Phase 4
Construction & Monitoring Stage
1. The Construction Act
What is a Construction Lien (against a job) ? A Lien is a claim that is registered on title to a property to secure a debt owed by the property owner to the Subcontractor or Contractor or Provider of goods and services that have contributed to the construction or enhancement of that property. It creates a (legal) interest in the property in favour of those who supply materials or services. The amount of the Lien is equal to the value of the debt owed for goods and services. The right to the Lien arises as soon as one party provides services or materials towards an improvement to a property for the benefit of another party. Meaning, as soon as a Contractor or Subcontractor completes their work, they have a right to a lien (Corestone Law).
2. Job Costing & Job Order Contracting and Schedule of Values
Contractor’s Construction Job Costing accurately tracks all costs associated with a job, including labor, materials, and overheads. It gives you a detailed breakdown of an entire project so you can track expenses in real-time and easily calculate future profitability. To maximize your profit and the success of your projects, you need an accurate view of all ongoing work, teams, and individual jobs (Deltek).
Job Order Contracting, or JOC (pronounced “jock”), is a project delivery method allowing owners to award a single contract to a GC that will cover multiple jobs during a set period of time and with a budgetary cap. The scope of the contract is not defined at the bidding stage (Procore).
A Schedule of Values, also called an SOV, is a legal document that contains a breakdown of the value and cost of work items required on a construction job. This document also provides a roadmap of the progress of the project from inception until its completion date (Indeed).
3. Prompt Payment, Construction Holdback and Back-Charges
What is the Prompt payment law in Ontario? – Part I. 1 of Ontario’s Construction Act requires owners to pay a Subs & Contractor’s Proper invoice with 28-days of receipt in line with the Contractor’s Schedule of Values (SOV), unless a notice of non-payment is given, and for Contractors to pay their subcontractors within 7-days of receipt of the owners’ payment, again unless a notice of non-payment is given. On time prompt payment by the Owner is critical to the Subs and Contractor’s legal ability to access its cashflow after work properly completed for that month or period and directly influences the Subs and Contractors construction business success and business health (Gaholt & Deltek, 2024).
The standard Construction Holdback amount is 10% of the value of the work provided, and it is retained by the party responsible for payment until the lien period expires, which is typically 60 days after the work is completed or abandoned (Frank Fledman Law).
Construction Back-Charges is a tool the general contractor can use to recoup the unexpected costs of having to go back and fix the defective work to come out with a satisfactory finished project. Contractors may simply withhold some of the payment due to a contractor to cover these costs (Trusspayments)
4. Construction Contract Law and Contract Administration
Construction Law is a branch of law that deals with matters relating to building construction, engineering, and related fields. It is in essence an amalgam of Contract Law, commercial law, planning law, employment law and tort (Wiki, 2024).
Contract management is the process of managing contract creation, execution and analysis to maximize operational and financial performance at an organization, all while reducing financial risk. Organizations encounter an ever-increasing amount of pressure to reduce costs and improve company performance (BND, 2023).
Contract administration is the planning and execution of contracts. It involves oversight of contract lifecycle management and the tracking of: counterparties. terms and conditions. contract financials (Cobblestone).
5. The Commissioning Process
The Building Commissioning Process is a systematic process of ensuring that a building performs in accordance with the design intent, contract documents, and the owner’s operational needs. Commissioning is fundamental to the success of the whole-building design process (Dept. of Energy, Los Alamos & AI Generated).
Purpose
- New Building Commissioning ensures that a project building is designed, constructed, and operated to perform optimally. It is critical for:
- Ensuring the building meets owner’s operational needs and is compliant with regulations
- Obtaining sustainability certifications and Maximizing energy efficiency
Process
- New or Existing Building Commissioning begins at the design stage and continues through construction and occupancy. It involves:
- Monitoring building plans and Testing and documenting systems
- Training building occupants on proper operation and maintenance
- Reviewing construction documents and Validating and testing installed equipment
- Assessing claims about construction materials and Following good documentation practices
Benefits
- Ensure the building is constructed and operated successfully
- Improve energy usage and Reduce operation and maintenance costs
- Maximize the efficiency of operations