Ontario Electrical Contractor 27 B LEGISLATION Will the new Construction Act Under Bill 142 Help Electrical Contractors? By Jamie Collum, Surety & Construction Specialist, Construction Practices Division Bill 142: What’s in it for Electrical Subcontractors? On July 1, 2018, the first part of Ontario’s new Construction Act came into effect.The Act is the most wide-ranging change of rules in the construction industry in Ontario since 1983. The overall intention is to keep projects and funds moving forward and to provide a fairer marketplace for all parties. While we cannot focus on every change here, these are a few key modifications that are important for sub- contractors to understand. Prompt Payment – Improving the Flow of Contract Funds The new prompt payment rules come into effect on October 1, 2019.The legislation states that an owner must pay a general contractor within 28 days of receiving a “proper invoice,” unless the owner delivers a notice of non-payment in the prescribed form within 14 days.This is a significant improvement from the past, when sub-trades were often forced to wait up to 90 days or longer for payments. A general contractor who receives full payment from an owner must then pay any subcontractor within seven days of receipt of payment. If the contractor fails to make this payment, they must provide a written notice of non-payment to the subcontractor to explain the reasons for non-payment. A More Responsive Surety Under the new Act, sureties must now follow mandatory response times to claims: Performance bond claims:The surety will have four business days to acknowledge a claim and request documents in the prescribed form, and then must provide its position within 20 business days from date of claim. Labour & Material Payment bond claims: The surety is required to acknowledge and request information within three business days after receiving the initial notice of claim, and then must provide its written notice the earlier of 10 business days after receiving information from the claimant, or 25 business days after the initial notice of the claim. Payment of Labour & Material Payment bond claims: The Surety will have 10 days after providing its written position to pay any undisputed amounts. Changes to Holdback Provisions The new legislation provides for holdback payment on an annual, phased or segmented basis. However, it is important to note that the Act still provides a general contractor with the ability to withhold some or the entire amount of the holdback, conditional upon the general contractor publishing a notice of non-payment. A New Process to Resolve Disputes The introduction of adjudication as a means for dispute resolution is a significant change. The new process is intended to provide faster settlement of disputes. ·  The valuation of services or materials provided under the contract; ·  Payment under the contract, including in respect of a change order, whether approved or not, or a proposed change order; ·  Non-payment of a holdback; or ·  Any other matter that the parties to the adjudication agree to, or that may be prescribed by regulation. The determinations of the adjudicators are binding on the parties, and any amount determined to be owed must then be paid within 10 days. A Brighter Future for All When there is a major failure in the construction industry, it has the ability to cause widespread financial pain and duress. The common consensus has been that the industry fails to recognize potential failures before they reach catastrophe. However, there is renewed optimism that the improvements under the new Construction Act will lead to the quicker identification of concerns, which should help to minimize effects of the next major failure. At the very least, sub-trades should be alerted to the probability of serious issues earlier on, helping to minimize the exposures across the industry. With these new regulations the industry will be supported by much more responsive sureties in times of crisis. FCA Surety is a surety bond broker that has been providing surety expertise to the construction industry for over 99 years. For more information on the changes to the new Construction Act, please visit www.whatissurety.com.