Changes Would Help Contractors Invest in Business, Contributing to Employment, Economic Impact: Teitsma
The Manitoba government has introduced amendments to the Builders’ Liens Act to reduce unnecessary slowdowns on construction projects caused by delays in payments, Consumer Protection and Government Services Minister James Teitsma announced today.
“The window for major construction is often limited by seasonal challenges, so greater efficiency in project remuneration is important to the flow of work performed and to project owners, contractors and Manitoba workers,” said Teitsma. “These amendments would establish specific payment obligations to owners, contractors and subcontractors in the construction industry, specifying a timely payment structure based on the progress of the work, the achievement of project milestones and the project’s conclusion.”
The minister said the Builders’ Liens Amendment Act (Prompt Payment) has been developed in response to concerns expressed by construction industry stakeholders about delayed payments causing problems throughout project payment chains. While existing legislation secures claimants’ rights to funds and ensures the funds are kept within the construction pyramid and flow appropriately, there is currently no remedy for late payments.
A prompt payment framework would enhance the regulatory and economic competitiveness of the province and assist the industry by:
- ensuring orderly and timely construction projects by avoiding the disruptive effects of non-payments through supply chains;
- avoiding increased construction costs that result from bidders adding contingency amounts to allow for the risk of late payments, ensuring better value;
- reducing the risk of disruptions to construction projects while ensuring subcontractors and suppliers can pay bills and workers; and
- establishing an adjudication framework to resolve prompt payment disputes in a timely manner.
Though delayed payments are not unique to the construction sector, the minister said this industry is especially vulnerable to the negative impacts of delayed payments due to its tiered payment structure. At each tier of the contract chain, contractors and subcontractors must finance payrolls, materials and other expenses in advance of being paid, the minister noted, adding that delayed payments at multiple tiers can compound severe financial consequences for subcontractors.
Accounting for approximately eight per cent of Manitoba’s employment, the construction industry is a significant contributor to the province’s economic stability. The minister noted most Manitoba construction contractors are small or medium-sized companies with limited cash flow and limited access to credit, so delayed payments limit their ability to invest in their businesses and hire apprentices.
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