported air tight elements, with a sufficient durability so that their important properties will not decay over their service life.

During a renovation, new air tight components such as air barrier membranes, sheathing panels with taped seams or liquid or foam sprays can be installed.

Increasing insulation levels during a renovation often involves installing a new layer of exterior thermal insulation between the existing structure and the cladding. Once structural support for the cladding with appropriate thermal breaks is provided, there is little cost increase associated with providing thicker insulation.

Interior insulation can sometimes be added with appropriate regard for the durability of existing building systems.

Window and curtainwall assemblies include a lot of technology to provide architectural appeal along with good durability and thermal performance. Canadian manufacturers of windows and curtain walls produce products with specifications that rank with the world’s best.

In renovations, air tightness and thermal insulation levels can be achieved that are equivalent to or exceed levels mandated for new construction. Renovation of existing buildings is an important portion of Canada’s effort to meet our GHG emission targets and in the absence of regulations, owners are encouraged to meet or exceed energy performance levels intended for new buildings when undertaking building enclosure renovations. It is a once in a lifetime opportunity for most buildings when the work takes place. The marginal costs are low, and the potential benefits worthwhile.

Leslie Peer, Ph.D., P.Eng., FEC, RRC, LEED AP, is a principal in the restoration and building enclosure group at Read Jones Christoffersen Ltd in Vancouver.

Insurance, bonding, surety

Contract Risk Management Strategies Surety Bonds vs. Letters of Credit, or Contractor Default Insurance

By Bob Sloat

T

he surety bonding industry has been writing more bonds covering more and larger contracts every year for the last two decades; it is estimated that some $100 billion worth of contract obligations were guaranteed in 2016. This is interesting, because unlike the world’s other large surety market — the U.S.A. — there is no law compelling contracting authorities spending public dollars to use surety bonding to guarantee contract performance. Obviously, contracting authorities in Canada, from large utilities to government transportation departments, have decided that bonding is the way to go.

That said, there are options put forward in the market place. The purpose of this article is to compare bonding to two oft-promoted options: Subcontractor Default Insurance and Irrevocable Letters of Credit.

Subcontractor Default Insurance (SDI) This is an insurance product to protect large general contractors from the costs of unexpected subcontractor and supplier default. Much has been written about SDI over the years about the effectiveness of this product for its intended purpose; and about whether it compares to surety bonding with respect to protecting contracting authorities from the risk of default at the level of the head contract.

The rationale advanced is that since most of the value of construction contracts is subcontracted — 80 per cent or more isn’t unusual — then SDI would protect against most of the risk. The problem with this rationale is that the major risk to contracting authorities isn’t from subcontractor default; rather the real risk is that the general contractor will default. In that event, SDI provides no meaningful protection.

The contracting authority would inevitably end

up ‘owning the full problem’ and be on their own to work through the disaster.

From the perspective of a contracting authority, whether SDI is effective for its intended purpose is moot: it does not replace the need for a contract guarantee — which can only be provided by surety bonding. Also, payment security has become a major concern in the construction sector — only Labour and Material Payment Bonds can guarantee subcontractor and supplier payment.

Irrevocable Letters of Credit (“Liquid Security”) What are the differences between surety bonds and ILOCs (irrevocable letters of credit)?

The following table summarizes some of the differences between ILOCs and surety bonds and why calling for surety bonds may be prudent and provide more protection for owners.

Summary

Surety bonds represent the best means of providing full, non-intrusive protection against the perils of contractor default for the following reasons: Prequalification Surety bonds provide more than pure financial security and are issued only after an exhaustive evaluation and prequalification process. The process of evaluation and prequalification, which is at the heart of the surety product, provides owners (obligees) with the confidence that the contractor (principal) has sufficient management and business structures in place to assure success.

Cash Position Surety bonds do not affect the contractor’s (principal’s) cash and/or its banking facility. The contractor (principal) has full access to these

resources which enables the company to expedite the completion of the bonded project.

Integrity of the Security A surety bond is in force for the life of the contract and does not expire.

On-going Monitoring Sureties monitor a bonded contractor’s (principal’s) entire work program on an ongoing basis which often allows them to foresee potential problems and mitigate these issues before any impact has been realized on the bonded project.

Trigger Surety bonds are “on default” instruments. They support the fairness of the underlying construction contract and require an owner (obligee) to honour its obligations and demonstrate that a default has occurred.

Completed Project With a performance bond in place, when a default has been declared, the owner (obligee) will end up with a completed project at the amount it contracted.

Administrative Burden A labour and material payment bond removes the administrative burden to the owner and ensures that subs and suppliers are paid in full. Any unpaid subs and/or suppliers with direct contracts on the project will not be required to lien a job.

Once their bond claim has been validated they will be paid by the surety.

Bob Sloat is director business development — Western Canada for the Surety Association of Canada.

This information is intended to serve as a general guideline.

Nothing contained herein should be construed as legal advice. Readers are cautioned to consult with legal counsel for such advice.

Surety Bonds

ILOCs

Prequalification of contractor

Sureties have an extensive process for prequalifying contractors and only issue bond(s) when they have the confidence that a contractor has the skills/talent, labour, equipment, cash and experience to be able to complete the work.

Banks issue ILOCs based their assessment of the contractor’s financial status. Banks do not assess a contractor’s past performance before issuing an ILOC.

Cash position

Sureties assess the working capital and cash flow of the contractor (principal).

A surety bond does not negatively affect the ability of the contractor to access more bank credit.

An ILOC reduces a contractor’s line of credit which can cause cash flow issues during a project. The likelihood of default increases if the contractor does not have the cash flow and banking credit to pay the bills. This could lead to a reduction of contractors bidding.

Integrity of the security

Performance bonds and labour and material payment bonds cannot be cancelled. A Performance Bond clearly states what constitutes completion of the work so there is no need for the obligee (owner) to ensure that the bond is still in force.

The onus is on the owner to ensure that the ILOC is still in force and has not been cancelled or expired.

On-going monitoring

Because sureties monitor a bonded contractor’s entire work program on an on-going basis, they are often aware of problems that have the potential to negatively impact the bonded project. While these problems may have nothing to do with the bonded contract, sureties will use this information to work with the contractor to prevent performance problems on the bonded project.

Banks focus strictly on the contractor’s ability to repay the outstanding amounts.

To see more, go to: http://www.surety-canada.com/en/surety_resources/faq/surety-bonds-versus-letters-of-credit.html January/February 2017

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Insurance, bonding, surety

Good Times, New Risks

By Steve McConnell

W

ith an upcoming provincial election and the recent announcement of up to $24.5 billion in infrastructure spending over three years, it’s hard not to be excited about the future.

Add to this the recent speculation that up to one quarter of residential homes in Vancouver could be replaced with multi-residential units by 2030, construction industry optimism is high. While there are no guarantees in construction, it certainly feels upbeat. As our neighbours in Alberta will attest, boom times bring risk and failure too.

Having available work to bid on is the critical first step. Consistent, effective and profitable execution is no easy task.

Incomplete drawings are increasingly common. While it is hard to say exactly why this is occurring, it seems as though significant merger activity and the globalization of design and engineering companies have resulted in a hollowing out of local design expertise. A hypercompetitive marketplace for design consultants may have driven pricing to a point where it is not possible for design firms to deliver a quality product to the market at historical standards. For the astute contractor, this creates an opportunity to provide design and contracting services to the owner. P3s, design build contracts and integrated project delivery (IDP), each in their own way bring design and construction together to benefit the owner.

They can also bring ambiguity, contractual issues, inter-party power imbalances and conflict to the project and to the unsuspecting contactor.

Private owners like property developers have long recognized that bringing together the same team of like minded companies to each project brings consistency, trust, innovation and profitability. Design innovation is shared and improved general contractor sub-trade cooperation helps to reduce the kind of delays and conflicts that have historically irritated public owners. The P3 and IDP models attempt to mimic this success by bringing it to public sector work.

While the intent might be good, open competition, innovation, access and transparency can be lost in the process.

CCDC and CCA standard documents have evolved over the years to meet the needs of all project stakeholders. As public owners behave more like private owners through very restrictive and subjective prequalification calls and nonstandard contracts, newer, younger and hungrier companies are locked out. Non standard contracts can reduce payment protection for downstream contractors. They also introduce a power imbalance in the construction pyramid that forces unreasonable risk to the weakest participants. These procurement models, due to their size and financing component, discrimi-

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nate against mid-sized local contractors. Innovation and competition are stifled. Worse, skilled and innovative local contractors end up working in a subservient capacity for large multi-nation corporations who provide little to the project other than a large balance sheet and financing.

Payment protection for sub-contractors and suppliers which has historically been provided by payment bonds on public work is often eliminated. While talk of prompt payment legislation to protect sub-trades and suppliers has begun, implementation in B.C. is a long way off.

Non-standard contract terms often mean non-standard insurance requirements. In construction, insurance claims are not unusual. As a broker with a significant construction book, we are regularly drawn into formal insurance claims.

While advertising might suggest that insurance is like a warm blanket that covers the contractor, it is rarely like this in the real world. Construction insurance is complex. CCDC insurance standards are designed to provide adequate and fair coverage to all construction participants. As the industry moves to newer delivery models, risk is often forced down on downstream contractors. This can occur contractually, through weakly worded insurance policies or by policy exclusions and large deductibles. If these contractors are not able to effectively offset this risk with insurance, they end up in a dangerous game of construction insurance roulette. In practice, insurance is much like a blanket with many holes.

Patches can be purchased to fill in these gaps but often, these patches also have holes. Sometimes,

January/February 2017

these can be patched as well, for more money.

Often, the blanket will have holes that simply cannot be patched at any price. When the head construction contract forces risk downstream and when insurance cannot be placed to completely take on this risk, the contractor ends up exposing their balance sheet and sometimes their solvency, to the project. Comprehensive insurance review, on a project by project basis, is essential for all project participants.

Prosperous times are ahead for our industry.

But even though work is abundant, profitable work is not. Poor design work on the front end will present an ongoing challenge and an opportunity for contractors. Delivery models that favour large multi-national contractors may result in onerous contracts that will transfer risk to smaller contractors. Access to some government work might be restricted to only large contractors and their friends. Standard insurance coverage and bonding may not be effective for some project delivery methods. Contractors who are lower on the construction pyramid are most exposed to insurance gaps. Insurance will not cover all risk.

2017 should be one of the best years in construction for a long time. With a focus on complete front end design, use of standard contracts including bonds and fair public tendering that encourage openness and transparency, 2017 should also be a profitable one for most.

Steve McConnell is client executive, vice president at CMW Insurance.

Insurance, bonding, surety

Minimizing Liability Risk Professional liability insurance requirements differ across provinces.

By Jeff McLellan

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hat is professional liability insurance and what it covers are common questions by many within the construction, design and engineering communities.

Construction professionals such as architects, engineers, land surveyors and quantity surveyors typically carry professional liability insurance (also known as errors and omissions liability insurance). These policies insure the professional from their liability arising out of actual or alleged errors or negligence in the performance of their services to others. This policy is often referred to as the professional’s ‘practice policy’ and is normally renewed annually.

A notable fact about these policies is that it must be in place at the time a claim is made in order for it to respond and pay the claim. This is important when hiring an architect or engineer who does not normally carry professional liability insurance and agrees to obtain it while working on a project really does not provide owners or their projects with much protection if they decide to not maintain the policy after the first year. Policies also normally have an aggregate limit that caps the amount available in any one policy period.

How do owners address this potentially major exposure to their project’s profitability?

The most robust and efficient option is to arrange a project specific professional liability policy which insures all professionals for the

work on a specific project during and after it’s completed for a given time period. These are not commonplace and the details are outside the scope of this article.

So that leaves us with addressing the expectations of the owner and professionals in the early stages of the project.

Properly drafted insurance provisions in an RFP or contract make everyone’s life easier.

While the owner has the right to require whatever types of insurance of the consultants, it should be noted that requiring higher than normal limits that don’t make sense for the project may limit the number of firms interested in the project or in turn may increase their fees as they are looking to recover the additional cost of the insurance requirements.

Another area that causes a lot of concern is omnibus language in the indemnity agreement that makes reference to “any and all claims or demands” that is not tied to an error, omission or negligent act in the rendering of professional services and goes beyond the legal liability that is covered under the professional liability insurance. Such broadly worded indemnity clauses may create uninsured business risks for the consultant. All of these items can negatively impact the project and in turn the owner’s reputation, resulting in consultants pricing this unknown risk into their proposals.

Examples of specific provisions include a requirement in the contract with professionals

outlining the insurance the owner requires them to carry and how long the owner requires it to be maintained. This can be worded in various ways but owners need to consult an insurance broker who has specific knowledge of professional liability so they can have confidence that they are asking their consultants to provide what makes sense. We often see requests for what is known as Additional Insured status, however most professional liability insurers will not grant this type of coverage.

Notice to the project owner of the cancellation of the professional’s policy (from their insurer) is a suitable option but not totally reliable depending on the insurer. Another option is asking for notice of material change, which we often see but most insurance companies are not prepared to provide this because the term “material change” is too nebulous and vague.

Not all provinces require architects or engineers to obtain professional liability insurance.

For example in the province of B.C. there is currently no requirement for architects or engineers to maintain professional liability insurance, only a requirement for them to advise clients if they have insurance or not. This comes as a surprise to many people and is one of the main reasons owners need to ask the question to their consultants.

Jeff McLellan is vice president, professional services, architects & engineers practice leader — Western Region at BFL Canada Insurance Services Inc.

January/February 2017

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25

Legal File

Bad Debts and Worthless Investments What to know to claim a tax deduction for bad debts

By MaryAnne Loney

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any businesses and projects did not survive the recent economic downturn. As a result, other businesses and individuals may have significant bad debts and/or worthless investments. These losses could potentially provide tax deductions.

The Income Tax Act allows deductions for: • Amounts previously reported in income which are uncollectable (“Trade Debts”) — These result from the sale of goods and services.

• Bad investments — These are capital loans to or the purchase of shares in other businesses.

Bad Debts In Rich v R., the Federal Court of Appeal established a non-exhaustive list of criteria to be considered in determining if a debt is “bad.”

• The history and age of the debt.

• The financial position of the debtor, its revenues and expenses, whether it is earning income or incurring losses, its cash flow and its assets, liabilities and liquidity.

• Changes in [debtor’s] total sales as compared with prior years.

• The debtor’s cash, accounts receivable and other current assets at the relevant time and as compared with prior years.

• The debtor’s accounts payable and other current liabilities at the relevant time and as compared with prior years.

• The general business conditions in the country, the community of the debtor and in the debtor’s line of business.

• The past experience of the taxpayer with writing off bad debts .

What you need to prove your debt is bad will vary depending on the circumstances. If a situation is “hopeless”, then no steps are required.

Conversely, if it appears that there was some hope of collection, a “vigorous pursuit” of collection is necessary before a deduction can be claimed.

Trade Debts The Canada Revenue Agency (CRA) is even more restrictive in its interpretation. While CRA interpretation is not law, it is followed by CRA auditors, so it determines whether you are likely to be reassessed.

The CRA states a decision as to whether Trade Debts are bad should be made “only after determined efforts to collect the debt have been unsuccessful or there is clear evidence to indicate that it has in fact become uncollectible.”

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This suggests you should keep records showing what collection steps were taken and what evidence there is that the debt is uncollectible.

However, there does appear to be room for some business discretion regarding what are “determined efforts” to collect and what is “clear evidence” that the debt is uncollectible.

Capital Loans and Worthless Shares The CRA is even less permissive when it comes to capital loans which it states “will not be uncollectible at the end of a particular taxation year unless the creditor has exhausted all legal means of collecting it or where the debtor has become insolvent and has no means of paying it.”

This suggests that a lawsuit (or a passed limitation period) or the debtor’s insolvency will be necessary to convince the CRA to allow the deduction. Also, unlike with Trade Debts, the CRA only allows deductions on capital loans when the full outstanding amount is uncollectable. This means you must collect whatever you can before claiming a deduction for any of the loan.

There is also a deduction available when shares you have purchased have no value. To claim a deduction the taxpayer must be able to show that the debtor went bankrupt during the year or is insolvent, has ceased carrying on a business and it is reasonable to assume the corporation will be dissolved without resuming a business.

January/February 2017

Finally, as an added complication, deductions for capital loans and worthless shares are only available when the above conditions are met and the taxpayer elects for the provision to apply to the debt or share in their income tax return for the year. This means that if the conditions at issue only apply in a specific year, for example a business goes into bankruptcy in a specific year and you fail to make the election, you may never be able to claim the deduction.

Takeaways In practice, there are three steps you can take to increase the likelihood that you will be able to claim deductions for bad debts and worthless shares: • Take appropriate collective action and track the financial status of your debtors and the businesses you have invested in so you know when those businesses may be insolvent or declare bankruptcy; • Keep records of your efforts and; • Claim the deductions as soon as possible.

These steps should reduce the chance of the CRA denying the deduction. Further, if the CRA does deny the deduction, these steps should put you in a stronger position to appeal to the tax court whose position on the subject appears to be more in line with business realities.

MaryAnne Loney is an associate at McLennan Ross LLP

Legal File

Bid Shopping: Rights and Remedies

By David Hughes

W

hile many people involved in the construction industry know that bid-shopping is not allowed, they often do not know what exactly counts as bid-shopping, or what their rights and remedies are if they suspect that they have been a victim of bid-shopping. This brief article attempts to shine a light on these two questions.

Bid-shopping is not just shopping a price A “traditional” definition of bid-shopping is set out in Fred Welsh Ltd. v. BGM Construction Ltd. 1996 CanLII 850 (BCSC): Bid manipulation occurs when the company who has received an early bid goes to a competitor and asks the competitor if they can come up with a better price than the one suggested by the company which has done a considerable amount of work to arrive at its estimate. This nefarious practice is described in the industry as “bid-shopping”.

However, more recent cases have found that bid-shopping doesn’t just involve an owner taking a contractor’s price and taking it to other contractors to see if they can beat it. In the case of Stanco Projects Ltd v. HMTQ & Aplin & Martin Consultants Ltd., 2004 BCSC 1038, Madam Justice Ballance stated: … the term “bid-shopping” should be given an expansive interpretation so as to encompass conduct where a tendering authority uses the bids submitted to it as a negotiating tool, whether expressly or in a more clandestine way, before the construction contract has been awarded, with a view to obtain a better price or other contractual advantage from that particular tenderer or any of the others. What I am speaking of here is bid manipulation which can potentially encompass as vast a spectrum of objectionable practices as particular circumstances may make available to a motivated and inventive owner, intent on advancing its own financial or contractual betterment outside the boundaries of the established tendering protocol …

On appeal, the Court of Appeal declined to comment on whether or not Madam Justice Balance’s expanded definition was correct. Only time will tell whether this broader definition of bid shopping will gain traction; however, following Stanco, it appears that what counts as bid-shopping may be broader than what was initially thought. However, as a general principle, any time a party (an owner or a general) does something after bid closing that has the result of that party getting a better deal, there should be reason for a bidder to seek an informed opinion on whether or not it has legal recourse. This is because, in many cases, the offensive activity

that is termed “bid-shopping” may in fact be another way of expressing the fact that an owner has breached a legal duty to treat all compliant bidders equally and fairly.

The law against bid-shopping protects subcontractors whose price has been used From experience, “traditional” bid-shopping seems to impact subcontractors more often than general contractors. However, many subcontractors are under the mistaken impression that they have no recourse if a general contractor uses the subcontractor’s price in the general contractor’s bid and then shops that price around after the general contractor has been awarded the contract.

In the case of Welsh the B.C. Supreme Court found that when a general contractor used a particular subcontractor’s price in the general contractor’s tender to the owner and the owner accepted that tender, the general contractor was then bound to that subcontractor. Justice Romilly stated: Having reviewed the cases, I am satisfied that the use of the [subcontractor’s] bid in the [general contractor’s] bid, rather than the [general contractor’s] nomination of the [sub-contractor], is what is determinative, in most cases, of whether the parties are bound to enter into [a contract] upon the [owner’s] acceptance of the [general contractor’s] bid.

Thus, following Welsh, a subcontractor has the right to sue a general contractor for breach of contract if, having incorporated that subcon-

tractor’s bid in its own bid, the general contractor then shops that subcontractor’s price. The remedy awarded to the disappointed subcontractor in Welsh was the subcontractor’s lost profits and overhead on that job.

Conclusion There is no doubt that many times bid-shopping goes unchallenged because the victim does not want to damage its relationship by involving a lawyer to pursue an owner or a general contractor who may be the source of future work. However, part of the reason that bidshopping sometimes goes un-challenged may also be a result of: • a general lack of appreciation among contractors that what the owner (or the general contractor) has done actually amounts to bid-shopping; and • a mistaken belief that subcontractors have no legal recourse.

Hopefully, this article has offered a new perspective on those two points. Of course, individual situations differ and this article only presents general information rather than legal advice. For questions about an individual situation, it is best to contact a lawyer who is experienced in construction law for advice.

David Hughes practices construction law at Forward Law LLP in Kamloops. He has served as a director of the Southern Interior Construction Association since 2014.

January/February 2017

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Legal File

Assuring Insurance

By John Singleton

I

nsurance in the construction industry is a backstop to crippling losses. For developers/owners it presents a source of funding for repairing physical loss or damage to the project during construction and for responding to liabilities of builders and designers for construction or design errors manifesting during or after construction. It is not the builder’s or designer’s physical business assets which offer security to owners/developers, but the insurance placed to protect the project or builders and designers in the event things go wrong. Without construction insurance, there is no funding to compensate when the inevitable consequences of construction and design errors occur.

Recognizing the importance of construction insurance, one wonders why so often these valuable assets are misunderstood, mismanaged and often forfeited. Those who have had the experience of losing insurance coverage because of its mismanagement appreciate the value it has. It is fundamental to have a clear understanding of what the various coverages are and what needs to be done to preserve these valuable assets.

Builder’s Risk Insurance Otherwise known as course of construction insurance, builder’s risk insurance affords coverage for physical damage to property during the course of construction. All parties involved in the project are usually extended coverage, whether owners/developers, builders, designers, subtrades, subconsultants, etc. In other words, everyone has an insurable interest in the entire project so, in the event of a loss, all project participants are entitled to enforce coverage under the policy so as to make good any physical damage caused during the course of construction. Of course, there are limitations of this coverage, the most of important of which is that coverage does not extend to the cost of making good faulty workmanship, materials or design, now defined in the modern wording to mean the cost which would have been incurred to avoid the loss had it been known immediately before the loss that it was going to occur. In other words, the cost of fixing the defect or default which lead to the loss is all that is excluded.

At the present time, the law is in a state of flux as to what constitutes coverage of physical damage to property and uncovered costs associated with making good faulty work product or design. Two recent cases have shown a divergence of opinion between different levels of our court system with the prospect that future cases, having different factual twists, face an uncertain world. Against this background, it is most important to seek professional advice from those 28 construction business

familiar with this form of coverage before either presenting the claim to the insurers or accepting a coverage reserve or coverage denial from the insurers.

Builder’s risk insurance provides coverage only for losses which occur during the course of construction of the project. Once the project is completed, the coverage under this policy is at an end and any subsequent claims for the cost of repairing physical damage to property are going to fall on any liability policies which might be available to targeted defendants.

General Liability Insurance This form of coverage extends to affording the insureds (mainly builders and trades) with defence coverage and indemnity coverage for their liability for physical damage to tangible property or bodily injury. The property damage must occur after the project in question is completed, whereas the bodily injury can occur at any time during or after completion of the project. The policy includes coverage for liability arising out of the provision of professional services. In order for coverage to attach under this policy the claim in question must arise out of an “occurrence” defined to mean an accident or an unlooked for mishap or event.

The historical form of coverage required the “occurrence” which gave rise to the property damage or bodily injury to have taken place during the currency of the policy. The property damage or bodily injury under this coverage could occur at any time during the course of the policy or after the policy had expired. This form of coverage then would provide protection to the insureds for their liability for property damage and bodily injury taking place at any time as long as it arose out of an “occurrence” which took place during the course of the project.

The modern form of general liability coverage requires the property damage in question to have taken place during the currency of the policy. So under this form of coverage, if there is no property damage during the course of any particular policy, there is no coverage available under it, whereas under the historical coverage, the policy would apply to any property damage or bodily injury arising out of an occurrence during the policy period.

The case law associated with general liability coverage is no less clear than that associated with builder’s risk insurance, in fact perhaps less so. The courts are constantly wrestling with different policy wordings and fact patterns which lead to results which are not necessarily in accord with the earlier conventional wisdom on the same coverage issues. So once again, it is critically important

January/February 2017

to seek the appropriate advice in presenting any claim to the insurers under this form of coverage and to critically assess the insurer’s response once the claim is presented.

Finally, under this policy, there is an obligation on the insured to cooperate with the insurer or defence counsel once a claim is reported.

In this regard, the insured can be looked at as a partner with the insurer or defence counsel in investigating and defending the claim. Any breach of this obligation by the insured can, once again, result in the prejudice to the insurer’s ability to afford a full defence and a forfeiture of coverage.

Professional Liability Insurance The obligations under a professional liability policy on the part of the insured consultants is much like the obligation on builders and trades under the general liability policy, outlined above.

This form of coverage has one significant difference in coverage when compared to the coverage available under a general liability policy: under the professional liability policy the only claims that are covered are those which are “made” during the currency of a policy.

Once the policy has expired, no claims can be made after that date, regardless of when the error, omission or negligent act occurred. There must be a policy in force at the date the claim is made.

Another important feature is that it will afford coverage to the insureds if a “circumstance” is reported during the currency of the policy, although a formal claim might not be advanced until after expiry of the policy. This should bring to light the need for the insured consultant to immediately report any circumstance which might reasonably be foreseen to give rise to a claim at some time in the future.

Once the policy in place at the time knowledge is acquired has expired, there can be no coverage under that policy.

From the foregoing, it should be clear that insurance is a very important asset to be carefully managed so as to assure insurance is there when needed. It is insurance which in the overwhelming majority of the cases constitutes the only recovery available to owners and developers to fund the losses they experience and, in the case of builders and designers, the only source of funding for what can prove to be an otherwise unaffordable defence effort or to satisfy a judgment which can have a crippling effect on the ongoing operations of your business.

John Singleton, Q.C., is a partner at Singleton Urquhart LLP in Vancouver.

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2017 Construction

LEADERSHIP

May 5-6, 2017

Fairmont Chateau Whistler

Forum

Building Tomorrow’s Leaders Designed for middle managers, the conference will address current issues, trends, best practices and equip delegates with tools to become well rounded industry leaders.

This year’s program will include panel discussions, engaging sessions, and a variety of networking activities that will help delegates make valuable connections.

Learn more and register now at vrca.bc.ca/conference

Featuring Keynote Speaker John Furlong, CEO of the Vancouver 2010 Olympic & Paralympic Winter Games.

Industry News

Bird Consortium to build hospital Bird Construction Inc. has executed a contract with Fraser Health through Bird Design-Build Construction Inc., a wholly owned subsidiary, to design and build a new mental health facility and energy centre at Royal Columbian Hospital in New Westminster, British Columbia. The contract, valued at approximately $200 million, will commence construction in early 2017 and be completed in winter 2019.

This new 75-bed mental health and substance use centre will be a four storey building with approximately 13,000-square-metres that will provide both inpatient and outpatient services. The mental health building will target LEED Gold certification and include a two level bridge link to the existing hospital with one level for patient movement and the other for hospital services.

In addition, the building will have a multi-level 450 stall parkade to service the campus. The energy centre is designed to support the needs of the existing campus in addition to the new mental health building and is sized to support future proposed redevelopment phases. It will also house an IT communication hub which is designed to support Royal Columbian’s future information technology infrastructure requirements.

B.C. leads in job growth B.C. set the pace for job-growth in Canada finishing the year with a mark of 3.0 per cent. Three per cent translates into 69,000 new jobs in the province, which also had the country’s lowest unemployment rate for 2016.

Financial institutes such as RBC Economics, BMO Capital Markets, Desjardins, Scotiabank along with the Conference Board of Canada are projecting that job growth in B.C., while moderate, will once again outpace Canada as a whole and will either be leading all other provinces or be right near the top. In addition, these forecasters expect B.C.’s unemployment rate to continue its downward trajectory, to sit between 6.1 per cent and a low of 5.7 per cent.

These positive reports build on the most recent Labour Market Outlook which forecasts nearly one million job openings in B.C. by 2025.

Over the next decade, $3 billion of training investment is being directed to focus on skills and programs for future in-demand jobs. Job openings in the next 10 years are expected in major occupational groups including: sales and service; health; trades, transport and equipment operators; manufacturing and utilities; and natural resources and agriculture.

30 construction business

New CEO for VICA The Vancouver Island Construction Association (VICA) has announced that Rory Kulmala will succeed Greg Baynton as the chief executive officer effective February 27, 2017. Baynton is retiring at the end of March after a decade at the helm.

Kulmala has 25 years of industry-related experience and brings with him strong relationships with key stakeholders within the Vancouver Island construction community. He has been involved in the private and public sector in many capacities, from business development, capital planning and corporate governance to project management and quality control.

He has strong ties to various levels of government, including First Nations and crown corporations, as well as to the developer community and construction industry.

Remember Joe Y. Wai Vancouver architect Joe Y. Wai died unexpectedly on January 11 from complications related to an aneurysm. He was 76. Wai leaves a legacy of activism and generosity, and will be remembered for his passion for architecture and community.

Wai is best known for his work designing the Dr. Sun Yat-Sen Classical Chinese Garden (photo above), with landscape architect Don Vaughan. The garden is the first full Chinese Garden to be built outside of China and it continues to serve as a peaceful retreat in the centre of the city. Chinatown’s Millennium Gate, a towering landmark that welcomes both visitors and Vancouverites alike, is another Wai creation.

Chris Gardner named ICBA president The Independent Contractors and Businesses Association of British Columbia (ICBA) has named Chris Gardner as its new president. Gardner replaces Gord Stewart, who was appointed to the role in December of last year. Stewart will remain with the organization as a consultant until the end of 2017.

Former president Philip Hochstein, who retired at end of 2016, will also remain on in a consulting role until the end of 2018. ICBA’s leadership team includes Dr. Lindsay Langill, vice president; Mike Davis, regional vice president; and Alain Bergeron, president of ICBA Benefit Services Ltd.

January/February 2017

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