CCDC and CCA standard form contracts

Most construction contracts are not drafted from scratch. They start from standard forms prepared by industry bodies, then are modified by supplementary conditions written for the project. Standard forms save time, reflect decades of experience, allocate risk in ways the industry understands, and allow courts to develop consistent interpretations. They also have a weakness: because everyone has seen them, people stop reading them, and the supplementary conditions that change them are where many disputes begin. This lesson introduces the main families of forms, the structure of a typical general conditions document, and how to review amendments.

Why standard forms exist

Standard forms solve several problems at once. They reduce the cost of drafting and reviewing contracts on every project. They allocate risks in a balanced way that has been negotiated between owners, designers, contractors and sometimes sureties and insurers. They coordinate the documents: the general conditions, the subcontract and the insurance requirements are written to fit together. And they are known to banks, sureties and courts, which reduces uncertainty.

In Canada, the Canadian Construction Documents Committee (CCDC) is a joint committee of owners, consultants, contractors and others, including the Canadian Construction Association (CCA), the Association of Consulting Engineering Companies, the Construction Specifications Canada and owner representatives. Its documents are the most widely used private and public contract forms in the country outside Quebec, where they are also used in translation along with forms tailored to the Civil Code. The CCA publishes its own subcontract forms, and several public owners use their own conditions.

Structure of a contract

A typical contract package has several layers, read together.

• The agreement: names the parties, the work, the contract price, the contract time and the list of contract documents.
• The general conditions: the standard rules on administration, payment, changes, delays, insurance, termination and disputes.
• Supplementary conditions: project-specific amendments to the general conditions, sometimes many pages long.
• Division 01 of the specifications: general requirements such as submittals, scheduling, site facilities and closeout.
• Technical specifications and drawings: what is to be built.
• Addenda issued during bidding, and change orders after award.

Inside CCDC 2-2020

CCDC 2-2020 consists of an agreement, definitions and general conditions organized in parts. The parts most often used on site are these.

• Part 2, administration of the contract: the consultant administers the contract, interprets the documents and certifies payment.
• Part 3, execution of the work: the contractor controls the work, provides the schedule under GC 3.4, supervises, and is responsible for subcontractors.
• Part 5, payment: applications for payment, holdback, substantial performance and final payment, now read together with provincial prompt payment law.
• Part 6, changes in the work: change orders (GC 6.2), change directives (GC 6.3), concealed or unknown conditions (GC 6.4), delays (GC 6.5) and claims for a change in contract price (GC 6.6).
• Part 7, default notice: the owner's right to perform the work, terminate or stop the work (GC 7.1) and the contractor's right to suspend or terminate (GC 7.2).
• Part 8, dispute resolution: negotiation, mediation and arbitration, now subject to statutory adjudication where available.
• Parts 9 to 12: protection of work and property, governing regulations, insurance and indemnification, waiver and warranty, including the one-year warranty period in GC 12.3.

Every new CCDC edition changes some provisions. CCDC 2-2020, for example, expanded the contractor's scheduling and safety obligations, revised the treatment of delays and claims, and added provisions for owner-supplied materials and for interaction with prompt payment legislation. A manager moving to the 2020 form from the 2008 form should read the changes rather than assume familiarity.

Supplementary conditions and amendments

Owners rarely use standard forms unchanged. Supplementary conditions add project requirements, adjust risk and sometimes transfer risks that the standard form deliberately leaves with the owner. Common amendments include:

• Shifting the risk of unknown site conditions to the contractor.
• Shortening notice periods for claims, or making notice a condition precedent to any entitlement.
• Adding broad indemnities, waivers of claims and limits on delay damages.
• Extending warranty periods or adding performance guarantees.
• Changing payment terms, holdback release or retainage.
• Adding owner rights to terminate for convenience.

CCDC documents carry a seal that may be used only if the form is unchanged except for supplementary conditions. Some industry associations publish guides recommending against heavy amendments; CCDC's own guide warns that wholesale changes defeat the purpose of the form. Courts interpret supplementary conditions according to their words, and the more a form is amended, the less weight earlier cases on the unamended form carry.

Subcontracts and flow-down

A subcontract must fit the prime contract. Most subcontract forms include a flow-down clause binding the subcontractor to the general contractor as the general contractor is bound to the owner, for the subcontractor's part of the work. Flow-down protects the general contractor from being caught between an owner's demands and a subcontractor's narrower obligations, but it can also impose on subcontractors terms they never saw. A subcontractor should always ask for the prime contract, or at least the parts that flow down.

CCA 1-2021 is drafted to coordinate with CCDC 2-2020, including payment timing that reflects prompt payment legislation, and many general contractors amend it heavily. Subcontractors should compare amended subcontracts with the standard form, paying special attention to pay-when-paid clauses, set-off rights, notice periods and warranties that run longer than those in the prime contract.

Choosing a form

The right form depends on the delivery method and on how price risk is shared.

• Stipulated price or lump sum: the contractor takes the risk of cost overruns on a defined scope.
• Cost plus a fee, with or without a guaranteed maximum price: the owner pays actual costs, and takes more of the risk, in exchange for flexibility and transparency.
• Unit price: payment by measured quantities, suited to civil work where quantities are uncertain.
• Construction management and design-build: different relationships with the designers and different allocation of design risk, covered in CON-340.

The contract summary at project start-up

The single most effective legal habit for a construction manager is to prepare a contract summary at the start of every project. A good summary fits on two or three pages and is shared with the site team, the project accountant and the estimator who will price changes. It turns a contract package of several hundred pages into the handful of terms that people need to act on every week.

• Parties, addresses for notices and the people authorized to give instructions and sign changes.
• Contract price, pricing method, allowances, unit prices and the markups allowed on changes.
• Contract time, milestones, liquidated damages, and the procedure and notice periods for time extensions.
• Payment terms: application dates, holdback or retainage, stored materials and the documents needed with each application.
• Requirements for notices of claims, differing site conditions, delays and defects, with each period stated in days.
• Insurance and bonding requirements, warranties and correction periods, and closeout documents.
• Dispute resolution steps and any unusual or onerous amendments flagged for attention.

The summary is a working tool, not a legal opinion. It should cite the clause numbers so that anyone can go back to the source, and it should be updated whenever a change order or amendment alters a term. Many disputes that end in court would never have arisen if the people on site had known, from the first week, that the contract required written notice within seven days or that only the owner's director of capital projects could sign a change.