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The introduction of B.C.’s Bill 20, ��������ion Prompt Payment Act, has solid support from most building sector associations and groups but the bill is not without some caveats.

The regulations are a positive for tightening timelines, putting certainty into payment schedules when a “significant and sharp downturn” in residential construction has led to financial distress in the building sector and “layoffs by contractors not seen in a generation,” said Chris Gardner, president of the Independent Contractors and Businesses Association (ICBA).

But Gardner said municipalities, the province, regional entities and school boards, all of which procure “billions and billions of dollars in construction projects” appear to be exempt from the regulations.

If that is the case, it “would defeat the purpose of the legislation.”

“Our members tell us some of slowest and latest payers in construction projects are government-related entities,” he said.

While the ICBA has raised its concerns with the province about possible exemptions in the public sector, it hadn’t received a response at press time.

Matt MacKinnis, president of the Electrical Contractors Association of B.C. (ECABC), said the association is optimistic the government will get the new regulations right.

But he agreed no one should be exempt under the new rules.

The legislation “must not have any carve-outs for specific types of owners and no exemptions for specific aspects of the construction sector,” he said.

MacKinnis said under the current rules member contractors often wait two-to-four months for payment for invoiced jobs, putting them in a financial squeeze to pay their own workers and suppliers.

Important to “the success of changing the culture” is for the government to ensure contractors clearly understand their new expectations under the act, such as timelines for providing notice of payment and making payments, said Brynn Bourke, executive director of the B.C. Building Trades.

“The timely flow of compensation has been an issue and can really be a challenge for smaller subcontractors, putting out their own money, paying their own crews and waiting (for payment) in some cases an inordinate amount of time,” Bourke added.

Kim Barbero, CEO of the Mechanical Contractors Association of B.C. (MCABC), called the legislation “a historic step” to modernizing the movement of money through the B.C. construction economy.

“Success will depend on clear timelines for payment and adjudication, consistent enforcement across both public and private projects, consideration for multi-year projects already in progress when the law comes into effect and rules that reflect how construction actually works.”

Those rules include clarity for everything from progress billing to flow-through payments, she said, noting the MCABC has been advocating for reform legislation for more than a decade.

The new regulations need “qualified and independent adjudicators and consistent application across both public and private sectors,” she added.

The association CEO said because mechanical contractors are “deeply integrated into every phase of construction” when payments slow at the top of the chain, the impact is quickly felt by its members.

“Contractors are effectively financing work they’ve already completed, materials they paid for… sometimes for months.”

Barbero added to prevent disputes contractors need clarity and standardized requirements on when the payment clock starts, typically 28 days from a proper invoice “with cascading payments seven days down the chain.”

She stressed the importance of enforcement “to prevent loopholes that allow larger entities to delay payment.”

The legislation has been “our number one advocacy push” for years, said Chris Atchison, president of the B.C. ��������ion Association. The idea is “to be in line and a bit more harmonized on payment certainty with the rest of Canada.”

The BCCA estimates the risk premiums associated with payment delays/uncertainties tacked onto public projects at roughly $4 billion, based on “informal estimates” provided by members, he said. 

“If bids are being submitted from contractors down the construction pyramid up to major subtrades and to GCs and up to owners, everyone has to factor in a risk premium associated with payment delays.”

Mark Olsen, manager of Western Canada’s Labourers’ International Union of North America (LIUNA), said the union applauds the legislation.

“It is great that the government is helping everybody (union and non-union) in the construction industry.”

While LIUNA doesn’t get involved when its member contractors don’t get paid, the union provides certainty for its member workers through enforcement measures under its collective agreement. 

In cases where a contractor withholds payment from workers, union remedies can include initiating a formal grievance and seeking retroactive compensation with interest, Olsen said.

Bill 20 must pass through second and third readings to receive Royal Assent and become law. That could happen before the year’s end, followed with setting up the framework for the act which will “take months,” said Atchison.

“The message to industry is to start to prepare your culture, your attitude…because payment certainty is coming,” said the BCCA president.

To ensure its members understand their obligations and rights under the new regime, the Electrical Contractors Association will create educational material and conduct webinars and seminars, informing members on the steps forward to the new regime, MacKinnis said.