THE OFFICIAL PUBLICATION OF THE GRAND VALLEY ......ect profiled, contact GVCA’s pre-bid reporter...

THE OFFICIAL PUBLICATION OF THE GRAND VALLEY CONSTRUCTION ASSOCIATION • VOLUME 7 • ISSUE 4 • JULY/AUGUST 2018

The Finance & Bonding issueWith articles about how blockchain will change construction, the latest on performance bonds, and theeffects of steel and aluminum tariffs on our industry.Also, look for our annual GVCA Education Supplement.

GVCA-Journal_July-August-2018-6.qxp_Layout 1 2018-06-28 11:48 AM

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GVCA Journal July/August 2018 3

The official publication of theGrand Valley Construction Association

JULY/AUGUST 2018VOLUME 7, ISSUE 4

Publisher: Martha George

Editor: James Raiswell

Contributors: Kimberly AitkenSandra ArthursTed DreyerShawn McCallumGregory PetrelaDerek Rae

Layout and design: Patrick KilbornKymberly BurchellMoreSALES

Photography: Joseph Paul Bergeljpbphotography.com

Advertising sales: Sandra [email protected] 519-622-4822 x129

Subscription inquiries and letters to the editor: [email protected]

GVCA Journal is published six times yearly by theGrand Valley Construction Association ©2018. All rights reserved.

Canadian Publications Mail Product Sales Agreement #42259531; ISSN 2368-2930; in Canadian Periodical Index.

GVCA Journal subscription is a benefit of Grand ValleyConstruction Association membership and is includedin membership fees.

Magazine Subscription: Canada $28/yr (incl. 13% HST).US/International $32/yr (Cdn).

Return undeliverable addresses to:Grand Valley Construction Association,25 Sheldon Drive, Cambridge, Ontario N1R 6R8

© 2018 Grand Valley Construction AssociationAll rights reserved. The contents of this publicationmay not be reproduced by any means, in whole or inpart, without prior written consent of the publisher.

DEPARTMENTS

FEATURE ARTICLES

8

10

12

13

24

Blockchain The Ultimate Disrupter22

Construction 101 More than Just the Basics

2625

4 MESSAGE FROMTHE CHAIR

4 MESSAGE FROM THE PRESIDENT

5 CRYSTAL BALL REPORT

6 FINANCE

7 LEGAL

28 SIGHTINGS

30 GVCA EVENTS &EDUCATION CALENDAR

30 ADVERTISERS’ INDEX

ConestogaCollegeto Award Scholarships

Minimizing the Impact of

Steel andAluminumTariffs

21 Performance Bond Required

Voters turfLiberals

U.S. imposed

Surety Bondingand the New Construction Act

NarishaJoseph


4 GVCA Journal July/August 2018

MESSAGE FROM THE CHAIR

MESSAGE FROM THE PRESIDENT

If that sounds like you’re be-ing asked to juggle a lot ofballs at the same time, it’sbecause you are. This is whatyou signed on for when youeither started your business

or took over an existing one.The construction industry issophisticated and risky. Be-ing an expert in your field isno longer something to as-pire to. It’s a mandatory

criterion. Luckily for you,help’s available.

GVCA is a resource you canand should always turn to forhelp in learning about thelatest news and trends—con-

struction, management, professional development, legal or otherwise. Marthaand her team are there tohelp, and they will stay ontop of new developments asthey happen. They’re yourexperts. Use them!

We know that most businesses fail due to poor management prac-tices, but the biggest cause is lack of cash flow. Being underfundedcan cripple a business quickly. As owners of our businesses, we needto ensure that we manage our money, invest wisely, weigh risk whenwe bid each project, commit to a consistently high standard of exe-cution, and treat our most valuable resource, our employees well.

Martha George, GSC

Becomea business expert

Focus on themoneyOne simple way to work onyour business is to focus onthe money. Separate thosejobs that generate moneyfrom those that are simplythere to occupy your timeand talent. Work on thethings that make profit.

Dump everything else.

Remember the days ofdreaming, having fun andfreewheeling it without being tied down? Close youreyes and think back to thoseglorious days. Capture thatfeeling again. It feels great,

doesn’t it? Now open youreyes and make it happen.

Grow your business by fol-lowing the money. Profit isn’ta dirty word. It’s what you’reworking for. RememberParkinson’s Law? Work expands to fill the available

time. The same principleholds for business tasks.They expand to fill youravailable resources. Handthose jobs off to someoneelse, someone you trust. Nowfocus your time and atten-tion on growing the businessand generating revenue.

Steve Stecho, GSC

It’s easy to get lost in working in your business rather than on yourbusiness. Trust me, I know how easy it is to get sucked into the vortexof “busy”, and to miss the many opportunities that exist all around us.I was a business owner myself for many years.



1101 Homer Watson Blvd.Value: $40 million

Project detailsWith most of the prepara-tory work complete, thesprawling site that oncehoused one of Kitchener'slargest factories could seenew construction start laterthis summer. The project aims to trans-form the former KitchenerFrame property at HomerWatson Boulevard andBleams Road into a mix ofindustrial, commercial andretail space. Authorities hopeto break ground in August orSeptember.The first phase will likely bea medical/professional/com-mercial complex that will siton about four acres of land.That could take shape as asingle building of about60,000 square feet or twosmaller buildings at about30,000 square feet each. The developers also are inthe process of attracting in-dustrial tenants for the twobuildings that weren't de-molished. One is about50,000 square feet; the other

is about 80,000 square feet.Work over the past couple ofyears has included environ-mental cleanup, the installa-tion and connection of serv-ices such as sanitary sewer,water and hydro, and theconstruction and preparationof new entrances to the site.

Trinity United ChurchRedevelopment74 Frederick St. Value: $40 million

Project detailsThe existing 42,000-square-foot 1905 building, whichhas no significant architec-tural or heritage value, willbe torn down. The church isworking on plans to preserveessential elements of thecongregation's heritage, suchas stained-glass windows andchurch archives. Plans are still in the earlystages, but the church hopesto build at least one buildingof up to 20 storeys, withunits suitable for one or twopeople. In keeping with thechurch's mission, Trinitywould like the units to bemodest and affordable.

The developer plans to buildup to 18,000 square feet ofspace that the church coulduse for its worship and of-fices, and which other com-munity groups may use formeetings and activities.

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GVCA’s Crystal Ball Report is a unique and insightful member service. Updated daily byGVCA staff, the report tracks planned projects during the pre-bidding phases, followingthem from concept to design to prequalification, construction and completion.

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Blockchain began as a digitalplatform to decentralize therecording of transactions,mainly for cryptocurrencieslike bitcoin. The system usesreplicated transactions acrossmultiple users to ensure alldata is valid at all times. Itarose due to distrust of the fi-nancial institutions. Sincethen, the concept has grownwidely in theory and muchbroader applications could becoming.To illustrate the potential im-pact of blockchain, let’s startwith a simplified example. If Iwant to have a building builtfor my company, I would ten-der for bids on the design andbuilding. For simplicity let’sstart when the design phase iscomplete. I would hire thegeneral contractor (GC) withthe winning bid to pass therisk onto the GC for any costoverruns to ensure I get thebuilding specs I require at theprice that I accepted. The GCthen contracts prequalifiedsubcontractors to carry out theconstruction of the build al-lowing the GC to spread outits risk. The subcontractorsprocure the materials and pro-vide the labour to completetheir portion of the work andbill the GC. The GC collectsprogress payments from the

consumer and pays the sub-contractors periodically.In our simplified example, theGC and each subcontractor isa middle man. The GC over-sees the work for the con-sumer; the subcontractor pro-cures the materials and labourfor the GC. Due to this struc-ture, there are added costsalong the line, like when a sub-contractor adds a mark-up tothe materials it purchases forits portion of the build.

So how could thischange with blockchain?Using a blockchain systemcould allow the consumer todeal directly with each sup-plier and subtrade. But thatdoes not mean that GCs arenot needed. Instead, the GC’srole would shift to focus ongetting the specs of a buildinto the decentralized data-base and providing projectmanagement and health andsafety services. The “market-place” would then electroni-cally bid on their portion ofthe build. The terms of thework/supplies needed wouldbe very specific and the bid-ding companies would bebidding on price and the abil-ity to get the work done inthe proposed timeframe.

The marketplace would act asthe prequalification of thosevendors and subtrades basedon the reputation stored in

the digital footprint of thatvendor. This removes theneed for manual pre-qualifi-cation allowing companies towork together that do nothave a history.The blockchain would create“smart contracts” (or self-exe-cuting contracts) for the win-ning bid for each portion ofthe build. Work is scheduledthrough the system andmarked as completed whendone resulting in data added tothe blockchain/database.

FINANCE


Buildingwith blockchain

Written by Kimberly Aitken, CPA, CA, Co-Leader of RLB LLP’sConstruction Team. Contact her at 519-822-9933 or visit rlb.ca.

Benefits to the consumer• No middle-man cost

mark up.• Blockchain system tracks

all work, reporting and gov-ernance requirements.

• Increased accuracy andtransparency.

Benefits to the GC• Reduced risk. The GC now

bids on specific aspects ofthe contract therefore re-ducing their risk should asubtrade not complete the work.

Benefits to the subtradesand vendors• Payment occurs as soon as

work is complete/materialsare supplied and verified.

• Work is scheduled automat-ically leaving incentive toget work done quicker thanthe accepted bid.

• No need to procure the sup-plies for the work (labour-only) which reduces the riskof the consumer requiringhigher priced products afteryour bid has been accepted.

Blockchain, bitcoin, artificial intelligence. It may seem like technol-ogy is starting to take over. Although some of these technologicaladvances may seem years away from having an impact on the con-struction industry, having some understanding of their potential canprotect your company from becoming obsolete or slow to adapt.

This automatically schedulesthe project manager to inspectthe work and triggers paymentto the subtrade immediatelyafter inspection. These smartcontracts would automaticallyenforce the agreed upon obli-gations and the data remainsaccurate due to the replicationof each piece of informationacross the network.

Although blockchain is verynew and therefore not yetfully understood or regu-lated, you can see that thetechnology can and likelywill disrupt the many indus-tries in the future. Construction is an industrythat can see benefits to all in-volved through this techno-logical shift. So stay connectedto the changes happening soyour company is ready andwilling to adapt when thetime comes.


LEGAL


This article was written by Ted Dreyer, a construction lawyer atMadorin, Snyder LLP in Kitchener. He can be reached at 519-744-4491 and [email protected].

For those unfamiliar withsurety bonds, a labour andmaterial (L&M) bond is aguarantee given by a suretythat the subcontractors andsuppliers of the general con-tractor who posts the bondwill be paid. An unpaid sub-contractor or supplier maymake a claim upon an L&Mbond in addition or as an al-ternative to filing a claim forlien. A performance bond isa guarantee given by a suretyto the owner that the gen-eral contractor that postedthe performance bond willcomplete its work.

Public contracts As of July 1, 2018, the generalcontractor on any public con-tract of $500,000 or more willneed to post an L&M bondand a performance bond. Apublic contract means a contract with the provincialcrown, a municipality, or abroader public-sector organi-zation. A broader public-sector organization means: • any school board• any hospital • any university • any college of applied arts • any children’s aid society • any organization receiving

$10,000,000 per year fromthe Ontario government

• any community health facility

Each of the L&M bond andthe performance bond will

need to cover 50 percent ofthe contract price. Furthermore, as of October 1,a person with a claim on aL&M bond in connectionwith a public contract mayrefer any dispute with thesurety or the principal of thebond (typically the generalcontractor) to adjudication.

Making a claim on anL&M bond The key to making a claimon an L&M bond is givingtimely notice of your claim.The deadline for making aclaim on an L&M bond isdictated by the terms of thebond. A written claim on aL&M bond for money owingother than holdback must bemade not later than 120 daysafter the subcontractor's orsupplier's date of last supply.A written claim for holdbackmust be made not later than120 days of the date that thesubcontractor or supplierought to have been paid infull by the general contractor.If you are a subcontractor orsupplier to the general con-tractor, written notice of aclaim must be delivered tothe surety, the general con-tractor, and the owner. Youcan find out who the surety isby asking the owner for acopy of the L&M bond.

Bill 142 makes changes relating to labour andmaterial bonds and performance bonds thathave drawn comparatively little attention so far.

The impact of Bill 142 onSurety Bonds

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What is at stake forCanadaThe U.S. accounts for 83 percent (USD5.5 billion) of Canadian steel exports,while Canada represents 43 percent(USD 6 billion) of US steel exports. TheU.S. receives 87 percent (USD 8.5 bil-lion) of Canadian aluminum exports.A study by the Peterson Institute for In-ternational Economics found that thetariffs could lead to losses of up to $3.2billion annually (five times as much asChina's losses of $689 million) for oursteel-aluminum industries.The tariffs' long-term effects on theCanadian construction industry are un-clear. Current projects contracted underdefined steel-aluminum prices may be

impacted and depending on the eco-nomic impact, the cost of projects inCanada may increase, or projects may be delayed.

WTO and Pandora's BoxThe last time a U.S. President ordered a232 investigation was in 2001 over ironand steel products. The department de-cided then that imports, because theywere often sourced from allies such asCanada and Australia, do not representa security threat.

Under the World Trade Organization(WTO, GATT Article XXI) membersare permitted to take any trade action toprotect “essential security interests.” Thisexemption was intended for countries at

war or the importation of sensitive goodssuch as fissile materials. Under the mostrecent 232 action, the administration isclaiming that the importation of alu-minum and steel products have “weakenedthe internal economy,” therefore harmAmerica’s “essential security interests.”

According to experts, the imposition ofsteel and aluminum tariffs is an abuse ofboth section 232 and article XXI, but itwill be difficult for other WTO mem-bers to challenge. The Department ofCommerce will likely investigate othergoods using the same justification toraise tariffs and restrict imports withoutany challenge at the WTO.

The greater risk to the global tradingsystem is the precedent this action setsfor other countries. It is possible thatother WTO members, including China,may make similar justifications to banthe imports of additional products. In aletter to the administration last yearsigned by all former national economicadvisors, they warned the President thatif he decides to act on these 232 investi-gations, it will open a Pandora’s Box atthe WTO.

The Canadian Construction Association (CCA) is working with the Government of Canada tominimize the impact of United States-imposed tar-iffs on steel and aluminum. The U.S. tariffs are un-

acceptable and hurt the Canadian construction industry, ourworkers and fundamentally all Canadians by raising prices forconsumers and reducing competitiveness of businesses.

Minimizing the Impact of

Steel and Aluminum Tariffs

U.S. imposed



CCA’s viewThe CCA has long advocated for reci-procity and the establishment and main-tenance of a free-flowing internationalsystem of trade, both in terms of goodsas well as services. CCA supports inter-national free trade agreements, includ-ing provisions respecting governmentprocurement. A trade war will have a negative effecton citizens on both sides of the border,but CCA is pleased that the Canadiangovernment has taken prompt and decisive action to defend our industryand its workers. At this point, the re-establishment of what has always been a great trading relationship with the US is paramount.The construction industry plays a crucialrole in building Canada’s future. We areasking the Government of Canada tosupport the industry so that it can maintain its competitiveness and meetCanada’s infrastructure needs. Some of the suggested measures include a research and development fund for theconstruction industry, accelerated depre-ciation of our equipment, and protectingthe project proponent against price fluctuations due to steel and aluminum tariffs for all federal PSPC and infra-structure program contracts.

April 17, 2017The White House published a

Presidential Memorandum

for the Secretary of Com-

merce requesting an investi-

gation into the national secu-

rity effect of steel and

aluminum imports. Under the

Trade Act of 1962, article 232,

the President can task the De-

partment of Commerce with

investigating an import to de-

termine if it poses a national

security threat. If the depart-

ment identifies a threat, it

provides the President with a

menu of options to eliminate

the threat.

March 7, 2018The U.S. subjected China to

25-percent steel and 10-per-

cent aluminum tariffs.

April 1, 2018China announced duties

of $3 billion on 128 prima-

rily agricultural American

products.

May 31, 2018The U.S. subjected Canada,

Mexico and the EU to

the 25-percent steel and

10-percent aluminum

tariffs. In retaliation,

Canada announced duties

of $6.6 billion on steel,

aluminum and selected

imports from the U.S.

Mexico announced duties

on American agricultural

products and flat steel.

The EU announced plans

to implement duties on

$7 billion worth of U.S

exports.

Tariff timeline



Amongst the wave of changes takingeffect is mandatory bonding for anycontractor who enters into a publiccontract in respect of an improvementgreater than $500,000 (see Ted

Dreyer’s article in this magazine for thedefinition of a public contract). The actgoes a step further by prescribing newperformance and labour and materialpayment bond forms that contain

accelerated response times for thesurety to respond to a claim. Thesetimelines impose rigid requirements tokeep the process moving and mitigatethe impact of the event.

On performance bond claims, a suretywill now have four business days to ac-knowledge a claim, and 20 businessdays to respond with a position. Onlabour and material payment bondclaims from a subcontractor, a suretymust acknowledge that claim withinthree business days and will have to

July 1, 2018 signals the beginning of a new age for construction in Ontario with the modernization of theConstruction Lien Act. Now to be known as the Construction Act, the first phase of the implementation

of the act changes the rules governing trusts, lien periods,holdbacks, and a host of other items

Surety Bondingand the NewConstructionAct

What Does a Contractor Need to Know?


provide a formal position no later than25 business days after receipt by thesurety of a notice of claim. The suretyalso has to pay any undisputedamounts within 10 days of providingtheir position. Contractors should be mindful that thenew time constraints will impose a bur-den on them to relay critical claim re-lated information to their surety sothose deadlines can be respected.As a reminder, the new bond forms willonly apply to public projects in On-tario. CCDC bond forms, federal bondforms and private-owner bond formsmay still be used in other scenarios. For contractors that already maintainbonding, but expect to use their bondfacility more frequently going forward,now would be a good time to refreshyourself on a few of the key terms ofyour bond program. While most bond programs take intoaccount the contractors overall backlog(bonded and unbonded projects), con-tractors who expect to be bidding morebonded work need to remember thatmost conventional bond facilitiescount the value of each bonded tenderagainst the program’s aggregate limit.If you are unsure whether you havesufficient bond capacity to accommo-date an increase in tender bond activityspeak with your surety bond represen-tative about ways to increase yourlimit. Aside from the obvious steps(injecting cash or offering additional

security), there are some creative solu-tions available that a good surety pro-fessional can utilize to garner the nec-essary support. As to the cost, for contract bonds (per-formance and labour, and material pay-ment bonds) the surety charges a rateper thousand dollars of contract price,inclusive of the HST. Contractors arelikely familiar with their basic rates butmay be unsure of when surcharges willapply. For example, sureties have his-torically applied a small surcharge on“broad” form labour and material pay-ment bonds—such as the federal pay-ment bond—which extends coverage tosecond-tier claimants. At the time ofthis writing, the surety marketplace isstill developing their position onwhether the act’s labour and materialpayment bond form, which is a “broad”form extending protection to a secondlayer of possible claimants, will attract a surcharge or not. Review the costs associated with your bond program on a regular basis and ask questionswhen you are unsure of surcharges applying or not. A more active bond facility may alsolead to the surety requesting more frequent and even more comprehensivereporting packages from their contrac-tor clients. A surety’s reporting require-ments are generally a function of bondactivity and the contractor’s financialstrength. Contractors should ask ques-tions of their bond providers and ensure they are striking an appropriate

balance to keep the bond relationshiphealthy. You want to provide sufficientinformation to allow the surety toproperly assess the risk without over-burdening your project and accountingteams in the process. On a final note, contractors will be in-terested to hear that the new Construc-tion Act allows for annual and phasedrelease of holdback on large (valued atmore than $10 million), long-termprojects. The new act also permitsholdback to be held in the form of al-ternate security such as a letter of creditor bond, which is a radical change overthe former act. Where alternate secu-rity is in place, the owner need not holdback the standard 10 percent fromevery progress draw.Does this mean we will see a suddenflood of holdback repayment bonds is-sued in the marketplace? Possibly, butit’s tough to predict how much tractionthese will ultimately gain. The ownermust be agreeable to accepting thebond—the act permits but does not require it—and given that holdback repayment bonds are essentially finan-cial guarantees, sureties will be reservedabout offering these bonds, with approvals dependent on the nature of thecontract and stature of the contractor. Because of the cash flow benefits to thecontractor, if the price of the bond isright, a holdback repayment bond is anoption many contractors should findworth exploring.


This article was written by Greg Petrela and Shawn McCallum of Petrela Winter & Associates. Greg can be reached at 416-488-2522and [email protected]. Shawn can be reached at 519-860-8525 and [email protected]



Journal: How did your focus on theconstruction industry begin?Narisha: For me, it all began when afew friends asked me to review and explain their construction insurancepolicies. After setting up a few policiesfor local businesses and friends, I real-ized how much I enjoyed working inconstruction. Every day brings a newopportunity.

Journal: What did you study inschool?Narisha: While completing my BA atthe University of Waterloo, I earned myRegistered Insurance Brokers of On-tario (RIBO) accreditation and workedpart-time at Ontario Teacher’s Insurance Plan (OTIP).

Chris Floyd, the president of IndividualInsurance Services at OTIP, sat downwith me to review the RIBO Act. Hissupport was incredible, as I was alreadybalancing my university classes and work.

I earned my Chartered Insurance Professional designation in 2010 after

working in Home and Auto Insurancein several different progressive positionsover nine years.

Journal: How did you get your start incommercial insurance?Narisha: After getting married andhaving two kids, I was looking to movemy career forward. I joined Cowan In-surance Group as their manager ofGroup Home & Auto Insurance, andthen joined Frank Cowan Company asa business & sales insurance analyst inCommercial Insurance.

I joined Stevenson & Hunt, now Gal-lagher, in 2013 as an account executivein Commercial Insurance and haven’tlooked back.

Journal: How did you get involvedwith LinC?Narisha: It was my mentor, Jeff Kien-apple, SVP, Commercial Insurance, whosuggested that I get more involved withLinC. Jeff was the chair of GVCA in2017. He showed me the value that thisgroup offers.

For me, it made sense to get more actively involved with LinC, given thatI was born and raised in Kitchener,work in Waterloo, and now live inCambridge. I am surrounded by con-struction projects of all sizes, and proudto say that we insure many of them.

Journal: How do you see your role aschair of LinC helping you and those inthe industry?Narisha: Whether someone is new tothe workforce or new to the construc-tion industry, I believe that LinC pro-vides an incredible opportunity to con-nect with other leaders in constructionand keep current on industry changes.LinC organizes events and educationalseminars, provides networking opportu-nities to build relationships with indi-viduals in construction, and the abilityto share challenges and solutions.As LinC chair, I want to increase ournetworking abilities, community in-volvement and grow our membership.My goals are to raise awareness aboutour group, and share the resources thatwe have with those in construction,which will ultimately build a brighter future for our industry and our region.

Narisha Joseph is an insurance broker with Gallagher in Canada and chair of GVCA’s LinC group. She focuses on construction and finds it rewarding to help business owners with

their insurance and risk-management needs.

Leaders in Construction Leader Profile #7NarishaJoseph

Editor’s note: this article is the seventh ina series of question and answer sessions weheld with members of the GVCA’s Leadersin Construction group. For more informa-tion, visit gvca.org.


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16 GVCA Journal July/August 2018 For more information visit www.gvca.org or call 519-622-4822.

What is your training strategy? There is great evidence that training is critical to the success of a company. This can be evident in a number of ways. Training can be a retention tool – increasing job satisfaction and instilling loyalty and commitment from good employees. Training can be a recruiting tool as today’s workers are looking for professional development opportunities. Training is also essential for knowledge transfer – do you have registered apprentices learning from your experienced employees? Training is necessary in today’s competitive landscape in order to stay abreast of technological change.

Well-trained employees provide a competitive advantage and may help you run a better business. Conestoga College can assist with your training needs. We offer 22 different apprenticeship programs, and have a variety of full-time programs from which to

recruit including HVAC Technician, Mechanical Techniques Plumbing, Brick and Stone Fundamentals, and Carpentry and Renovation Technician. We also offer continuing education classes and

part-time programming such as Construction Management.

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“Employers know that when they call us to fill a position on a crew, it will be with someone who is

,””says Mike Ropp, Training Director at LIUNA Local 1059 Training Centre. “That confidence is a result of our commitment to developing a training program

””

Instructor Josh Stew rtt says the LIUNA Local 1059 Training Centre allows apprentices to learn how to work safely using the latest technology, tools and materials. ’ss a controlled environment our members can really learn from. Yoou can’t duplicate

the job site any closer,” says Stewaindoor sandbox to perform excavatito practice working at heights, overheven a sewer and watermain systemwork in confined spaces. It’s a greathe safest w .””

Triston Gagnon, a graduate of the program agrees. “The instructors experience. They teach you tips you textbooks to make it easier for yourssafer for you and others around you

Members get a comprehensive rttification so they

valuable in the labour market, busafely at the end of each work day.

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GVCA Journal July/August 2018 19For more information visit www.gvca.org or call 519-622-4822.

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INJURED WORKER? Successful WSIB Outcomes for ConstrucWorkplace Injury Claims

HANDLING WORKPLACE VIOLENCE & HPreventing Escalation in Construction W

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MANAGING IN CONSTRUCTION! A CACONCERN OR CELEBRATION‘Need to Know’ Basics When Taking Roles in Construction

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Consider the performance bond requiredin your typical construction contract. Lasttime we checked, the construction buyerneeded assurances against potentialevents of non-performance. Those couldbe due to mismanagement, unforeseencircumstances, negligence, bankruptcy,and so on. As most readers of this piececan relate, in the event of an owner run-ning into irreconcilable troubles with theconstruction team, an insurer will providethe funding necessary to get the job done.It might not be as smooth as otherwisedesired, but the final outcome is positive.While the cost of a performance bond iscarried by the successful bidder, the buyeractually pays the price. The cost of thebond is usually embedded in the con-struction seller’s contract.So what about a bond in an investmentenvironment? The characteristics of abond might be well known, but perhaps a

small recap is worthwhile. While a share-holder is participating in the corporation’ssuccesses and failures, they bear the high-est risk. Their return of capital is notguaranteed. As a preferred shareholder,you’re paid a preferential dividend that is bound to its payment obligations bycovenants. Your participation in the successes and failures of the business arelimited. As a bond holder, you’re essen-tially a lender to the corporation, not participating per se. In the event of fail-ure, you’re first in line to see your originalinvestment returned to you. So it could be posited that an investmentbond is a form of insurance. High-riskborrowers pay more for their borrowing;lower-risk borrowers pay less. The buyerof the bond is essentially lending money

at an interest rate commensurate to therisk of the company. The bond compelsthe issuer (the construction seller) tomake whole the lender (the constructionbuyer) in the event of serious trouble. In recent history, bonds carried muchhigher interest rates than they feature to-day and so while they were quite a handysource of income they generally fail tofulfill that role today. So what role does abond really play in this environment?! Insurance against major failures. In short,risk reduction.Any investment strategy that incorpo-rates bond elements incorporates an in-surance-like feature. An investment port-folio that can’t afford material lossesneeds to have a high proportion allocatedto performance assurances – bonds issuedby financially secure issuers. Likewise, aconstruction project that can afford mini-mal downtime due to material non-performance needs a highly valued androbust performance bond backed by a financially secure insurer.

Nobody needs insurance—until they do. High-risk cases pay more for insurance, which is purelogic. How that insurance is achieved is not always so obvious.

Performance Bond Required

This article was written by Derek Rae, CIM, vice-president and portfolio manager with TheRaeLipskie Partnership, Private Wealth Management in Waterloo, ON. He can be reached [email protected] and 519-578-6849. For more information, visit www.raelipskie.com.



Malloch leads the Deloitte InnovationLab in the Communitech startup hub.The lab creates digital prototypes thatvalidate new product and service valuepropositions leveraging emerging tech-nologies such as blockchain, machinelearning and the Internet of Things.

In fact, Deloitte now has over 800 prac-titioners in their blockchain communityfrom 40 countries around the world.“All labs at Communitech are explor-ing innovations in this new economic environment where we are finding solutions that are evolving from non-

traditional players,” said Malloch. “So,you now have competition coming atyou enabled by new technology.”This is a symbiotic relationship withstartups where the lab provides accessto its clients who are consuming someof the new technology solutions coming out of the labs.Bitcoin is based on blockchain wherethere is a block that has been createdwhich has specific encrypted informa-tion that only the right people at theright time can see. The block goes intoa network of computers and this net-work has to come to the agreement

At this year’s What the Tech event, Norm Malloch lead the audience through an entertaining discussion of just what blockchain is, how it

works and its multi sector potential as a globalmanagement process system.

Blockchain The Ultimate Disrupter



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that the transaction is valid.This block is then put into the chain.It is chronological and secure. Onlypeople who have the key can look inside the block so it is public yet private at the same time. These aretechnology disruptions that have majoreconomic impacts.Blockchain reduces the cost of trust.Just think of all the transactions thatare done on a daily basis where youwould need to act with an intermedia-tor. We now have this computer entitythat is trustworthy and can bypass theneed of an intermediator. We are starting to see ‘Go Live’ sys-tems in 2018 that use blockchain tech-nology. For example, prototypes havebeen developed for international tradewhere you have an importer-exportertransaction. You may be buying a loadof tires. For the non-transport part ofthis transaction, the paperwork wouldusually take about 21 days. The lab researchers have demonstrated that thetransaction can be completed in two.This prototype was developed twoyears ago and is now being used inHong Kong where they put this product behind their firewall andstarted integrating it into some of their systems.When looking at how this processcould be used in construction, it couldbe through the use of a smart contractwhere aspects of the contract could beverified in a trusted way and then pro-ceed to payment.Smart contracts can be lumped together to form an organization calleddecentralized autonomous organiza-tions (DAOs). They are designed torun through rules encoded as computerprograms called smart contracts. ADAO's transactions and program rulesare maintained on a blockchain towork together in something like abuilding management system.The blockchain technology is a majordisruptor which will continue to beused in many industries and servicesectors well into the future.



With Doug Ford now Ontario’s Pre-mier-elect, here’s what we at the Coun-cil of Ontario Construction Associa-tions see happening both in terms ofhis next steps, and in terms of the newgovernment’s impact on our industry.One of Ford’s first actions will be to en-gage an outside auditor to review govern-ment’s books and determine the accuratestate of government finances. Once thisreview is completed, Ford will know theextent to which he can balance tax cutsand spending increases. He will then bein a position to identify his government’spriorities—and the timing of each.Ford will appoint his cabinet ministers.Look for him to appoint about 28members. It will be interesting to see ifFord will run his government in thesame transparent way as his predeces-sor and publish the mandate letters ofhis ministers and their assistants. Staffing up the premier’s and ministers’offices with loyal and competent partyoperatives will be a big job. Fortunatelyfor Ford, there are a lot of unemployedformer Harper federal government po-litical staffers still available. Let’s hopehe selects a principal secretary who isexperienced and competent.Finally, Ford and his team will develop alegislative program for the 42nd Parliamentand a plan for the first session which weexpect to open in mid-September.

What will COCA do?Given the dramatic change at Queen’sPark, you might well ask, “What willCOCA do?” Our role is to work withour members and senior officials atQueen’s Park to ensure that theprovince’s framework of laws and regu-lations supports success in the con-struction industry.Our success is determined by twothings: the quality of our thinking,ideas and solutions, and the quality ofour relationships. COCA had excellentworking relationships with all 107

MPPs in the previous Parliament. Go-ing forward, there are 73 new MPPs.We have to introduce ourselves to themand launch positive and productive re-lationships.We will meet with the new Minister ofLabour, Attorney General, Minister ofInfrastructure and Minister of Ad-vanced Education and Skills Develop-ment, Minister of Economic Develop-ment and their respective critics. Wewill be interested to meet with the newMPP for Guelph and OGP leaderMike Schreiner. We will ask the issuesthat concern them most, inform themabout the unique nature of the con-struction industry and ask them howwe can help. We want to establishCOCA as the first place to turn whenconstruction related issues arise.We have our work cut out for us.

With Doug Ford now Ontario’s Premier-elect,here’s what we at the Council of OntarioConstruction Associations see happeningboth in terms of his next steps, and in terms

of the new government’s impact on our industry.

Voters turf LiberalsElect majority PC government In his wrap-up of the June 7 provincial election, COCA president Ian Cunningham tells us there’s much work ahead for the council.

CONTRACT REVIEWPROCUREMENT/TENDER DISPUTES

CONSTRUCTION LIENSCONSTRUCTION LITIGATION

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Over the next four years, ConestogaCollege will award scholarships to morethan 65 first-year post-secondary stu-dents and close to 20 apprentices in arange of skilled trades—including con-struction. The college received the fund-ing to do so through The W. GarfieldWeston Foundation in February.Adelaide Manley, liaison officer for theWeston Family Scholarship in theSkilled Trades, explains that these arescholarships with a difference. The fund-ing of up to $4,000 (i.e., $1,000 per se-mester) will help post-secondary studentsand apprentices pay for tuition and otherassociated costs. One of the conditionstied to the funding is that recipients willalso be required to volunteer time to fur-ther promote the skilled trades.“All recipients become Weston FamilyScholars,” she explains. “They will be in-volved in the various mentoring and co-curricular activities within the School ofTrades and Apprenticeship at Con-estoga, as well as external activities suchas presentations to high schools, openhouses and at events promoting SkillsOntario. Mentorship, giving back, andprofessional development are thereforekey components of this program.”For apprentices, there’s an additionalbenefit to applying. Not only can thefunding be used to offset the cost oftheir seats in their programs, as well astheir tools, materials and books, butthose who complete their apprentice-

ships will earn a further $1,000—as a bonus.That’s an important message for em-ployers. It means that any company thatemploys apprentices or is thinking abouthiring an apprentice can help incenttheir people to sign up to receive train-ing from the college.Early signs from Conestoga show thatthe program has been successful. Thecollege awarded the first block of schol-arships to a cohort of students in March.Since then, group members have at-tended and acted as ambassadors for thetrades in more than 20 events.

“For young people who are consideringcareers in the skills trades, the opportu-nity to hear from those who are enrolledin the program is really important,” she says.Conestoga College has plans to awardeven more scholarships. During the2018–19 academic year, it expects toaward scholarships to 28 post-secondarystudents and a further 14 apprentices.More’s expected in the years that follow.“The scholarships are open to studentsin a range of construction, industrial andmotive power sector programs,” Manleyadds, “as well as across all the college’scampuses: in Kitchener-Waterloo, Cambridge, Guelph and Ingersol.”Anyone interested in learning moreabout the Weston Family Scholarship inthe Skilled Trades should visit www.con-estogac.on.ca/westonfoundation.

Agrant from The W. Garfield Weston Foundationhas enabled Conestoga College to award scholarships to dozens of students in a range of

skilled trades programs.

Conestoga Collegeto Award Nearly 90 Skilled Trades Scholarships in the Next Four Years

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Don’t let the name fool you. The Cana-dian Construction Association (CCA)endorsed Construction 101 program isabout more than just the basics of this in-dustry. It dives deep into concepts thateven people who have served in this in-dustry for years—contractors, designersowners, project managers and profession-als—may still not understand fully.Derek Smith, the former director of theLondon Construction Association andnow a full-time instructor for programslike Construction 101, explains a bitabout the history of the program. It wasimagined and developed initially by theCCA to be a program that explained coreconcepts to new entrants in the industry,as well as to those involved in careers thatdon’t touch the tools—owners, lawyers,accountants and claims managers.“It grew from there,” he says, adding thatConstruction 101 is now one of twomandatory elements for Gold Seal certification for foremen. “It’s now a

staple for any new entrant to the indus-try. It touches on a broad base of materi-als that are common across the industryand across the country. If focuses on is-sues like tendering, contract award andbidding as opposed to estimating andengineering. But no matter who you areor where you’re from, if you’re someonewith 10 or fewer years’ experience in thisindustry, there’s something in the mate-rial for you.”

The industry in eightmodulesSection one of the course starts out sim-ply. Instructors describe key industryterms and unpack the differences betweencore concepts such as industrial, commer-cial and institutional construction, high-rise and tract residential, and civil con-struction. One of the key takeaways forsome participants is that there is a signifi-cant difference between the workforce forhigh-density residential construction andthose working on subdivision.

Section two explores construction docu-ments. It’s a dive into bid calls, drawingsand specifications, addenda, general con-tract conditions, supplementary generalconditions, and some suggestions onhow to prepare bids.Section three looks at contract law. It’sfocused on bidding and tendering, con-tract award and the role played by docu-ments such as the CCDC23 Guide toAwarding Contracts. From there, section four considers thedifferent types of contracts and deliverymodels. It starts with a look at the tra-ditional design-bid-build arrangement,and cuts across design-build, construc-tion management, CM at risk, andcost-plus scenarios. The idea here is toperform group activities where partici-pants examine risk and discuss how itshould be allocated among the variousconstruction parties.Section five is where the material takes alegal turn. Smith explores foundationallegal documents, such as the Ron Engi-neering decision that established the distinction between Contract A andContract B—and what each of thoseconcepts means for the relationships between general contractor and owner,and general contractor and subcontractors.Section six explores risk management.Participants learn about and discuss the

Its name sells the Construction 101 program short. Yes, this is a program that teaches fundamentals topeople who are new to our industry, but there’s more onoffer. Construction 101 cuts across a range of subjects and

raises ideas that even people with years of experience in ourindustry might not know or have otherwise thought about.Watch for a Construction 101 session at GVCA this fall.

Construction 101

More than Just the Basics


different types of risk, allocation ofrisks, and the need for performance,and labour and material bonds.In section seven, participants receive ahigh-level overview of project manage-ment and administration. Specifically,the course material looks as those procedures that are involved in running

a project from award to closeout and leaving the site.Finally, section eight looks at the services provided to contractors, designers and buyers by constructionassociations, including affiliations between CCA and its constituent associations, and resources such as

Gold Seal accreditation.“The best feature of the program isthat it gets people talking and learningfrom each other,” Smith explains. “People learn so much from one another. They share ideas and bestpractices, and the takeaways are very valuable.”


Changes to come?

Always on the lookout to

improve the material he

delivers, Smith is consider-

ing streamlining the Con-

struction 101 program in the

near future. His idea is to

break the material into silos

that are aimed at the particu-

lar needs of participant

groups. So one silo might be

aimed at owners only,

another at design profes-

sionals, and so on.

The next step: Construction 201Following on the teachings pro-

vided in Construction 101, Con-

struction 201 dives into the soft

skills required to succeed in this

industry. Knowing your con-

tract and your procedures is

one thing. Communicating

those to others, and negotiat-

ing with them to get them on

your side is something entirely

different. Construction 201 fills

that soft skills gap that many

people in our industry lack.

Dates to be announced soon!GVCA plans to host a Con-

struction 101 session this

fall. Head to gvca.org for the

latest in course program-

ming information, and don’t

be too quick to rule yourself

or any of your seasoned em-

ployees out of this important

program. There’s a surprising

amount of information in

Construction 101 that even

accomplished employees

might not know!

ISO 9001: 2008 Registered

www.aclsteel.ca519.568.8822

2255 Shirley DriveKitchener, ON, N2B 3X4


GVCA SIGHTINGS


RLB Guelph, Jerseys for Humboldt Leaders in Construction (LinC) Spring Clean-up

Velocity Mechanical Inc., CNIB Fundraiser Walterfedy participating in CANstruction 2018

AccuTemp Heating & Cooling raised over $10,000 on the Spin for kids event

We have an extensive local team of commercial litigators. Our expertise includes:

Timothy J. McGurrinCommercial Litigation Lead, Kitchener-Waterloo 519.593.3221 | [email protected]

MILLERTHOMSON.COM

VANCOUVER CALGARY EDMONTON SASKATOON REGINA LONDON KITCHENER-WATERLOO GUELPH TORONTO VAUGHAN MARKHAM MONTRÉAL

LOCAL EXPERTISE. NATIONAL RESOURCES.

Construction liens | Contract disputes | Commercial Litigation Arbitrations | Trust claims


GVCA SIGHTINGS


Kevan Thompson Industry Leader,

Vice President Construction

Phone: 519-650-6363 ext. 41552 Toll free: 1-866-578-6030

[email protected] www.cowangroup.ca

CONSTRUCTION

ConstructionInsurance & Surety Specialists

programs

surety solutions

management team

Shannon Gerryts receiving Gold Seal Certification

Women in Construction (WinC) Spring Dinner

GVCA Annual Golf Tournament



CONTACT MARTHA GEORGE AT 519-622-4822 X 123, OR [email protected]

ATTENTION CONSULTANTS, PROCUREMENT OFFICIALS, AND FACILITIES MANAGEMENT PERSONNEL.

Construction is complicated!Whether you are in the public, or private sector, GVCA is here to help.We’ll help you unpack issues like various procurement methods, contractor selection, calling bids and awarding contracts, and in-depth understanding of the New Lien Act. If you have a procurement issues you need tackled, just ask.

GVCA WILL FACILITATE A SESSION FOR YOU AT NO CHARGE. We will organize, facilitate, and even provide the coffee.

EVENTS CALENDAR

July 19 LinC Golf Tournament - Conestoga Golf Club

July 24GVCA Safety Group 10th Anniversary Celebration FREE to all GVCA members – come celebrate our 10 year anniversary.BBQ, cake and light refreshments outside at the GVCA office from 3-5pm. Special presentation from Ms. Elizabeth Witmer, Chair of theWSIB. RSVP to Sarah ([email protected])

August 23 WinC Golf Tournament - Galt Golf & Country Club

October 13Oktoberfest Corporate night - Concordia Club (tickets available for pur-chase through GVCA)

Note: To view a complete list of upcoming events and to register, please visitwww.gvca.org/calendar

EDUCATION CALENDAR

July 9Approved Working at Heights

July 23Approved Working at Heights

July 27Approved Working at Heights – REFRESHER

August 20Approved Working at Heights

August 23Injured Worker? Successful WSIB Outcomes For Construction Workplace Injury Claims (Earn 1 Gold Seal credit)

August 24Substance Use Prevention in Your Construction Business (Earn 1 Gold Seal credit)

August 31Approved Working at Heights – REFRESHER

September 6Impact Of Your Attitude On Employees (Earn 1 Gold Seal credit)

September 11 & 12Construction Drawings & Specifications (Earn 2 Gold Seal credits)

September 12Construction Industry Ethics (In-Class Portion) (mandatory for Gold Seal certification)

September 17 & 18Adjudication & Prompt Payment

September 17Approved Working at Heights

September 28Approved Working at Heights – REFRESHER

NoteAll education & training will be held at GVCA -25 Sheldon Drive (unlessnoted otherwise). To view a complete list of upcoming education and toregister, please visit www.gvca.org/calendar.

REGISTRATION REQUIREDfor all courses and events. To register, or request additional information please contact [email protected] or call519-622-4822 X120 or go to: www.gvca.org/eventscalendar.

ACL Steel Ltd. . . . . . . . . . . . . 27Alliance Roofing . . . . . . . . . . 11Ball Construction Ltd. . . . . . . . 2Baywood Interiors Ltd. . . . . . 11Capital Paving . . . . . . . . . . . . . 9Conestoga College . . . . . . . . 16Conestoga Roofing . . . . . . . . . 9Cowan Insurance Group Ltd. . 29CLAC . . . . . . . . . . . . . . . . . . . 19Cushman Wakefield . . . . . . . 32Duncan, Linton LLP . . . . . . . . 24

JDI Cleaning Systems . . . . . . 22Knell's Door & Hardware . . . 23K-W Door Installations Inc. . . . 5Liuna . . . . . . . . . . . . . . . . . . . 17Miller Thomson LLP . . . . . . . 28MNP . . . . . . . . . . . . . . . . . . . 25PCPM Construction . . . . . . . . 21Petrela, Winter & Associates . . 27Rae Lipskie . . . . . . . . . . . . . . . 7RCT Bins . . . . . . . . . . . . . . . . 10The Guarantee . . . . . . . . . . . . 2York University . . . . . . . . . . .18

ADVERTISERS’ INDEX


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THE OFFICIAL PUBLICATION OF THE GRAND VALLEY ......ect profiled, contact GVCA’s pre-bid reporter...

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