Construction File: The Pitfalls of Incomplete Contract Documents

In providing a price, contractors expect that the contract documents are complete and reflect the project requirements, and that any changes, errors or omissions from the documents will lead to a change order with commensurate adjustment to both the contract price and duration. As the bidding is done in a competitive environment, contractors and their subcontractors are reluctant to add allowances to their tendered price, fearing that they will not be successful as low bidder. While the design may have taken several months to complete, the contractor is often unfairly expected to verify the consultant’s drawings and specifications for deficiencies or completeness during a much shorter bidding period. To remain competitive, a contractor should be able to rely entirely on the contract documents, and that their price will reflect the scope of work outlined in the documents alone, even if the contract is loaded with onerous clauses.

Different researchers have conducted studies to determine the common causes of significant claims on contracts and the results seem to be consistent. On average, claims amounted to 30% of the construction value. Four of the major causes for claims were:

  • Inadequate site and/or subsurface investigation prior to starting the design
  • Starting design efforts too late and/or unduly limiting the cost of engineering and design
  • Calling for bids with an incomplete set of drawings
  • Endeavouring to complete the design through shop drawing review

The common feature of all these projects was hurriedly and incompletely prepared bid documents, giving rise to design changes, extra work, and quantity fluctuation during the project. Many owners may argue that such a high premium can be justified as long as the facility is available on the scheduled date. Unfortunately, experience does not support such an argument. The analysis of the reports revealed that nearly all of them suffered significant delays, notwithstanding any attempted acceleration. The average delay was 5.69 months, representing nearly a 50% overrun in the average planned duration. Had more time been spent in investigating, planning and designing these projects than they actually did, they would have saved at least 20% of the actual cost even had they paid approximately 50% more to their designers. It is safe to state that the ultimate cost of the project would be significantly lower if owners allowed more time to complete their design.

Best Practices for Complete Contract Documents:

  1. Owners need to recognize there is an implied warranty that the drawings and specifications that they provide to the contractors as part of a contract are accurate, complete and buildable and that the contractor is not responsible for the consequences of defects in the plans and specifications.
  2. The owner should not skimp on the front 10% of the project costs (architectural and engineering) at the expense of the latter 90% of the project (construction). Owners should demand that consultants provide 100% complete contract documents at the time a contract is tendered. If necessary, cash allowances should be well defined.
  3. Most contracts require the consultant to perform the first adjudication of an issue, but when the claim results from design errors and omissions in the contract documents, the consultant may be in a conflict of interest position. The result is a possible dispute between the contractor and the owner with possible litigation costs. A better approach may be for the owner to use a third party neutral to provide an independent opinion on issues that arise during construction.
  4. The use of onerous clauses to prevent a contractor from recovering costs due to incomplete contract documents is not a principled practice and may not be considered as being fair by the courts. It may therefore be either unenforceable or interpreted to the benefit of the contractor. This should be taken into consideration when drafting a contract.
  5. When consultants have been asked why incomplete documents are issued for contracts, the usual response has been that the fees are not adequate to do a complete job. Designers should be cautious that commercialism does not replace professionalism.

These are some sound fundamentals for achieving the schedule and cost objectives of a project. The most critical of the requirements is having drawings, specifications and other parts of the contract documents as close to 100% complete as possible at the time of executing a contract. If 100% is not achievable for some reason, then the contract documents must make provision for fair and equitable adjustments to the time and price in the contract as changes are issued. Otherwise, the spectre of claims and potential litigation loom on the horizon to the peril of all parties involved in the contract.

Acknowledgement: This document was prepared from information provided in ‘The Revay Report, March 2010’ – to access the complete report, go to http://www.revay.com/index.php/publications/the-revay-report/.

2020 Annual Report Cover Image.png
September 21, 2020

BCCA Releases it's 2020 Annual Report

On Friday, September 18th, The BCCA held it's Annual General Meeting and shared it's latest Annual Report which covers the fiscal period between April 1, 2019, and March 31, 2020.
Read More
BCCA Builders Code Champion Awards Finalists.jpg
November 29, 2019

Inaugural Builders Code Champion Awards Celebrate Construction Sector Leadership

Nine months after unveiling the resources to help the industrial, commercial, and institutional construction sector set a standard code of conduct on worksites in B.C., the Builders Code has honoured six companies for their leadership at the inaugural Builders Code Champion Awards. Hosted by the BCCA and Minerva BC at the Ocean Pointe Resort in Victoria yesterday, the awards recognized companies with advanced policies and practices that seek to ensure all employees can reach their full potential in the skilled trades.
Read More
Feature-Graphic.png
November 26, 2019

BCCA Celebrates National Construction Day with New Worksite Behavior Training App

As part of its ongoing efforts to address bullying, hazing, and harassment on B.C. construction worksites, the BC Construction Association (BCCA) is marking National Construction Day with the beta launch of a new Builders Code Crew Training App that uses animation and humour to help construction workers recognize the difference between “Cool or Tool” behavior on the worksite.
Read More
bcca_news_mic_article.jpg
November 05, 2019

Canada's First Impact-Investment Mortgage Fund Set to Serve BC's Essential Workers

Tax-free impact investment vehicle supports housing affordability for BC tradespeople, teachers, firefighters. Essential workers in B.C. struggling to afford a home in the community where they work may soon have access to a new first-time homebuyer mortgage financing solution. A mortgage investment corporation (MIC) launched by the non-profit BC Construction Association (BCCA) aims to make securing a mortgage easier for B.C.’s skilled tradespeople, medical care providers, educators, and emergency responders, while at the same time provide the growing impact investment market with a tax-free vehicle that supports housing affordability.
Read More
trans-mountain-pipeline.png
August 23, 2019

BCCA Welcomes Trans Mountain Announcement Resuming Work on Pipeline Expansion Project

The BC Construction Association welcomes Wednesday’s (Aug. 21) announcement by Trans Mountain Corporation President and CEO Ian Anderson that construction work on the project will resume in communities along the route, including an immediate return to work at B.C.’s Burnaby Terminal and Westridge Marine Terminal. According to Trans Mountain, this will see 4,200 contract workers working along the route in B.C. and Alberta in the fourth quarter of 2019.
Read More
NRCA_BBQ_BuildersCode3.jpg
August 20, 2019

Builders Code Ramps Up Services Across Northern Region

New Builders Code training for site supervisors, forepersons and union business managers on how best to deal with the perpetrators and targets of worksite bullying and harassment was announced today in Prince George, along with a new local Employer Advisor for the northern region. The training, which supports the construction personnel that work most closely with tradespeople on construction sites, was announced by Northern Regional Construction Association (NRCA) CEO Scott Bone.
Read More
July 04, 2019

Aligning the Construction and Technology Sectors

Construction is changing. With a skilled labour shortage and other pressures affecting our industry, it is more important than ever to innovate and become a future-forward construction company. New technologies that help us become more productive and efficient are critical to moving the construction industry forward, but can also feel overwhelming at times.
Read More
June 27, 2019

Multibillion Dollar BC Construction Sector Untapped by Tech

In the midst of a sector-wide drive for greater innovation and productivity in the face of a booming industry and a looming skills shortage, a recent State of Construction Technology survey conducted by the British Columbia Construction Association (BCCA) shows B.C.’s construction employers are underserved by a tech sector that is largely unaware of the huge potential market they represent.
Read More
BuildersCode-Bricklok-7.jpg
March 19, 2019

Builders Code Expansion: First Advisor Now Available to Vancouver Island Construction Employers

Industry Seeks to Improve Retention of Skilled Tradeswomen by Addressing Worksite Behaviour. Construction employers who want to address diversity or harassment issues on their worksites but lack the human resources personnel or expertise to do so will now have access to confidential advisors with experience in HR management, mediation and conflict resolution as part of the Builders Code recently launched by the BC Construction Association and project partners.
Read More
BuildersCode_Launch_0218.jpg
March 08, 2019

BC Construction Industry Introduces Worksite Conduct Standards to Improve Worker Retention

The Province of B.C. and the BC Construction Association (BCCA) marked International Women’s Day today with the launch of the Builders Code, a comprehensive program that aims to address B.C.’s skilled labour shortage by reducing harassment, bullying and hazing on construction worksites. The Builders Code defines an Acceptable Worksite and provides employers with tools, training and resources to improve and promote safe and productive worksite behavior.
Read More
February 25, 2019

Risk Alerts Issued for Two Provincial Construction Projects

The BC Construction Association (BCCA) has today issued two Contractor’s Alerts warning BC contractors of “Onerous Bidding Conditions” on two Prince George construction projects being procured by BC Housing. The projects are a building envelope remediation on Westwood Court and renovation work on the Hart Haven Group Home at Dagg Road, both in Prince George. Total value of both projects is $9.5M - $5M on Westwood Court and $4.5M on the Hart Haven project.
Read More
lng-ttf-1000.png
February 07, 2019

Supporting BC's Skilled Workforce

LNG Canada and the BC Construction Association (BCCA) today announced that Marissa McTavish, an electrical apprentice from Prince George, has become the 1,000th participant in LNG Canada’s Trades Training Fund (TTF) and her employer, Primus Electric, the 500th employer to sponsor an employee with the Fund.
Read More
ircc_social-media_02.jpg
January 22, 2019

British Columbia Construction Association Selected to Provide Pre-Arrival Services

Pre-arrival settlement services are a key element of Canada’s immigration program. They provide newcomers, including refugees, with the information and settlement support they need to make informed decisions about their new life in Canada before they arrive, such as how to prepare for finding a job. To help deliver these important services, Immigration, Refugees and Citizenship Canada (IRCC) will be providing funding of $3.4 million to the British Columbia Construction Association (BCCA).
Read More
bcca-logo-bug-white(1).png
September 17, 2018

BCCA Integrated Membership Update 2017

There are a record-breaking number of significant issues applying pressure to BC’s construction industry this year, and BCCA is working at the provincial level to make sure industry’s concerns and recommendations are heard loud and clear.
Read More
tmx-workers.jpg
August 30, 2018

Response to Federal Court of Appeal's Trans Mountain Pipeline Decision

BCCA is extremely disappointed by the Federal Court of Appeal's Trans Mountain expansion project decision today which undermines Canada’s economy and role on the global stage. This blow to investor confidence comes at a time when BC is already under pressure from new tariffs, taxation, and policy directives.
Read More
PlumbingCode2012_cover(0).jpg
August 24, 2018

New BC Building and Plumbing Code 2018

The new BC Building and Plumbing Code will be effective December 10, 2018 and will apply to building permits applied for on or after that date. The BC Fire Code is anticipated to be adopted in the fall of 2018 and effective December 10, 2018. Buildings with permits in place under the previous 2012 BC Building Code will generally not be affected by the adoption of the new code.
Read More
bcca-board-exec.png
August 02, 2018

Industry Voices - Industry Must Come Together

Premier Horgan's Community Benefits Agreement (CBA) is the most dangerous and disruptive policy to be introduced by any government into our industry in recent memory. Whether you are a union or an open-shop employer, your basic rights and freedoms as Canadians are being blatantly disregarded, as is government's obligation for fair, open and transparent procurement practises.
Read More
pattullo-bridge-replacement.png
July 27, 2018

Pattullo Procurement Strategy Takes BC Construction a Bridge Too Far

The new Pattullo Bridge Community Benefits Agreement patently illustrates what is unfair with our current government’s policy decision to mandate the nature and extent of procurement requirements in major public construction projects. For BCCA, an association that hinges its principles on fair, open and transparent procurement practices, this agreement is taking public policy in construction tendering a bridge too far.
Read More
bcca-logo-bug-white.png
July 18, 2018

Response to the Province’s Community Benefits Agreement Announcement

BCCA is working with our counterparts at the local, provincial and national levels to inform government on the risks of Community Benefit Agreements, and to educate public owners on the use of fair, open, and transparent procurement processes which are an obligation and responsibility of government to taxpayers.
Read More
youth-apprentice-848x480(0).png
June 21, 2018

Tackling the Late Payment Epidemic: What Will It Take?

"Prompt payment” is a familiar issue in the construction industry. Of course there’s nothing prompt about it. It’s the LACK of prompt payment that makes it an issue, handicapping our industry, squeezing the small contractors, and pushing risk down into the supply chain onto those who can least afford to carry it.
Read More
URBC_Full-Banner.png
May 30, 2018

Understanding Risk British Columbia (UR+ BC) Video #URBC

The Understanding Risk British Columbia (UR+ BC) symposium, hosted April 16 & 17, 2018 in Victoria BC, marked the first time the construction industry played a leadership role in bringing together builders, designers, engineers, scientists, and policymakers to tackle the challenges of hazard mitigation and increased resilience in the industrial, commercial, and institutional built environment.
Read More
trans-mountain-pipeline.png
May 29, 2018

BCCA Response to Federal Purchase of Trans Mountain pipeline for $4.5 Billion

Official Statement - The BC Construction Association has long been a strong public supporter of BC’s oil and gas strategy and of the Kinder Morgan Trans Mountain pipeline in particular, recognizing the significance of the project for the economic prosperity of British Columbia and the rest of Canada provided that all environmental safety stipulations are met.
Read More
construction-leadership-winners-2018.png
April 17, 2018

Construction Leadership Award Winners 2018

#ConstructionMonthBC wouldn't be complete without a Construction Leadership Dinner. We honoured Amy Carr, Mary-Anne Bowcott, Karen Anderson, Becky Lupton, Max Ignatiuk, Jerry Pasitney & Tracey MacKinnon for their industry leadership roles.
Read More
Jessica-S-profile.png
April 12, 2018

UR+ BC Panelist: Jessica Shoubridge

Principal, Thrive Consulting, Director, EERI-BC, and UR+ BC Organizer, Jessica Shoubridge, has worked across all orders of government, academia, non-profits and the private sector to help bridge gaps between science, policy, and action for risk reduction and resilience building.
Read More
mic-lisa-lucy.png
March 19, 2018

A Conversation with Dr. Lucy Jones

We're with Lucy Jones, an expert in earthquake research and earthquake risk reduction from LA. Lucy is the 2018 distinguished lecturer for the Earthquake Engineering Research Institute, BC Branch. She's in Victoria to talk about creating resilience in our communities, particularly about creating building codes that reflect the realities of earthquake loses.
Read More