How to Deal With Changes During the Course of a Major Construction Project

One of the foundations of a successful construction project is ensuring the different parties have thoroughly comprehended the contract. This is all the more true for contracts awarded through a call for tenders.

In fact, diligently reviewing the available documentation will not only ensure that the bidder sets a fair price, but that it is also aware of the extent of its obligations, thus generally avoiding any unpleasant surprises during the fulfilment of the contract. 

Impact in the Event of Changes to the Contract

Despite the contractor's diligence or the client's good faith, there are very few worksites that are not subject to some changes during the performance of the work. The nature or reason for these changes is numerous. This may be the result of unexpected working conditions, changes to the work to be performed, or unforeseen additional work, etc. As a general rule, as it relates to public contracts, these changes are governed by clauses that are specific to the contract between the two parties.

It is of paramount importance that all contractors become familiar with and understand the contractual clauses establishing the applicable process for changes to the contract.

In 2414-9098 Québec inc. v. Pasagard Development Corporation, the Court of Appeal recalled that "it is settled case law and doctrine that where the contract provides for a procedure to amend the contract and the works to be performed, this must be respected by the contractor; if not, his claim for compensation for the additional works undertaken will be rejected."[1]  In this case, the procedure, which is very common, included provisions stipulating the need for an agreement with regards to both the scope and cost of the additional work, prior to its execution. As such, for the work that was performed in non-compliance with this procedure, and in the absence of a waiver by the client, the contractor's claim was therefore rejected.

Although it is imperative to respect the contractual procedure establishing the measures to be taken following any amendments, it is not always possible to avoid disputes in all cases. However, we can retain some principles from the case law that could save contractors quite a bit of hassle.

Clarifying ambiguities

First and foremost, we should recall that when a contract is unclear and has been imposed by a party, it must be interpreted according to the intentions of the person who drafted it. This applies to the contract and the entirety of the contractual documents (including the specifications). It is preferable to clarify at any time, whether at the submission or execution stage, any interpretive ambiguities or difficulties that may arise. In fact, at the trial stage, the Tribunal will have to distinguish between an ambiguity resulting in confusion and a difficulty that may be resolved through the interpretation of the clauses in relation to one another.[2]

Prioritising agreements

Thereafter, as we have seen above, prior to the fulfilment of the works which would warrant additional charges, it would also be very useful to agree on the scope of such works and the cost, especially in relation to the contractual procedure which should be followed. It should be noted that the client's silence does not necessarily mean that the approval process for additional work has been waived. It is therefore important to not only oppose the matter in writing, but also to solicit a response, since the intention to oppose it must be unequivocal.[3] 

Determine the urgency and need for change

It is also preferable to seek confirmation from professionals with regard to the urgency for any changes, as the costs associated with a management decision in the absence of such urgency, for example costs related to lost productivity, are not necessarily considered extra charges.[4]

In short, it is important to deal with your case meticulously at all times in order to establish tangible proof of the damages being claimed.

The Pilot Project Procedure

A thorough review of the documents will also help determine whether the project on which the contractor will be bidding is subject to the Pilot project to facilitate payment to enterprises that are parties to public construction work contracts and related public subcontracts. This innovative project, which came into force in 2018, aims, as its name suggests, to facilitate payments to both contractors and subcontractors in the context of public construction works.

The procedure provided for in this project will make it possible, among other things, to resolve disputes that may arise regarding an assessment as to the value of a contractual amendment.[5]

Thus, if, in the context of a construction project submitted to the pilot project, a dispute arises regarding the assessment of the value of an amendment to the contract, it may be submitted to an expert intervener who will compile the various viewpoints of the parties. The latter will then have the mandate to resolve the dispute within 30 days of receiving the required documentation.[6]

The expert intervener's decision shall be binding and payment shall be made within 10 days of receipt of the notice.

What is innovative about the legislator's approach is that the payment made within this dispute settlement process is deemed to be made under protest, therefore without prejudice and subject to the payer's right to reimbursement of all or part of the amount paid.[7] An appeal which relates to the same elements as those in the dispute settlement process may also be brought before an arbitrator or the Court.[8]

Thus, if the contractor remains dissatisfied with the ensuing results, it is generally possible for them to file a claim for additional work, which must, of course, be accompanied by supporting evidence. The client will also have the opportunity to file a claim with the Court or an arbitrator for reimbursement of the amount they consider to have overpaid.

In doing so, this procedure will allow work to continue on the construction site while avoiding the accumulation of significant costs associated with any additional work, all without waiving the rights of any of the parties.

No construction site is immune to changes while works are in progress. Thus, an accurate review of the contract between the contractor and the client, as well as thorough knowledge of the contract amendment process, will undoubtedly allow a meticulous contractor to successfully complete requests for claims for additional work. Let it be added that the same applies to the management of the end of a contract.

Given the issues that may arise in the contractual amendments process and the associated value assessment, the solution proposed by the pilot project may help to ensure the much sought-after improvement in the progress of construction projects. Only time will tell whether this legal innovation will be successful enough to become the norm in public construction contracts.

  

[1]2414-9098 Québec inc. v. Pasagard Development Corporation, 2017 QCCA 1515, para. 22;  [2]Bâtiments Kalad'Art inc. v. 175934 Canada Inc. 2002 CanLII 7705 (QCCS), para. 82;  [3]Société de cogénération de St-Félicien, société en commandite v. Industries Falmec inc., 2005 QCCA 441, para. 58; Birdair inc. v. Danny's Construction Company Inc. 2013 QCCA 580, para. 194.  [4]Aluminerie Alouette inc. v. Construction du St-Laurent Ltée, 2003 CanLII 10112 (QCCA), para. 123.  [5]Art. 20 pilot project.  [6]Art. 28 pilot project.  [7]Art. 38 pilot project. [8]Art. 42 pilot project.