Collaborative Construction Contracts

Abstract

In recent years, construction projects across Canada have encountered significant challenges, including a global pandemic, disruptions in the supply chain, environmental disasters, geopolitical conflicts, war, protests, volatile financial conditions, and the everincreasing time and costs associated with dispute resolution. These challenges have contributed to a scarcity in competitive and reliable pricing under traditional project risk profiles in some regions and sectors.

Canadian construction industry stakeholders are increasingly interested in collaborative contracting models like early contractor involvement, progressive design build, integrated project delivery, and alliance models. These models aim to achieve on budget and on schedule project completion, while minimizing disputes and incentivizing cooperative behaviours. Major projects in Ontario and British Columbia are proceeding under collaborative contracting models.

Meanwhile, the energy sector in Canada appears to be one of the few industries slow to adopt collaborative contracting models. It is common to see traditional fixed price or costplus design-build or engineering, procurement, and construction contracts on large industrial projects, particularly in Alberta. But the energy sector is not immune to the market factors shifting the tides in various other construction sectors in Canada. If energy projects wish to attract bids from an experienced and varied pool of potential participants and take advantage of some innovative contracting strategies, change may be warranted.

This article assesses the features and suitability of these collaborative contracts for the construction of energy-related projects in contrast to more traditional delivery models. The authors provide commentary on their risks and benefits and identify relevant opportunities for the energy sector in Canada to embrace collaborative construction contracting models.