SUPREME SURPRISE

LEGAL
It is possible that the industry will see an increase in Construction-Manager-at-Risk (“CMAR”) contracts (e.g. under a CCDC-5B
contract), where the construction manager acts as agent during
pre-construction, before then assuming the role of general contractor
once the construction phase begins. This may resolve some of the
issues faced by an owner early on in the project, before allowing them
to delegate control of the activities that actually run the risk of OHSA
liability (i.e. construction activities).
However, the devil will be in the details of such contracts and of
the parties’ conduct. It can be di昀케cult to know where the construction
manager role begins and the general contractor role ends—particularly where the construction phase begins while the pre-construction
phase (e.g. design, land acquisition, permitting, etc.) is still in progress—such that a CMAR contract will have to be carefully drafted in
order to limit the owner’s OHSA exposure.
As it pertains to satisfying a due diligence defence, any construction management contract should be explicit about the extent to
which the owner is delegating its authority to the construction manager. As is the case with the owner-general contractor relationship,
the owner under a construction management model would also be
well-served by precisely articulating the scope of monitoring rights,
and clearly stipulating that such monitoring does not imply an act of
control by the owner.
It may be prudent for owners to consider appropriate measures
to demonstrate due diligence. For example, an owner may want to
retain their own OHSA consultant to monitor the constructor, while
taking steps to ensure that monitoring does not amount to supervision. This might include incorporating comprehensive reporting
obligations for the contractor and robust investigative rights for the
owner or its consultant, while remaining clear that the contractor
retains ultimate decision-making authority with respect to health and
safety issues.
The construction management model
by contrast, the construction management model may pose a risk to
owners insofar as subcontracts would be between the owner and the
subtrades, such that the owner directly employs those organizations
with personnel on the project site.
There would arguably be an enhanced risk under the due diligence
analysis of the owner being deemed to have retained control over
the project. Using a construction manager might undermine a due
diligence defence; insofar as the construction manager does not have
a direct contractual relationship with subtrades and therefore has no
contractual control over them—although the construction manager
may have delegated authority from the owner to manage the subtrades. This tension creates a catch-22 for owners requiring assistance
in managing projects (i.e. a more bene昀椀cial form of delivery model
creates a greater risk to the owner).
P3 model
P3s share some similarities with the design-build approach sometimes used under the general contractor model, such that the observations above apply to some extent to P3s as well. However, the
unique features of P3 models create additional risks in light of Greater
Sudbury.
Project agreements on P3s are intended to be a complete code
of the owner and project contractor’s relationship, including with
respect to the allocation of rights, obligations, and risk, as well as
available remedies. Owners enter into project agreements on the
assumption that they have shifted all risk to the project co except for a
limited number of speci昀椀cally articulated exceptions. Greater Sudbury
arguably undermines this structure by shifting responsibility and risk
back to the owner.
This is problematic in circumstances where the P3 model engages
the criteria of the due diligence defence in a di昀昀erent manner from
other project delivery models. First, it is more likely on a large P3 that
a public owner will have enhanced expertise, given that large public
owners typically are involved in many P3 projects and have signi昀椀cant institutional knowledge. As a result, the second criterion of the
due diligence analysis—delegation of control in order to overcome
a lack of skill, knowledge, or expertise—would be more di昀케cult to
satisfy.
Given the size and complexity of P3 projects, it is arguably impractical to suggest that an owner could e昀昀ectively monitor an entire
project without deploying signi昀椀cant resources to oversee both the
project site and the project contractor’s relevant o昀昀-site activities. This
might increase the e昀昀orts the owner must undertake to satisfy those
obligations, at the same time as it is trying to avoid exerting control
over the project’s overall health and safety scheme.
An e昀昀ective approach for P3 owners to bolster a due diligence
defence may entail (1) explicitly articulating in the project agreement
the extent to which the owner is ceding control over the project site;
(2) expressly identifying the limits of the owner’s supervisory rights
in respect of occupational health and safety; and (3) including comprehensive monitoring rights over the project co’s work, including in
relation to occupational health and safety.
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