As a developer or investor in the Canadian construction market, it is crucial to be well-versed in the CCDC contracts. These contracts are the industry standard forms used across the country and are suitable for most development projects.

I have received numerous inquiries about CCDC contracts in the past; Let's delve into the four main CCDC contracts: CCDC 2, the combination of CCDC 5A and CCDC 17, CCDC 3, and CCDC 5B. Each of these contracts will be discussed in detail to provide a comprehensive understanding. Simply put, being knowledgeable about these CCDC contracts is crucial for your success in the construction industry.

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CCDC2

The CCDC 2 is the most commonly used standard form for construction contracts. It is a fixed price and fixed schedule contract in which the owner, who is also the developer, enters into an agreement with a general contractor. The contractor provides one fee to the owner and is responsible for entering into separate contracts with each sub-trade.

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This type of contract offers a multitude of benefits for the owner. It provides pricing certainty, as all the risk of Tradesmen not performing their contracts falls on the contractor. In case of any issues, the owner can make claims against the contractor. Moreover, lenders favor this type of contract as it provides them with pricing certainty when advancing construction loans to Developers.

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Overall, the CCDC 2 offers a reliable and secure approach to construction contracts, benefitting all parties involved.

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Construction Management Model (CCDC 5A + CCDC 17)

The Construction Management Model (CCDC 5A + CCDC 17) entails the owner entering into a CCDC 5A contract with a construction manager in addition to separate CCDC 17 contracts with each tradesperson. Tthe construction manager's fee is typically a percentage of the total project cost, or potentially a flat fee.

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In this model, the construction manager will provide a range of services to the owner, such as constructability review, assistance with tendering and bidding, and finding skilled tradespeople. Under this model, the owner must be equipped to handle the associated risks and possess sufficient administrative skills to negotiate directly with each tradesperson.

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While a suitable option for capable owners, this model does come with potential risks. Should any issues arise, the owner will be responsible for managing and resolving them with each individual tradesperson.

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Nevertheless, for sophisticated owners, this model offers increased pricing certainty as they can negotiate directly with each tradesperson.

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CCDC 5B

The CCDC 5B contract model combines elements of the CCDC 5A model with some additional factors. Under this model, the construction manager is responsible for providing pre-construction services for a fee, similar to the CCDC 5A model. However, the owner also has the opportunity to appoint the construction manager as a contractor for a fixed fee.

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It is important to note that this arrangement introduces some pricing risk, as construction managers often have more leverage in later stages of the process. This may lead to them exerting more influence until the owner exercises the option for them to carry out the construction work.

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In the case of amending or exercising the option for CCDC 5B, if the construction manager is also acting as the contractor for the actual construction work, it will be necessary to amend the standard form using supplementary conditions.

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Therefore, for developers utilizing the CCDC 5B model, it is essential to have a lawyer draft these supplementary conditions to ensure their interests are protected.

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Cost Plus Contract (CCDC 3)

The Cost Plus Contract (CCDC 3) model bears similarity to CCDC2 as it is a general contractor model. Under this contract, the owner enters into an agreement with one contractor who then assumes responsibility for signing separate contracts with all the tradespeople.

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The owner must bear all the costs of these individual trades contracts and also pay the contractor a fee on top of that. As a contractor, the risk is intermediary between CCDC2, where you have full control, and 5A, where you do not hold the risk of directly entering into contracts with tradespeople and ensuring their work is done properly.

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CCDC3 is a hybrid contract and is most effective for renovation projects or those with an undefined scope, where the exact location of construction is unclear, making it challenging to obtain multiple bids.

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Those are four of the primary CCDC contracts commonly used for residential and mixed-use development in BC. Familiarity with these contracts is crucial for successful project management. Standard form CCDC can be modified with supplementary conditions to meet specific project needs. These conditions enhance the contract and serve three main purposes: addressing unique business points, optimizing administrative processes, and allocating risk between the contractor and developer.

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Overall, understanding CCDC contracts and utilizing supplementary conditions can greatly benefit construction projects in BC.

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Curious to learn more? Check out the video above to delve deeper into the topic!