COVER STORY
time , financing construction projects for between $ 7 million and $ 1 billion because of delayed payment .
“ Holdbacks and overdue payments mean that contractors are seeing money owed to them being used to finance other projects ,” said Frank Graumann , who represents the Sheet Metal Contractors Association of Alberta on the ATCC . “ Often , a 10 per cent holdback on a contract might not get paid for 12 to 18 months . Payees are using that money to fund the next job and that ’ s wrong .”
According to the trade coalition survey , overdue payments reduce working capital , discourage contractors from bidding on jobs , affect credit ratings and result in loss of productivity , with members reporting spending a half-day per week on average chasing overdue accounts . Although lien legislation is useful , it is costly to pursue and the grace period to file a claim is too short .
“ You have to use your money to pursue your money ,” said Evans . “ Other guys are sitting on your money saying , ‘ Well , come and get it .’ We want to have tools to force their hand .”
The current Alberta government “ to its credit has recognized there is a problem and have taken steps to help their process so that they pay on time ,” Evans said .
To help make its case for province-wide legislation , the
coalition is researching what percentage of contracts are publicly funded and which are privately funded . “ Our initial research shows that publicly funded construction projects amount to less than 15 per cent of the total construction permits issued annually in Alberta . This means there are billions of dollars of construction projects that are not impacted by Alberta Infrastructure ’ s best practices ,” Evans said .
He added that momentum is building nationally on the issue . Prompt payment legislation on federal contracts is winding its way through Parliament with Bill S-224 having passed second reading and now in committee . A review of Ontario ’ s Construction Lien Act is also looking at some form of prompt payment legislation .
Internationally , Australia , New Zealand , the United Kingdom and some U . S . states have already adopted prompt payment legislation . Some payment strategies in those
With more than 3,000 trade contractors in the province , it was estimated that these contractors are , at any given time , financing construction projects for between $ 7 million and $ 1 billion because of delayed payment . anytime
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In Canada , governments appear to be getting the message that delayed payments to small business ripple through the economy .
“ When the prime contractor gets paid , we want mechanisms for the sub-contractor to get paid ,” said Graumann . “ We want to have the ability to walk off a job if there is a dispute and not be threatened with being thrown off the job and losing the contract and being replaced .” He said getting paid within 30 to 45 days is crucial , rather than the current average of 78 days .
Evans agrees . “ Small business cash flow is really what makes the world go around ,” he said . “ If you get paid , you pay your suppliers , you pay your staff , and you can confidently bid on your next job .”
Evans said there will be “ some action ” on prompt payment legislation within the next year . “ Whether we can get it to the place we want , that ’ s yet to be seen . But we ’ re as close as we ’ ve ever been and we are going to continue to push as hard as we can ,” he said . •
18 2017 Edition www . smcaa . ca