The Vancouver Regional Construction Association (VRCA) hosted a free, online panel discussion on what is currently the hottest topic in construction: Fixed-Price Contracts in a Price-Volatile Market. Over 215 association members attended the 90-minute session, which broke attendance records for the VRCA’s online events. Donna Grant, President, moderated, with the following panelists fielding questions from Grant and attendees:

• Terry Brown, Principal, STBR Consulting Ltd.
• Mike Demers, Michael G Demers Law Corporation
• Katy Fairley, Industry Standard Practices Consultant, BCCA; Principal Consultant, Fairley Strategies
• Mary Van Buren, President, Canadian Construction Association

When asked how VRCA members could best prepare for and manage the risks, Fairley had this to say, “Now’s the time for due diligence. When communicating with the owners, show the facts, show the proof of costs and impacts to productivity, the delay or price increases, and especially show your mitigation methods.”

Demers, a well-respected lawyer in the construction realm for over 30 years, was a realist when it came to protecting yourself in the current market, “As an industry we need to take a harder look at the traditional fixed-price contract methods we’ve been using. The industry is used to dealing with these contracts and the owners are used to having the price certainty, but when you get current conditions, we need to determine how to allocate the risks with cost escalation and supply chain issues so we can remain a robust, healthy construction industry.”

Brown, who spent 25 years with Greyback Construction Ltd., leading ICI and multi-residential projects, said, “When looking at new projects, these are unprecedented times. Not only do we have escalating prices, but we have skill shortages, supply chain issues, and there’s a ton of work on the horizon. Don’t undervalue yourself. Don’t discount the value you can bring to the industry because you’re needed right now. Don’t be afraid to draw a line in the sand and to make those hard business decisions to walk away from some opportunities.”

Van Buren, who has served as CCA president for almost 5 years, brought the national perspective to the discussion, “Right now, we’re at this unenviable position of having a shortage of workforce and supplies, partly due to COVID and partly due to economic conditions around the world, and we’re out of time as we’re seeing significant infrastructure investments. As a country, we need to be better at planning so that all the pieces line up and we don’t find ourselves in these difficult situations. We are also seeing the federal government as an open owner and are asking them to be flexible in our current situation. Quite frankly, they’re motivated to be! They want you to be successful, and they want their projects to be completed.”

Also in attendance was Chris Atchison, President, BCCA, who had this to say, “BCCA released our annual industry survey and Spring ’22 Stat Pack today and the data shows that construction is an industry under pressure: more projects to build despite more labour and material shortages, higher costs, more taxes, more government, more rules, lingering pandemic. The stress that contractors are feeling is coming through loud and clear. Owners and contractors need to get through this time together, and the only way to do that is to work together on reasonable solutions. Whatever is on the contract page isn’t going to change the reality of what’s happening in the market and on the site.”

Grant as moderator noted the common themes in the discussion centered around stakeholders being committed to remaining reasonable, to remembering they aren’t just dealing with companies but people, and to staying focused on open and transparent communication. “Ultimately all those involved are working toward a common goal. We need to keep that in mind when it starts getting adversarial. Everyone is feeling the pain of the current conditions and the solutions won’t just be local. This is a national and global issue.”

Some key takeaways from the session included the importance of owners remaining flexible during unpredictable and rapidly changing conditions. For contractors and subcontractors, if there isn’t an escalation clause or if supplementary conditions are excessive, seriously consider the risk before jumping in – you may need to walk away.