CCDC documents are a common base contract for most construction projects in Canada. CCDC documents are based on the combined experience and thought of architects, engineers, owners, contractors, and sub-contractors. They recognize the need to protect and preserve the interests and rights of both parties to the contract in a fair and equitable manner.
CCDC 2 was recently updated, from its current 2008 version. The CCDC 2 is the document that is typically used for Fixed Price or Lump Sum Contract structures, between an Owner and Contractor.
According to the CCDC committee, this document has been updated for the following key reasons:
- To minimize the need for Supplementary Conditions
- To update the document to reflect more current market standards
What are the main changes relating to insurance?
Amongst the many changes within the document, are two main changes that are important to review when looking into the insurance requirements of the contract.
Ready for takeover
‘Ready for Takeover Milestone’ (RFT) has now been added to the based CCDC 2 2020 document as a new clause in the contract (12.1). There are eight prerequisites to attaining RFT (GC 12.1.1), although four items may be deferred.
Rationale for this change:
- To avoid confusion between Substantial Performance defined in provincial legislation and the Owner requirement for care, custody and control. The Owner can now define the Ready for Use definition.
- To create a clearer separation between the release of statutory hold back and performance of the work.
- To provide distinction for the Contractor on what is needed to be completed prior to the Owner taking over the project.
How does this affect you from an insurance perspective? RFT now affects timelines relating to the insurance, warranty, indemnification, and waiver of claims. Previously, insurances referenced in section (11.1) were required to stay in force until a point in reference to Substantial Performance of the Work. The new change in CCDC 2 2020 replaces the notion of Substantial Performance to RFT. This is important to understand so that the appropriate dates are conveyed to your broker or insurer.
Insurance requirements
Certain insurance limits have been increased, and new requirements have been added to the new CCDC 41. It is important to understand these changes as the CCDC 41 (2020) is a referenced document in other CCDC documents as well. The changes are summarized as per the below table:
Limits — CCDC 41 (2008) |
Increased Limits CCDC 41 (2020) |
New Requirements — CCDC 41 (2020) |
11.1.1.1 — $5,000,000 General Liability insurance |
11.1.1.1 — $10,000,000 General Liability insurance |
11.1.1.5 — Boiler & Machinery Insurance now includes hot testing and commissioning |
11.1.1.2 — $5,000,000 Automobile Liability insurance |
11.1.1.2 — $10,000,000 Automobile Liability insurance |
CCDC 41, 4. — $5,000,000 Unmanned aerial vehicle liability insurance with respect to owned or non-owned aircraft (if used directly or indirectly in the performance of the Work) |
11.1.1.3 — $5,000,000 Aircraft & Watercraft Liability insurance when owned or non-owned aircraft or watercraft are used directly or indirectly in the performance of the Work |
11.1.1.3 — $10,000,000 Aircraft & Watercraft Liability insurance when owned or non-owned aircraft or watercraft are used directly or indirectly in the performance of the Work |
CCDC 41, 8. — $5,000,000 Contractors’ Pollution Liability per occurrence |
KEY TAKEAWAYS
For Owners:
- Owners are able to request the new / increased insurance requirements on an existing contract (CCDC 2008) via a change order.
- The new contract was designed to be fair to both parties and to minimize the use of Supplementary Conditions, which have been used heavily in the past.
- The Owner can now define the Ready for Use definition.
- The new wording addresses early occupancy.
For Contractors:
- The Ready for Takeover clause is not a list of new activities that must be completed prior to handing over the work. This clause simply creates a clearer line as compared to Substantial Performance.
- The updated insurance requirements can be enacted at any time by the owner, even if the 2008 version was signed. The owner may request the change via a change order. Therefore it is important to assess if you are compliant with the updated requirements.