COVER STORY
time, financing construction projects for between $ 7 million and $ 1 billion because of delayed payment.
“ Holdbacks and overdue payments mean that contractors are seeing money owed to them being used to finance other projects,” said Frank Graumann, who represents the Sheet Metal Contractors Association of Alberta on the ATCC.“ Often, a 10 per cent holdback on a contract might not get paid for 12 to 18 months. Payees are using that money to fund the next job and that’ s wrong.”
According to the trade coalition survey, overdue payments reduce working capital, discourage contractors from bidding on jobs, affect credit ratings and result in loss of productivity, with members reporting spending a half-day per week on average chasing overdue accounts. Although lien legislation is useful, it is costly to pursue and the grace period to file a claim is too short.
“ You have to use your money to pursue your money,” said Evans.“ Other guys are sitting on your money saying,‘ Well, come and get it.’ We want to have tools to force their hand.”
The current Alberta government“ to its credit has recognized there is a problem and have taken steps to help their process so that they pay on time,” Evans said.
To help make its case for province-wide legislation, the
coalition is researching what percentage of contracts are publicly funded and which are privately funded.“ Our initial research shows that publicly funded construction projects amount to less than 15 per cent of the total construction permits issued annually in Alberta. This means there are billions of dollars of construction projects that are not impacted by Alberta Infrastructure’ s best practices,” Evans said.
He added that momentum is building nationally on the issue. Prompt payment legislation on federal contracts is winding its way through Parliament with Bill S-224 having passed second reading and now in committee. A review of Ontario’ s Construction Lien Act is also looking at some form of prompt payment legislation.
Internationally, Australia, New Zealand, the United Kingdom and some U. S. states have already adopted prompt payment legislation. Some payment strategies in those
With more than 3,000 trade contractors in the province, it was estimated that these contractors are, at any given time, financing construction projects for between $ 7 million and $ 1 billion because of delayed payment. anytime
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In Canada, governments appear to be getting the message that delayed payments to small business ripple through the economy.
“ When the prime contractor gets paid, we want mechanisms for the sub-contractor to get paid,” said Graumann.“ We want to have the ability to walk off a job if there is a dispute and not be threatened with being thrown off the job and losing the contract and being replaced.” He said getting paid within 30 to 45 days is crucial, rather than the current average of 78 days.
Evans agrees.“ Small business cash flow is really what makes the world go around,” he said.“ If you get paid, you pay your suppliers, you pay your staff, and you can confidently bid on your next job.”
Evans said there will be“ some action” on prompt payment legislation within the next year.“ Whether we can get it to the place we want, that’ s yet to be seen. But we’ re as close as we’ ve ever been and we are going to continue to push as hard as we can,” he said. •
18 2017 Edition www. smcaa. ca