LABOUR STRATEGY: CANADIAN NATURAL’S HORIZON OIL SANDS PROJECT GETS IT RIGHT

A FORUM ON OPEN SHOP CONSTRUCTION

Volume 18 • Spring 2010

WOMEN BUILD:
Moving to an inclusive
construction climate

GET CASH FLOWING: Strategies to help collect from clients

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 Contents
Volume 18 • Spring 2010

24

5 Executive editor’s column 32 More Than Their Due

6 ON THE COVER
Finding the P3 Balance
Government and contractors are working
together to examine the future direction
of public/private partnerships in Alberta
By Bill Stewart
Illustration by Leanne Kroll
By Stephen Kushner
12 Want More Business?
Ensuring a positive customer experience
during all phases of a construction job will
help increase your client base
By Scott Wood
16 Building the Workforce
Women are making strides in the construc-
tion industry, but there is still a long way
to go before they make major inroads on
job sites
By Emily Senger
20 Cash: The Lifeblood
of Every Contractor
Completing jobs is the easy part, it’s cash
flow strategies that will make or break a
contracting business
By Anthony R. Stagliano
An antiquated Canadian system allows union
leaders to spend dues to support partisan
causes, even when members don’t agree
with the politics
By Bill Stewart
38 Get the Benefits
A streamlined delivery process puts open shop
health and benefit plans ahead of the pack
By Joel Thompson
43 We Can Work It Out
Construction professionals, in their quest to
build things, sometimes fall short in building
relationships
By Lauren Pinch
46 The Last Word
The construction industry by the numbers

24 The Labour Strategy

That Worked
Some wise negotiating allowed Canadian
Natural Resources Limited to access the
best open shop and union workers
from across Canada for the Horizon
30 Oil Sands Project
By Denis Bobiy

30 Tendering Law
The search for the perfect exclusion clause 43
By Ryan Kary and Corbin Devlin
OPENMIND SPRING 2010 3
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 Executive Editor’s Column

On behalf of Merit Contractors

Volume 18 • Spring 2010 Association, welcome to the 2010
Publisher Ruth Kelly edition of Open Mind magazine.
Executive Editor Stephen Kushner
Associate Editor Anna Ravlikovska Although most industries went through a very
Editor, Contract Magazines Emily Senger difficult year in 2009, many signals indi-
Copy Chief Kim Tannas cate the economy is improving and surveys
Art Director Charles Burke show there is more optimism with what
Assistant Art Director Rodrigo López Orozco 2010 and 2011 will bring.
Production Co-ordinator Betty-Lou Smith While the construction sector may still
Circulation Co-ordinator Andrea Cruickshank struggle with tight bottom lines, lower
Vice-President Sales Anita McGillis
work volumes and reduced profit margins,
Advertising Representatives
Dennis McCormack, Zoë Morris, Lloyd Hamshaw,
there are some very positive signals in areas related to natural resource
Tara Kochan, Jim Perry development, housing and infrastructure.
Sales Assistants
Stefanie Jackson, Karen Reilly
Contractors now, more than ever, must focus on becoming more
Contributing Writers
competitive through productivity gains, increased collaboration, and
Denis Bobiy, Corbin Devlin, Ryan Kary, Lauren Pinch, tighter controls to ensure success and to be well positioned when our
Anthony R. Stagliano, Bill Stewart, Joel Thompson,
Scott Woods work volumes return.
Contributing Illustrators and Photographers In this issue of Open Mind we examine various topics that will help
Johnny Bork, Kevin Ghiglione, Buffy Goodman,
Leanne Kroll, Heff O’Reilly
contractors be better prepared for the future.
Open Mind is published by Venture Publishing Inc.
Increasing government infrastructure spending and public/private
for Merit Contractors Association. partnerships present both challenges and opportunities to the industry.
Venture Publishing Inc. Being involved in the building of many new public projects such as new
10259-105 Street,
Edmonton, Alberta T5J IE3 educational facilities, health centres and road infrastructure under
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www.venturepublishing.ca
governments work their way out of the recession.
Merit Contractors Association
Customer service and good client maintenance is something all of us
103-13025 St. Albert Trail, can improve on. In this issue, you will find an article discussing how you
Edmonton, Alberta T5L 5G4
Tel.: (780) 455-5999 or 1-888-816-9991 can create a lasting and beneficial relationship with your clients to pro-
Fax: (780) 455-2109
meritedm@meritalberta.com mote repeat business and a loyal client base. Other key issues examined
www.meritalberta.com
are the importance of cash flow to any contractor’s business and how
Merit Contractors Association is a non-profit
organization that offers human resource services
Merit’s group insurance benefits plan provides a great and cost-effective
to the open shop construction industry. program for your employees. The tips in these articles will give you some
Printed in Canada by Transcontinental LGM Graphics
easy steps to increase your cash flow and boost net margins.
The opinions conveyed by contributors to
Open Mind magazine may not be indicative The controversial topic of mandatory union dues being used to
of the views of Venture Publishing Inc. or
Merit Contractors Association. While every advance the political agendas of union leaders is also discussed in the
effort is made to ensure accuracy, neither
Venture Publishing Inc. or Merit Contractors article “More Than Their Due.” This topic is becoming of greater impor-
Association assume any responsibility or
liability for errors or omissions. tance as unions are increasingly trying to influence the outcome of pro-
Canadian Publications Mail Product Agreement vincial elections in Canada.
#40020055
We hope you enjoy this issue of Open Mind, Canada’s only open shop
Copyright © 2010 by Merit Contractors Association
No part of this publication should be reproduced
magazine dedicated to construction industry news and topics.
without express permission of Merit Contractors
Association.
�

Stephen Kushner
PRESIDENT
�

MERIT CONTRACTORS ASSOCIATION

OPENMIND SPRING 2009 5

 Fin
din
the
g

Bal
anc
6 OPENMIND SPRING 2010
BY
BIL
L

e
ST
EWAR
T
Government and contractors are working
together to examine the future of public/
private partnerships in Alberta
P ublic authorities throughout the world are increas-
ingly looking to the private sector to finance, construct
and maintain assets. The broad spectrum of potential
opportunities for public/private sector joint ventures and partner-
ships has spawned an equally broad array of contractual and busi-
ness models. This contracting out takes many forms and is in place
for toll roads and bridges, lease-back arrangements on government
office buildings and the operation of health centers, educational
institutes, waste disposal facilities, penal institutions and airports,
to name some examples.
Construction is Alberta’s fourth largest industry. In 2008, it
accounted for eight per cent of Alberta’s gross domestic product, or
$23.3 billion. At its peak in August 2008, more than 227,000 people,
or roughly one in nine Albertans, were employed in the industry.
Until recently, the Alberta government followed a traditional
procurement model for acquiring its physical assets. This is a pay-
as-you-go approach, in which government underwrites 100 per cent
of capital costs for the roads and buildings it owns, or helps finance
through capital grants to school boards, health authorities or post-
secondary institutions. Under the traditional procurement model,
government staff direct and co-ordinate extensive design, bidding
and building processes that result in public ownership of the asset
and full responsibility for future maintenance.
In 2003, the Alberta government approved a policy to recognize
alternate project financing. The scope included public/private part-
nerships – known as P3s – as well as capital leases, capital bonds
and other forms of borrowing.
This allowed the government to supplement traditional con-
struction procurement with accelerated scheduling for “major and
complex capital projects” that had “significant ongoing mainte-
nance requirements.” The policy sought to have new facilities and
services brought on-stream on time, on budget and with “sufficient
quality to remain high standard throughout their life.” A key objec-
tive was to bind contractors “into long-term operational contracts
and carry the responsibility for the quality of work” being done.
While these objectives make good sense, consider the chal-
lenges of bringing together government, finance, construction and
maintenance interests under a single partnership arrangement.
OPENMIND SPRING 2010 7
 Finding the Balance

Legal, financial, technical, administra-

tive and pursuit of project dynamics can
become much more complex under P3s,
compared to traditional approaches.
Large projects in Edmonton and Cal-
gary initially served as pilot projects for P3
methodologies. The first “pure” P3 was the
southeast leg of the Anthony Henday Drive
as part of the Edmonton Ring Road. This
project was built at a capital cost of $365
million and included an additional $128
million for maintenance over a 30-year con-
tract (total value $493 million).
In 2007, three major P3 projects were
announced: the 21-kilometre northeast
section of Stoney Trail in Calgary ($936
million), the 21-kilometre northwest leg
of Anthony Henday Drive ($1.42 billion)
and 18 K-9 schools. This latter project com-
prised bundles of nine schools in each of
Edmonton and Calgary ($634 million).
The Alberta government estimated that
building the two latter projects as P3s saved
Alberta taxpayers $358 million, compared
to the estimated total costs it would have
incurred using traditional procurement
approaches.

Consulting with Industry P3 IN ACTION: Steel girder construction on the future

The Alberta government’s three-year
capital plan, covering 2009-2012, contains
$23 billion in direct capital spending and
capital grants. This makes the province
one of the most significant purchasers of
Alberta construction services. Suffice to
say, a change in procurement policy can
dramatically affect the industry.
Over the years, many contractors work-
ing in specific industry segments developed
considerable capacity and expertise while
working with the Alberta government and
its capital grant recipients. This is especially
the case for construction and maintenance
of roadways, bridges, schools and hospitals
throughout the province. Much of their
expertise and operational capacity was built
on long term familiarity with traditionally
financed design/specify/bid/build procure-
ment procedures. Hence, when the province
expanded its use of P3s, many wondered
about the effect this change would have.
In response, the Merit Contractors
Association initiated a consultation
8 OPENMIND SPRING 2010
66th St. interchange at Anthony Henday Drive.
between government and industry part-
ners to explore ways government and
industry could work together to review
the recent experience with P3 projects and,
where consensus could be reached, recom-
mend adjustments. In January 2009, Merit
and the Alberta Construction Association
brought together more than 120 industry
experts from architecture, engineering,
civil construction, finance and insurance,
and general and specialty contractor
sectors to examine delivering P3 projects
in Alberta.
The session was comprised of two
parts. The first part consisted of presenta-
tions. The Hon. Jack Hayden, who was then
Min ister of I nfra str uct ure, opened
the forum, followed by senior govern-
ment off icia ls. Design, f ina nce a nd
construction managers with experi-
ence executing P3 projects then provided
their perspectives.
In the second part of the session, partici-
pants formed working groups according
to industry sector to discuss a series of pre-
selected questions. Aided by facilitators,
each group formulated recommendations
on how the Alberta government might
consider delivering future P3 projects. The
results of these discussions and recommen-
dations follow.
Industry Findings
Construction contractors generally
agreed that under appropriate project and
market conditions, P3 approaches aid gov-
ernment in obtaining greater certainty in
scheduling, completion dates, construc-
tion costs and lifecycle maintenance costs.
Standardizing requirements on large scale
project bundles, or suites, enables economy
of scale efficiencies. And, when specifica-
tions and/or operational standards are
clearly established at the outset, the risk
Increased private sector government to meet construc-
tion and maintenance service
a manner supporting the capacity, capital
investment and expertise of Canadian and
involvement, with its focus needs. Albertan construction companies, a series
There was also a general of 21 technical and process related recom-
on financial bottom line consensus that incorporat- mendations were made.
results, provides additional ing longer term maintenance
into the government’s strat-
In broad terms, it was recommended
that the government regularly consult with
oversight to projects. eg y for new construction industry to:
procurement was a positive Determine the appropriate balance
to the public owner for costs of changing development. The rationale was that hold- between traditional, mixed and pure P3
specifications while the project is under ing proponents responsible for maintain- approaches to procurement and mainte-
construction is reduced. ing the capital asset until ownership is nance of capital assets.
Contractors also felt that the Alberta returned to the public encourages inno- Examine ways and means of improving
government potentially benefitted from vation, including design and equipment the traditional procurement model.
having access to large national and trans- selection geared to life-cycle optimization Refine its P3 approach, particularly with
national construction expertise and finance from the outset. It also ensures that fund- respect to the appropriate levels and risk
capital for large projects – especially when ing is dedicated for ongoing maintenance – elements being allocated between gov-
local markets are operating at capacity, as a practice not always adhered to by govern- ernment and the private sector.
they were in 2007 and 2008. Increased pri- ments facing fluctuating revenues. Ensure its procurement approaches are
vate sector involvement, with its focus on based on securing competitive bids and
financial bottom line results, also provides Recommendations participation from the widest possible
additional oversight to projects in a man- Within the context of a framework call- array of contractors and suppliers.
ner that might not always be available to ing for refining its P3 policy to provide Recommendations were also made
resource-strained, public sector projects. best value for taxpayer-funded projects in regarding types and sizes of projects that
At the same time, participants raised
concerns about how projects were bundled,
and how transferring certain risk elements
from the public to the private sector could
result in the Alberta government failing to
realize potential cost efficiencies that may
be available from traditional or mixed pro-
curement and financing models.
In particular, bundling similar struc-
tures to create an exceptionally large-scale
project can result in fewer contractors with
expertise in local market conditions and
fewer relationships with local sub-contrac-
tors and/or suppliers who are capable, or
willing, to compete in the process. It was
also submitted that misunderstanding
local conditions could result in higher risk
premiums being incurred. Higher capital
costs would also be incurred when com-
mercial terms are not reasonable, risks are
disproportionately allocated to industry, or
when completion schedules or cost expecta-
tions are unachievable.
And while industry participants were
unable to reach consensus on the extent to
which the Alberta government should use
P3 approaches, there was consensus that, CALGARY VIEWS: Construction on
when executed properly, these approaches Stoney Trail NE at McKnight Boulevard.
were an important policy mechanism for the
OPENMIND SPRING 2010 9
 Finding the Balance

industry felt lent themselves well to P3
approaches. There was also general con-
sensus within industry that, as with other
types of projects, P3 construction projects
were delivered more cost effectively when
they concentrated on a municipal or
regional basis in proximity to larger urban
municipalities.
Con sidera ble at tent ion wa s a l so
attached to how risk in P3s is often “allo-
cated to the party best able to manage and
price it.” The government’s current P3
approach effectively transfers all risk and
related liabilities to the private sector part-
ners. Industry participants suggested that
this, perhaps, assumes that the private
sector was more capable or willing to
attach lower cost premiums to deal with
the risk that uncertain conditions bring to
any construction project.
It was suggested that, in certain circum-
stances, the Alberta government and the
agencies it funds were better able to con-
trol, or have influence over, certain critical
pre-project activities that can significantly
hamper scheduled completion dates. This
includes acquiring development permits
and certifying environmentally compli-
ant sub-surface conditions. By assuming
responsibility for these types of uncertain-
ties, it was suggested that the overall proc-
ess would be more efficient, quicker and
result in lower overall costs.

P3 construction projects
were delivered more
cost effectively when
they concentrated on
a municipal or regional
basis in proximity to larger BRIDGE AHEAD: Bridge deck construction at Anthony
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 Ensuring a positive customer experience
during all phases of a construction job
will help increase your client base

By Scott Wood

12 OPENMIND SPRING 2010


W
hat differentiates one business
from another is not only its
product or service, but also the
client experience. For instance,
why do so many people who’ve had a
home built or remodelled say they’d never
do it again? Because it didn’t turn out as
they expected, or it was more complicated
and protracted than they anticipated.
In contrast, people who have a positive
experience with a construction company
become loyal clients who return for future
projects and refer the firm to colleagues,
friends and family.
Give Clients What They Really Want
Clients want their money’s worth – a
dependable contractor they can count on
for work they can’t do themselves. A great
client experience is all about the golden
rule. Treat others the way you want to
be treated.
More specif ica lly, it includes the
following elements:
Know the client. Take the time to get to
know individual clients and their unique
needs. What problems or challenges are
they trying to solve? What are their plans
for the new property? Create realistic
expectations.
Don’t let technology replace timely and
consistent personal communication
with clients. Reach out to make clients
feel valued and demonstrate that their
satisfaction is the company’s ultimate
goal. Provide expertise and guidance by
suggesting the best course of action to
take, explaining options and helping
clients make decisions. “Each client has to
think he or she is your only client,” says Joe
Percario, president of Joe Percario General
Contracting in Warren, N.J.
Establish – and then exceed – quality
standards. Because quality is subjective,
its definition has to be mutually agreed
on by contractor and client so both parties
know when it has been achieved. Always
strive to exceed the set standard. “Quality
control is about having experienced project
managers and supervisors,” Percario says.
“Always account for those management
costs in your bid. If your price is a little
higher than a competitor’s, clients will
hire you anyways, provided your initial
presentation highlights your project
management expertise.”
Deliver on time. Failure to deliver on
schedule raises doubts about whether the
company always stands behind its word.
“Clients’ time is money,” Percario says.
“They don’t mind paying a little more for
having their project completed in a timely
manner so they can rent out properties or
open businesses sooner.”
Make customer service everyone’s
job. Anyone at any point of contact
with the client – whether in person, by
phone or electronically – has the power
to positively or negatively inf luence
the client experience. This includes
company owners, receptionists, accounts
receivable personnel, salespeople, project
managers, workers and subcontractors.
“A good experience starts with a good
first impression,” Percario says. “Our
first response team is trained to make a
masterful presentation to prospective
clients. Our office staff, too, is trained to be
the voice of the company.”
OPENMIND SPRING 2010 13
 Want More Business?
“A Client’s time is money.
They don’t mind paying
a little more for having
their project completed
in a timely manner
so they can rent out
properties or open A
businesses sooner.”
Joe Percario, president,
Joe Percario General Contracting,
Warren, N.J.
Reprinted with permission from
Construction Executive
March 2009
14 OPENMIND SPRING 2010
Stay involved. Construction business
owners need to stay involved throughout
the project to ensure a l l sta f f a nd
subcontractors deliver excellent client
service. Two companies may offer equally
good products, but clients prefer the one
that is organized, meets expectations,
communicates regularly and listens well.
“You have to own the client relationship
a s well a s the client-subcontractor
relationship,” Percario says. “I ca ll
subcontractors ‘exclusive representatives’
and consider them an extension of my
company. They need to know the complete
scope of work and understand the client’s
needs. I involve them in project meetings
and introduce them to clients early on.
Solid project management is essential to
ensuring neither the client relationship
nor the subcontractor relationship is
jeopardized.”
Besides generating repeat and referral
business, a client-friendly environment
enhances a company’s ability to attract and
retain quality employees.
People don’t wa nt to
work for a company that Determining if clients are having
treats its clients badly a positive experience is a
because, most likely, it
will treat its employees prerequisite for improvement.
poorly as well. Further, in
smaller communities where bankers may
know both the construction company’s
personnel and clients personally, obtaining
financing also may depend on creating a
positive client experience.
Follow Up and Follow Through
Determining if clients are having a
positive experience is a prerequisite
for i mprovement . O ne met hod of
mea surement is to track repeat
business and referrals, as well as rework
and warranty work. In addition, the
promptness with which clients pay their
bills may indicate satisfaction.
Most importantly, ask clients what they
really think. An absence of complaints
does not guarantee satisfaction. Getting
feedback on completed projects has to
be done in a non-threatening way. If the
company owner personally visits clients
and asks their opinion, the answers may be
polite, rather than honest. It’s better to send
a questionnaire people can complete in
private. However, wait a few weeks after the
project has been completed before sending
the survey; everything may seem perfect on
the first day, but issues may arise later.
“Client surveys give you actionable
infor mat ion a nd a re a point of
d if ferentiation to the marketplace
because they let clients know you care,”
Percario says. “Make sure to provide
contact information in case they have
questions about materials, installation
or maintenance. This puts them back in
touch with the lead qualifying department
for up-sells, additional business and
referrals. When clients don’t respond to the
survey, we have a trained lead qualify team
member call and get the questionnaire
a n s were d w h i le a t t he s a me t i me
discussing the benefits of repeat business
and referrals.”
Positive client feedback also can be
used for marketing purposes, as well as
for employee incentive programs. Because
followup with a questionnaire creates
expectations, it’s even more important to
follow through with necessary rework or
warranty work. “If there is a complaint,
send an experienced professional to the
site for an inspection,” Percario says. “The
worst thing you could do is ignore those
issues once you’ve been paid. After all the
hard work you’ve done to build a great
client experience, you’ll be viewed as just
another money-grabbing contractor.”
In the current economic conditions,
as businesses begin to recover, increased
market share goes to proactive companies
that streamline their operations and
implement processes to deliver customer
service excellence. Giving clients what they
really want and treating them the way they
want to be treated assures business success
in any economic environment.
Scott Wood is director of client services with
IPA, a management consulting firm in Buffalo
Grove, Ill. For more information, visit www.
ipa-c.com.
16 OPENMIND SPRING 2010
 ing
uild ce
B rkfo
t he
r
Wo BY EMILY SENGER

Women are making strides in the construction

industry, but there is still a long way to go before
women make major inroads on job sites

I n high school, numbers were Julia Penner’s nemesis. She struggled to earn the math
credits to graduate. While Penner spent many lunch hours sitting inside, doing extra work
on math homework, she did look forward to one part of high school: welding class.
In fact, the welding class that Penner loved launched the farm girl from Stettler into a
15-year career in the trades. Now, at age 32, Penner worked as a journeyman welder for 12
years, earned her pressure ticket, owns a home, and, two years ago, she took a position as a
trades consultant with the Alberta government.
When Penner looks back she’s happy with her career decision, even if it comes with the
occasional burn. “To me, it was just the best opportunity,” she says. “If I could go back and do
it all again, I would not change a thing.”
Penner’s decision to enter a career in the trades led to a job she loves and a comfortable
financial situation, but she is in the minority. While women are gaining ground in other
traditionally male-dominated fields, they remain under-represented in construction trades.
In 2008, the Alberta government had more than 70,000 registered apprentices. Of those, just
5,745 were women. Attracting more women into trades is recognized as an important step to
meeting future labour force demands and women are showing increased interest in careers in
the trades; on these points, trade schools, government, industry and non-profit organizations
agree. But there is another consensus too: there is still a long way to go.
OPENMIND SPRING 2010 17
 Building the Workforce
“I really
encourage
women to get
a trade because
it makes you
self-sufficient.”
Julia Penner,
journeyman welder
At SAIT in Calgary, the number of women
enrolled in programs in the School of
Construction has increased since dean Larry
Rosia took the helm 10 years ago. Rosia says
he is encouraged by an increasing openness
in construction. He says new technologies
also help make construction careers more
appealing, and available, to a wider range of
women. “The first thing that comes to mind
is some of the physical work might be restric-
tive to women but it’s certainly not,” Rosia
says. “With the technology that we have
today, and the machinery, that is no longer
a factor.”
In 2000, when Rosia began at SAIT, there
were about 280 women enrolled in programs
at the school. Today, there are closer to 500.
Still, women represented less than nine per
cent of the 5,872 students in 2009. The gender
split at NAIT in Edmonton is similar. In 2008,
13,028 students enrolled in apprenticeship
programs at NAIT. Of those, 917 were female –
about seven per cent.
In the SAIT School of Construction, female
instructors in the plumbing, architecture,
heating ventilation and air-conditioning
(HVAC), and painting and decorating classes
at the school provide compelling role models.
Still, Rosia says, there is a long way to go to
attract more female high school students to
choose construction trades. “There’s still the
stigma of parents saying, ‘I want my daugh-
ter to go off to university, or take more tradi-
tional-type programming and occupations,’”
says Rosia.
At least one Alberta program is working
with young women in high school to chal-
lenge this stigma. The annual Girls Exploring
Technology and Trades conference (GETT),
18 OPENMIND SPRING 2010
TRADING INFORMATION: Welder Julia
Penner (right) speaks with a high school
student at the 2009 GETT conference.
now in its ninth year, will host about 190 girls
in Edmonton this May as part of the annual
Skills Canada Alberta competition, which
aims to promote technical and trade careers
to Alberta youth.
An important part of the GETT conference
is a roundtable session, where high school
girls talk to women who work in the trades.
One of the most frequently asked questions
Skills Canada Alberta communications co-
ordinator Shawna Bourke overhears the girls
ask: “How much do you make?” Once the
important questions are out of the way, par-
ticipants try their hand at trades like welding,
or a female mechanic might teach the young
women how to change a tire. “It creates this
opportunity for girls to think, ‘if she can do
that, I can do that, too,’” Bourke says. “And
that’s the whole idea. It’s for girls to con-
sider that their options aren’t limited, they’re
unlimited.”
Penner was a speaker at last year’s GETT
conference. She promotes trade careers as a
way for young women to gain financial inde-
pendence, like she did. “I really encourage
women to get a trade because it makes you
self-sufficient,” she says.
One Alberta charity was founded on
just what Penner talks about: using trades
as a gateway to financial independence. In
Edmonton, Women Building Futures pro-
vides women with a 17-week pre-trade train-
ing course, which prepares them to enter an
apprenticeship.
“The reality is that a lot of women in
Alberta, and across Canada, work full
time and earn below the poverty line,” says
Women Building Futures president and CEO
JudyLynn Archer. “That’s because a lot of
them work in retail and food service. They’re
working hard. They’re working over 30 hours
a week and they still have to access the food
bank to have something for the kids to eat.”
About half the women who come through the
program have kids. Most are single parents.
Women Building Futures provides affordable
housing for students who need it and for their
children, too, eliminating the financial barri-
ers that prevent many women from seeking
training or switching careers.
Paul Verhesen, president of Clark Builders,
is a director on the Women Building Futures
board. He’s been involved with the organi-
zation for five years, since Clark Builders
renovated an old warehouse in downtown
Edmonton, transforming it into the Women
Building Futures campus. Clark Builders has
also hired many Women Building Futures
grads as apprentices, with great success.
When Verhesen first started working with
Women Building Futures, the Alberta econ-
omy was red hot. “At the time, when Alberta
was booming, we were looking for all labour
sources from all labour pools and women
in our industry was a natural fit,” he says.
“Typically, the hurdle has been training and
just believing in them that they can do the
job. That’s where Women Building Futures
comes in.”
As the economy picks up, Verhesen believes
a similar skilled labour shortage is on the
horizon in Alberta. Both industry and govern-
ment will need to step up to get more women
into the construction labour force. “We’ve got
some momentum going now, but could it be
better? Yes,” Verhesen says. “Could industry
do a better job? Absolutely. Could govern-
ment do a better job of supporting Women
Building Futures, and others non-profits?
Absolutely.”
Verhesen’s call for the government and
industry to do more has been answered, at
least partially. In March, Lynne Yelich, fed-
eral Minister of State for Western Economic
Diversification, announced a $267,500 invest-
ment in Women Building Futures. Industry
also chipped in, reaching a total $512,000
investment. The money will be used to fin-
ish classrooms, to purchase new software to
manage client relationships, and for video
conference technology to reach women in
rural areas.
Backed by investments like this, Archer
 General Contracting
Project Management
Butler Building Systems
Design/Build Contracting
hopes to get more women to consider trades,
but to be realistic about it, too, and to make
sure that they do some research before plung-
Providing
ing in. “It’s a tough road,” she says. “It’s not quality,
for everybody.” She also hopes to reach indus- innovative
try members who will need to look for non- and cost
traditional labour sources as the economy
picks back up and baby boomers retire in
effective
the coming years. “We really encourage con- solutions
struction companies to consider hiring our to our
graduates,” she says. “I know they won’t be customers,
disappointed.”
on time and
on budget.
Women Build
Don’t fear the hammer: It was the lesson
many women learned during a unique
construction project sponsored by PCL.
In 2006, the company sponsored the
Edmonton Women Build Habitat for Elan Construction Limited
#100, 3639-27th St. N.E.
Humanity project. The goal: complete a Calgary, AB T1Y 5E4
2,200-square-foot duplex in Edmonton Tel: (403) 291-1165
for two families in 3.5 months, on time Fax: (403) 291-5396
www.elanconstruction.com
and on budget, using women volunteers
as labour.
000.Elean_1-3S_nBL.indd 1 3/23/10 9:31:42 AM
PCL donated expertise – a female
project manager and a female carpenter
apprentice – to teach volunteers basic
construction skills. That project manager
was PCL employee Karla Horcica. “Part
of the intent of the program was to teach
women building skills,” says Horcica,
who is currently a PCL construction co-
ordinator. ICBA Benefit Services Ltd. is proud to offer
Horcica, a civil engineer by training, The Construction Supplier Plan and The Owner/Operator
managed volunteer builders and sub- benefit plans to Merit Canada members.
contractors daily during Women Build.
She also brushed up on her own skills. These plans offer the advantage of group pooling and
wholesale pricing to 1 and 2 person companies, engineers,
“How am I supposed to teach these
consultants and wholesalers involved in the construction
women to use a skill saw when I don’t
industry.
know how to use a skill saw?” she recalls.
“A lot of the stuff, I’d never done before.” For more information www.meritcanada.ca
The project is part of PCL’s com-
mitment to encouraging women in
construction trades. The company hires a
graduates from the Women Building
Futures program, which provides women
with pre-apprenticeship training. It also
sponsors 16 scholarships at NAIT, worth partner
$2,000 each. This year, five recipients
were women.
 illustration by johnny bork

20
OPENMIND SPRING 2010
CASH
The
Lifeblood
by Anthony R. Stagliano
ake no mistake about it:
Cash continues to be
the lifeblood that runs through
the veins of every construction
company. Unfortunately, many
contractors are more comfortable
bidding on jobs (and dealing with
problems and technical matters in
the field) than collecting the money
they are owed.
However, the ability to find and
maintain a positive cash flow remains at
the heart of the most successful contrac-
tors. It’s a fatal fact of life that more contrac-
tors go out of business because of a lack of
cash flow than a lack of backlog or profit.
Contractors do not have to be in business
to make money, but they do have to make
money in order to stay in business.
Cash flow management actually starts
when contractors decide to bid on a job.
Many contractors are more interested in
submitting the lowest successful bid than in
the importance of cash. However, their joy
can be short-lived, especially if they have “left
too much on the table.”
So, when making that important decision
about whether or not to bid on a job, realisti-
cally address the following questions: How
busy will the company be when given notice
to proceed? Has the company been success-
Completing jobs is the easy part,
it’s cash flow strategies that will make
or break a contracting business
of the Contractor
ful with this type of contract in the past? Is
the job’s location feasible? What is the pos-
sible impact of seasonal weather conditions?
Are there any unusual contract clauses that
could negatively affect cash flow?
In addition, carefully review the custom-
er’s past payment practices for instances of
over-inspection, improper or excessive back
charges, and significant reductions in pay-
ment requests. If the payment history is too
questionable, it’s not prudent to bid the job.
Preventive Care: Contract Terms
If the decision is made to bid on a job,
remember that because profit ultimately
turns into cash flow, the margin or reward
must justify the risk. Therefore, negotiate
best payment terms before – not after – the
contract is awarded.
Every contractor should seek to modify
or eliminate contract retainage terms. For
example, if a contract states that the stand-
ard 10 per cent will be withheld, then nego-
tiate for a reduction to at least five per cent
when the contract is 50 per cent complete.
As the contract approaches 75 to 80 per cent
completion, the retainage should be further
reduced to two per cent or less.
Withholding 10 per cent retainage until
the end of a contract creates a serious drain
on cash flow. And, a severe drain or loss
of cash (the “blood” of a business) can kill
a company, just as excessive blood loss
can kill a person.
In 2007, the Construction Financial
Management Association’s annual financial
survey reported that the average net earnings
before income taxes (net margin) for all types
of contractors is 2.7 per cent. It’s no coinci-
dence that best in class contractors reported
a net margin of 8.1 per cent.
For a contractor who performs work in
the early stages of a project, the longer the
retainage is held, the greater the probability
of a cash flow problem. To speed up collec-
tion of the remaining retainage, all punch list
items should be completed as soon as possi-
ble. If not monitored carefully, the last 10 per
cent of a job can take 20 per cent of its cost
to finish. The best companies in the business
are known as “closers.”
Daily Exercise: The Collections Policy
It’s a well-known fact that contractors face
unique problems and issues when it comes
to collecting their money. These include:
retainage, pay-when-paid clauses, pay-if-paid
clauses, right to stop work, back charges,
approval of change orders, front-end load-
ing, partial payments, mobilization, stored
materials, claims, lien rights and disputes.
Given this context, your corporate culture
OPENMIND SPRING 2010 21
 CASH: The Lifeblood of the Contractor

must reinforce your company’s right (not
privilege) to collect owed money. Adopt a
proactive attitude about collecting cash, and
don’t be afraid to spread the word to your
customers. Make collections a daily process.
Eliminate those end-of-month panic attacks
where a lack of cash starts to drain the life out
of your company.
Keep in mind the old saying, “The
squeaky wheel gets the grease.” Call early
and often, and encourage everyone in your
finance department to bill on time for the
total amount owed. Bill aggressively, and
don’t be ashamed to use a rea-
sonable amount of front-end it’s a fatal fact of life that more contractors
loading. Remember, it’s just
good business practice.
go out of business because of a lack of cash
flow than a lack of backlog or profit.
Regular followup: billing
Knowing each contract’s billing terms –
including the timing for submission of bill-
ing, the approval process and the contact
person – is a must. Always deliver the first
invoice in person as well as subsequent large
invoices. Also, pick up checks to help elimi-
nate delays and excuses.
After the initial meeting, do not wait until
payments are past due to call again. Contact
the controller seven to 10 days before pay-
ment is expected to confirm that everything
is on schedule for timely payments, and ask if
there are any questions or problems.
If you wait until your payment is past
due, you may have missed your customers’
billing cycle for the next month and your
second invoice might be incorrect and,
therefore, also delayed.
ny’s right to additional compensation.
Also, monitor changes in on-site condi-
tions, accelerations of work, unusual weather
conditions, stacking of trades or out-of-
sequence work. Whenever possible, use your
leverage to have these change orders signed,
especially when customers need your help to
meet their goals.
elective Procedures: other Cash
Management Techniques
Contractors must keep a tight grip on cash
flow at all times to survive construction’s
volatile and high risk environment. So con-
sider these additional cash management
techniques:
1. Mail checks as late as possible (but still
keep within payment terms) to maximize
the use of cash for investment activities. To
create the most cash float for balances over
the weekend, mail or deliver checks so they
arrive late in the week.
2. Use specialized accounts to maximize
cash f low. A controlled disbursement
account with a bank in another remote loca-
tion can increase the float on checks from
one to three days. Zero-balance accounts
employ a central bank account and a
number of separate accounts (like payroll)
with no balances. The separate accounts
receive only enough funds from the central
account to cover the checks presented. This
makes larger balances available on checks
that clear the bank.
3. Invest excess or
idle funds. This is a
goal every contrac-
tor should strive to
achieve. Some com-
mon investment
vehicles include: certificates of deposit, gov-
ernment securities, commercial paper, bank-
ers acceptances, repurchase agreements,
tax-exempt funds, mutual funds and bonds.
However, if a company has a line of credit
with an outstanding balance, first sweep
available excess daily funds against the out-
standing balance. This will result in net inter-

Change orders: A Prescription

Profit fade and cash flow drain also result
from the improper handling of change
orders. It’s imperative that everyone on
the job, especially your project manage-
ment team (including PMs, superintendents,
foremen, etc.), knows about work outside the
original contract’s scope and communicates
this information daily so that proper change
orders can be issued.
Written documentation through field
change orders singed by the customers’
authorized representative – as well as job dia-
ries, meeting minutes, and digital photos – are
excellent tools for substantiating your compa-
22 OPENMIND SPRING 2010
est income because the interest rate earned
on short-term investments is usually lower
than the interest paid on a line of credit.
4. Make remote cheque deposits. Due to a
relatively new banking service, you can now
scan and transmit critical daily deposits
within minutes. Using this service will put
your money to work faster, with the added
bonuses of increased security and higher col-
lection rates. Electronic deposits can be made
outside traditional banking hours, and phys-
ical cheques are no longer required by most
banks. In addition, accelerating deposits can
mean significantly more net interest income
earned. You can also shred these cheques at
the end of your bank’s recommending hold-
ing period.
Triage: expensive Sources of Cash
Other auxiliary sources of cash include the
infusion of additional equity or loans by
shareholders. The primary problem with
this alternative is an owner’s ability to infuse
after-tax cash into the company. A second
source is borrowed money, primarily from a
credit grantor (usually a bank).
Various types of financing are available
for short-term cash shortages, including lines
of credit, demand notes, factoring/receivable
financing and asset-based lending. However,
keep in mind that borrowed money has its
own catch-22 related to the negative impact
on working capital, benchmarking ratios
and such potential loan covenants as debt-
to-equity ratios.
Conclusion
A construction company can be as com-
plex and mysterious as the human body.
To maintain financial health, contractors
must be committed to self-examination,
consultation and diagnosis with their out-
side financial “doctors.” Isn’t it time for your
company’s annual physical?
Anthony R. Stagliano is national director of
Construction Industry Services for Mayer Hoff-
man McCann P.C., and CBIZ MHM, LLC in
Philadelphia, Pa. Stagliano is a CFMA instructor
and a frequent author for CFMA Building Profits.
Reprinted with permission from CFMA
Building Profits Emagazine Sept./Oct. 2008
Twenty point prescription
for a healthy cash flow
lethargic cash flow slows contractor growth
and development, and a cash flow embolism
means death to any business. Follow this pre-
scription to help protect your company from
these risks and infuse your operations with a
vigorous cash flow.
1. Establish a sufficient line of credit or have
another source of funds available to pro-
vide for temporary or emergency cash
flow shortfalls.
2. have excess daily cash sweep first against
your line of credit because the interest rate
earned on short-term investment is usually
lower.
3. If appropriate, consider asking your bank
or leasing company for a waiver or skip
payments for two or three months during
off-season periods.
4. have officers, owners and other related
parties repay their loans as the first step
towards restructuring debt and enhanc-
ing cash flow.
5. Negotiate for the lowest possible retention
percentage, as well as the phase-out of
retention, into the payment terms of each
contract.
6. Require the same method of retention
from your subs and suppliers to help offset
your retention withheld by the owner.
7. Strongly encourage the speedy resolution
of proposed additions and deletions to
each contract by requiring signed authori-
zation in the field for scope changes before
work begins.
8. Include a contract clause providing for
attorney fee reimbursement. this is critical
to ensuring the collection of receivables. It
discourages the owner from withholding
payment and helps make litigation more
cost-effective should it become necessary
to file a claim.
9. assemble a knowledgeable construction
industry management team consisting of
your accountant, banker, surety agent and
lawyer to advise your company on cash
flow issues.
10.Prepare and maintain a 12-month mov-
ing cash flow forecast or budget, with the
first three months functioning as an early
warning system.
11. always perform a “lease vs. buy” analysis
prior to acquiring any major purchase, such
as equipment or rolling stocks.
12.Only pay bills on specially designated days
of the month to enhance cash flow plan-
ning and promote office efficiency.
13.Never miss purchase discount arrange-
ments because the standard “two per
cent, 10 days, net 30” approximates a 36
per cent interest rate.
14.Offer your customers discounts for early
payment.
15.always know your customer’s approval
and payment process, including the per-
son who does the approving.
16.always deliver the first invoice in person,
as well as subsequent large invoices. also
pick up cheques to help eliminate delays
and excuses.
17. Make bank deposits electronically to earn
additional interest and to verify your cus-
tomers’ bank and account numbers, which
allows for future verification of sufficient
funds.
18.have your attorney prepare a series of
standard form letters for problem custom-
ers. Many people pay upon receiving the
first letter from an attorney.
19.Do not fear offending or alienating your
customers. Remember, persistence pays.
If you can shorten your collection cycle by
five to 10 days, you will have achieved a
significant number of extra days of cash.
20.Never lose sight of the fact that the collec-
tion of your accounts receivable is a right,
not a privilege.
OPENMIND SPRING 2010 23
 THE
LABOUR
STRATEGY
THAT
WORKED BY DENIS BOBIY

A CONSTRUCTION FEAT: The Horizon Oil Sands project north of Fort McMurray
employed more than 800 contractors during Phase 1 of construction.

24 OPENMIND SPRING 2010

W
hen it’s at full production, Canadian Natural
Resources Limited’s multi-billion dollar Horizon
Oil Sands project is targeted to produce a whopping
232,000 barrels-per-day. But transforming the project site from
isolated fields and forest approximately 70 kilometres north
of Fort McMurray into its present day state was no small feat,
and required some innovative labour negotiations on the part
of Canadian Natural in order to bring together more than 800
contractors, both open-shop and union, from all across Canada.
Construction began on the project in 2004 and will be
completed in three stages. First production commenced in
February 2009 with design capacity for 110,000 barrels per day of
synthetic crude oil.
Prior to beginning the project, Canadian Natural’s project
team undertook extensive reviews of previous projects in an
attempt to learn, and understand, the factors of major project
performance. It met with many owners, engineering firms and
construction contractors.
The project team’s findings led it to adopt a number of key
strategies, which included focusing on preparedness, breaking the
project into manageable pieces and optimizing project definition
before construction. Experiences of other major projects clearly
identified that the timely supply of qualified labour and the avail-
ability of experienced and competent contractors were significant
components of a successful construction execution.

Project Labour Strategies

Plans for Phase 1 of the project placed construction between 2004
and 2008, a time span when Alberta was to see the construction of a
number of other major projects. The concern about the availability
of skilled workers and qualified contractors led Canadian Natural
to adopt a “managed open site” labour strategy, which would ena-
ble it to access the national construction community – contractors
and tradespersons – regardless of their union status or affiliations.
To further attract and retain workers, the owner undertook a large-
scale fly-in/fly-out program, which provided free air transportation
for workers from hubs near their primary residences, to the project
OPENMIND SPRING 2010 25
 The Labour Strategy That Worked

and then back to their residences again.

Workers were also provided free room and
board in on-site camps.
Labour stability was a prime concern for
Canadian Natural. It wanted to establish
a “level playing field” for all contractors
and workers on the project. In addition,
the planned construction duration of the
project covered a number of construction
industry collective bargaining periods.
Canadian Natural was also seeking a labour
relations vehicle which would provide
labour stability and common employment
terms and conditions for employers and
their employees on the project, regardless
of their union status/non-union status or
specific union affiliation.
In the instance of non-union employers,
the project’s labour execution strategy pro-
vided representation for their workers by
the Christian Labour Association of Can-
ada (CLAC) and a benefits/retirement plan negotiations could result in the absence this same period, the owner approached
for workers if the employer was not a par- of an acceptable project labour agreement, CLAC to engage it in discussions related
ticipant of a recognized industry plan, such examined its alternative options. As a result to a project labour agreement under the
as the Merit Benefit Plan. In the event that of this review, Canadian Natural chose to Division 8 designation. Negotiations with
a contractor became certified by a union, make an application to the provincial gov- CLAC began in January, and in April 2005
the non-union contractor was assured the ernment to request Division 8 designation the parties concluded an umbrella agree-
right of maintaining the commercial terms for its project, in accordance with provincial ment for the project.
under which it had contracted to do the labour legislation. If granted, the designa- The agreement ensured a managed
work, through to work completion. Effec- tion would provide the project a “no strike/ open site and set standard terms only in
tive management of site access (flights) and lockout” status and enable the owner, or its areas necessary to support labour stability.
site logistics (busing and accommodation) principal contractor, to negotiate a project It established a level playing field for both
were also key considerations. labour agreement with a union or group of union and non-union employers and facili-
The owner approached the affiliates unions. The review process was interrupted tated successful management of site logis-
of the Alberta Building and Construction due to a provincial election fall 2004. Cana- tics and infrastructure. As an example, for
employers affiliated with the Alberta build-
ing trade unions almost all of the terms
EXPERIENCES OF OTHER MAJOR PROJECTS CLEARLY and conditions of their provincial collec-
IDENTIFIED THAT THE TIMELY SUPPLY OF QUALIFIED tive agreements were grandfathered in the
Division 8 agreement. For CLAC affiliated
LABOUR AND THE AVAILABILITY OF EXPERIENCED AND employers, the Division 8 terms and condi-
COMPETENT CONTRACTORS WERE SIGNIFICANT COMPO- tions were closely aligned with key CLAC
NENTS OF A SUCCESSFUL CONSTRUCTION EXECUTION. employer provincial collective agreements.

Trades Council in the first quarter of 2004,
with the intent to conclude a project labour
agreement for the duration of construc-
tion of the project. Discussions continued
into the end of the third quarter in 2004
without success. Canadian Natural, con-
cerned that prolonged and unsuccessful
26 OPENMIND SPRING 2010
dian Natural was subsequently granted the
Division 8 designation in early December.
Intensive negotiations continued
between the affiliates of the Alberta Build-
ing and Construction Trades Council
and Canadian Natural in Q1 of 2005, but
they did not reach an agreement. During
Negotiation Outcomes
With the completion of Phase 1, Canadian
Natural had the opportunity to assess the
effectiveness of the elected labour execution
strategy. The adopted strategy produced a
number of highly successful results. The
project attracted a significant number of
employers and employees from not only
 Horizon Phase 1 Construction by the Numbers

January 2005 to
Duration of the project
May 2009
February 28, 2009 Date first barrel of oil is produced at

52
the site (first shipment on March 18)
Alberta and Western Canada, but also from the ability of the project Total man-hours
million
Central and Eastern Canada. Many of these to successfully attract
workers were first-time participants in the
Alberta industrial construction industry
and retain the required
labour resources. With-
175,000 Metres of large bore pipe installed
2 3 , 0 0 0 Approximate number of piles
who previously would not have been able
to secure jobs and support their families.
out this service, many
workers from other 143,000 Cubic meters of concrete
Many of these employers, and their employ- regions of the country million
1.5 Lineal feet of cable

800
ees, remained in the province, and others would not have been
Contractors on the site
will return for future opportunities. This able to access jobs at
bodes well for future Alberta projects. the site. The umbrella Flights in to and out of the site

The elected strategy, combined with the
logistics of flights, shift cycles and camp
facilities, clearly facilitated the engage-
ment of workforce members and con-
struction contractors, who might have
otherwise been excluded from the project
due to the potential for labour conflict and
instability. This included local workforce
members, and local and aboriginal busi-
nesses and contractors. As with the afore-
mentioned instance, the introduction of
new contractors to the oil sands will make
the Alberta marketplace more competi-
tive and will assist the industry in devel-
oping new business opportunities. These
new contractors also have the potential
to increase and enhance employment and
business opportunities for Canadians and
Canadian companies.
The fly-in/fly-out program was a huge
success and a major contributing factor in
9,700
agreement facilitated Passengers transported in the fly-in
by the Division 8 des- fly-out program
ignation continues to
serve the project well 420,0 0 0
in terms of providing
the sought-after labour
stability and the provision of terms and ability of the project to optimize the engage-
conditions conducive to a level playing ment of its affiliated building trade union
field for all participants. contractors and union members.
The project also incurred a number of The perception by unions that the need
setbacks. The execution strategy was more for extended shift cycles was driven by anti-
difficult to implement than the more com- building trade union sentiment, or unwill-
monly used traditional approaches in the ingness to pay double-time, rather than the
industry. Initially, all contractors incurred need to manage site logistics and ensure
difficulty managing the workforce related equitable treatment of the workforce, was
to the shift cycles. Although some of the a further impediment to the inability of
Alberta building and construction trade the parties to effect a resolution to the
unions did agree to work within the Divi- negotiation process. Another significant
sion 8 agreement, the inability to success- disappointment was the project-wide level
fully conclude an accord with all of these of productivity. Based on the degree of
building trade unions detracted from the front-end preparation and commitment to
OPENMIND SPRING 2010 27
 The Labour Strategy That Worked

preparedness for construction, actual performance factors were, likewise, within

results were less than anticipated. Addi-
tional areas of project performance that
were less than expected included some
absenteeism, high employee turnover, early
quits and late starts. Although the latter
are comparable to industry standards, they
are still deemed less than acceptable. Other
industry norms. Overall, project costs were,
certainly, in excess of budgeted amounts.
Going Forward
Moving from 110,000 barrels-per-day
to 232,000 barrels-per-day, it does not
appear Canadian Natural will need to

make substantial changes to its original

labour relations strategies, or to signifi-
cantly depart from proven practices. The
elected construction execution strategy
engaged in the initial phase has proven
www.nait.ca/cit to be viable from many perspectives. The
company will rely on the lessons learned
from Phase 1 to improve upon project

invest in your experts

implementation and execution.
Future project work may again be bro-
ken into smaller pieces and competitively
corporate training for the real world awarded to those firms with proven per-
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affiliations of industry participants. The
Develop your future leaders. Call us today. adoption of site logistics initiatives such
ph (780) 378.1230 email cittraining@nait.ca as using a fly-in/fly-out program, access
to on-site camp facilities and the adop-
tion of shift cycles will remain key com-
ponents that drive employers’ abilities to
corporate and attract and retain the required workforce.
international training Similarly, the project continues to rely on
the Division 8 Project Labour Agreement
to provide the labour stability and stand-
ardization of working terms and condi-
000.NAIT_1-2M_nBL.indd 1 3/23/10 9:39:35 AM
tions for the construction workforce.
Concerns related to total project cost, Horizon Construction Man-hour Percentages by Union Affiliation
price certainty and workforce perform-
ance will be key focus points of future 2006 2007 2008 Project Total Total Construction
(EXCLUDING BUSSING & CAMP OPERATIONS)
project and expansion approvals. Owners
BTU 53% 37% 32% 40% 24%
will need a high degree of assurance that
these projects can be delivered within the CLAC 32% 49% 53% 45% 61%
identified costs and time frames. Non-union 14% 11% 13% 13% 13%
CEP 1% 3% 2% 2% 2%

OPENMIND SPRING 2010 29

 The search for
the perfect
exclusion clause

O
n Feb. 12, 2010, nearly 11 months
a fter the appea l wa s hea rd,
the Supreme Court of Canada
released its decision in Tercon
Contractors v. The Queen in Right of the
Province of British Columbia.
In a 5-4 split decision, the Supreme
Court awarded damages to Tercon, the
lowest compliant bidder, and ruled that the
Province of B.C. had wrongfully granted
a highway contract to an ineligible bid-
der. However, on slightly different facts,
or assuming a different exclusion clause,
things could have gone the other way for
Tercon, casting a further shadow upon the
already cloudy arena of tender law.

30 OPENMIND SPRING 2010

 BY RYAN KARY AND CORBIN DEVLIN

The Tercon tender process was one in which only six pre- evolved, in part, to limit construction owners’ ability to accept non-
approved bidders were able to bid on the contract, and one of the compliant bids, or engage in bid-shopping, or evaluate bids based on
bidders teamed up with an outside (non-approved) contractor to undisclosed criteria. The Tercon decision suggests that owners have a
form a joint venture. When the province accepted the proposal from legitimate means to regain at least some of these advantages by draft-
the joint venture Tercon sued, claiming it was the lowest compliant ing more aggressive (and specific) exclusion clauses.
bidder and entitled to its lost profits. If owners are able to formulate legally sound “Tercon clauses,”
The province relied upon an exclusion clause which stated that, the nature of tendering could be in for a significant change in the
“No Proponent shall have any claim for any compensation of any coming years.
kind whatsoever, as a result of participating in this RFP [request
for proposal].” At trial, the court refused to enforce the exclusion Ryan Kary is an associate and Corbin Devlin is a partner at McLennan Ross
clause, and awarded damages to Tercon. On appeal, the B.C. Court Construction LLP.
of Appeal reversed the trial decision, ruling that the exclusion clause
prevented Tercon from obtaining damages against the province.
The Supreme Court abandoned previously established case law
based on “fundamental breach” of contract, and all nine judges
agreed on a three-part test to determine if the province’s exclusion
clause would be enforced: Today’s Journeypeople
1. Does the exclusion clause apply to the circumstances established skilled and respected
in evidence?
2. If “yes” to question one, was the exclusion clause unconscion-
Alberta’s apprenticeship and industry
able at the time the contract was made? training system produces high quality,
3. If “yes” to question one and “no” to question two, should the certified tradespeople.
court nevertheless refuse to enforce the valid exclusion clause
The key to this success is the
because of the existence of overriding public policy? commitment of Alberta employers,
The majority (five judges) of the Supreme Court determined just like you.
that the exclusion clause did not apply to the tender. The court
When you hire and train apprentices,
ruled that since the province accepted a bid from a party (the joint you are developing the skilled
venture) that was not one of the six approved contractors, Tercon workforce your business and
did not suffer damages “as a result of participating in this RFP,” your community need.
because this RFP involved a bidder who was not contemplated in
the initial tender process.
The minority (four judges) felt that the majority analysis required
a strained interpretation of the exclusion clause, and concluded that Invest in your people, your business, your future.
the clause clearly applied to the facts. More importantly, the minority
ILLUSTRATION BY HEFF O’REILLY

stated the exclusion clause was not unconscionable, and public policy Visit www.tradesecrets.gov.ab.ca or call 310-0000
would not bar its enforcement. and ask for the Apprenticeship & Industry Training office nearest you.

Beyond the establishment of a new test for exclusion clause

enforcement, the significance of the Tercon decision lies in the “what
now” factor, as the door has been opened for owners to draft exclu-
sion clauses which will give them greater flexibility (accepting non-
compliant bids, for example) and legal protection from contractors
claiming unfair treatment in the tender process. The law of tender has
000.ABAdv_1-4S_nBL.indd 1 3/26/10 3:00:05 PM
32
ILLUSTRATION BY KEVIN GHIGLIONE

OPENMIND SPRING 2010

More Than
Their
DueBY BILL STEWART

An antiquated Canadian system allows union leaders

to spend dues to support partisan causes,
even when members don’t agree with the politics

I f asked, most Canadians would likely say that Canada’s

unionization rules are more benign and neutral compared
to European countries, with longer histories of democratic
socialist governments. However, the sad reality is that Canada
is an isolated island in the industrialized world when it comes
to the archaic and antiquated rules by which Canadian work-
ers are forced to pay union dues.

OPENMIND SPRING 2010 33

 More Than Their Due
At the same time, there are virtually no
restrictions on how Canadian union lead-
ers use these dues, particularly for political
purposes. Consequently, Canadian unions
receive more than their due in terms of the
funds they collect from employees. Broad
sweeping reforms are needed to democra-
tize how these funds are spent.
Canada’s trade union movement has
historically aligned itself with left-wing
political parties such as the Cooperative
Commonwealth Federation (CCF) and
its successor, the New Democratic Party
(NDP). However, Canadian aff iliates
of U.S.-based unions
recently starting using
compu l sor y dues to There are virtually no restrictions on
finance costly U.S.-style
political attack cam- how Canadian union leaders use these
paigns – without the dues, particularly for political purposes.
sa me kinds of check
and balance rules that
exist in the United States.
During the Ontario provincial election
in 2003, five construction union affili-
ates of the Building and Construction
Trades Council of Ontario joined three
ot her u n ion s to for m t he Work i ng
Families Coalition. This group ran a
$5-million negative attack advertising
campaignt that helped bring down the
ruling Progressive Conservative govern-
ment in 2003. Shortly thereafter, construc-
tion industry employees lost their right to
a secret ballot in unionization elections.
In 20 07, a f f il iates of the A lber ta
Building Trades Council helped organize,
and were the major source of funds for,
the A lberta ns for Cha nge coa lition.
34 OPENMIND SPRING 2010
The coalition spent more than
$2 million on ostensibly “non-par-
tisan” advertising, slamming the premier
and the Progressive Conservative govern-
ment just before, and during, the 2008
Alberta provincial election. This was
more than the three opposition parties
spent on advertising, and even included
spots that ran during the Super Bowl.
How We Got Here
The current union dues collection frame-
work dates back to a 1946 arbitration
decision by Justice Ivan Rand. In what is
known as the “Rand formula,” he ruled
that the best way to settle a long strike was
to have employees pay union dues, regard-
less of whether they were union members
or not.
This compromise formula assumed
that all employees, regardless of their
union membership status or political per-
suasion, benefited from having a union
negotiate and administer collective bar-
gaining agreements on their behalf.
Designed to prevent “free-riders,” from
receiving the benefits of collective bar-
gaining without having to pay anything,
a compulsory dues check-off mechanism
ensured all bargaining unit employees
paid the same for these services.
M a ny prov i nc i a l gover n-
ments incorporated these princi-
ples into their labour laws through what
are termed “union security provisions.”
Unfortunately, in so doing, they set few
boundaries beyond internal union self-
regulation as to how dues were spent.
This provides Canadian union leaders
with vast resources to pursue political
agendas, regardless of member views.
Concern over this was brought to the
Supreme Court of Canada in 1991. Merv
Lavigne was a teacher in Ontario’s college
system whose union dues were directed
to campaigns and organi-
zations he disagreed with.
D on a t ion s we r e m a d e
to d isa r ma ment ca m-
pa ig n s a nd c a mpa ig n s
that opposed municipal
funding to build Toronto’s
Sk y D ome s t a d iu m , t o
provide strike support for the National
Union of Mineworkers in the United
Kingdom and to a health-care workers’
union in Nicaragua. Donations were also
made to the NDP. He argued this violated
his “freedom of association” rights under
Canada’s Charter of Rights and Freedoms
because he was being forced to conform to
the underlying ideology behind the causes
he was ultimately contributing to.
Even though the Supreme Court nar-
rowly ruled against Lavigne, key principles
contained in strongly worded dissenting
opinions were critical to the landmark
R. v. Advance Cutting and Coring case
in 2001. In this case, the Supreme Court
ruled for the first time that “freedom of
association” also includes, within limits,
being free from compelled association.
The court narrowly upheld the Quebec
government’s mandatory unionization
rules because they were part of an overall
scheme put in place to deal with the cor-
ruption and destructive union violence
that ran rampant across the construction
industry during the ’70s.
Notwithstanding this, a number of jus-
tices took the position that Quebec’s man-
datory union membership requirement
meant that all individuals were forced to
share similar values with all other union
members. This is an important
consideration because many The time is ripe for elected
workplaces outside Quebec’s
construction industry operate as legislators to bring Canadian
closed shops where union mem-
bership is a mandatory employ-
labour laws in line with the rest
ment condition. of the industrialized world.
The Road Forward
Current Canadian labour laws are among
the most archaic in the industrialized
world. While other countries are reform-
ing their legislation and rules, Canadian
laws and jurisprudence stand out in terms
of how they force members and non-
members to pay union dues that are often
used for political purposes. Consider
how the Alberta Labour Relations Board
(ALRB) dealt with the following issue in a
November 2009 decision.
O ver ma ny yea rs, a u n ion i zed
employer had negotiated numerous col-
lective agreements that included an open
shop arrangement, allowing employees
to elect whether they would join and pay
dues to the union. Employees choosing
not to join the union were not required
to pay dues.
While this type of arrangement is unu-
sual in Canadian unionized settings,
Alberta’s Labour Code allows union secu-
rity clauses to be settled at the bargaining
table. When the employer refused to agree
to include a requirement for all employ-
ees to pay dues, the ALRB ruled that the
employer was bargaining in bad faith and
that Alberta’s labour code was unconsti-
tutional because it did not “mandate a
minimum union security provision” to
help finance the union.
Given biased and expansive interpre-
tations such as this, the time is ripe for
elected legislators to bring Canadian
labour laws in line with the rest of the
industrialized world and establish a
framework that respects the democratic
rights of individual working people, as
opposed to the institutional interests of
labour leaders.
R e s e a r c h s u r v e y s i n d ic a t e t h a t
Canadians clearly support reforming how
dues are collected and used by unions. A
Nanos Research poll for the National Post
and Global National on workplace issues,
released in August 2008, found that only
16 per cent of working Canadians felt
union dues should be used to make politi-
cal contributions to political parties.
Similarly, only 17 per cent of respondents
felt union dues should be spent on parti-
san political advertising campaigns.
Only two provincial governments have
ever attempted to set boundaries around
how unions use dues. In 1961, the British
Columbia government amended its labour
relations legislation to prohibit trade
unions from “contributing to or expend-
ing on behalf of any candidate for politi-
cal office, any moneys deducted from an
employee’s wages or paid as a condition of
membership in the trade union.”
In 1996, Manitoba enacted legis-
lation further requiring unions
to “consult each employee who
is in a bargaining unit about
whether they wish [ed] their
union dues to be used for politi-
cal purposes.” The legislation
further allowed employees objecting to
such uses to have an equivalent amount
redirected to a charity of their choice.
These provisions were later repealed.
Other industrialized countries that
Canada competes with globally have put
in place formal mechanisms to democra-
tize the collection of dues and the distri-
bution of monies for political purposes.
Since 1992, unions in the United Kingdom
have been required to pass a “political reso-
lution” that must be periodically voted on
to establish a segregated “political fund”
for which union members may voluntarily
contribute to. Unionized employees in the
47-nation Council of Europe, have a choice
regarding union membership.
OPENMIND SPRING 2010 35
 More Than Their Due
And, following a 2007 land-
mark European Court of Human
Rights ruling, it is now illegal for
unions to use unionized non-mem-
bers’ dues for political activities.
In 1988, the U.S. Supreme Court
ruled that unions may use dues for
political purposes but that non-mem-
bers would not be required to support
these activities. Since then, a variety of
rules and formulas have been developed
to allow non-members to opt out of con-
tributing to non-collective bargaining
activities but pay a “fair share” of costs
associated with core workplace-related
union activities.
I n t he U. S ., Wa sh i ng ton St a t e ,
Michigan, Ohio, Wyoming and Utah have
all adopted paycheque protection provi-
sions within election financing legisla-
tion that prohibit unions from using dues
for political purposes without specific
authorization in writing from employ-
ees. As such, unions are subjected to the
same rigorous accounting, reporting, fi l-
ing, compliance and enforcement meas-
ures that all other organizations making
political contributions are subjected to.
Approaches along these lines would
likely fi nd wide acceptance in Canada. A
2008 Nanos Research survey found that
most Canadian workers opposed manda-
tory union membership. Most respond-
ents also felt that it would be fairer to
36 OPENMIND SPRING 2010
pay lower dues to cover the costs of
collective bargaining and agreement
administration, but not be forced to
pay for union activities relating to non-
collective bargaining activities, such as
supporting or opposing political par-
ties and social causes. The challenge,
therefore, is to create a transparent and
accountable structure that equally bal-
ances the rights of employees who sup-
port their union being politically active,
and want to contribute to furthering its
political objectives, with the rights of
employees who believe that any monies
they are legally required to pay to a union
should be limited strictly to negotiating
and administering collective agreements.
To create this ba lance, Canadian
unions should be expressly prohibited
from spending dues that are legislatively
mandated for purposes beyond what is
needed to maintain a collective bargain-
ing relationship with the employer. Funds
collected for these purposes should be
accounted for separately and segregated
from monies that may be collected and
used for other purposes.
The rights of unions and union mem-
bers to voluntarily engage in political
activism or support political causes and
parties should also be expressly dealt
with. Most jurisdictions address this
by requiring separate political action
accounts from which all voluntary dona-
tions and expenditures are accounted for,
reported on and then audited. There is no
reason that similar structures could not
be established in Canada.
While it may be arguable that at one
time unions were justified in spending
dues for political campaigns, the magni-
tude of recent union-financed political
advertising campaigns is reaching epic
proportions. Is it appropriate for unions
to spend more on advertising than the
political parties themselves during an
election campaign? Is it fair that the
millions they spend to support political
campaigns and left wing social causes are
being financed by working Canadians
who are required by law to pay dues?
Moreover, Canada should re-examine
a system where, regardless of whether
union members agree with the political
views being expressed, Canada’s archaic
and paternalistic labour laws dictate that
Canadian workers must yield their politi-
cal voices to union leaders who claim to
speak on their behalf.
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000.MMM-1-4S_nBL.indd
AM 1 OPENMIND SPRING
3/23/10 37 AM
2010 8:54:08
 INSURANCE ASSURED: Nancy Bochard,
president of Mercon Benefit Services, says
a large client like Merit helps employees get
the best insurance at the lowest cost.

38 OPENMIND SPRING 2010

A streamlined delivery process puts
open shop health and benefit plans
ahead of the pack
By Joel Thompson photograph by buffy goodman

M
edical and dental benefit plans for employees
have become widespread in commercial and industrial
construction.
Merit’s biannual wage and benefit survey has tracked
the steady growth of benefit coverage in the construction industry over
the past 20 years. Percentages of employers offering benefit coverage
for their field staff has grown from about 25 percent in the 1980s to
94 per cent in the June 2009 survey.
The residential sector has lagged behind in providing benefit cov-
erage, but the majority of construction workers in the industrial and
commercial sector are covered by medical and dental insurance plans
and expect that, when they go to a new employer, benefit coverage will
be part of their compensation package. Employee surveys by Merit also
reveal that employees value benefit coverage and large majorities would
choose the benefit coverage over an offer of a cash raise equivalent to
the cost of coverage.

OPENMIND SPRING 2010 39

 Get the Benefits
For open shop organizations, the wide-
spread expectation in the construction
work force that benefit coverage will be
provided has locked in an important cost
and competitive advantage. While the
work force now assumes coverage will be
provided, and it is difficult for employers to
attract quality personnel without offering
benefits, the cost of coverage varies greatly
between employers. There is a striking gap
between most building trade union plans
and those available to open shop employ-
ers. This difference is outlined in the table
accompanying this article.
Merit Alberta began as a vehicle to pro-
vide member companies with cost effective
benefit coverage. In the 25 years since, the
not-for-profit model of multi-employer,
portable benefit coverage has expanded
continuously and now covers construction
workers across the country. That increased
volume, accompanied by constant upgrad-
ing of administrative procedures, has
resulted in open shop employers paying
considerably less for equivalent benefit cov-
erage than their union competitors.
Merit benefits were modeled on tra-
ditional union hourbank benefit plans.
Open shop benefits were introduced to
replace union plans, as much of the work
force of the fledgling non-union sector had
once been union members. With very simi-
lar plan design and levels of coverage, why
has the open shop industry been able to
provide benefit plan coverage at a reduced
cost?
Part of the reason is volume. Nancy
Bochard is president of Mercon Benefit
Services, the organization which admin-
isters benefit plans for open shop associa-
tions across Canada. She explains that a
large employee group brings advantages.
“Underwriting is very competitive and
when we take our 50,000 life plan to the
market we get excellent rates,” she says.
“Insurance companies regard us as a very
important client. Having a group as large
as ours also insulates the plan from sud-
den premium increases due to a period of
bad claims experience.”
Multi-employer hourbank-based ben-
efit plans are complicated to administer.
They consist of many employers with a
40 OPENMIND SPRING 2010
wide range of businesses represented. The are now remitted by our employers elec-
employee group, ref lecting conditions in tronically,” Bochard says. “This gives us
the construction industry, often has a dis- integrity of data because it goes right from
jointed work history with frequent layoffs our employers into our system. It frees up
and changes of employers. It is a daunting our staff from doing data entry and allows
administrative task to liaise with employ- them to spend more time on customer
ers and communicate with employees and service with the employees.”
their dependents who are spread across the Her staff of 17 administers the benefits
country. for the 50,000 employees who make up
Coping with this complexity requires the work force of the various open shop
the use of the most up-to-date software associations across the country. She cites
and electronic communications. This a recent expansion of its group as an illus-
Rapid increases in internet access and usage has
provided a tremendous opportunity to increase
levels of customer service and satisfaction by
using the internet to deliver plan information.
technology entails big investments that tration of system capabilities. Adding a
are beyond the scope of smaller plans, but new 7,000 employee group in the past year
provide huge gains in productivity and required only one additional staff person.
efficiency. “Ninety per cent of our hours She says pending system upgrades and
HOURLY COSTS FOR BENEFIT PLANS IN THE ALBERTA
CONSTRUCTION INDUSTRY AS OF SPRING 2010
HOURLY BENEFIT PLAN
GROUP PREMIUM
Boilermakers $2.25
Bricklayers $1.10
Carpenters $1.40
Electricians $1.87
Elevator constructors $1.18
Glaziers $1.25
Insulators $1.50
Ironworkers (structural) $2.00
Labourers (provincial) $1.60
Plumbers and pipefitters $1.86
Millwrights $2.50
Operating engineers $2.00
Refrigeration mechanics $1.55
Roofers $1.40
Sheetmetal workers $1.40
Teamsters $2.00
Tilesetters $1.70
CLAC $1.25
Merit Contractors Association (Alberta) $0.87
new contact management software will “Insurance companies regard us as a very impor-
further enhance efficiency and allow some
new services to be offered with a retiree tant client. Having a group as large as ours also
benefit plan (to be unveiled soon) and health insulates the plan from sudden premium increases
spending accounts under consideration.
Employee surveys have revealed rapid due to a period of bad claims experience.”
increases in internet access and usage. This Nancy Bochard, Mercon Benefits president
has provided a tremendous opportunity
to increase levels of customer service and
satisfaction by using the internet to deliver
benefit plan information. Enrollees can
use the benefit plan website to access basic
information, submit enquiries, download
claim forms or access information on
their own personal accounts. While this
Employer’s Game Plan
internet-based communication requires If injury strikes your roster...
OIS needs to be in your play book.
ongoing investment and maintenance,
it offers huge scope for improving service
levels without the need to increase benefit
plan staff.
While cutting-edge administrative sys-
tems are essential to keep premiums low,
overall management is also important. A

IS
board of trustees oversees Merit benefits,

O
which includes independent outside insur-
ance and construction industry experts, as
well as member contractors. This ensures
strategic planning that is predicated solely
on the financial health of the benefit plan
ry Service
l Inju
and is not affected by political considera-
tions or reaction to short-term market con-
ationa
ditions.
Similarly, the large financial reserves Occup
that every benefit plan must maintain are
ity
professionally managed by independent disabil ment
e
managvices
financial consultants. The various build-

access
ing trade unions offer similar benefit
plans, but for a variety of reasons, these ick ser
qu ical
plans cannot match the low premiums of
to medrts
expe
Merit benefits.
One obvious reason is size. The build-
ing trade unions are organized on tradi-
tional trade divisions, each with their own
jurisdictions and collective agreements.
With more than 20 different construc-
tion unions, separate benefit plans for
every union mean that the union sector is
unable to take advantage of economies The Occupational Injury Service (OIS) is designed to get your workers quick access
of scale and generate the required funds to expert medical and disability management services to get them back to work safely.
to finance the technology to maximize
administrative efficiency. Some of the Visit www.wcb.ab.ca for more information.
smaller unions, with only a few hun-
dred benefit plan enrollees, are in a situa-

000.WCB_1-2M_nBL.indd 1 3/23/10 10:06:26 AM

 Get the Benefits

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0-
Call 1-80 Perhaps the biggest barrier preventing
union benefit plans from improving their
cost effectiveness is that there is no incen-
tive for the unions to do so. Union benefit
plan premiums are 100 per cent paid by
unionized employers; there is no cost-share
with employees.
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taxation standpoint (long-term disabil-
ity benefits are taxable when premiums
are employer paid) and it means the work
force has no stake in ensuring its benefit
plan is cost effective. In fact, the situation
is quite the opposite. Benefit plan premi-
ums are factored into the gross wage figure
and higher benefit premiums inflate that
number.
• Piping & Equipment Insulation For union leadership, who are a ll
elected, it is good politics to be able to
• Fireproofing / Fire Stopping point to a high gross wage number in their
• Siding / Metal Buildings / Utilidors collective agreement, even though an extra
dollar an hour in benefit premiums make
• Asbestos Abatement it more difficult for its contractors to com-
pete in the marketplace and provide work
• Maintenance Services for the union membership.
• Glycol and Steam Tracing With some union benefit plans cost-
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000.Northern_1-3S_nBL.indd 1 3/31/10 10:56:21 AM

 We can
Work It
Out BY LAUREN PINCH

Construction
professionals, in their
quest to build
things, sometimes
fall short in building
relationships.
Architects and
ILLUSTRATION S BY RODRIGO LÓPEZ OROZCO

contractors can
find themselves
competing for
control and the good
favour of a project owner

OPENMIND SPRING 2010 43

 We Can Work It Out
A lthough some rivalry is expected,
the industry knows that too much
tension can turn what should be
a collaborative relationship into
an adverse one – perhaps delaying a project
or driving up its costs.
Why do contractors and architects clash
in some cases, but not in others? Can conflict
be avoided? Or is a little tug-of-war impor-
tant to building the best project possible for
the client? A few industry experts weighed in
to help answer these questions.
Steve Risk, president of Paul Risk Associ-
ates in Quaryville, Pa., a firm that performs
both design-build and bid work, offers
insights from the contractor’s perspective.
44 OPENMIND SPRING 2010
Thomas Howorth, FAIA, a participant in
the American Institute of Architects Com-
mittee on Design, which advocates for high-
quality design and innovation within the
industry, offers the architect’s perspective.
Giles Jacknain, a Chicago-based consult-
ant for Zweig White, a firm specializing in
enhancing the business practices of archi-
tecture, engineering and construction pro-
fessionals, offers a third-party perspective.
What is at the root of the tension
between contractors and architects?
“I think the root of the tension comes
from deciding who is really responsible for
the client’s best interest,” Jacknain says. “The
contractor and the architect have a different
set of incentives. The architect is looking to
create or design something that makes the
client happy; the contractor is looking to
keep costs down.”
The duality is actually beneficial to bal-
ancing the project, he says. “Some clients,
particularly developers, want that conflict.
They want the architect to constantly push
a design to satisfy the client’s needs. At the
same time, they want the contractor to be
pushing back in the other direction to bal-
ance the cost needs of the project,” Jacknain
adds. “The architect should have an under-
standing of what the owner wants and why
he wants it built, whereas the contractor
“It’s more of a problem with com-
munication. The architect looks at
the project like an artist, and the
contractor looks at it as a builder
and pragmatist.” Paul Risk, contractor
should have an understanding of how it
should be built.”
A third-generation family-owned firm,
Paul Risk and Associates became a forerun-
ner in the design-build process more than 40
years ago – before it was even called design-
build. With 75 per cent of its business com-
ing from repeat clients across the health
care, religious, commercial and institutional
sectors, the company has succeeded in bal-
ancing dual incentives.
“I try not to call it a conflict,” Risk says.
“It’s more of a problem with communica-
tion. The architect looks at the project like
an artist, and the contractor looks at it as a
builder and pragmatist.”
In addition, owners have
become intently focused
on “cost, cost, cost,” he
says, putting pressure on
both parties.
Howorth, who works
with contractors on his-
toric preservation, government and institu-
tional jobs, believes the traditional bidding
process is a primary contributor to mistrust.
“I think the main tension that architects
have in relationships with contractors ulti-
mately derives from the competitive real-
ity in which contractors have to operate,”
Howorth says. “Contractors are at the mercy
of the bid market. Anybody that can get
licensed or bonded will be considered quali-
fied, along with their sub-bidders. In order to
compete, they are bound to take the lowest
price they can get, or run the risk of not get-
ting the job. You wind up with an adversarial
situation right out of the gate.”
And the potential for change orders adds
to the discord.
“Some contractors don’t call obvious
design omissions to the attention of the
architect because they can take [the omis-
sion] out of their bid to create a change
order later,” Howorth explains. “This cre-
ates unrealistic expectations for the owner,
who thinks the contractor should have
done something about the missing item and
brought it to the architect.” (The bid speci-
fications generally require the contractor to
call omissions to the attention of the archi-
tect and request clarification.)
Another issue is the volatility in the con-
struction materials market. “An architect
may design a beautiful building on budget,
and then the price of the concrete doubles,”
Jacknain says. “It’s a no win situation for
everybody.”
Reprinted with permission from
Construction Executive November 2007

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 Capital expenditure for construction in 2006 2007 2008 2009 p 2010 (est.)
Alberta (in $ millions): 52,986.6 59,767.6 65,155.2 47,550.4 49,514.7

Construction price index for

apartment buildings in 2005 2006 2007 2008 2009
Calgary: 115.2 131.5 156.8 173.3 157.7
Edmonton: 114.6 129.0 152.0 164.4 145.6
% change Calgary: 6.6 14.1 19.2 11.2 -9.0
% change Edmonton: 6.5 12.6 17.8 10.9 -11.0

Value of building permits (monthly) Seasonally adjusted (in $ millions) % change

in Alberta February January February Jan. 2010 to Feb. 2009 to
2009 2010 2010 Feb. 2010 Feb. 2010
Residential: 240 614 691 12.5 188.0
Non-residential: 301 279 319 14.7 6.0
Alberta Total: 541 892 1010 13.2 86.7

Yearly value of all building permits 2005 2006 2007 2008 2009
in Alberta ($ millions) 10,201.7 13,875.7 15,729.7 13,142.2 11,276.9

New housing price index 2005 2006 2007 2008 2009

($ thousands) Calgary: 147.8 212.2 246.6 248.2 231.6
Edmonton: 137.7 177.5 234.4 236.8 210.3

Wholesale merchants’ sales by industry

unadjusted ($ millions) across Canada 2005 2006 2007 2008 2009
Building supplies: 39,687.1 42,997.3 45,330.3 46,094.0 43,506.1
Metal products: 16,072.5 17,711.1 17,774.9 19,421.2 13,760.0
Lumber and millwork: 13,762.0 13,222.6 12,894.5 11,269.1 8,783.3
Machinery and equipment: 46,488.4 50,966.0 54,540.5 60,135.4 50,703.8

Number of employees covered under the 2004 2005 2006 2007 2008 2009
Merit Hour Bank Benefit Plan: 21,238 24,844 28,291 33,875 38,314 38,187

Total manhours worked under the 2004 2005 2006 2007 2008 2009
Merit Hour Bank Benefit Plan: 43,693,974 51,931,342 58,264,783 69,743,223 77,595,931 74,140,547

Source: Merit Contractors Association

46 OPENMIND SPRING 2010

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What is a COR?
A “Certificate of Recognition” (COR) is a
document issued by a Certifying Partner and
Alberta Employment and Immigration (AEI).
The COR recognizes that an employer ’s health
and safety management system has been
evaluated by a certified health and safety auditor
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promote a “Small Employer Certificate of Recogntion” (SECOR) program for
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construction services.

• Effective health and safety management

systems have been shown to contribute to
the reduction of workplace injuries.
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