Construction Economist Journal - Spring 2019

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CONSTRUCTION ECONOMIST

The Journal of the Canadian Institute of Quantity Surveyors Le Journal de l’Institut canadien des économistes en construction

SPRING 2019

Governance In action

PQS Awarded OBE

Indigenous Awareness

Emerging Leaders

Erin Brownlow

Bola Abisogun

Robert Laboucane

James Little

• CIQS membership growth • PI and E&O Insurance • IP Law for Construction • CIQS Congress 2019 – Quebec • Adjudication Symposium 2019 – Toronto ciqs.org

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The mission of CIQS is to promote and advance professional quantity surveying and construction estimating; to establish and maintain national standards; to recruit, educate and support our members.

Canadian Institute of Quantity Surveyors 90 Nolan Court, Unit 19, Markham, ON L3R 4L9 t. 905/477.0008 f. 905/477.6774 toll free. +1 866/345.1168 e. info@ciqs.org www.ciqs.org

Executive Director Sheila Lennon, CAE.................... . . . . . . execdir@ciqs.org Editor Arif Ghaffur, PQS....................... . . . . . . . editor@ciqs.org Send Change of Address to: Canadian Institute of Quantity Surveyors 90 Nolan Court, Unit 19, Markham, Ontario L3R 4L9

CIQS Board Chair/Secretary/Treasurer: David Dooks, PQS(F) Vice Chair: Erin Brownlow, PQS

CONSTRUCTION ECONOMIST SPRING 2019

The Journal of the Canadian Institute of Quantity Surveyors Le Journal de l’Institut canadien des économistes en construction

Features CIQS Congress 2019 – Quebec. . . . . . . . . . . . . . . . . . . . 6 Value management: An essential costing tool. . . . . . . . . . 14 Getting to know our people – Aliya Karim. . . . . . . . . . . . 16 Enforceability of liquidated damages. . . . . . . . . . . . . . . 17 Intellectual property law should matter to you. . . . . . . . . 19 Continuing professional development – CIQS podcast. . . 21 Project monitoring. . . . . . . . . . . . . . . . . . . . . . . . . 22 Indigenous awareness – Part 3. . . . . . . . . . . . . . . . 24 Leadership interview – James Little. . . . . . . . . . . . . 26

Registrar and Director: Michael Gabert, PQS

CIQS membership growth . . . . . . . . . . . . . . . . . . 28

Director: Indu Elapatha, PQS

Lessons from the coal face . . . . . . . . . . . . . . . . . 29

Director/Assistant Secretary/Treasurer: Royston Lewis, PQS(F)

2019 Construction Adjudication Symposium. . . . . . 32

Director: Mike Watkinson, PQS

CIQS – Governance in action . . . . . . . . . . . . . . . 33

Director: Wassim Sultani, PQS

29

Education Director: Wendy Hobbs, PQS

Statements of fact and opinion contained within this journal are those of the authors, including subject matter experts. CIQS assumes no responsibility or liability for the content of such fact and opinion, nor do they represent the official policy of CIQS. Published four times a year on behalf of the Canadian Institute of Quantity Surveyors by

Corners

Messages

Legal Corner. . . . . . . . . . . . . . . .

12

Chair’s Message . . . . . . . . . . . . . . .

4

Executive Director’s Message. . . . . . .

8

Editor’s Message. . . . . . . . . . . . .

10

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 3

Chair’s Message

Taking a look ahead

A

t the May 2019 Board meeting, we will be reviewing and updating the short and long term goals of the Institute. While the CIQS works through the restructuring transition period, we wish to refocus our attention on its aims and objectives. The current key result areas include a strategic plan focused on professional certification and standards; growth and sustainability; governance and administration; and website and media.

Education will remain a major initiative as much work is needed to improve the program, update resource materials, and develop new relevant publications. The education committee is now formed, and we hope these volunteers can identify our weak and strong points, and make recommendations with achievable outcomes on how to improve.

At this year’s annual general meeting in Quebec City, Quebec, the CIQS celebrates its 60th anniversary. Currently, we have 1,921 members, moving ever closer to exceeding two thousand. The membership count represents a 19.2% increase since 2009. Looking back to 1999, our total membership has nearly doubled. The association has shown steady growth and there is still room to grow.

We wish to continue to support and collaborate on International Construction Measurement Standards (ICMS) for coding, and International Construction Measurement Standards 2 for life cycle costing. This year, The Construction Institute of Canada 2 has added bid requirements that include ICMS protocols. Construction estimating and construction management students from universities and colleges in British Columbia, Alberta, Ontario, and Nova Scotia are learning about and

David Dooks, PQS(F)

Completion of major goals is important and striving to complete the minor goals is no less important. implementing ICMS. ICMS was first presented internationally at the Pacific Association of Quantity Surveyors 2017 Conference in Vancouver, and the CIQS website includes the ICMS presentation video and links to access the standards.

Moving forward, the CIQS has recently asked for a working committee to update the Method of Measurement of Construction Works publication, with a plan to include recommendations on how to educate, make use of and implement ICMS. One of the major reasons for growth over the last 10 years is our ability to reach more people than ever before.

Technology and online media have become a major factor in the way we interact and connect with each other.

The Institute has utilized online tools such as social media to post association activities, social networking opportunities and provide information to members and our followers. The www.ciqs.org website includes a steady release of media materials such as newsletters and notices to our members, promotional videos used to increase awareness for our professional designations, podcast interviews with members and industry partners to expand knowledge, and a digital platform on which to read the Construction Economist online. The website, with support of our social media accounts, is our primary resource for reaching our members and increasing awareness of the profession. The website is now approaching a million-page views

4 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

per year, with nearly 75,000 page-views per month.

Our lobbying scans of the federal government for several regions across Canada are progressing and are expected to be completed in 2019. We will have more to report as information is made available. We have also retained a professional who is working with us to develop new marketing materials designed to reach aspiring students trying to decide on a career path, and to promote membership growth and raise awareness of what it means to have a CEC or PQS designation. These resources are nearing final draft and are planned to be released later this year.

There are many things to consider when looking ahead. There is a continued effort to translate more content into French. We continue to support the formation of the Young Quantity Surveyors (YQS) and provide opportunities for these volunteers to participate in and influence the future of the CIQS. We continue to foster international relationships with our industry partners around the world, including new interest between Canada and US. Completion of major goals is important and striving to complete the minor goals is no less important.

As part of these goals, we want our members to feel engaged and provide us with comments and feedback on what matters to them, and how we can improve the profession for the benefit of all.

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Message du Président du Conseil

Regarder devant

L

ors de la réunion du conseil d’administration de mai 2019, nous examinerons et mettrons à jour les objectifs à court et à long terme de l’Institut. Pendant que l’ICÉC traverse la période de transition de la restructuration, nous souhaitons recentrer notre attention sur ses buts et objectifs. Les résultats clés ciblés comprennent : un plan stratégique axé sur la certification et les normes professionnelles; croissance et durabilité; gouvernance et administration; et site web et médias.

L’éducation restera une initiative majeure, car il reste beaucoup à faire pour améliorer le programme, mettre à jour les documents de référence et créer de nouvelles publications pertinentes.

Le comité de l’éducation est maintenant formé et nous espérons que ces volontaires pourront identifier nos points faibles et nos points forts et faire des recommandations avec des résultats concrets et réalisables sur la manière de s’améliorer.

Lors de l’assemblée générale annuelle de cette année qui aura lieu dans la ville de Québec, au Québec, l’ICÉC célèbrera son 60e anniversaire. Actuellement, nous avons 1 921 membres, se rapprochant toujours plus de dépasser deux mille.

Le nombre de membres représente une augmentation de 19,2 % depuis 2009.

Si l’on compare avec 1999, le nombre total de nos membres a presque doublé.

L’association a connu une croissance soutenue et il y a encore de la place pour se développer.

Nous souhaitons continuer à soutenir et à collaborer sur les normes internationales de mesure de la construction (ICMS) pour le codage et sur la phase 2 des normes internationales de mesure de la construction pour l’établissement du coût du cycle de vie.

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Cette année, l’Institut de la construction du Canada 2 a ajouté des exigences de soumission incluant les protocoles ICMS. Les étudiants en construction et en estimation de la construction issus d’universités et de collèges de la ColombieBritannique, de l’Alberta, de l’Ontario et de la Nouvelle-Écosse se familiarisent avec le système de gestion intégrée des connaissances. L’ICMS a été présenté pour la première fois à l’international lors de la conférence 2017 de la Pacific Association of Quantity Surveyors (PAQS) à Vancouver, et le site Web de l’ICÉC comprend la vidéo de présentation du système ICMS et des liens pour accéder aux normes. Pour aller de l’avant, l’ICÉC a récemment demandé à un comité de travail de mettre à jour la publication sur la Méthode de mesure des travaux de construction, avec un plan contenant des recommandations sur la manière d’éduquer, d’utiliser et de mettre en œuvre les normes ICMS. L’une des principales raisons de la croissance des dix dernières années est notre capacité à atteindre plus de personnes que jamais auparavant. La technologie et les médias en ligne sont devenus un facteur majeur dans la manière dont nous interagissons et nous connectons les uns avec les autres. L’Institut a utilisé des outils en ligne tels que les médias sociaux pour publier des activités d’association, des possibilités de réseautage social et fournir des informations aux membres et à nos abonnés. Le site Web de l’ICÉC (CIQS.org) met à votre disposition une publication régulière de matériel médiatique tels que des bulletins d’information et d’avis à nos membres, des vidéos promotionnelles utilisés pour accroître la sensibilisation de nos désignations professionnelles, des interviews podcast avec les membres et partenaires de l’industrie pour élargir les connaissances, et une plateforme numérique pour lire le journal Construction Economist

en ligne. Le site Web, avec le support de nos comptes de médias sociaux, est notre principale ressource pour atteindre nos membres et accroître la notoriété de la profession. Le site Web compte maintenant près d’un million de pages vues par an, avec près de 75 000 pages vues par mois.

Nos analyses du lobbying du gouvernement fédéral dans plusieurs régions du Canada progressent et devraient s’achever en 2019. Nous aurons plus à signaler à mesure que les informations sont disponibles. Nous avons également retenu les services d’un professionnel qui travaille avec nous pour développer de nouveaux supports marketing destinés aux futurs étudiants souhaitant choisir un cheminement de carrière, promouvoir la croissance du nombre d’adhérents et sensibiliser le public à ce que signifie l’obtention de la désignation ECC ou ÉCA. Ces ressources approchent de la version finale et devraient être publiées plus tard cette année.

Il y a beaucoup de choses à considérer lorsqu’on regarde vers l’avant. Il y a un effort continu pour traduire plus de contenu en français. Nous continuons à soutenir la formation des jeunes économistes en construction (YQS) et à leur donner la possibilité de participer et d’influencer l’avenir de l’ICÉC. Nous continuons d’entretenir des relations internationales avec nos partenaires de l’industrie partout dans le monde, y compris un nouvel intérêt entre le Canada et les États-Unis. La réalisation des principaux objectifs est importante et l’effort d’atteindre les objectifs mineurs l’est tout autant. Dans le cadre de ces objectifs, nous souhaitons que nos membres se sentent engagés et nous fournissent des commentaires sur ce qui compte pour eux et sur la manière dont nous pouvons améliorer la profession dans l’intérêt de tous.

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 5

We are pleased to announce that Congress 2019 and the Institute’s 60th Anniversary will be held in Quebec City, QC on July 25-28, 2019 at the Hilton Quebec.

Agenda & Registration Details

Sponsorship Opportunities

Thursday, July 25, 2019 CIQS Board Meeting

Networking

9:00am – 5:00pm

Chair’s Dinner & 60 Celebration Sponsor (Exclusive)

$3,000

YQS Meet and Greet

5:15pm – 6:00pm

Welcome Reception Sponsor (Exclusive)

$3,000

Welcome Reception

6:00pm – 8:30pm

Friday, July 26, 2019 Technical Sessions

9:00am – 5:00pm

French & English Sessions YQS Social Activity

6:00pm – 8:00pm

Free night for delegates

Saturday, July 27, 2019 Annual General Meeting

9:00am – 10:30am

Technical Sessions

10:30am – 12:00pm

Chair’s Reception and Dinner

6:30pm – 11:00pm

& 60th Anniversary Sunday, July 28, 2019 Farewell Breakfast

7:30am – 10:00am

Golf Tournament (Date and Time TBD) Sunday morning or Saturday afternoon

th

Wi-Fi Sponsor (Exclusive)

$3,000

Hotel Key Sponsor (Exclusive)

$3,000

Lanyard Sponsor (Exclusive)

$1,500

Delegate Bag Sponsor (Exclusive)

$1,500

Branding Technical Session Sponsor (8 Available)

$500

Refreshment Break Sponsor (2 Available)

$350

Young Bursary Program Sponsor (4 Available)

$500

Onsite Program Sponsor (2 Available)

$500

To learn more about the Congress Sponsorship Program, contact us and we will be happy to work with you to create a sponsorship package that offers the best Return on Investment for you.

Email : marketing@ciqs.org | Tel : 905.477.0008

For more information please visit www.ciqs.org/congress

Nous sommes heureux d’annoncer que le Congrès 2019 et 60e anniversaire de l’Institut aura lieu à Québec, du 25 au 28 juillet 2019, au Hilton Québec.

Agenda et inscriptions

Opportunités de commandites

Jeudi 25 juillet 2019

Réseautage

Réunion du conseil de l’ICÉC

9h00 – 17h00

Souper du président et célébration du 60e (exclusif)

3 000$

Accueil et rencontre du groupe YQS

17h15 – 18h00

Commanditaire de la réception de bienvenue (exclusif)

3 000$

Réception de bienvenue

18h00 – 20h30

Vendredi 26 juillet 2019 Séances techniques

9h00 – 17h00

Séances en français et en anglais Activité sociale du groupe YQS

18h00 – 20h00

Soirée libre pour les délégués

Samedi 27 juillet 2019 Assemblée générale annuelle

9h00 – 10h30

Séances techniques

10h30 – 12h00

Réception et souper du président

18h30 – 23h00

& 60e Anniversaire Dimanche 28 juillet 2019 Petit déjeuner d’adieu

7h30 – 10h00

Tournoi de golf (date et heure à déterminer) Dimanche matin ou samedi après-midi

Partenaire Wi-Fi (exclusif)

3 000$

Commanditaire de la clé d'hôtel (exclusif)

3 000$

Commanditaire de la lanière du porte-nom (exclusif)

1 500$

Commanditaire du sac remis aux délégués (exclusif)

1 500$

Image de marque Commanditaire des séances technique (8 disponibles)

500$

Pause de réseautage et rafraîchissements (2 disponibles)

350$

Commanditaire du programme de bourses (4 disponibles)

500$

Commanditaire du programme officiel (2 disponibles)

500$

Pour en savoir davantage sur les opportunités de commandites, veuillez nous contacter et nous serons heureux de créer une offre sur mesure vous offrant le meilleur retour sur investissement.

Courriel : marketing@ciqs.org | Tél : 905.477.0008

Pour plus d’informations, veuillez visiter www.ciqs.org/congress

Executive Director’s Message

Quarterly meeting updates

T

he CIQS Board of Directors held its quarterly meeting January 18-19, 2019 in Toronto, Ontario. These are the highlights from that meeting.

The submissions were reviewed by the Education Director and the CIQS Board of Directors, resulting in the selection of three new members for the Education Committee.

Governance It was noted that Craig Bye, PQS(F), Vice Chair, had resigned from the Board of Directors prior to the January Board meeting, due to personal reasons. The CIQS Board sincerely thanks Craig for his dedication and his many years of service to the National Board and CIQS members.

Erin Brownlow, PQS from Nova Scotia was nominated and appointed by the Board as the Vice Chair of CIQS. Congratulations Erin!

CIQS Education Committee Members: • Wendy Hobbs, PQS(F) (Education Director and Chair of Committee) • Roy Lewis, PQS(F) • Indu Elapatha, PQS • NEW Tulsi Regmi, PhD, PQS, MCIOB • NEW Rob Wilson, BSc(Hons), MRICS, PQS, MNZIBS • NEW Nicholas Charlton, PQS

Education Several applications were received for membership in the CIQS Education Committee. We thank all members who applied.

Membership Membership renewal invoices for the 2019-20 membership year were made available as of February 2019. You will notice on your invoice that there is now only one national fee and no affiliate fees due to the governance restructuring.

Please ensure payment of the fees, which are due by March 31, 2019. Any

8 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

Sheila Lennon, CAE

dues received after this deadline will have a $50 penalty fee applied.

As shown in the table below, the CIQS Registrar Report demonstrates continuous growth in membership for the PQS, CEC, and Associate categories. Student numbers are on the rise after a noticeable decrease in 2017. There will be increased focus on student recruitment during the 2019-20 membership year.

More information on the classifications of memberships and current numbers can be found on page 28 of this journal.

Congress 2019 Planning is well underway for Congress 2019 in Quebec City, QC, July 25-28, 2019 at the Hilton Quebec.

This year will feature some slight changes to the Congress format, including the Annual General Meeting, so that all members can attend and participate. More information on

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Executive Director’s Message

the 2019 Congress can be found on page 6 of this journal.

CIQS Committees Calls for expression of interest have been sent to all members for the following committees: • Elemental Cost Analysis Revision Committee • Congress Program Committee If you are interested in joining either committee, please contact the national office.

CIQS Membership Totals

2016

2017

2018

PQS

885

922

958

Retired - PQS

84

92

86

Honorary Life

19

15

16

CEC

361

384

400

Retired - CEC

5

4

5

Associate

446

452

456

SUB-TOTAL

1800

1869

1921

Students

132

107

139

TOTAL

1932

1976

2060

Congratulations to the following ‘Designation Holders’ who have qualified as a PQS or CEC (including reinstatements): CIQS – British Columbia Mohamed Burhanudeen, CEC James Campbell, PQS Susanna Cardinal, CEC Gabriel Esu, PQS Louise Kelly, CEC Della Roussin, CEC

CIQS – Members at Large Victor Adeniji, CEC Omobolanle Adeyemo, CEC Stanford Chinyayi, PQS A.B. Chamara Rumesh Dias, CEC Tom Duttmann, CEC Christopher Farquharson, CEC Nura Jibo, PQS Priyanka Karunaratna, PQS Sungyi Kim, PQS David J. Phillips, PQS Craig Taylor, CEC Justin Wilbert, PQS

CIQS – Maritimes Bryan W. MacLean, CEC Charles Ryan, CEC CIQS – Ontario Ayo Abiola, CEC Asoka S Gunasekara, CEC Graham Hensby, PQS Gabriel Paul Hurl, PQS Nadine Kralj, PQS Amit Sharma, PQS Louis Stirpe, CEC Bineesh Gopi Susamma, PQS

Thileepan Tharmalingam, PQS Jonathan Weigand, PQS Scott L. Wilkinson, PQS Jiamin Wu, PQS Billy (Qiyun) Zang, CEC CIQS – Québec Anne Boivin, CEC Mahoussi Erick Djoi, CEC Belkacem Gueraiche, CEC Bhisen Jatoo, CEC

PQS awarded OBE We are very pleased that Bola Abisogun, a Professional Quantity Surveyor (PQS) and founder and chief executive of project manager Urbanis, has been awarded the Order of the British Empire (OBE) for services to diversity and young people in the construction industry.

Bola received the award on February 7, 2019 at an investiture ceremony at Buckingham Palace and was awarded the OBE by Prince Charles. This is an excellent honour and the Canadian Institute of Quantity Surveyors congratulates Bola on this achievement.

Bola has been a champion of diversity in the construction industry for many years.

He has been instrumental in setting up a number of networks to champion BAME (Black, Asian, and Minority Ethnic) representation and seek opportunities, both in the UK and in the USA, for young people to gain industry insight and experience.

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 9

Editor’s Message

Professional liability and errors and omissions Capacity issues for service providers

P

rofessional Liability and Errors & Omissions Insurance is typically obtained by professional service providers either because they are required to provide this by their clients, or they seek to rely on this in the event of a claim against them that alleges ‘errors’ or ‘omissions’ on the part of service providers during the course of one’s duties or contractual obligation.

Such insurance is typically provided by insurance companies; and syndicates from which insurance brokers obtain insurances for their clients. Lloyd’s, a major insurer, recently undertook a review of the business plans of the lowest decile syndicates, and identified what had eroded their profit during the period from 2011 to 2016.

Professional indemnity in the UK and internationally was found to result in a loss of 435 million pounds to Lloyd’s over the same period. The industry risk codes for construction and miscellaneous (often used in errors for construction professional indemnity) in this line of cover, showed a loss over the five-year study period.

Lloyd’s key objective is to ensure that the market is delivering sustainable performance but with syndicates now operating at a loss, the Lloyd’s market is reconsidering its market positioning.

As a result, Lloyd’s has charged those syndicates identified as poorly performing with turning around these perennially unprofitable areas and demonstrating a realistic route back to a sustainable profit.

Further, it is understood that with 70% of the impact on claims coming from just 40% of the premium – then is reasonably easy to isolate the problem areas. This simply means that Professional Liability pricing may be on the rise as market conditions change.

I recently caught up with Barrie Ngeh, Accountant Executive of the Construction Services Group with Aon Risk Solutions.

Barrie said, “The landscape for obtaining and maintaining professional indemnity, errors and omissions is rapidly changing.

There is increased vigilance and pressure on premiums that may impact service providers such as Quantity Surveyors.”

Barrie also referred me to Aon’s publication titled 2018 Global Market Overview in Q3, which identified the following: 1. Ongoing losses: The construction professional liability losses sustained are both large in number and quantum, which has now made some insurers’ portfolios unsustainable.

2. Types of claims: The professional liability claims have been in the form of both damages and claims.

10 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

Arif Ghaffur, PQS

3. Legal costs: In the US, there is a macro view wherein it is believed that for every $1 paid by insurers, some $0.60 relates to plaintiffs’ and defendants’ legal costs.

4. Ongoing trends: The trend regarding frequency and quantum of claims has been increasing for nearly 12 years, with no adjustments of insurers’ terms.

5. Changing market: There have been no new entrants to the construction professional liability market, with parallel consolidation following insurer mergers leading a softening in the insurance market.

6. Architects and engineers: Poor underwriting results are driving insurers’ decisions, with five insurers withdrawing from underwriting architects and engineers in the US. 7. Stable market: In Canada, the marketplace remains stable for construction professional liability, but there is growing uncertainty regarding the future of the projectspecific market.

8. Changing conditions: The market is starting to pull back with certain terms and conditions, and what used to be readily available now requires negotiation with insurers.

9. Market exit: The insurer of one large Canadian professional liability program is electing not to continue, due to its claims experience.

10. Other markets: The Middle East and Asia have lower premiums, and the main reason for this is the lack claims in these territories.

Barrie Ngeh, Accountant Executive – Construction Services Group, Aon Risk Solutions

I thank you for your support and contribution to the Construction Economist, and sincerely wish you and your families are having a wonderful spring. If you have feedback, suggestions, and of course any articles that you would like to be considered for publication, please email editor@ciqs.org.

Arif Ghaffur PQS The Construction Economist is also available in electronic format. Please visit the CIQS website www.ciqs.org and press the Publications tab.

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Education Corner

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 11

Legal Corner

New payment legislation

Legislation for construction introduced in SK

B

ill No. 152. An Act to amend The Builders’ Lien Act (the Bill) was brought forward by the Saskatchewan government on November 20, 2018. The Bill is expected to get a second reading soon and should be finalized in the legislature during the Spring 2019 session.

Development of a regulatory framework will follow, though nothing has yet been made public. It is possible this legislation could be in force by January 2020, but remains subject to change as the Bill is not yet law. However, it is important for those working on projects in Saskatchewan to understand the currently proposed changes.

Broadly speaking, the Bill proposes: 1. A defined payment cycle 2. An adjudication system for resolving disputes 3. The right to suspend work after adjudication, determination, and non-payment

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4. Interest on any overdue payments These changes are in line with legislative changes in Canada’s largest construction market, the province of Ontario in December 2017.

Defined payment cycle A ‘proper invoice’ must be submitted by the contractor to the owner, monthly unless the contract provides otherwise. ‘Proper invoice’ and the process for ‘giving of proper invoices’ are defined in the Bill. Those familiar with CCDC standard form construction contracts and the important role of the ‘payment certifier’ in CCDCs should take note that the Bill provides that a provision in a contract (such as the CCDCs) that makes the giving of a ‘proper invoice’ conditional on the prior certification of a payment certifier or on the owner’s prior approval is of no force or effect. Therefore, additional amendments to the CCDCs in the Supplementary Conditions will be required when using CCDCs in Saskatchewan, to comply with the Bill.

Deadlines The new Bill defines numerous deadlines under the prompt payment process. Such deadlines are something that all parties – owners, contractors, and subcontractors – should be intimately aware of so deadlines are not missed. For example, an owner has 28 days to pay the ‘proper invoice’ received in accordance with the Bill. An owner may refuse to pay all or a portion of the proper invoice no later than 14 days after receipt of the proper invoice.

After the owner pays the contractor, the contractor must within seven days pay all subcontractors and suppliers. These are only three examples of the numerous deadlines.

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12 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

Adjudication system The most important change in the Bill for projects is the introduction of the adjudication system. A party to a contract can refer valuation, payments, change order, costs, certification issues and other matters to an adjudicator for determination. A party to a contract or a subcontract may refer a matter to adjudication even if the matter is the subject of a court action or of an arbitration pursuant to The Arbitration Act, 1992 (Saskatchewan).

To address concerns that the adjudication system may be misused, if an adjudicator determines that a party to the adjudication has acted in a manner that is frivolous, vexatious, an abuse of process, or other than in good faith, the adjudicator may provide, as part of the adjudicator’s determination, that the party be required to pay some or all of the other party’s costs, any part of the fees that would otherwise be payable by the other party, To return to Table of Contents CLICK HERE

Legal Corner

or both. Therefore ample consideration should be given prior to proceeding to adjudication for a particular project.

Right to suspend work after adjudication, determination and non-payment after the adjudication process is complete and a determination is made, if an amount deemed payable, is not paid, only then can a contractor or subcontractor suspend work. A contractor or subcontractor does not have a de facto right to simply send an invoice and then suspend work for failure to pay. However if a contractor or subcontractor follows the process correctly and does suspend work in accordance with the Bill, then the contractor or subcontractor is entitled to reasonable costs incurred.

Interest on late payments Interest begins to accrue on an amount that is not paid when it is due to be paid at the pre-judgment interest rate in effect pursuant to The Pre-judgment Interest Act or, if the contract or subcontract specifies a different interest rate for the purpose, the greater of the pre-judgment interest rate and the interest rate specified in the contract or subcontract. Interest also accrues on amounts deemed payable by the adjudicator in a similar fashion.

About the authors Troy Baril advises clients in Saskatchewan, across Canada, and internationally on all aspects of litigation related to municipal and administrative matters. He also has experience with mediation and arbitration to help his clients avoid going to court where possible.

He provides advice on construction disputes, bylaws, land use, and electronic communications, among other matters.

Chad Eggerman is the co-lead of the Projects Group.

He provides advice to clients to minimize risks and complete projects on time and on budget. Chad counsels clients on projects in many industries, but he has particular expertise in renewable energy, infrastructure, and natural resource projects. Chad acts for many clients located in Europe undertaking projects in Canada, as well as Canadian clients executing projects abroad.

BUILDING SUCCESS Miller Thomson’s National Construction and Infrastructure Group is one of the largest and most active in Canada, spanning British Columbia to Québec. We have extensive experience serving the needs of all industry stakeholders, including owners, developers, contractors, manufacturers and certified professionals.

The construction sector is complex and evolving. With our breadth of knowledge extending to all areas of construction law, we bring creative legal thinking and provide strategic solutions to the multifaceted issues that can arise.

Visit our website for more information on our construction law services.

FO R WA R D TO G E T H E R TM MILLERTHOMSON.COM VANCOUVER CALGARY KITCHENER-WATERLOO GUELPH Construction Economist_7x4.625.indd 1 CLICK HERE to return to Table of Contents

EDMONTON TORONTO

SASKATOON VAUGHAN

REGINA MARKHAM

LONDON MONTRÉAL 2/11/2019 3:50:17 PM

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 13

VALUE MANAGEMENT:

AN ESSENTIAL COSTING TOOL

C

ost planning/estimating in supporting a client in making decisions to proceed or not to proceed with a construction project is one of most essential services a Quantity Surveyor can offer. However, often the estimated number is over the client’s budget and this is where we can draw from one of our most essential costing tools: Value Management.

The terms Value Management, Value Analysis, and Value Engineering all mean the same thing, but were adapted to suit the industry or environment in which they were being used. The terminology difference is tied in with the origin of Value Management, which dates to the Second World War. During the war all industrial operations of the countries involved in the war had severe material shortages. All types of steels, aluminium, copper, bronze, nickel, and tin were committed to the war effort.

The initial development of the Value Analysis concept was through the General Electric (GE) Company.

GE’s material plants were producing engineering components requiring materials that were often in short supply. A GE engineer, who was leading purchasing, changed the manufacturing approach to try to mitigate the material shortages. He changed the approach of what the material ‘was’ to rather what the material ‘did’, i.e. that which was needed to perform the function.

While investigating this approach, he discovered that alternative materials, machinery and labour could be sourced to produce material of the required function – which sometimes performed better and at lower cost. When this approach was presented to management, they stated that it appeared to be an approach that analysed BOTH function and cost, and suggested that this tool be called ‘Value Analysis’.

WHAT DO YOU SEE?

Word of the new management tool was relayed to the chief of the US Navy, who saw potential to save money with their operations and decided to send some of their staff to be trained in the technique. However, as there were no job posts for ‘analysts’, the trainees were called ‘engineers’. As a result, the Navy began to use the term ‘Value Engineering’ to describe the tool.

Use of the tool was recognized by management in government and industrial operations, where the use of ‘function approach’ would be further explored and this is where the concept of ‘Value Management’ was born.

The tool was adopted by the construction industry which found benefit in supporting clients in reducing costs to support their budgets. It went a lot further than just cost cutting at later design stages but was applied at the start of a project – and for this it requires creativity. It requires design teams to design with a function approach in mind, and to look at components in a completely different perspective and mind-set, so that alternatives can be sought.

Purpose of Value Management The main purpose of Value Management is the elimination of unnecessary cost, which is defined as

14 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

‘cost that provides neither additional function, length of life, or user benefit’.

Examples of unnecessary costs are: • Costs that do not make meaningful contribution to a project like providing floor finishes when a tenant or end-user is likely to replace the floor finishes.

• Costs expended on unnecessary materials, like when a wall constructed in face brick which is then rendered.

• Costs that do not consider life cycle costs like using a less robust flooring finish in high traffic areas such as a shopping mall, which saves capital cost but is more expensive in the long run as it must be replaced more frequently.

Methodology of Value Management The principle of Value Management is to create a logical decision-making process that asks key questions, examines costs and measures what can be eliminated or avoided. The questions asked follow the Value Management Think Plan phases, which pose a series of questions and enable a logical step-by-step process to find solutions. The methodology would be introduced as the structure of a Value Management workshop (typically two days), which can be facilitated by a Quantity Surveyor or a Value Management consultant.

The questions posed are as follows: The workshop facilitator encourages the design team in a workshop setting to envision their design in a different way, to follow the thought process so alternatives can be sought – this involves creativity sessions and active participation of the attendees.

All questions must be followed as part of the logical decision-making process; To return to Table of Contents CLICK HERE

however, the key phase is the function phase which presents the question ‘what does it do?’. This functional approach has two characteristics: • A two-word limitation imposed to avoid any misunderstandings.

• An abstract change in thinking – by creating an abstract description, the thought process is guided into a different dimension, where we no longer look at the physical aspects of the component but rather its functional purpose.

It should be noted that the above is a challenging process, which requires a good understanding of the component being examined, so it requires key members of the design and client team to attend the workshop. The most obvious functional analysis may not necessarily be correct. An example would be as follows: If we had to examine the function of a door, it could be to ‘permit access’ or ‘prevent access’; however, should the door be a prison door, the function could be to ‘prevent egress’ and should the door be an external glazed door, the function would be to ‘allow view’. As a result, if the door function required is to ‘permit access’ and not to ‘allow view’, then a more expensive glazed door could be replaced with a standard door that would meet the required function at lower cost and save the client money.

The logical analysis of the function of a component or element will provide new information to the design team and help to clarify the client’s objectives. There are several techniques to elicit this information, such as the Function Analysis System Technique (FAST) diagramming, which would be undertaken during the Value Management workshop.

When should Value Management be undertaken?

It is important to note that cost-value reductions can be made on a project at any time from INCEPTION to COMPLETION. However, it is easier to make changes during the earlier stages of a project than when the construction phase is nearing completion when any potential changes could create additional cost.

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However, clients can benefit from undertaking a Value Management workshop to determine solutions for their building by examining high value cost components that would serve their required function at lower cost.

Value Management can be facilitated by a Quantity Surveyor experienced in the management tool or a Value Management consultant whose role would be to facilitate workshops and elicit creative thinking from the design team.

Also, later design changes can have negative cost impact upon other aspects of the project. The diagram below shows the relationship between early and late design changes, the cost impact, and the available potential or opportunity for implementing changes.

Conclusion Value Management/Value Analysis/ Value Engineering is often seen as a cost cutting exercise and often undertaken when the design is well progressed.

QUESTION

V.M. THINK PLAN PHASES

What is it?

INFORMATION

What does it do?

FUNCTION

What else will do it?

CREATION/SPECULATION

How will that work?

EVALUATION

How best can that be accomplished?

INVESTIGATION/DEVELOPMENT

What is required to change?

RECOMMENDATION/SELECTION/ CONCLUSION

How is change implemented?

IMPLEMENTATION

How effective was the change?

AUDIT

CONSTRUCTION AND PROPERTY CONSULTANTS

Core Two has job opportunities in our Cost Planning department for Senior Cost Consultants.

Candidates must have: At least 5 years of relevant experience in the construction industry; Strong communication skills; Strong technical skills; Time management skills; RICS/CIQS membership.

We offer an extensive employee package commensurate with expertise, qualifications, skills and potential for growth.

If you are interested, please submit your resume/CV to contact@coretwo.ca. www.coretwo.ca

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 15

About the author

Angela Lai, FRICS, PQS, LEED AP O+M is the Managing Partner of Core Two, a property and construction cost consultancy based in Vancouver, BC, and is on the instructing team for Passive House Canada. Angela has over 17 years’ experience in the construction and development industry spanning South Africa, the UK and Canada.

Angela’s experience is diverse having worked as a cost manager, loan monitor and a management consultant, and having specialist expertise in sustainability, life cycle and FM costing. She is the current past President of CIQS – BC, past Director for the CIQS National Board and Vice Chair of the RICS BC chapter. She also teaches at BCIT and for the RICS training hub.

Source: Passive House Canada

GETTING TO KNOW OUR PEOPLE

Aliya Karim, Administrative Coordinator What is your role at the CIQS and who are you accountable to?

I am the Administrative Coordinator, and I’m, accountable to the ED. What does a typical day look like and is there much variety in your job?

I am in charge of the following tasks: Collecting membership fees organizing/facilitating CIQS exam sessions, fulfilling online orders for members and colleages, preparing financial reports, processing all submission payments, preparing TPE exams for members, and preparing CEC/PQS diplomas.

Each day is different depending on the time of the year as my tasks

change depending on deadlines/initiatives taking place.

How long have you been doing this and how has your role changed?

I have been in this position for three years. I took over as Administrative Assistant, but then became a coordinator once the role began to evolve.

What is the most satisfying part of your job?

Seeing how far members have come especially in terms of getting their designation, especially when they have several different requirements to satisfy.

They are always very excited once that final letter comes through.

16 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

What are the challenges and opportunities of performing your role?

I don’t necessarily see any challenges in performing my role; I just like to ensure that all members are held to the same rules and standards of the Institute.

Tell us a little bit about yourself – do you have any particular other interests?

My background is in International Development and Globalization from the University of Ottawa.

I have been working in non-profits for several years. I like to travel in my spare time and am currently volunteering with underprivileged children in the community.

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Enforceability of liquidated damages

The constraints and practical realities to the enforceability of liquidated damages

Liquidated damages are generally defined in Canada as a contractual provision requiring a party in breach to pay a predetermined amount to the other party as compensation for the breaching party’s failure to perform a specific task or comply with a duty or obligation, within a specified time.

The introduction of Liquidated Damages was originally intended to allow the injured party, typically the Owner, to recover monetary sums for injury from the Contractor, often without having to prove the specifics of the financial losses incurred due to delays in the agreed project Substantial Completion Date.

Constraints to the application and recovery of LDs can vary widely depending on the jurisdiction, and they have undergone significant legal court challenges over the years. In some instances, the Owner may now be required to demonstrate a genuine calculation estimate of the financial cost of the delay.

Are the LDs reasonable or unreasonably excessive under these circumstances, and how did the Owner derive the daily penalty amount sought under the contract provisions? Were the LDs set up on a system of financial schedules or were they a percentage of the Contract Sum. Given that an Owner may employ multiple stakeholders to deliver the project, Owner-caused delays are not unusual. The Owner may not realize the LDs if the Contractor is commercially proactive at serving formal Schedule Delay notices in accordance with the contract provisions.

In some jurisdictions where the Owner and the Contractor are both complicit for project schedule delays, courts have denied that the Owner is entitlement CLICK HERE to return to Table of Contents

to the recovery of LDs. The abundance of Schedule Delay impacts due to slow responses by design consultants to RFI’s, shop drawing processing or changes by the Owner’s internal user groups are not contractually difficult to prove if they are well documented by the Contractor, thereby rendering LDs ineffective.

Enforceability challenges to the recovery of LDs may also arise if the Owner instructs the Contractor to retain a favoured or Owner Nominated Subcontractor that performs unsatisfactorily during the project execution. How solid is the Owner’s position to recover LDs in the eyes of the court when the Contractor initially advised against the retention and engagement of the Owner’s preferred Sub Contractor?

One unfortunate impractical reality for the Contractor is there may be no cap limit on the amount of LDs; however, the Owner may not recover the LDs in the event of a Contractor becoming insolvent.

While the Owner may have alternative recovery recourse through the bonding security company, how likely is the Owner to realize on the LDs in a drawnout, contested, payout making its way through the legal justice system?

Another grey area for dispute that can often arise on the imposition of LDs between the Owner & Contractor may be their disagreement on what constitutes “Substantial Completion” or “Schedule Milestones Completion Dates”. Courts have generally ruled against Owner plaintiffs if the contract wording is ambiguous. A hindsight review of the facts and surrounding circumstances may well illustrate a degree of ambiguity in the Contract wording as to what exactly constituted the specifics and definition of “Substantial Completion” or the

achievement of a “Milestone Date” before a new phase of the “Contract” can begin.

In conclusion, while the Owner may seek to apply penalties for entirely legitimate reasons on the Contractor, excessive Liquated Damages, however contractually worded, combined with an unrealistic “schedule” and a questionable low bid may well inflict financial hardship on both parties leading to counterproductive results.

DISCLAIMER This article is presented for information purposes only and the content does not constitute legal opinion. The views expressed are solely the author’s and should not be relied upon for legal application purposes.

About the author

Jerry Crawford is a claims consulting professional, a member of the CIQS, holds a PMP designation from the Project Management Institute, and is Gold Seal Certified with the Canadian Construction Association.

Jerry has over 40 years of construction industry experience both nationally and internationally.

He is the founder and principal director of KGC Consulting Services Ltd., working with clients to provide construction dispute litigation support on transportation, energy, commercial, industrial, multi-family residential, civil, and building infrastructure projects.

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 17

INTELLECTUAL PROPERTY LAW SHOULD MATTER TO YOU AN INTRO TO IP LAW FOR THE CONSTRUCTION INDUSTRY

T

he construction industry is rapidly evolving and competition is fierce.

Companies are striving to create innovative buildings and structures, while reducing costs and build time.

To achieve these goals, companies are constantly creating new products, designs, plans, drawings, and methods.

Intellectual property lies at the heart of all of this. Familiarizing yourself with intellectual property law will allow you to protect these critical assets and avoid infringing on the intellectual property rights of others.

What is intellectual property?

Intellectual property refers to creations of the mind. It is any kind of idea that you can ‘own’. It is not a physical object, even if it can be manipulated into one. The purpose of intellectual property law is to encourage people to create intellectual goods. To achieve this, the law gives people and businesses the right to ‘own’ their intellectual goods, usually for a limited time, which allows them to profit from their ideas.

Intellectual property rights are ‘negative’ in that they only prevent others from using or distributing your protected works. It is also possible that the protected works of others may encumber your works.

Generally, intellectual property may be subdivided into four categories: copyrights, patents, trademarks, and trade secrets.

Copyrights A copyright is the right to use or reproduce a creative or intellectual work and derive a commercial benefit from it.

It includes literary works, artistic works, and software code. To be granted a copyright the work must be original and must involve more than a trivial amount of skill and judgment.

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In the construction industry, copyright most often relates to artistic work, which encompasses architectural drawings, sketches, site plans, and construction documents.

The owner of the work is presumed to be its author. However, if the author of the work created it within the scope of employment duties, the owner will usually be his/her employer.

A copyright automatically comes into existence when the work is created. It is not necessary to mark the work with the word ‘copyright’ or the ‘©’ symbol.

A copyright is infringed when a substantial portion of a work is reproduced without the owner’s consent.

Therefore, even if you make minor changes to someone’s work, you may still be liable. In the 2017 Lainco case, the Federal Court extended copyright protection to a building structure and awarded $750,000 in damages, signalling that courts are prepared to award significant damages when there is an infringement.

The issue of copyright is often forgotten during the negotiation of construction agreements. A contract may state that all documents created by the contractor, architect, or engineer – in preparation of the project, – will belong to the owner. Such a situation would result in the contractor, architect, or engineer losing his/her ability to use or reproduce the documents outside the project. Accordingly, parties to a construction agreement should ensure that they have been properly compensated for the extra copyright value, prior to agreeing to such conditions.

Patents A patent is a temporary protection granted to an individual who invents or discovers a new product or process. For example, you can patent a tool, and also

the method to build it. The patent gives the individual the right to stop others from making, using or selling the invention.

When most people think of a patent, they imagine a utility patent. This patent covers the creation of a new or improved, and useful product, process, or machine. In other words, it’s what we colloquially refer to as an invention. Utility patents have been granted for such inventions as a roof shingle system and a new house-building method.

The second type of patent is a design patent. This patent is granted to the ornamental design of something with practical utility. For example, a new type of tile flooring or house façade may be eligible for such patent protection.

Patents are typically granted for a period of 20 years. It is the responsibility of the patent owner to enforce his/her patent should an infringement occur.

Trademarks Trademarks are symbols, designs, or words that identify products or services as being connected to a particular source. Unlike a patent, a trademark cannot have a functional purpose. One of the most well known trademarks is the Coca-Cola logo, which you immediately reference back to the company.

Trademark law exists so that consumers can make informed purchasing decisions and are not misled as to the product’s or service’s origin. As long as the entity continues to use the trademark, and as long as it is attributable to the entity, the trademark will continue to exist and be enforceable.

No registration is necessary to have rights over a trademark. For example, a company may affix the ™ symbol to its logo without registering it. However, it is also possible to apply for a registered trademark, which is identified using the ® symbol and means that your trademark has been reviewed and accepted by the government.

Since trademarks do not have to be registered, it may be difficult to ensure that

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 19

your new mark does not infringe on an existing one. Accordingly, a company should speak to a lawyer who can perform comprehensive searches prior to adopting a new logo or other trademark.

In the construction industry, certain distinctive design features and layouts may also be trademarked. For example, it is possible that a retail merchant’s use of vaulted ceilings in his/her store is a trademark and cannot be imitated.

Trademark law also extends to the way in which owners or vendors advertise their products or services.

For example, displaying another business’ slogan in your marketing material may confuse a consumer into believing that your development is connected to that other business.

When determining whether the use of a symbol, design or layout infringes on an existing trademark, a company should ask whether consumers might be misled or confused by the mark.

Trade secrets A trade secret applies to confidential information that gives a business a competitive edge. In other words, the business derives its value from the secrecy. This information might be a formula, process, or design. A trade secret must contain information that is not generally known or reasonably ascertainable by others. The holder of the secret must also have taken all reasonable measures to keep it secret.

Within the construction industry, secrets may attach to customer lists, production or construction methods, product formulas, and marketing strategies.

Unlike the other types of intellectual property, which are protected by the government, a trade secret is protected by private means, and does not have a formal registry. Once a trade secret is made public, it stops being a trade secret and can be freely used by anyone. Accordingly, the law surrounding trade secrets focuses on the broken duties and wrongful actions of people who steal and receive them.

Intellectual property basics to keep in mind when dealing with a potential intellectual property issue, you should: • Ensure your work is protected wherever possible, and that you are not infringing on someone else’s intellectual property rights.

• Remember that you can’t escape liability just because you weren’t directly involved in the infringement.

• Carefully review contracts to see if you are unknowingly transferring any of your intellectual property rights.

• Remember that you may license your intellectual property rights through an agreement, without having to transfer ownership.

• See if there’s any insurance coverage for potential intellectual property infringement.

• Speak to a lawyer, when in doubt.

These comments are of a general nature and not intended to provide legal advice as individual situations will differ and should be discussed with a lawyer.

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About the authors

Paul Hancock is a lawyer practising with the construction practice group at Goldman Sloan Nash & Haber (GSNH) LLP. He has acted for owners, general contractors, subcontractors, architects, and material suppliers in complex construction lien matters, contractual claims, and breach of trust actions. Paul offers timely and pragmatic advice to his clients to reach cost-efficient and successful resolutions of legal disputes.

Joshua Halpern is a Student-at-Law with Goldman Sloan Nash & Haber (GSNH) LLP. He holds a Juris Doctor degree from Osgoode Hall Law School, and a Master of Business Administration degree from the Schulich School of Business.

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CONTINUING PROFESSIONAL DEVELOPMENT – CIQS PODCAST Learning on the Go/Knowledge Counts The newly-launched CIQS Podcast features one-on-one interviews, presentations and informative discussions from construction industry economists, influencers and experts.

It is a show about a diversity of topics of particular interest to Professional Quantity Surveyors, Construction Estimators Certified, and a wide variety of other construction professionals.

The best part is that it’s delivered straight to your phone, so no need to figure out your schedule in advance. It’s whenever (and wherever) you want. The first four episodes are uploaded and ready to go: Episode #1: Eye in the Sky – Using Drones in Surveying Drones help save time and money and can improve safety, too.

Join us as we explore the possibilities of unmanned flight in construction.

Episode #2: Caring About Client Care – The Building Blocks of Excellent Client Relations Keeping existing clients happy is the key to building your business.

Episode #3: Tall Wood Buildings – Reaching New Heights with Wood Buildings Discussing tall wood buildings and other wood-related construction with a professor from the Southern Alberta Institute of Technology (SAIT).

Episode #4: Construction Claims Management – A ProblemSolving Approach to Litigation and Dispute Resolution In this episode, we speak with Niamh Ni Chroinin about managing the inevitable claims that arise on construction projects.

More podcasts will be available. (Watch out for Change Management and Major Contract Formation). Please visit www.ciqs.org/english/ciqs-podcast for the most current podcasts, and subscribe on the following programs:

Note: This article is printed courtesy of CIQS - Ontario eNewsletter, WINTER EDITION, January 2019, Vol.9, No.1, and the from the Editor’s Desk by Mr. Lenny Simonelli, PQS(F).

There’s a new wave of construction law.

Let us help you catch it.

Make GSNH LLP part of your team.

Our construction group is highly skilled and ready to assist you with any questions relating to the new Construction Act. We understand the construction industry and we cover all industry sectors.

Visit www.gsnh.com/practice_areas/ construction/

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 21

Project monitoring

AN EARLY-WARNING APPROACH TO AVOIDING PROBLEMS

N

o one likes operating in panic mode – and that’s especially true with construction projects. With proper project monitoring, the Consulting Quantity Surveyors provides clients with transparent and independent advice to assess the progress of a construction project. This ‘early warning’ approach means clients can avoid potential budget shortfalls and cost overruns.

What’s involved?

Consulting Quantity Surveyors are engaged for financing a project. Many lenders and owners also require reports from independent project monitors along the way. There are usually two types of reports required: • A preliminary report, done at the beginning of the project.

• Status reports, done monthly throughout the project.

How involved is a project monitor? That depends on what the client and the stakeholders demand.

At the very minimum, the project monitor provides the following services as part of their role: 1. Preliminary report Regulatory reviews a. Review of all developments agreements, permits, and material contracts for

development with a view to determine how these potentially will affect the project and cash flow. The project monitor should check for factors such as easements. b. Review the plans and specifications with specific focus on completeness and adequacy. The review should determine whether the costs (including onsite and offsite or external construction or servicing costs, soft costs, and financing costs) have been identified in order to fully develop the project. c. Review the construction contracts with complete focus on completeness and consistency with the project description and on determining if any contract exclusions and/or amendments require project budget adjustments. The project monitor could comment on the form of contracts and any risks arising. d. Review the Project Budget (including both hard and soft costs) to determine the completeness, adequacy, and reasonableness of the project budget and that the project budget is sufficient to complete the project.

This review is based on a review of construction contracts substantiating a portion of the project budget. The project monitor’s opinion should

22 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

explain its approach to review for the remainder of the budget (review of trade quotation or an estimate prepared by the Quantity Surveyor).

The Quantity Surveyor should review the loan and financing agreements to confirm project obligations are correctly carried in the budget. e. Review of any approved or potential change orders with specific focus on their completeness, adequacy, and reasonableness (on both scope and cost). f. Provide comments on any potential problem areas or disputes that may affect completion of the project and in particular, how they may affect the budget and construction time schedule. g. Review the project construction and time schedule in the context of the project plans and specifications and construction contracts to determine whether it is realistic. h. Lenders or joint venture partners often require confirmation that initial cash equity has been injected. If this is a requirement, the project monitor should pre-agree the method to be used. Specifically, is this review to be done by 1) reviewing bank statements and cancelled cheques, or 2) reviewing invoices and accounts payable reports? The project manager should also confirm if ongoing disbursement audits are required (by review of cancelled cheques and bank statements). i. At times, lenders or joint venture partners may require a review of lease and purchase and sales agreements.

If this is a requirement, the Quantity Surveyor should pre-agree to a new level of review of lease and purchase sales agreements. Specifically, is this review to 1) perform a detailed review of the agreements to confirm that To return to Table of Contents CLICK HERE

specific sales or deposits requirements are met, 2) confirm that project financial obligations under these agreements are correctly provided for the budget, or 3) that all the lease and sales agreements are reported correctly in project revenue and purchaser deposit reports.

Technical reviews j. Review the soils and environmental reports (soil tests, geotechnical reports and/or environmental assessments) to check that any material recommendations are shown in the plans and specifications and the project budget. k. At times, lenders or joint venture partners may require confirmation that builder’s risk and wrap up liability insurances are in place. Consulting Quantity Surveyors are not insurance specialists and any consulting Quantity Surveyor reviews should be done in conjunction with an insurance advisor. If this is a requirement, the project monitor should review insurance certificates posted to confirm any material errors in coverage amounts and periods stated.

2. Status report Financial reviews a. Site visits, coinciding with the date of the status report, are to be done to assess the progress of work on site.

This visit should be the basis of the opinion and costs to date. b. The status report should include, at a minimum: I. The cost of work completed to date.

II. The cumulative positive or negative value of any charge orders.

III. The amount of any lien holdbacks.

IV. The current estimate of cost to complete the project.

In addition the status report will: c. Update the project cash flow projection, together with comments on any material variances from the original cash flow projection. d. Provide comment on material changes to the plans and specifications. e. Provide comments on any potential problem areas or disputes, which may affect the completion of the project.

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f. Recommend budget and construction schedule revisions.

Technical reviews Consulting Quantity Surveyors will need to review and rely on quality reports issued by project consultants to certify that construction to date has been performed in accordance with the approved plans and specifications and complies with the applicable codes. The project monitor needs to check that material deficiency amounts are withheld from payments made to contractors.

Why it’s valued With project monitoring, lenders and owners reduce risk with early warning reporting and get extra piece of mind, knowing that the budget is reasonable for the project scope, that the costs reported are transparent and reasonable for the work, and that the overall cost to complete the project is adequate.

(From the CACQS Cost Management: Best Practices Guide – 2016)

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 23

INDIGENOUS AWARENESS – Part 3 of 4

Wanted now – RELATIONSHIPS THAT WORK

A

new working relationship is long overdue – and desperately needed – among Indigenous Canadians, service agencies, governments, and industry. Yet my experience with all these groups underlines that a huge amount of confusion remains about just what needs to be done to achieve this goal. Who will the partners be and how can lasting, respectful interaction be achieved and maintained? These are crucial questions for our country, our citizenry and our shared future. These are crucial questions for you. Endless national conferences, frequent debates and ongoing controversy centre on this issue. We should, however, be well past arguing and clinging to non-productive, even irrelevant positions. That is right, folks. It is time to move forward.

Precedent set The backdrop for all this is built on numerous Supreme Court rulings and interpretations of existing law. Beginning with the Calder decision in 1973, the sphere of interaction with Indigenous peoples, their leadership and communities has changed dramatically, and the legal community, industry and governments have been trying to figure this out. This Supreme Court of Canada ruling confirmed the

existence of Indigenous title as a concept in Canadian common law.

Many people in the legal community and industry find it hard to believe our courts have moved in a direction that acknowledges certain inherent rights of Canada’s Indigenous peoples. The nation’s highest court has even told the federal government that there will be reconciliation for past injustices. In December 2017, Indigenous peoples across Canada celebrated the 20th anniversary of the Delgamuukw/ Gisday’wa decision, which recognized Aboriginal rights under the law and the federal government’s legal obligations. This victory has been critical in advancing rights of people on their lands and in their communities, and confirmed in many subsequent court rulings. Every day, these rights are defined, recognized and affirmed.

It has taken the federal government 20-plus years to actually reach a point where a plan to move forward is even being discussed within and among numerous federal government departments that deal with Indigenous peoples’ national issues.

Indigenous Canadians will no longer stand by and watch their traditional territories sold, infringed upon, and misused. They have the inherent right to the land and the right to decide

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what is done on the land and what is done to them as people.

This essentially means that Indigenous governments and communities must be meaningfully engaged at the highest strategic levels of planning based on the consultation protocols and agreements.

This is our highest courts talking. And this is the reality that all of us, as Canadians, as governments, as industry representatives, need to acknowledge and deal with. Not surprisingly, provincial and federal regulators have felt the impact, and unfortunately there still exists vigorous resistance to doing what is legally and morally right.

Clearly, governments and their regulators are required to bring forward full explanations for all stakeholders and rights-holders, with the benefits any project brings to the Indigenous communities, because the high court’s direction is clear – infringement without full, prior and informed consent must be followed. As Canada begins the journey of reconciliation, Canadians need to find ways to cooperate. Canadians will need to learn as much as possible about their fellow Indigenous citizens if reconciliation is to be successful.

Respecting one another What does this mean to industry members who have assets on land they wish to develop? What is their legal

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obligation? Hopefully your legal advisers can best answer those questions, but I can tell you this: the better the relationship between industry and their new Indigenous partners, the fewer problems there will be in accessing and developing assets.

Stakeholders need to improve the quality of their relationships and bring out the best in each partner to the benefit of the whole initiative. Governments and industry have to figure out how they are going to build respect and trust to ensure collaboration and cooperation with a group of people they often just don’t understand or know much about. I believe it can be done.

For many in industry, the building of relationships leading to partnerships has been going on for more than 30 years. Dozens of best practices have been tested and proven to work for all parties involved. Some companies are doing better than others. Hundreds are making, I believe, an honest effort. Others, unfortunately, simply refuse to accept this new reality. Let’s emphasize the positive.

Numerous companies are well past courtship and are fully engaged and are paying much attention to the maintenance of their partnerships. These arrangements go all the way from a simple agreement in principle to a full jointventure partnership, with the usual memorandums of understanding, impact benefit agreements and participation agreements along the way. Throw in limited partnerships and you begin to see the picture – a full pastiche of negotiation, process and progress.

infringement of these rights without full disclosure and justification I can draw only one conclusion: we need to get to know each other and get down to the business of building a better country – for everyone’s benefit. Delays, denials, confrontational attitudes and hindrances are simply not acceptable or in the best interests of Canadians. The status quo of confrontation must stop.

Will you join us in this effort, regardless of how limited or how extensive your dealings are with Canada’s Indigenous peoples?

I hope so.

About the author Robert Laboucane, originally from Fort McMurray Alberta, is Director of the Calgarybased Indigenous Awareness Canada. He and his staff facilitate one-day workshops and offer a number of exciting Online Training Programs for companies and organizations across Canada including local, provincial and federal government departments, small businesses, service agencies, and major corporations for 34 years.

Indigenous Awareness Canada Indigenous Awareness Canada has been working for over 30 years to provide training programs that help people connect, create greater understanding, and to enhance communications between Indigenous and non-Indigenous people. Indigenous awareness training is an important first step and a foundational building block for developing long-term committed relationships and achieving better outcomes. Trusting and respectful relationships are built through improved awareness, comfort, confidence, and communications. www.indigenousawarenesscanada.com

Industry becomes aware Since Indigenous rights, treaty rights and the existence of Indigenous title are confirmed and recognized, and since the courts will not accept or allow CLICK HERE to return to Table of Contents

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 25

LEADERSHIP REVIEW

Interview with

James Little, Associate, Singleton Urquhart Reynolds Vogel LLP When and where did the interest arise to become a lawyer?

My interest in advocacy arose in high school. At that time, I took an elective class called Dispute Resolution and the Law, which fascinated me. I enjoyed learning about the inherent complexities of the legal system and the unique challenges litigators faced on a dayto-day basis. Over the course of my undergraduate degree, my academic trajectory took me on another path into the world of civil and environmental engineering. However, while I did enjoy my time learning and developing as an engineering student, and then engineerin-training, the idea of working as a litigator had strongly taken root and ultimately pulled me towards law school.

What did you study prior to going to Law School?

I studied Civil and Environmental Engineering at the University of Western Ontario (now Western University).

There, I was lucky to learn from some of the finest technical minds in Canada.

Ultimately, I finished with a Bachelor of Engineering Sciences with a focus on Water and Wastewater Engineering.

This background has allowed me to transition naturally into the field of construction law, and often provides me with necessary insight into problems our clients face in the construction industry.

Which Law School did you attend and what do you view as a highlight?

After a few years working as an engineerin-training, I was fortunate to be accepted and enrolled at the University of Windsor – Faculty of Law. There, I was able to develop my legal skills while also meting an amazing group of future

lawyers. I also was in a unique position; as the only engineer in my graduating class (and one of only a few in the faculty at the time), I was able to approach legal problems with a different lens.

Engineers are taught to focus on logical solutions to problems and to approach them meticulously and with efficiency.

Lawyers are also taught to problem solve and importantly, to write effectively. In combining the skills I had been taught at both of these institutions, I found myself uniquely positioned to enter the legal field, seeking a position related to engineering and legal challenges facing the construction industry.

Where did you work after Law School and what were your particular experiences?

During law school and after graduation, I was employed by a large national law firm where I worked as a summer student, articled student, and associate, with a focus on infrastructure development, public policy, construction litigation and dispute resolution. I have since developed a broad practice at Singleton Urquhart Reynolds Vogel LLP, a nationally and internationally recognized construction law firm, that handles significant and complex construction and infrastructure files. There, under tutelage provided by the leaders of the firm – and in particular partners Bruce Reynolds and Sharon Vogel – we are building a construction practice that includes public-private partnerships and large procurements involving a wide variety of projects such a highways, mines, transit, bridges, hospitals, and other significant projects. As well, I have been involved in lawsuits and arbitrations involving international and domestic

26 | CONSTRUCTION ECONOMIST | www.ciqs.org | Spring 2019

James Little

entities. I have also had the privilege of working with Bruce and Sharon on the amendments to the Construction Lien Act (now Construction Act) in Ontario, as well a being engaged by Public Services and Procurement Canada to propose legislation at the federal level in relation to issues of prolonged payment cycles and inefficiency of dispute resolution.

What do you see as the change facing the construction industry?

As we often tell our clients, change is coming. This change in the form of prompt payment and adjudication in Canada’s construction industry.

For example, in fall 2019, Ontario’s Construction Act will enter into its second phase of transition where, on October 1, 2019, prompt payment and adjudication provisions under the legislation will come into force. What this means is new statutory requirements for prompt payment, and a completely new form of dispute resolution―that has been effectively employed in the UK for decades―will be brought into Ontario to break up dispute grid-lock and allow cash to flow on construction projects.

Construction businesses will need to adapt their practices, their procedures, and potentially even adjust staffing, to accommodate the new requirements of the legislation. Change is not limited to Ontario, however. As announced in the federal Fall 2018 Economic Statement, the Government of Canada will introduce legislation to implement the prompt payment of contractors and sub-contractors for federal projects on federal lands, as well as the adjudication of payment issues. We have also heard that several provinces across the country are following suit, as they introduce To return to Table of Contents CLICK HERE

A leadership role is something I believed should be earned. My goal, which I understand is shared with my colleagues, is to continue to develop as leaders intellectually within our field of practice. their own respective versions of prompt payment and adjudication legislation, following from our work in Ontario.

Do you think that the industry is well positioned to respond to these changes?

Not to sound cliché, but it depends.

When we are advising our clients, we focus on reviewing their various contracts and policies to ensure they are effectively prepared and that their businesses will be well positioned to succeed under the new legislative regime. That said, not every construction industry participant has taken the necessary steps to prepare themselves for the change.

Understandably, change is hard and can sometimes be expensive. While the push for promptness of payment and adjudication began with grass-roots movements at the subcontractor and trade level, not all of those businesses will have had the opportunity to adjust.

The transition period for prompt payment and adjudication was made to extend from July 1, 2018 to October 1, 2019 for this very purpose. Hopefully, over the course of 2019, all construction industry participants will take the time to prepare themselves and re-engineer their internal processes―such that October 1, 2019 is a smooth transition and not a shock to the industry.

What would you say is one of the most interesting mandates that you have worked on?

As I have already spoken about our public policy mandates in recommending adjudication and prompt payment to both the Ontario and Federal governments, another example of an interesting mandate comes to mind. Over the first three and a half years of my practice, I was engaged as part of a team working for an EPCM contractor in relation to a $300 million mining dispute under the CLICK HERE to return to Table of Contents

ICC rules for international arbitration.

As part of this team, we were tasked with rebuilding the events of a lengthy and complex project that had intriguing factual circumstances leading to intricate legal issues.

Working with the client in developing a sound legal strategy and gaining insight into the workings of the world of major projects was truly rewarding and has influenced my practice significantly in the years since.

Can you explain your role within the Canadian and Ontario Bar Associations?

I view the construction bar as being a particularly collegial group of people who elevate the standards of the practice of law in Canada. They are also a group of people who are uniquely positioned to monitor, review and address legal issues that face the construction industry year-over-year.

As such, I was fortunate to have been elected as a member-at-large on the Ontario Bar Association Construction and Infrastructure Section Executive.

As part of the executive, we meet regularly to discuss and evaluate progress on legal mandates as well as current issues before Ontario’s judiciary. As well, I am currently the Chair of the Canadian Bar Association Young Leaders Subcommittee for Construction and Infrastructure law, and sit on the Canadian Bar Association Construction and Infrastructure Section executive in that role. With this particular position, I have the opportunity to focus, with my fellow committee members, on issues such as the furtherance of construction legal education in law schools. Currently, construction law is taught at only a few law schools across the country, and is not a wellknown discipline, despite the size,

strength and sophistication of the industry we serve.

What future leadership role would you like to take in the future?

A leadership role is something I believed should be earned. My goal, which I understand is shared with my colleagues, is to continue to develop as leaders intellectually within our field of practice.

In that regard, we focus on academic pursuits and the development of our craft through further education, publishing and teaching opportunities. I hope to continue on this path, while developing interesting connections and doing the best work for the best clients, all with developing a practice that works for me, my family and my firm.

What drives you to excel in what you do and what are your interests or hobbies?

My passion for my career drives me to excel. I enjoy the puzzles and the challenges that a career in construction law has to offer. I find the practice to be mentally stimulating while also enjoyable, given the opportunity to work with passionate individuals with similar drives to succeed. I am driven to excel by those around me, and I hope to inspire them as well. When I am not working however, I enjoy international travel, photography, and most importantly, time with my wife and my son Austin.

James Little is an Associate in the Construction and Infrastructure Practice Group of Singleton Urquhart Reynolds Vogel LLP. He advises on domestic and international construction disputes, including court proceedings, negotiation, arbitration and other dispute resolution alternatives, and for a wide variety of construction industry clients.el.

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 27

CIQS MEMBERSHIP GROWTH Classifications and current numbers

NOTE: CIQS Education Policy Guidance Notes Section B governs all membership categories and should be referred to for greater membership detail.

CIQS membership is granted at the following seven levels: 1. Professional Quantity Surveyor (‘PQS’) This category includes individuals who: have successfully completed the Test of Professional Experience (‘TPE’) for the PQS/ECA designation, or are Fellows (‘FRICS’), Members (‘MRICS’), or Associates (‘ARICS’) of the Royal Institution of Chartered Surveyors (‘RICS’), and whose primary professional discipline is quantity surveying.

Members in 1(a) and 1(b) may use the designatory letters ‘PQS’ and the title ‘Professional Quantity Surveyor’, or the French equivalent ‘ECA’ and the title ‘Économiste en Construction Agréé’.

2. Professional Quantity Surveyor (‘PQS(F)’) PQS(F) members are those who have been awarded Fellowship designation by the CIQS, recognizing meritorious service to the CIQS. (See Fellowship guidelines in the Members Only Portal on the CIQS website.).

Members in this category are entitled to use the designation ‘Professional Quantity Surveyor (Fellow)’ or ‘PQS(F)’, or the French equivalent ‘ECA’ and the title ‘Économiste en Construction Agréé.

In 2018, the PQS and PQS(F) members total 958.

3. Construction Estimator Certified (‘CEC’) This category includes individuals who: a. have successfully completed the TPE for the CEC/ECC designation, b. have the required mechanical or electrical requirements, c. have been admitted to sit the Direct Final Examination for PQS/ECA, d. have been admitted to sit the Mature Candidate Examination for PQS/ECA, e. hold equivalent professional qualifications, but have not completed the TPE requirements for PQS/ECA, or f. are Canadian Construction Association (CCA) Gold Seal Certified Estimators (‘GSC’).

Members in this category may use the designatory letters ‘CEC’ and the title ‘Construction Estimator Certified’, or the French equivalent ‘ECC’ and the title ‘Estimateur en Construction Certifié’.

4. Associate This category includes individuals who: a. have not completed the TPE for either the Professional Quantity Surveyor (‘PQS’)/Économistes en Construction Agréé (‘ECA’) or Construction Estimator Certified (‘CEC’)/ Estimateur en Construction Certifié (‘ECC’), b. have attained the equivalent of PQS/ECA through recognized overseas professional associations, but have not completed the relevant TPE requirements, c. have been admitted to sit the direct final examinations for CEC/ECC, or d. are studying towards passing the CIQS examinations and who are not full-time students, or e are gainfully or self-employed in, or associated with, the construction industry, but whose membership is deemed appropriate by the CIQS. In 2018, the Associate members total 456.

5. Student Student members are individuals who are registered in fulltime program of studies approved by the CIQS. In 2018, the Student members total 139.

6. Retired Retired members are PQS and CEC who have permanently retired from active employment in quantity surveying.

In 2018, the Retired members total 91.

7. Honorary life Honorary life member are individuals whom the CIQS has recognized as having provided long-standing service to the CIQS or to one of the regional Chapters. Members in this category are exempt from membership fees.

In 2018, the Honorary life members total 16.

As identified in the Executive Director’s message, it is pleasing that the CIQS Registrar Report demonstrates continuous growth in membership for the PQS, CEC, and Associate categories.

Arif Ghaffur, Editor of Construction Economist, is proud to be a part of a growing organization and field.

In 2018, the CEC members total 400.

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Lessons from the coal face A personal perspective

Coal face Working at the coal face means that you are working closest to the frontline, where the hard toil is actually performed.

My bio contains a lot of qualifications which means that I have passed too many examinations, but qualifications mean nothing in the business world – experience and learning to apply that experience counts most. Since 1989, I have provided corporate rescue advice to thousands of companies in many different industries, and ranging in size from cross-border multinational conglomerates to a company operating from the sole director’s basement. Many times I have saved the business and employees’ jobs, other times I have mitigated the hurt that a director and employees might face, and sometimes I have just shaken my head and picked up the pieces.

Over the years, I have been involved with a variety of industries and businesses. I operate in real working conditions, rather than planning or talking about solutions. This has provided me with lessons that you cannot learn from a book.

It has also provided me with a litany of stories, and many colleagues have encouraged me to write a book or screenplay about my experiences. I shall attempt to include some situations, but there may be some changes in names and exact descriptions of events in order to protect identities.

Planning paralysis People plan. When things are going wrong, they plan more.

Early in my career one of the interview questions was a variation of where do you plan to be in five years? I learnt within five years that plans cannot be followed. It is better to have a rough outline of tasks with an estimated goal – and you should prepare to be flexible.

There’s a military phrase that says ‘no plan survives first contact with the enemy’. This is true in business too, whether it be a budget, an installation or employee hire, nothing turns out exactly as planned. However, when there is a diversion from the expected, I have seen many business owners spend time revising their plan to take into account new situations, even as the situations change. They get caught in a perpetual loop, cannot catch up, and planning takes the place of remedial action.

Never underestimate the stupidity of people This sounds like a cruel statement, but it is not meant to be.

The trouble is that, when challenged, some people panic. Once I had to advise a company that had a healthy business with a local municipality installing and refurbishing heating equipment in schools and community centres. The contracts were issued for bid every five years, and the company had won the contracts CLICK HERE to return to Table of Contents

over the previous 30 years, not only based on price, but also on the quality of their work. The original director had brought his two sons into the business, (who were in their late 20s), and they were the managers of 25 engineers and staff. The director had suffered a mild heart attack the year before and was looking to hand the company over to his sons.

A bid was issued for a schools contract, which was equivalent to approximately 40% of the company’s revenue. The company lost the bid, and the then-current contract was due to expire in two months. The council awarded the contract to a large national company and claimed that the reason was price and reliability, even though reliability had never been a problem.

There was a bit of an outcry in the local press about how a local business had been sacrificed, but not enough to move the council.

Seek knowledge I was brought in to see what could be done to help the business through this loss of revenue, to see if it could be replaced in some way or, at worst, a core business could be saved for the

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 29

director’s sons. My first series of calls was to some councillors in order to confirm the reasoning, to discover if the company could recoup some revenue from other new contracts, and to see if the company was at significant risk for future bids which were coming up for renewal in two years time. A couple of councillors confirmed what I had been worried about; they liked the director, but after his heart attack, they did not want to have the schools and community centres exposed. They had a lack of confidence in the sons’ sense of entitlement to the business.

Those were the real reasons – and they were a real risk to the future of the business – even if costs were reduced.

The municipality was clearly not going to assist its local business. After reviewing the financial records and operations, we began to craft a plan of survival with the director. It involved a reduction in shifts; sale of little used light machinery; some cost-savings from a review of supplier terms; and crucially, the bank financially supporting a couple of early retirements; and time for the business to submit bids to other nearby municipalities over the next 24 months. If successful, all remaining employees would be retained, albeit without the bonuses and overtime that they had enjoyed before. The sons also had 18 months to prove themselves to the municipality and bank before the renewal bids were to be submitted. If the plan was unsuccessful, the next step was to do a formal insolvencyprocess for whatever core business could be retained.

Salvation After agreeing the details with the director and the bank, we began drafting the plan for sign-off on a Friday morning.

Monday morning, I returned to the plant with the first draft because not everyone had email in those days. I was astonished to see a lot of heavy machinery had been dismantled and was in parts at the side of the factory alongside radiators.

Additionally, a lathe and circular saw were now installed in the factory floor, and piles of timber were lying around.

I climbed upstairs to the director’s office with a heavy tread and heavy heart. When I entered, the director had a big smile on his face and before I even asked, he shouted that he had saved the company.

This was great news. I asked him how he had done it, and the answer surprised me.

After a few commiserating drinks with his sons on Friday afternoon, they had found the solution: rabbit runs.

For those not familiar with the concept, they are exercise areas for rabbits, in addition to a hutch. A rabbit run allows rabbits to run, hop and generally stretch their legs and play.

It also provides the necessary space for toys and enrichment activities like digging holes and tunnels. It’s a childcare centre for rabbits.

Suffice to say, this was an unexpected turn of events.

Thus, over the weekend, the director and sons, along with some drinking buddies, had dismantled the radiator repair, maintenance, and installation light machinery. They had bought the lathe, saw and timber, and converted the business to the manufacture and sale of rabbit runs.

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My next questions were “to whom are you going to sell these, and how much will you be charging?” The disappointing answer was that the sons had already sold two prototypes for $60, one by leaving it outside the factory with a For Sale sign on it, and the other to a drinking buddy.

Considering that the various municipal contracts were in the range of $50,000 to $500,000 over a five-year period, I did not even have to do the mathematics or run a cost-benefit analysis to be certain that a lot of people were going to have to buy pet rabbits for this new business to succeed. Whilst change can be good, this was not one of the cases. It was not even worth doing this as a sideline, because the timber alone cost $40 per run, and therefore the price was too low and taking experienced radiator engineers to manufacture rabbit runs was not the best use of their time or skills. Nor did the business have any entry into the market, other than their front yard.

Lessons learnt This single situation demonstrated a lot of the lessons learnt from working with businesses, but it was a rare one where so many issues were faced and so many missteps taken.

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“I have learned to follow instincts when at the coal face.”

There was: • Panic, which led to the decision of dismantling the factory for an ill-thought-out plan to change the whole business.

• A lack of adequate succession plans that included management with skills and common sense. Particularly with the director’s health scare, succession planning or sale of the business should have been considered.

• Lack of planning, which meant that the director had assumed that the same business would continue forever in the same manner. The director had not kept up with the local industry and had not realized that a large competitor had emerged.

• Reliance on a single customer. Diversification is key, especially if the sole customer is any level of government, because politicians change and are not known for their loyalty for companies doing work in the past.

• The ignoring the advisors and bank. If a business is paying for advice and has obtained the bank’s support, then generally you should listen to the advice. At the very least, ideas should be discussed and run by the advisors in a coherent and logical manner.

period, the parties met and apparently discussed some modifications to the agreement. If any changes were agreed, they were not written down.

When things went off the rails, both sides claimed the other was lying and tempers became substantially raised to the point where expensive and pointless litigation is still a possibility.

From my objective viewpoint, both parties are eminently believable and, from their history in business, both are honest and respected for their integrity. It does not seem likely that suddenly one party decided to cheat the other.

However, I only have the written contracts to go on, and the terms are what must be applied. I can only guess that each party misunderstood what was formally agreed at the friendly meetings and made assumptions about what was being offered.

X-Files were not just conspiracy theories With email, it is easy to keep on top of any agreements or even discussions. You do not always have to involve lawyers, but if you change a contract or agreement, then you are best served getting them involved. Make sure that you write everything down to avoid such unpleasantness, possible cost, and loss of old friends. In many ways, the X-Files have the best advice on this matter: Trust No One. Common sense and instinct All people, all businesses, all lives will face challenges and crises at some point. I have seen the people who made the best out of the situations were those who remained calm and applied common sense. Common sense has no absolute definition, but I have seen it as people taking logical decisions based on the actual facts before them – not based on wishful thinking. The other takeaway has been that management does generally know their business. So, whilst I may have the varied experience and technical knowledge, their instincts have often been the guiding light in getting to an escape plan. So, I have learned to follow instincts when at the coal face.

I am sure you can come up with a few more lessons yourself.

Write everything down I am running out of space in this article to describe my James Bond, Hells Angels, crocodile, wire-tapping, and theatre stories. They will have to wait, but in the meantime, the final lesson I impart to management is to write down any agreement, no matter how long you have dealt with a party, no matter how friendly you think you are, and especially in the case of family.

There are still a few of us in the marketplace who believe that their word is their bond. Unfortunately, business is cut-throat and when money is at stake, few now live by that creed.

I was recently involved in a disputed situation where a company sold off part of its business. Original management was friendly with the new management. In the transition CLICK HERE to return to Table of Contents

About the author Michael Baigel is the President of Baigel Corp. in Toronto. Michael provides creative corporate recovery expertise gained from his experience of rescuing hundreds of businesses over three decades in both Canada and the UK. Saving businesses, jobs and families drives him on. Michael is a federally Licensed Insolvency Trustee in Canada; a Chartered Insolvency and Restructuring Professional, Canada; a Fellow of the Institute of Chartered Accountants in England and Wales; a Fellow of the Insolvency Practitioners Association (UK) and has a BA (Honours) degree in Economics.

Outside of work, Michael’s passion is soccer, and particularly Manchester United.

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 31

Canadian Institute of Quantity Surveyors CIQS – Governance in action

This year I was invited to attend the CIQS National Board Meeting held at the Delta Airport in Toronto on January 18 and 19, 2019. The meeting was attended by CIQS representatives from across Canada and the agenda covered everything from organizational aspects to financial aspects of the CIQS. David Dooks PQS(F) chaired the meeting, which involved debate and interaction. I had the opportunity to get some thoughts from all the attendees.

Sheila Lennon CAE – CIQS Executive Director: “The Board meetings are a very important forum for us to ensure a structured process of governance of an established professional body that has members in Canada and the international platform.”

David Dooks PQS(F) – CIQS Chair & Treasurer: “My role as the Chair includes ensuring that the CIQS achieves its objectives and I am delighted to have the opportunity to work with a talented group of professional leaders who are focussed in excellence in Construction Economics.”

Mike Watkinson PQS – CIQS Director: “As a relatively new member to the national CIQS Board, it is very pleasing to have such experience around the Board table. We are addressing many opportunities in a structured and results orientated manner.”

Indu Elapatha PQS – CIQS Director: “My responsibility includes CIQS Publications and I have been actively pursuing our objectives to ensure that these are applicable, relevant and timely. There is great satisfaction in participating in a national professional body such as the CIQS.” CLICK HERE to return to Table of Contents

Wendy Hobbs PQS(F) – CIQS Education Administrator: “My responsibility includes Education and I have been actively pursuing our objectives to ensure that we achieve excellence in the arena of education including professional development. I have really enjoyed my time as a continuing member of the Board.”

Erin Brownlow PQS – CIQS, Vice Chair: “Being part and leading a number of key initiatives, such as looking into the regulation of the profession. These are important initiatives as the CIQS looks at how the profession is perceived and what elevates the profession of Quantity Surveying.”

Roy Lewis PQS(F) – CIQS Director, Assistant Secretary Treasurer: “Having been in the Quantity Surveying profession for over 50 years and been on the CIQS boards for over 20 years, forums such as this Board meeting are critical to maintain the effective governance of a reputable professional body such as the CIQS.” Wassim Sultani PQS – CIQS Director: “The CIQS governance model is well established and the board format of reviewing a detailed agenda of items allows for the CIQS to progress with looking after the benefits of the members.”

Michael Gabert – President, CIQS – Prairies & NWT: “The opportunity to be a board member has been a great experience. It has shown me that our membership is full of hard working dedicated professionals who believe in promoting and advancing our profession. I am currently responsible for the marketing and registrar portfolios. A recent focus of marketing has been to provide updated and expanded materials to members across the country who are out promoting our career path and profession. We are well underway and hope to have this completed in 2019.”

At the Board meeting, I also caught up with Ian Duncan PQS(F): “Having been a past President of the CIQS and Chair of the Pacific Association of Consulting Quantity Surveyors (PAQS), it is particularly pleasing for me to remain involved and to assist others in the transition into the future leadership of the CIQS.” I also met with David Lai PQS(F), who was invited to participate in the development of ongoing PAQS education initiatives and ongoing CIQS education initiatives. He said: “As a previous CIQS Board member with responsibilities including Education, I was pleased to assist in areas requested to benefit the CIQS.”

Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 33

Canadian Institute of Quantity Surveyors | CIQS – Governance in action

It is refreshing to hear that members of the CIQS continue to provide services for Developers, Owners, Contractors, Subcontractors, Suppliers, Consultants, and other employers in the the private and public sectors across Canada and internationally. The CIQS brand continues to grow.

It was a pleasure to attend the CIQS National Board meeting and refreshing to meet a CIQS leadership team that is focused, with many

volunteering their time and expertise to a professional body that has solid leadership, a deep history, and a focus on organizational excellence.

I encourage you to visit www.ciqs.org for more information.

About the author Interviews conducted

by Arif Ghaffur, PQS, Editor of Construction Economist.

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ConEcon Consultants

25

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Core Two

15

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George Brown College

2

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Goldman Sloan Nash & Haber LLP

21

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Lakeland Consulting Inc.

36

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LCO Construction and Management

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Miller Thomson LLP

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Pelican Woodcliff Inc.

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QS Online Cost Consultants Inc.

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QSM – Mechanical Quantity Surveying

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TD Insurance

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TruEst Quantity Surveyors

8

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Vertigraph, Inc.

12

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www.vertigraph.com

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QUANTITY SURVEYORS, ESTIMATORS, PLANNERS A leading Cost Consulting and Project Management firm requires the following candidates for its Montreal and Ottawa offices: Junior, intermediate and senior level Q.S.’s, Estimators and Planners with experience on: • Commercial and institutional projects • Industrial projects (oil/gas, refineries, mining, metallurgical).

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Fax: 514-846-8913 | Phone: 514-846-8914 | E-Mail: MONTREAL@LCOGROUP.COM

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Call 1-888-589-5656 or go to tdinsurance.com/ciqs The TD Insurance Meloche Monnex program is underwritten by SECURITY NATIONAL INSURANCE COMPANY. It is distributed by Meloche Monnex Insurance and Financial Services, Inc. in Québec, by Meloche Monnex Financial Services Inc. in Ontario, and by TD Insurance Direct Agency Inc. in the rest of Canada. Our address: 50 Place Crémazie, 12th Floor, Montréal, Québec H2P 1B6. Due to provincial legislation, our car and recreational insurance program is not offered in British Columbia, Manitoba or Saskatchewan. All trade-marks are the property of their respective owners. ® The TD logo and other TD trade-marks are the property of The Toronto-Dominion Bank.

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Spring 2019 | www.ciqs.org | CONSTRUCTION ECONOMIST | 35

Construction Claims EXPERTISE Contemporary Records

Review

Assessment Submission

Resolution

Commercial Management Expertise

 Review records & establish contractual entitlement  Develop strategy for pursuit/defense & resolution  Analyze delay, extensions of time & liquidated damages  Assess specific claimable amounts & damages  Assess site indirects & head office overheads  Establish planned sequence & production impacts  Establish disruption & out of sequence working  Prepare narrative and visualizations to support entitlement

 Submit high-quality pursuit/defense documentation and reports  Support negotiations, mediation & participate in other forms of ADR (e.g. adjudication, referee, neutral)

Review | Implement | Deliver Richard Fogarasi MBA, BASc (Hons), P.Eng Vice President rf@lakelandconsulting.com 416.456.6446

Head Office 2150 Winston Park Drive, #206-208, Oakville, Ontario, L6H 5V1, Canada.

905.829.4000

Daniel Josiah BSc (Hons), PQS, MRICS, ACIArb Director & Lead, Construction Claims dj@lakelandconsulting.com 647.637.1449

www.lakelandconsulting.com