Prompt Payment Guidelines and Changes in Ontario Provincial Standards
The Ontario Provincial Standards outlines key updates related to prompt payment, claims, disputes, and other contractual conditions in construction projects. It emphasizes the concept of prompt payment, proper invoices, timelines of actions, claim negotiation, mediation, arbitration, adjudication, warranty periods, substantial performance, and completion certificates, aiming to streamline payment processes and resolve disputes efficiently.
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Ontario Provincial Standards Ontario Provincial Standards General Conditions of Contract Nov.2019 Brief Update on Changes OPSS.MUNI.100
Outline Prompt Payment Claims and Disputes Other updates Concept of prompt payment Definition of proper invoice Timelines of action Interest rate Claim Negotiation Mediation and Arbitration Adjudication (NEW) Warranty period Substantial Performance Completion Certificate
Prompt Payment: The prompt payment section in the construction act is comprised of a set of statutory deadlines for payments in construction projects. The Prompt Payment is based on the submission, by a contractor to an owner, of a Proper Invoice. Payment request can be initiated after receipt of Payment Certificate (OPS.MUNI.100 Nov.2018) PAYMENT CERTIFICATE Pre Oct 1, 2019 Contractor Owner or CA PROPER INVOICE Post Oct 1, 2019 Payment request is initiated by submitting a Proper Invoice (OPS.MUNI.100 Nov.2019)
Prompt Payment: The prompt payment section in the construction act is comprised of a set of statutory deadlines for payments in construction projects. The Prompt Payment is based on the submission, by a contractor to an owner, of a Proper Invoice. Pre Oct 1, 2019 Payment Certificate Owner issues it to contractor Payment request is initiated after receipt of Payment Certificate (OPS.MUNI.100 2018) PAYMENT CERTIFICATE Contractor Owner or CA Proper Invoice Contractor issues it to owner Payment request is initiated upon the owner's receipt of the invoice Owner has 28 days to make payment Owner disputes payment and have 14 days to provide notice of non- payment (OPS.MUNI.100 2019) PROPER INVOICE Post Oct 1, 2019
OPS.MUNI.100 requires the following for a Proper Invoice: The Proper Invoice can be a written bill or other request for payment for services or materials. And is submitted monthly, unless stated otherwise in the contract Quantities of work performed Value of work performed Any advanced payments for materials The amount of statutory holdback, liens, owner's set-off The amount of any acceptable taxes The amount due to the contractor Any info that may be prescribed in the Contract Document Requirements as set out in Section-6 of the Construction Act
Timeline Submission of Proper Invoice starts the clock for payment Action A. Submission of Proper Invoice Clock Starts (Day 0) B. Payment by Owner 1 28 Days after A C. Contractor to pay subcontractors 2 7 Days after B D. Subcontractor to pay their subcontractors 7 Days after C 1 if the owner wishes to dispute invoice, they have 14 days to provide a notice of non payment specifying amount of Proper Invoice not being paid along with detailed reasons for non-payment 2 After submission of Proper Invoice to Owner, the contractor has 7 days to either fully pay its subcontractors or provide a notice of non payment to the subcontractors
Interest Rate: Would be calculated base on: The prejudgment interest rate determined under subsection 127(2) of the Courts of Justice Act ( Ministry of Attorney General publishes the rate on quarterly basis: https://www.attorneygeneral.jus.gov.on.ca/english/courts/i nterestrates.php ) or; if the contract or subcontract specifies a different interest rate for the purpose
NO CHANGE NO CHANGE UPDATED CLAIM 1)Written notice within 7 Days of commencing part of work affected by the claim NEGOTIATION DISPUTE RESOLUTION Parties shall make reasonable efforts 2)Detailed claim no later than 30 Days after completion of work affected by the claim Timely provide disclosure of relevant facts, info, and documents Mediation GC.3.13.05 Arbitration GC.3.14 3)Owner has 30 days after receipt of detailed claim to request further particulars from the contractor If negotiated settlement cannot be reached, parties hall proceed with Mediation or Arbitration (30 Days) Adjudication (Construction Act)- Can be enacted at any time by either party during the claim process NEW 4)Contractor has 30 Days to provide the requested information 5)Within 90 Days the Owner shall advise the contractor of the owner s opinion regarding the validity of the claim Detailed Claim: Identify items in respect of which the claim arises State the grounds upon which the claim is made Include the records supporting such claim
Other Updates Warranty Period For the purposes of determining whether Final Acceptance has occurred, the Contract Administrator shall not take into account, in determining the discharge of the Contractor s obligations, any warranty obligation of the Contractor to the extent that the warranty extends beyond 12 months after Substantial Performance. Substantial Performance and Completion Payment Prior to the CA issuing Certificate of Substantial Performance or Completion Certificate, the Contractor shall submit a Proper Invoice. In addition to the requirement of the proper invoice, this invoice shall include: 1. 2. 3. 4. Value of work performed to the date of substantial performance Value of outstanding work (only for substantial performance) Amount of statutory holdback Amount due to contractor
RESOURCES OPSS.MUNI.100 General Conditions of Contract Volume 7 https://www.library.mto.gov.on.ca/SydneyP LUS/TechPubs/Portal/tp/opsViews.aspx?lan g=en-US OPS-101 Training Course https://www.municipalengineers.on.ca/eve nts/opstraining.html www.MunicipalEngineers.on.ca
