Prompt payment bill under construction

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This article was published 29/03/2023 (1265 days ago), so information in it may no longer be current.

Construction companies in Westman — big and small — that struggle with getting paid on time are keeping their eye on a piece of legislation that may be passed this summer, says the executive director of a construction association.

The Prompt Payment for Construction Act (Bill 38) has been in the works for several years, and its goal is to ensure construction contractors and subcontractors are paid on time — an issue that has plagued the industry for a very long time, according to Shawn Wood.

The construction industry has a tiered payment system from owner to general contractor, and in many cases, to the subcontractor. And there’s a risk to each of those levels if they’re not paid on time.

“So, once legislation is passed, there will be 28 days for the owner to pay the general contractor, and once they submit an invoice, each subcontractor underneath the general contractor will be paid within seven days of that payment being made,” explained Wood, executive director of the Construction Association of Rural Manitoba, which represents 170 companies in Manitoba.

The legislation is needed because many small contractors have limited cash flow, and if there are delays in getting paid, it will have a negative trickle-down effect.

“Up to this point, general contractors have been carrying a lot of those funds, which doesn’t give them the cash flow to be able to continue with other projects,” Wood said. “And then some of our smaller companies that are trade contractors still have to pay their employees, and if they don’t have that money coming in, [it] makes it hard to do that.”

The private member’s bill was introduced seven years ago by Brandon West MLA Reg Helwer, who was made aware of the matter by Winnipeg contractors. After consulting with others in the industry, he started drafting legislation.

Since then, the bill has gone through several stages of approval and public consultation and is now awaiting second reading. It could pass third reading on June 1, said Helwer, but he cautioned that with government process, it may be next year before the regulations are written and all public consultations are concluded.

The prompt payment legislation is not an enforcement, Helwer insisted. Rather, it is an enabling legislation, giving parties tools to come to an agreement through an adjudicator.

“So, both parties understand that there’s a problem with being paid and they go through the adjudication process. And while that’s happening, construction continues. Currently, what is happening now, construction stops, and nothing moves ahead.”

Many members of the Brandon Chamber of Commerce are small- to medium-sized businesses, with a high number in construction, said president Tanya LaBuick. That’s why the organization supports the prompt payment legislation, she added.

In general, people try to pay within a reasonable amount of time, she said, but prompt payment is about holding people accountable.

“I think it’ll help … everybody who’s involved in the construction industry, everything from lumber stores to electricians to general contractors, heating and plumbing folks. I think it will absolutely help everybody within that entire system,” LaBuick said.

Manitoba’s neighbouring provinces, Ontario and Saskatchewan, have already adopted prompt payment legislation, and since many within the industry cross borders to work, Wood said Bill 38 would simply bring Manitoba up to speed.

» mmcdougall@brandonsun.com

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