The Project Management Conference
2015 Program
Legal Issues
for Project Managers
October 6, 2015
Roy Nieuwenburg
ran@cwilson.com
CW 8699231
11:05 to 12:05pm
50 - 55 minutes - content
5 -10 minutes - Q & A
1
• Quick overview for this session
• Feel free to ask questions
(if you are thinking about it, probably others
are too) 
2
Themes for today’s session:
Managing the project to completion
Liability of Project Managers – some examples
Some aspects of Managing Liability – (i) for
Project Manager (ii) for Owner
Odds and Sods
3
Perspective:
– importance of “the legal issues” in comparison
to …
what project managers do to move along the
project to completion:
• people and relationships
• meetings, minutes, diligence, follow up,
expediting, ushering along (nudging and
nagging), common sense and
practicalities
• “strive for” adherence to the schedule
4
“project managers” in the broad sense
• whether they be external project managers,
like MHPM, or internal (such as UBC,
Airport Authority, Cressey, or Polygon, etc.)
• by whatever name – “project managers”,
“construction manager”, “VP Engineering”,
“head of procurement”, etc.
5
“the right people:”
A Practical Guide to Project Management
- Don Mackie:
“My career spans more than forty years. During
that time …”
• so, what does he have to say?
6
the right people:
7
how do you retain your ability to select
“the right people”
• since “people” are key, how do you retain
your ability to select “the right people” within competitive bidding mandates ?
• most important!
8
how do you retain your ability to select
“the right people” - continued
course of dealings:
• used a lot, from what I see
• for private sector (not really available for
public mandates)
9
how do you retain your ability to select
“the right people” - continued
prequalification (or a bidders list, etc.)
• issues and how to address:
• issue: “fax from Kinkos” (or Tercon 2010):
- clause: is sufficiently associated (including joint ventures)
•
issue: Ed Brunet & Associates case:
- clause: can still differentiate, based on relative rankings
and grading based on non-price criteria
10
how do you retain your ability to select
“the right people” - continued
retaining flexibility in RFP’s and tendering
• a large topic onto itself – too large for today
(but I’ll give a few examples)
11
illustration of the problem: the Sound
Contracting scenario
• Sound Contracting cases
• You can retain flexibility – even in the context
of the AIT, NWPTA (TILMA) and Core Policy
Manual and CAMF - but you have to have
vigorous, clear and strident provisions
• usual privilege clause won’t do it – most
packages I see fall short
12
Sampling of the kind of things you need:
Common sense prevails
Continental Steel Ltd. v. Mierau Contractors
• “reasonable exercise of business
judgment” is a vital tool in making good
procurement decisions
• recognized and validated by the courts in
British Columbia in Continental Steel Ltd.
v. Mierau Contractors, 2007 BCCA 292
13
Understanding Authority Levels – applied
to RFPs and Tenders
"Before any contract or obligation relative to the
subject matter herein becomes binding on {the
Owner}, approval thereof by its authorized
senior personnel, or such officer or officers of
{the Owner} as {the Owner} may from time to
time designate, must first be obtained."
14
For example:
The Owner may elect ...
The Owner reserves the right to ...
The Owner may ...
The Owner may...
The Owner may waive, regardless of severity, any nonconformity, non-compliance, irregularity or error. The
Owner may accept a non-compliant Tender.
etc.
15
September / October 2012 issue of
Construction Business
“At the time of Ron Engineering clauses of this nature
were rarely found in tender conditions, the thought
being that it would reduce the market available to
project sponsors. If the project sponsors could act
contrary to the express and implied terms of the
invitation to tender, particularly to those relating to noncompliant bids, without fear of consequence, then a
large portion of the market would be disinclined to bid to
the project. But that fear has not prevailed, and no
action or limitation clauses are commonly found in
tender documents.”
16
• “a stitch in time” – always attach proforma
Contract
17
• what are the tools and measures you can
draw upon to manage schedule and timely
performance?
18
Note: change made with CCDC 2-2008:
cannot use change order to accelerate
completion date.
Issue: e.g.: classes start on September 8 …
clause: can accelerate, as long as not earlier
than original date …
19
float and sample float clause
20
sample Builders Lien Act clause for Section 5(7)
Builders Lien Act - if you don’t establish
holdback saving account, then that can put the
Contractor “off the hook” for performance.
21
Of course Project Managers have liability
• Consultant found liable for recommending a
non-compliant tender
Tectonic Infrastructure Inc. v. Middlesex
Centre (Township)
• Consultant Found Liable for “Bid Shopping”
Stanco Projects Ltd. v. British Columbia
(Ministry of Water, Land and Air Protection)
22
• To third parties too, if foreseeable third party
relies on it:
ND Lea case
23
Some aspects of Managing Liability – (i)
for Project Manager (ii) for Owner
• Wrap-up insurance
• is the Project Manager covered?
(or subject to the standard exclusion)?
• Under a Wrap policy – will E&O be covered?
24
Wrap-up insurance – is Project Manager covered?
(or subject to the standard E & O exclusion)?
Excerpt from advice from leading brokerage from Vice President, Construction
Insurance Services [September, 2015]
“All standard Wrap Up Liability policies include Professional Liability exclusion,
this is because Wrap ups are to cover the potential 3rd Party Bodily Injury &
Property damage caused by a project not the design Errors or failure to provide
professional services.
Owners of projects can protect themselves by purchasing a ‘Project Specific
E&O’ Policy, this would be based on the fee base of the Professionals involved in
the project and require each Professional to complete a short application. You
can pick and choose which professionals you cover. The minimum premium for
project specific is around $80,000 to $100,000.
The policy would act similar to a Wrap Up Liability Policy in that it would be
Primary (before their own Professional Liability) …”
25
• third party beneficiary issues (aka privity of
contract)
• sample “Benefits Extend” clause and
“Agency and Trustee” clause
26
Privity of contract (aka third party beneficiary issues)
and “benefits extend” clause
Relevant to:
• whether project manager benefits from
insurance; and
• contracts that the project manager is
arranging for the Client / Owner (e.g. with
construction manager, consultants, trade
contractors, contractor, etc.)
27
Where Owner is a Trustee etc.
• Constitution Insurance Co. of Canada et al.
v. Kosmopoulos et al.
• Marks v. Commonwealth Insurance
You must specifically name the beneficiaries or
silent partners who have an interest or else
insurance, bonds etc. may be disallowed.
28
Odds and Sods
• Don’t forget to designate someone as “prime
contractor” for WCB (easy to overlook for
construction management projects).
• Are you, the project manager, the “prime
contractor” for WCB? [no]
29
"open site" project
"GC 16 LABOUR
16.1 The Project is an "open site" project. From
time to time, there may be present on the site
both unionized and non-unionized workers,
including the employees of the Owner. The
Contractor acknowledges and agrees, and
will ensure that each Subcontractor and
Supplier acknowledges and agrees, that: …”
30
Odds and Sods - continued
• Apprentices On Public Projects In British
Columbia Policy & Procedure Guidelines
• Construction Infrastructure Projects that are
procured after July 1, 2015 and that have a
provincial investment of $15 million or more
31
Odds and Sods - continued
Careful about agreeing to confidentiality.
Pharand Ski Corporation v. Province of Alberta
32
Odds and Sods - continued
• McCarty Inc. v. The Queen [CRA] – tax case
- nifty tax planning (but you might be
“pushing it”)
33
Odds and Sods - continued
• Have you thought about AIA forms?
34
any burning questions?
35
THANK YOU
Questions or Comments:
Roy Nieuwenburg | Clark Wilson LLP
ran@cwilson.com | 604.643.3112
www.cwilson.com