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ciqs.org

CONSTRUCTION ECONOMIST

The Journal of the Canadian Institute of

Quantity Surveyors

Le Journal de l’Institut canadien des économistes

en construction

SUMMER 2017

BRITISH COLUMBIA • PRAIRIES AND NORTHWEST TERRITORIES • ONTARIO • QUÉBEC • MARITIMES • NEWFOUNDLAND AND LABRADOR

• CIQS Board profiles• PAQS/ICMS – achievements & updates

• Construction law developments

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4 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

The Missing Middle – A millennial’s perspective . . . . . . . 18

PAQS update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Alan Hand’s 30th anniversary . . . . . . . . . . . . . . . . . . 27

Member interview – Philip Nixon . . . . . . . . . . . . . . . 28

Another successful joint CIQS/RICS event . . . . . . . . . 30

Leadership profiles . . . . . . . . . . . . . . . . . . . . . . . 32

ICMSC update . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Using Earned Value Management . . . . . . . . . . . . . 36

Published four times a year on behalf of the Canadian Institute of Quantity Surveyors by

Third Floor - 2020 Portage AvenueWinnipeg, Manitoba R3J 0K4Tel: 866-985-9780 Fax: 866-985-9799info@kelman.ca www.kelman.ca

Managing Editor . . . . . . . . . . . . . . . . . . . . . . . . . . . Chris KelmanArt Design/Production . . . . . . . . . . Kiersten DrysdaleAdvertising Coordinator . . . . . Stefanie HagidiakowMarketing Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . Jeff Kutny jeff@kelman.ca 866-985-9789

Publication Mails Agreement #40065075Send undeliverable addresses to: lauren@kelman.ca

Canadian Institute of Quantity Surveyors90 Nolan Court, Unit 19, Markham, ON L3R 4L9 t. 905/477.0008 f. 905/477.6774 toll free. +1 866/345.1168 e. info@ciqs.org www.ciqs.org

Executive DirectorSheila Lennon, CAE . . . . . . . . . . . . . . . . . . . . . . . . . execdir@ciqs.org

Editor Arif Ghaffur, PQS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . editor@ciqs.org

Send Change of Address to:Canadian Institute of Quantity Surveyors90 Nolan Court, Unit 19, Markham, Ontario L3R 4L9

CIQS BoardChair:Matthew K. Weber, PQS(F)

Vice Chair and Secretary/Treasurer:David Dooks, PQS

Past Chair:Craig Bye, PQS(F)

Registrar and CIQS – Prairies and NWT Rep:Michael Gabert, PQS

CIQS – British Columbia Rep:Indu Elapatha, PQS

CIQS – Maritimes Rep:Erin Brownlow, PQS

CIQS – Newfoundland and Labrador Rep:Royston Lewis, PQS(F)

CIQS – Ontario Rep:Arran Brannigan, PQS

CIQS – Quebec Rep:Wassim Sultani, PQS

Education Director:Wendy Hobbs, PQS

Statements of fact and opinion contained within this journal are those of the authors, including subject matter experts. CIQS assumes no responsibility or liability for the content of such fact and opinion, nor do they represent the official policy of CIQS.

Features

Corners MessagesChair’s Message . . . . . . . . . . . . . . . . 6 Executive Director’s Message . . . . . 13Editor’s Message . . . . . . . . . . . . . . 14

CPD Corner . . . . . . . . . . . . . . . . . . 16Education Corner . . . . . . . . . . . . . . 17Aspiring Professionals Corner . . . . . 21Legal Corner . . . . . . . . . . . . . . . . . 22

OUR CONCERN FOR THE ENVIRONMENT IS MORE THAN JUST TALKThis document is printed on paper certified to the standards of the Forest Stewardship Council® (FSC®).

The Journal of the Canadian Institute of Quantity SurveyorsLe Journal de l’Institut canadien des économistes en construction

The mission of CIQS is to promote and advance professional quantity surveying and construction estimating; to establish and maintain national standards; to recruit, educate and support our members .

18

CONSTRUCTION ECONOMIST SUMMER 2017

Chair’s Message

Matt Weber, PQS(F)

CIQS proposed governance restructuring

e are writing to inform you of some important changes to the Canadian Institute of Quantity

Surveyors (CIQS) governance structure that were approved by National Council in May 2017 . Once implemented, the new governance structure will give you, our designation holders, a direct vote on members of the National Council .

We are implementing these governance changes to engage designation holders more directly in the CIQS decision-making process and to eliminate some of the administrative burden associated with CIQS’ current governance structure .

Local needs will continue to be addressed by chapters of CIQS (rather than by separately incorporated affiliated corporations) . This allows for reduced costs and improved quality of member services and activities .

We set out below a detailed summary of the governance changes, which we plan to implement in the fall of 2017 .

Background – Current StructureIn 2010, in response to the requirement to transition to the Canada Not-for-profit Corporations Act (CNCA) (or be dissolved), CIQS, with advice and direction from our legal counsel, Borden Ladner Gervais LLP, continued under the CNCA and took that opportunity to implement other governance changes as described below .

The decision to establish CIQS as an ‘Association of Associations’ was agreed by National Council and the members at the AGM in Montreal in 2010 after much deliberation on two possible governance options identified by legal counsel:

1. CIQS as an Association of Associations.

In this model, National Council

representation would be selected by separately incorporated affiliated corporations which are parties to affiliation agreements with CIQS (the Affiliates) . Holders of designations would locally democratically elect their Affiliate board of directors and, indirectly, the board of directors of each Affiliate would appoint representatives to serve on National Council . In other words, the activities and affairs of CIQS would be handled, under this governance model, by National Council and the Affiliates; designation holders would have no direct governance role in CIQS (no right to directly vote or attend CIQS member meetings) .

2. CIQS as an Association of Members. In this model, National Council would

run an independent national nomination process and directors would be directly elected by designation holders . Designation holders, as members, would have the right to attend and vote at CIQS member meetings . In this model, the Affiliates would have no governance role .

Option 1 was selected in 2010 and the governance documents introduced and approved at the 2010 AGM reflect that governance model .

Since 2010, National Council undertook the development of a new strategic plan, advanced the consolidation of administration to improve quality of services and reduce costs, adopted education policies and processes to both standardise course content and ensure consistent delivery and other key initiatives . These steps have resulted in a significant reduction of administrative activity required at the Affiliate level .

However, National Council has recently learned that designation holders feel

disenfranchised and wish for a more direct and meaningful governance voice . This was neither the intention of the National Council nor was it part of the strategic plan .

Accordingly, after careful consideration and with advice from our legal counsel, the National Council decided at its May meeting to modify the CIQS governance structure and move to the governance model described in Option 2 above .

Under Option 2, the administrative burden of maintaining separate affiliate corporations (which will be dissolved) is eliminated, yet the importance of local activities and voices would be maintained through a ‘chapter’ model . Chapters of CIQS would be responsible for presentations, marketing, networking and events within their regions as well as bringing to the attention of National Council issues of particular importance to their regions, essentially maintaining the current ‘local affairs’ without the cost and complexity of the current governance structure .

Directors would be elected to the National Council at AGMs directly by designation holders . A nominating committee comprised of designation holders of various regions would solicit interest during the year, screen candidates and recommend candidates for positions on the National Council with a view to ensuring appropriate skills and experience benefit CIQS decision making .

The proposed governance restructuring requires the approval of each Affiliate and will likely result in the transfer of each Affiliate’s assets to CIQS in an appropriate manner . The method of disposal of such assets will need careful consideration in order to avoid the loss of not for profit tax status . CIQS is prepared to receive the transfer of

W

6 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

Chair’s Message

Affiliate assets and would use the cash transferred to CIQS by Affiliates for the benefit of members who reside in the Affiliates’ respective catchment areas, to preserve, to the extent appropriate, the intent behind the raising of these funds .

The National Council’s target is to

implement the proposed governance restructuring in October of 2017 .

In the meantime, the National Council executive would like to meet with the board of each Affiliate and with designation holders to discuss these important changes to our governance

structure and to answer any questions that may arise from this process .

We will be in touch with further information and a chance for you to directly share your views on the governance restructuring process with us in the near future .

1] OverviewGoals of restructuring• Engaging designation holders and

giving designation holders direct governance control of CIQS

• Cutting administrative cost and burden• Improving services provided to

designation holders

2] Summary of changesMembership structureA] Current Membership Structure:

i) there is 1 class of members, 1 vote each;

ii) 7 memberships are issued as follows:

(a) Canadian Institute of Quantity Surveyors – British Columbia

(b) Canadian Institute of Quantity Surveyors – Prairies and Northwest Territories

(c) Canadian Institute of Quantity Surveyors – Ontario

(d) Canadian Institute of Quantity Surveyors – Quebec

(e) Canadian Institute of Quantity Surveyors – Maritimes

(f) Canadian Institute of Quantity Surveyors – Newfoundland and Labrador

(g) Immediate Past Chair of the Corporation (ex officio)

iii) Quorum: majority of members

B] Post-Restructuring Membership Structure:i) 1 class of members, consisting of:

(a) Active Professional Quantity Surveyors (“PQS”)

(b) Active Construction Estimators Certified (“CEC”)

(c) Retired PQSs or CECs(d) Honorary Members

ii) students, international affiliates, associates and others who are do not fit into the categories above, could be invited to attend member meetings as guests and could

Overview of proposed governance restructuring of CIQS

Current governance structure Proposed post-restructuring governance structure

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 7CLICK HERE to return to Table of Contents

have a contractual relationship with CIQS, but are not members of CIQS

iii) Quorum: 50 members in person or by proxy, with at least 25 present in person

National Council composition• Current Structure: 10 Directors

o 6 nominees selected by the 6 affiliates – each affiliate annually carries out its own process to select a nominee

o the Immediate Past Chairo the Chairo the Vice-Chairo the Education Director

• Current Termo Chair, Vice Chair and Immediate

Past Chair: 2 yearso Education Director and the

6 nominees of affiliates: 1 year• Post-Restructuring Structure:

7 to 15 Directorso National Council will be called

“Board of Directors”o Directors nominated by

Nominating Committee based on expertise, experience and skill as needed by CIQS

o Nomination Committee will be comprised of members from each geographic region

o Nominees elected by the members (designation holders, retirees, and honorary members)

Chair’s Message

o Voting will be done electronically• Post-Restructuring Term

o 3-year terms staggered so that the terms of about one third of directors expire every year

Relationship with Affiliates• Current function of affiliates:

o recruiting, marketing, and promoting designation holders within their respective provinces/regions

o selecting representative to National Council

• Post-restructuring, CIQS will no longer have affiliates, but will have chapters within the governance structure of CIQS, which will carry out the function currently carried out by affiliates:o Chapters will operate at the

pleasure of the board of CIQS and will be governed by CIQS by-laws and terms of reference adopted by the board of CIQS

o Chapters will be responsible for presentations, marketing, networking and events within their regions as well as bringing to the attention of the board of CIQS issues of particular importance to their regions

• Affiliation agreements would be terminated

• Affiliates would gift property to CIQS• Affiliates would be dissolved

3] Documents in governance restructuring package• Amendment to Articles• Amendment to By-Laws• Form of Termination Agreements re

Affiliation Agreements• Form of Deed of Gift • Form of Chapter Terms of Reference• Amendment to Designation Holder License

4] Critical path to completion• May 5, 2017 – National Council approved

governance restructuring .• May – August 2017 – Engage with

Affiliates and Designation Holders re governance restructuring .

• July 23, 2017 – CIQS information session – a portion of the session will be dedicated to governance restructuring discussion with Designation Holders .

• September 2017 – Affiliate special meetings of members to approve governance restructuring at Affiliate level .

• September-October 2017 – CIQS Board meetings and CIQS member meeting to approve governance restructuring .

• October 2017-April 2018 – Implementation of governance restructuring .

Please send your questions and comments to either the CIQS National Board or your Affiliate .

Overview compiled by Nick G . Pasquino, Partner at Borden Ladner Gervais .

8 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

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Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 9CLICK HERE to return to Table of Contents

Message du Président du Conseil

Matt Weber, PQS(F)

Structure de gouvernance proposée pour l’ICÉC

ous vous écrivons pour vous informer de certains changements importants à la structure de gouvernance

de l’Institut canadien des économistes en construction (“ICÉC”) qui ont été approuvés par le conseil national en mai 2017 . Une fois mis en place, la nouvelle structure de gouvernance vous donnera, à titre de détenteur de désignation, une voix directe sur l’élection des membres du conseil national .

Nous mettons en œuvre ces changements de gouvernance pour permettre aux détenteurs de désignation de s’engager plus directement dans le processus décisionnel de l’ICÉC et pour éliminer une partie du fardeau administratif associé à la structure de gouvernance actuelle de l’ICÉC .

Les besoins locaux continueront d’être abordés par les chapitres de l’ICÉC (plutôt que par des sociétés affiliées incorporées de façon distincte) . Cela permet de réduire les coûts et améliorer la qualité des services et des activités des membres .

Nous proposons ci-dessous une résumé détaillé des changements apportés à la gouvernance, que nous prévoyons mettre en œuvre à l’automne 2017 .

Contexte – Structure actuelleEn 2010, en réponse à l’exigence du passage à la Loi canadienne sur les organisations à but non lucratif (« Loi BNL ») (ou être dissous), l’Institut canadien des économistes en construction (« ICÉC »), avec les conseils et l’orientation de notre conseiller juridique, Borden Ladner Gervais LLP, a continué sous le régime de la Loi BNL et a saisi cette occasion pour mettre en œuvre d’autres changements de gouvernance tel que décrit ci-dessous .

La décision de constituer l’ICÉC comme une association d’associations a été acceptée par le conseil national et les membres à l’AGA à Montréal en

2010 après de longues délibérations sur deux options de gouvernance possibles identifiées par notre conseiller juridique :

1. L’ICÉC comme une « association d’associations »

Dans ce modèle, la représentation du conseil national serait choisie par des sociétés affiliées incorporées séparément qui sont liés par des ententes d’affiliation avec l’ICÉC (les “affiliés”) . Les détenteurs des désignation pourraient élire démocratiquement le conseil d’administration de leur association affiliée et, indirectement, le conseil d’administration de chaque association affiliée désignera les représentants pour siéger au conseil national . En d’autres termes, les activités et les affaires de l’ICÉC serait traitée, en vertu de ce modèle de gouvernance, par le conseil national et les associations affiliées; les détenteurs des désignation n’auraient pas de rôle dans la gouvernance directe de l’ICÉC (pas le droit de voter directement ou d’assister aux réunions des membres de l’ICÉC) .

2. L’ICÉC comme une association de membres

Dans ce modèle, le conseil national organiserait un processus de nomination national et indépendant, tandis que les administrateurs seraient élus directement par les détenteurs des désignation . En tant que membres, les détenteurs de désignation auraient le droit d’assister et de voter aux réunions des membres de l’ICÉC . Dans ce modèle, les associations affiliées n’aurait aucun rôle de gouvernance .

La première option a été retenue en 2010 et les documents de gouvernance présentés et approuvés lors de l’AGA de 2010 reflètent ce modèle de gouvernance .

Depuis 2010, le conseil national a entrepris l’élaboration d’un nouveau plan

stratégique, a consolidé son administration pour améliorer la qualité des services et réduire les coûts, a élaboré des politiques et des processus éducatifs afin de normaliser le contenu des cours et d’assurer une cohérence sur le plan national et d’autres initiatives clés . Ces initiatives ont entraîné une réduction importante de l’activité administrative requise au niveau affilié .

Cependant, le conseil national a récemment appris que les détenteurs de désignation se sentent marginalisés et souhaitent une voix de gouvernance plus directe et significative . Ce n’était pas l’intention du conseil national et ne faisait pas parti un du plan stratégique .

Après un examen approfondi et suivant les recommandations de nos conseillers juridiques, le conseil national a décidé, lors de sa réunion de mai, de modifier la structure de gouvernance de l’ICÉC afin de passer au modèle de gouvernance décrit dans l’option 2 ci-dessus .

En vertu de l’option 2, le fardeau administratif du maintien des associations affiliées distinctes (qui seront dissoutes) est éliminé, mais l’importance des activités et des voix locales seraient maintenues par un modèle de « chapitre » . Les chapitres de l’ICÉC seraient responsables des présentations, du marketing, du réseautage et des événements au sein de leurs régions, ainsi que de porter à l’attention du conseil national les questions particulièrement importantes pour leurs régions, en maintenant essentiellement les « affaires locales » actuelles sans le coût et la complexité de la structure de gouvernance actuelle .

Les administrateurs au conseil national seraient élus directement par les détenteurs de désignation lors de l’AGA . Un comité de nomination composé de détenteurs de désignation de diverses régions solliciterait l’intérêt au cours de l’année, ferait une présélection des candidats

N

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Message du Président du Conseil

et recommanderait des candidats pour combler les postes du conseil national en vue d’assurer que les compétences et l’expérience appropriées pourront bénéficier au processus décisionnel de l’ICÉC .

Le projet de restructuration de la gouvernance proposé exige l’approbation de chaque affilié et entraînera vraisemblablement le transfert des actifs de chaque affilié vers l’ICÉC de façon appropriée . La méthode de cession de ces actifs nécessitera un examen minutieux afin

d’éviter la perte d’un statut fiscal à but non lucratif . L’ICÉC est disposé à recevoir le transfert des actifs de ses affiliés et utiliserait l’encaisse transférée par ses affiliés pour le bénéfice des membres de chaque région, afin de préserver, dans la mesure du possible, l’intention derrière la mobilisation de ces fonds .

L’objectif du conseil national est de mettre en œuvre le projet proposé de restructuration de la gouvernance en septembre 2017 .

Dans l’intervalle, l’exécutif du conseil national souhaiterait rencontrer le conseil d’administration de chaque affilié et les détenteurs de désignation afin de discuter de ces changements importants à notre structure de gouvernance et pour répondre aux questions qui pourraient découler de ce processus .

Nous vous reviendrons sous peu avec de plus amples informations et la chance de partager avec nous vos points de vue sur le processus de restructuration de la gouvernance .

1] SommaireObjectifs de la restructuration• Faire participer les détenteurs

de désignation et leur donner un contrôle direct de la gouvernance de l’ICÉC

• Réduire les coûts et le fardeau administratif

• Améliorer les services fournis aux détenteurs de designation

Sommaire du projet de restructuration de la gouvernance Institut canadien des économistes en construction

2] Sommaire des changementsStructure d’adhésionA] La structure d’adhésion actuelle :

i) Il y a 1 catégorie de membres, 1 voix chacun;

ii) Les 7 adhésions sont émises comme suit:(a) Institut canadien des

économistes en construction – Colombie-Britannique

(b) Institut canadien des économistes en construction – Prairies et Territoires du Nord-Ouest

(c) Institut canadien des économistes en construction – Ontario

(d) Institut canadien des économistes en construction – Québec

Structure de gouvernance de l’ICÉC –actuelle Structure de gouvernance de l’ICÉC – après la restructuration

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 11CLICK HERE to return to Table of Contents

Message du Président du Conseil

(e) Institut canadien des économistes en construction – Maritimes

(f) Institut canadien des économistes en construction – Terre-Neuve et Labrador

(g) Ancien président sortant de la Société (d’office)

iii) Quorum : La majorité des membres

B] Structure d’adhésion après la restructuration :i) Il y aurait 1 catégorie de membre,

composée de :(a) Économistes en construction

agréé (ÉCA)(b) Estimateurs en construction

certifié (ECC)(c) ÉCA ou ECC retraités(d) Membres honoraires

ii) Les étudiants, affilés à l’international, associés et autres membres qui n’entrent pas dans les catégories ci-dessus pourraient être conviés à assister aux réunions des membres en tant qu’invités et pourraient avoir une relation contractuelle avec l’ICÉC, mais ne sont pas membres de l’ICÉC

iii) Quorum : 50 membres présents en personne ou par procuration, avec au moins 25 présents en personne

Composition du conseil national• Structure actuelle : 10 administrateurs

o 6 candidats sélectionnés par les 6 associations affiliées – chaque affilié effectue annuellement son propre processus de nomination pour sélectionner un candidat

o Le président sortant immédiato Le présidento Le vice-présidento Le directeur de l’éducation

• Mandat actuelo Président, vice-président et

président sortant : 2 anso Le directeur de l’éducation et les

6 candidats sélectionnés par les affiliés : 1 an

• Structure après la restructuration : 7 à 15 administrateurso Le conseil national sera appelé

« Conseil d’administration »o Les administrateurs seront

nommés par le comité de mise en candidature en fonction de l’expertise, l’expérience et les compétences nécessaires à l’ICÉC

o Le comité de mise en candidature sera composé de membres de chaque région géographique

o Les candidats seront élus par les membres (détenteurs de désignation, retraités et membres honoraires)

o Le vote sera effectué par voie électronique

• Mandat après la restructurationo Termes de trois ans décalés de

manière à ce que le terme d’environ un tiers des administrateurs expire chaque année

Relation avec les affiliés• Fonction actuelle des affiliés :

o Le recrutement, le marketing et la promotion des détenteurs de désignation au sein de leur provinces/régions respectives

o La sélection d’un représentant au conseil national

• Après la restructuration, l’ICÉC n’aura plus d’associations affiliées, mais aura des chapitres au sein de sa structure de gouvernance qui assureront les fonctions actuellement effectuées par les affiliés :o Les chapitres fonctionneront

à la discrétion du conseil d’administration de l’ICÉC et seront régis par les règlements administratifs de l’ICÉC et les termes de références seront adoptés par le conseil de l’ICÉC

o Les chapitres seront responsables des présentations, du marketing, du réseautage et des événements au sein de leurs régions, ainsi que d’attirer l’attention du conseil d’administration de l’ICÉC sur les questions d’une importance particulière pour leurs regions

• Les accords d’affiliation seraient résiliés

• Les actifs des affiliés seraient transférés à l’ICÉC

• Les affiliés seraient dissous

3] Documents dans la trousse de restructuration de la gouvernance• Modification des articles• Modification des règlements

administratifs• Formulaire de résiliation des accords

d’affiliation• Formulaire de l’acte de donation• Formulaire des termes de référence

des chapitres• Modification de la licence des

détenteurs de designation

4] Chemin critique à la realisation• 5 mai 2017 – Le conseil national

a approuvé la restructuration de la gouvernance .

• Mai – Août 2017 – Nouer le dialogue avec les affiliés et les détenteurs de désignation concernant la restructuration de la gouvernance .

• 23 juillet 2017 – Séance d’information de l’ICÉC – une partie de la séance sera consacrée aux discussions sur la restructuration de la gouvernance avec les détenteurs de désignation .

• Septembre 2017 – Réunions spéciales des membres pour approuver la restructuration de la gouvernance au niveau des associations affiliées .

• Septembre/Octobre 2017 – Réunions du conseil d’administration et des membre de l’ICÉC pour approuver la restructuration de la gouvernance .

• Octobre 2017 – Avril 2018 – Mise en œuvre de la restructuration de la gouvernance .

Veuillez envoyer vos questions et commentaires soit au conseil national de l’ICÉC ou à votre affilié .

Sommaire par Nick G . Pasquino, Partenaire – Borden Ladner Gervais

12 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

Being successful – volunteering and benefits!Sheila Lennon, CAE

Executive Director’s Message

Volunteering in your professional association is beneficial for both the individual and the

organization . Volunteers are a vital component to all associations . CIQS depends on volunteers to support the advancement of its mission to our Designation Holders . It is also a great way to earn CPD points!

At CIQS, there are volunteer opportunities at various levels of the Institute . There are volunteers at the national level who offer guidance, leadership and support regarding issues affecting the industry and the profession, and who help to promote best practices within the Institute .

At the Affiliate level or ‘grass roots’ level, there are volunteers who lend their support and time to education and networking events, and who participate on various specific committees . There are many benefits of volunteering and these include:

Networking: Volunteering opens many opportunities to meet and engage with new people, including leaders in the profession . It is also an excellent way to find out about new opportunities career wise and allows you to develop great references and employment information . There is also the potential to create lifelong personal and professional relationships .

Develop skills: Joining a committee or board is an ideal way to practise and try new skills . Your self-confidence and inventory of skills will both get a boost through your development . Learning

from and observing others allow you to select best practices to use in your volunteer work . Working with a group of volunteers is also a great way to build your teamwork skills and learn about group dynamics .

Enhance your career: People are very aware of what is on their resume and look for ways to make it more impressive, make it stand out . Volunteering demonstrates a multitude of skills including management, leadership, planning and customer service, which can all be documented on your resume .

Sense of Accomplishment: Volunteers give their time and skills for free, but it is something one chooses

to do, rather than what one has to do . There is nothing better than the feeling of accomplishment, a sense of empowerment knowing that you made a difference by getting involved, setting goals and producing results .

CIQS and its Affiliates are always looking for new volunteers . Reach out to your local Affiliate representatives or CIQS National to find out how you can get involved . It is important to remember that, even if there are no opportunities at a particular time, you can still come out and support your local and National events . There is always opportunity to bring your ideas and opinions forward for future consideration .

There is nothing better than the feeling of accomplishment, a sense of empowerment knowing that you made a difference by getting involved, setting goals and producing results.

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 13CLICK HERE to return to Table of Contents

Arif Ghaffur, PQS

Payment certificationExpertise, independence and getting it right!

Editor’s Message

core competence of professional Quantity Surveyors is the ability to understand the technical

aspects of construction in terms of scope, timing and the cost for delivering any particular task or a project in its entirety . Quantity Surveyors are by no means Engineers or Architects, even though some may be part of a rare breed who hold dual qualifications and others who simply have aspirations to be Engineers or Architects! The rounded experience of Quantity Surveyors enables them to be well equipped professionally to understand construction, its process, priorities and expectations and, most importantly, the cost and value .

Professional Quantity Surveyors have a tremendous ‘wing span’ of being employed by Owners, Governments, Lenders, Contractors, Subcontractors and Management Consultants . Rapid and continuing growth in the Canadian construction industry and a general shortage of suitably qualified professionals have led to the requirement for construction professionals to utilize transferable skills and knowledge to enable them to deliver a wider range of services .

Some engineering and architectural firms employ those professionally qualified to provide these services by sub-consulting, others look ‘in-house’ to those best equipped within their organization to provide such services . These resources typically include professional Quantity Surveyors, Contract Administrators and other professionals that are considered to have ‘safe hands’ to work together and deliver this key aspect of a project .

It is perhaps fair to say that most professional Quantity Surveyors see payment certification as a core

competency that they are well qualified to provide due to their academic achievement, experience and professional designation(s) . Similarly, other professionals, although not professional Quantity Surveyors, feel that they are sufficiently experienced and competent to provide payment certification services .

Understandably, the Canadian construction industry and standard forms of contract, such as those prepared by CCDC, have placed the onus of verifying professional competence on the consultant . To this end, they have focused on the requirement for payment certification . The expectation is that those providing such services would be professionally qualified and experienced at the level of skill required .

The traditional role of professionals providing payment certification has typically extended to those who provide such services directly to Owners and Consultants (including Engineers and Architects) . Payment certification services are also required by contractors, who assess payments for sub-contractors/suppliers and those providing other goods and services throughout the construction supply chain . Irrespective of role and contractual relationship, the basic expectation of a payment certifier is based on the contract and other relevant documents, and extends to measuring, assessing and valuing work at certain points in time during, or at the end of, the construction process .

The role of carrying out payment certification should not be mistaken for that of the Independent Certifier (IC) . Although some similar competencies are used in the delivery of both services they are very different . In order to perform this ultimate neutral function, a professional firm is engaged jointly by the consortium selected to deliver the facility (SPV or Project Co) and the Owner . This is used for alternative project procurement methods (P3s or PPPs) . Relatively late to this service offering in the Canadian market place, professional quantity surveyors are nonetheless aptly qualified to perform this function too .

Irrespective of the role of the professional Quantity Surveyor in the payment certification process, it is important that this role is performed in a manner that seeks to accurately evaluate the value of the work done, recognizing that there is often reliance on other professionals to confirm the technical aspects of the project . The assessment of payment should not be ‘generous’ or, on the other side, ‘punitive’ – it should rather be accurate .

Having said this, there is always a variance in the accuracy of progressive (typically monthly) payments based upon the type of contract and the compensation mechanism . For example, unit rate contracts offer a greater level of accuracy as the units completed can be accurately measured, where stipulated sum contracts have some variance as there are often lump sums making up the contract price .

A “The very nature of the experience and competencies of Quantity Surveyors positions them to be the preferred choice for providing payment certification services.”Matt Weber, Chair CIQS

14 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

Editor’s Message

The Ontario Superior Court of Justice decision in Federated Contractors Inc . v . Ontario Realty Corp . in 2007 arose out of a contract for the construction of the St . Lawrence Valley Treatment Centre, a secure facility in Ontario . Whilst this case was of particular interest to consulting engineers who issue monthly payment certificates related to stipulated sum contracts, this case had broader ramifications . The primary message was that payment certificates should be in pace with the work actually provided and should not be issued to reflect a greater value of work than actually carried out .

On the basis that ‘cash is king’ in an industry that, for one reason or another, suffers from late and sometimes no payment, the process leading to payment has become more important than ever . There is also the situation – and some would go as far as to say that it is common practice in construction contracts – that Contractors’ billings are sometimes ‘front-end-loaded,’ and this has an impact on the ability to fairly and accurately certify payment . This is where Contractors payment is beyond the actual value of the work completed .

Contractors argue that the practice of such front-end-loading is counterbalanced by a payment certifier’s ability to withhold payment for substantial completion and final payment until all the work is complete and deficiencies have been rectified at the end of the contract . Fortunately, there is an increasing diligence around making sure that payment certification is accurate, as over-certification and payment can have disastrous consequences if a party is overpaid and is for some reason incapable of completing a project, e .g ., becoming insolvent . Some see the use of monthly

payment certificates as merely a mechanism where the certificates are provisional and subject to reassessment as to the true value of work carried out .

Others argue that monthly certificates are final and conclusive and cannot be reopened once issued and that, assuming no fraud, monthly payment certificates are final and conclusive . Industry standard contracts are routine in their wording on payment certification by stating that the certifier is the interpreter in first instance, irrespective of whether or not the quality or quantity of the work supplied by the contractor meets the requirements of the contract . Under most such contracts, the payment certifier has a number of days following the submission of a progress billing in which to amend the billing and advise why parts of it were not approved .

Whilst there is English case law that covers the issue of interim certificates prior to a final certificate, Canadian case law considers payment certificates to be final with most decisions dealing with cases where these were final and not interim certificates . English case law leans towards interim certificates not being final and subject to adjustment if gross overpayment is discovered . It is noted that English case law was based on the grounds that these cases dealt with contracts in which monthly certificates were expressly provisional .

There is the notion that the owner’s obligation is to pay what is certified and

that the time for discussion is before certification . In reality, a payment certifier rarely conducts a detailed or forensic-based inquiry when approving monthly payment certificates . To do so would slow projects down and potentially negatively affect performance by Contractors and Subcontractors; however, payment certifiers need to be careful not to allow payment certificates to exceed the value of work provided by a Contractor, as overpayment could adversely affect the ability to claim against security instruments such as performance bonds .

The issue of whether an interim payment certificate is final and conclusive can be avoided or circumvented by using an appropriate clause in future agreements stating that interim certificates are not conclusive as to the value or quality of services provided, and that payment certificates are subject to reopening and adjustment . The payment certification debate continues so, in closing, the benefit to Owners, Consultants and Contractors of having a professional Quantity Surveyor as the payment certifier is that they have professionals who are familiar with the technical, economic and contractual aspects of construction .

I hope that you and your families have a wonderful summer . If you have feedback, suggestions and, of course, any articles that you would like to have considered for publication, please reach out to us at editor@ciqs.org .

“Quantity surveyors have a deep history around the world in providing their expertise to assess, measure and value – all necessary ingredients of payment certification.”Ian Duncan, Chair, Pacific Association of Quantity Surveyor (PAQS)

“The Canadian construction industry is increasingly requiring independence in payment certification – Quantity Surveyors are well positioned to provide such oversight.”Louis yves LeBEAU, Chair, Association of Canadian Consulting Quantity Surveyors

Journal OnlineThe Construction Economist is also available in electronic format . Please visit the CIQS website www.ciqs.org and press the “Publications” tab .

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 15CLICK HERE to return to Table of Contents

The importance of CPD

CPD Corner

Wendy Hobbs, PQS

his will be my final article as CPD Director . It has been a wonderful privilege to serve in this position for the last

year . I will be continuing on helping with the Podcast (have you volunteered to be interviewed yet?) and hope to keep helping in many ways but this is my last in an official capacity .

I have talked a lot about professional development for our members in this column and how it earns our members points but points are not the only reason to go after professional development . It also helps us improve all those soft skills that are important when dealing with clients . Leadership classes, writing courses and management conferences, as examples,

improve our ability to provide better service for our clients and our employers as well as making us more confident people .

How many times have you walked out of a professional development situation with more energy and great ideas to bring back to your professional contacts? Those are the moments when we have improved on many aspects professionally and personally .

You get all that plus points? Seems like a pretty fair trade to me .

I hope you all had a wonderful time at PAQS in Vancouver, I know I did . I look forward to seeing you all in Halifax for the CIQS Congress next year .

Once again, thank you for reading and I look forward to seeing you all at CPD opportunities in the future .

Leadership classes, writing courses and management conferences, as examples, improve our ability to provide better service for our clients and our employers as well as making us more confident people.

T

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Junior, intermediate and senior level Q.S.’s, Estimators and Planners with experience on:

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We offer competitive salaries, benefits, training and potential for growth. Relocation assistance will be provided.We sincerely thank all applicants, but only those candidates which meet our requirements will be contacted.

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Please send resume in strictest confidence to: LCO - Construction and Management Consultants Inc.

QUANTITY SURVEYORS, ESTIMATORS, PLANNERS

16 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

A fond farewell

Education Corner

here were 37 candidates registered for 63 examinations for the May 2017 examination session . We are waiting

for the results . For the 2016 examinations sessions, there were 95 candidates taking 180 examinations . Overall we have a 74% pass rate to 26% failure rate (including no-shows) . Based on the examinations results of 2016, the CIQS awards winners are:a) Subject #302 Frank Helyar

Memorial Award: Alexander Ings (CIQS – Newfoundland & Labrador) and Nicolas Serge (CIQS – Ontario) .

b) Subject #303 Graham Randall Award: Xingquan Chen (CIQS – Ontario) .

c) Subject #308 Buster Vermeulen Memorial Award: Mary Allison Vivian (CIQS – Newfoundland & Labrador) .

During 2016/2017, the CIQS was contacted by several educational institutions seeking accreditation of their programs . These include: i) Lethbridge College – Civil

Engineering Technology Program . ii) SAIT Continuing Education –

Construction Estimation (not yet live) and Construction Planning (currently available) .

iii) The University of Salford, Manchester, UK . This university has several relevant Masters Programs including Quantity Surveying, Quantity Surveying (Mechanical & Electrical) and Construction Law .

Since April 1, 2015, membership assessment has been taken over by CIQS National . This has been quite a success as the waiting time for assessments has been drastically reduced and the assessments done resulted in a more consistent manner .

T Membership ApplicationsMonth 2015 2016 2017January 55 56February 41 57March 27 43April 26 57 24May 41 35 38June 41 31 July 42 34 August 19 43 September 59 30 October 42 34 November 49 40 December 23 20 Total 342 447 218

It has been an honour to serve as the CIQS Education Administrator for the past nine years . The time has come for me to pass on this responsibility to someone new . During this time, I have revised and created new Educational Policy Guidance Notes, assessed many educational programs, revised the Career Information Book, created the membership pathways and updated some of the CIQS syllabus . It has been a pleasure serving on the CIQS Council and having the opportunity to meet so many of our members from the various provinces across Canada .

David Lai, PQS(F)

AN UNDERSTANDING OF DEVELOPMENT IN BC LIKE NO OTHER

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Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 17CLICK HERE to return to Table of Contents

I n spring 2017, the Vancouver Board of Trade held its 2017 Housing Forum on the Missing Middle . As someone

who is part of a key demographic this crisis affects, I was ready to hear some recommendations . The message heard loud and clear at this seminar, as well as at the multitude of others this year, is that we “have to adapt our expectations .” A hard pill to swallow as someone who is now on the cusp of the age at which I ‘should be’ investing in my forever home .

My story is like many of my peers’: I was born to immigrant parents and raised here in Vancouver . My parents’ lives followed the typical synopsis of what an ideal plot should look like: be educated, get married, have kids and buy a house . This is the same narrative I, and many others of my generation, have been raised to believe is the most secure way to live our lives .

To purchase a property is an investment in our future as much as a measure of success . It has become our expectation of our life’s trajectory . We want to ‘make it’ and be seen as making it by others; personal accomplishment, image and status matter to millennials .1

So, what do we do now that this is no longer a viable reality for us if we choose to live in Vancouver? We are suddenly finding ourselves being none so gently coaxed to fundamentally change our expectations about how we intend to live – how we live together in our community, how high and how big we live, and where we live . This is the single loudest message coming from industry experts, and it is such a jarring reality check; one that I often feel unprepared for .

In speaking to many of my friends, they too are unprepared, and in fact, still in the denial phase of grief . In these

early days of a housing paradigm shift in Vancouver, many of us still reject the notion that we may never be able to live in Vancouver proper . Certainly not when the city ranks number 15 out of 17 cities in terms of affordability and economic competitiveness – a solid D grade that puts it below Toronto, Los Angeles and Sydney .2

What is the recommendation then? First, we have to begin to believe and internalize that the currently missing middle housing, duplexes, townhouses, live/work spaces, can also be a home . According to a survey released by Vancity in May 2016, most millennials who buy a home in Metro Vancouver will go deeper into debt every year .3 The report states that millennial couples who buy condos are better off, acquiring a relatively healthy disposable income each year rather than being in the red with a detached home .

There is a plethora of old adages that I can quote to back up the sentiment that a house is simply that, a house – a thing that we make into a home . It is where we live, raise families, renovate kitchens and store our high school yearbooks . It can be a laneway house, a low rise, or an Airstream; we need to move beyond boxing our notions of a house into the typical single detached, excessively large-yarded home .

Second, and perhaps the hardest to accept, Vancouver living may not be in our future . This pattern is already beginning to manifest itself, with millennials choosing municipalities such as Whistler, Fort St . John and Victoria to call home .4 Though we want the so called ‘happy ending’ of a sprawling detached single-family home in Kitsilano, through our own deliberate but unsure

choices we may end up in the alternative ending of owning a courtyard apartment in Port Moody .

This is not the depressing ending that many of us feel it may be, in fact, quite the opposite . A Stats Canada study on the average life satisfaction across census metropolitan areas from 2009 to 2013 saw that Vancouver ranked dead last, losing out heavily to cities like Kelowna and Abbotsford .5 Books such as Happy City by Charles Montgomery have long touted the negative effects modern cities have on general health and wellbeing and call for a radical change in the way we view urbanism and design .

We must now embrace disrupting the traditional markers of adulthood and perhaps eschew a more ‘traditional’ path in life . And are not millennials the best suited for this? We are the most educated and culturally diverse generation yet .6

The Missing Middle – A millennial’s perspective

18 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

Jasmin Bhandal, Corporate Strategy Analyst at ConEcon ConsultantsEagerly creative

and passionate for out of the box thinking, Jasmin brings her experience as a Brand Planner and Strategist to spearhead ConEcon’s corporate-level strategic and business development initiatives . With a background in strategy implementation for an array of industries including education, clean tech and CSR, Jasmin creatively translates business problems into precise and practical solutions . Having completed her Bachelors of Business Administration from the Beedie School of Business, SFU, Jasmin has since gone on to educate herself in Strategy Planning and Design from UBC .

We pursue originality while simultaneously cultivating community . Housing for us may be missing at the moment, but no doubt millennials will drive the change necessary to adapt and thrive – even if that is in regions beyond Vancouver .

Sources1 Doug Norris . Millennials: The Newest,

Biggest and Most Diverse Target Market. Page 14, Environics Analytics .

2 Greater Vancouver Board of Trade . Unlocking Supply: Housing Affordability and the Missing Middle.

3 Vancity Credit Union . No Funds City: Why Vancouver millennials have the lowest discretionary income in Canada.

4 Doug Norris . Millennials: The Newest, Biggest and Most Diverse Target Market. Page 15, Environics Analytics

5 Lu, Chaohui, Grant Schellenberg, Feng Houand John F . Helliwell . How’s Life in the City? Life Satisfaction Across Census Metropolitan Areas and Economic Regions in Canada. Statistics Canada, 20 April 2015 .

6 Doug Norris . Millennials: The Newest, Biggest and Most Diverse Target Market. Page 44, Environics Analytics .

“We have to begin to believe and internalize that the currently missing middle housing, duplexes, townhouses,

live/work spaces, can also be a home.”

About the author

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 19CLICK HERE to return to Table of Contents

:

would like to thank the Editor of Construction Economist, Arif Ghaffur, for the opportunity to tell you about my journey towards becoming a Professional

Quantity Surveyor .It was about two years ago that I

became involved with the CIQS and it became apparent to me that my previous work experience would be beneficial as I pursued the PQS designation .

Having graduated from University with a BBA with a Finance concentration and an Economics minor, I pursued a career in property management where I held the position of operation manager for 15 years .

During my career, I was looking for new opportunities . Exposure to the Quantity Surveying profession has provided me with a tremendous platform where my academic and work experience will be augmented with an expanded skill-set and a fresh perspective .

I had always felt the need for new challenges and, while I had enjoyed my career in property management, I decided it was time for a change . Whilst the planning and strategic part of operations had always appealed to me, the daily aspects of redeveloping an older property within an evolving city were becoming less rewarding .

My employer company managed a 1890s, 60,000 SF property, (containing retailers, offices, several art galleries, many art studios, and storage), that had undergone many renovations .

Whilst my role in operational management kept me engaged in key aspects of leadership, I am now adopting many of the skills becoming of a Professional Quantity Surveyor . I am

Striving toward the PQS designation

further advancing my software skills, specifically developing spreadsheets that encompass the PQS method and working towards a better understanding of the functioning of BIM . My approach is now more structured and concise .

With this expanded knowledge, I am contributing to the business in a more value driven manner and, in parallel, accumulating diary hours to comply with the Test of Professional Experience (TPE) requirement of becoming a Professional Quantity Surveyor .

My development as a professional has driven me to actively look for work and challenges that will broaden my experience and expand my network within the property, construction and engineering industries . It is indeed an interesting time in my professional career .

By becoming a Professional Quantity Surveyor, the opportunity of establishing my own practice becomes a reality . Furthermore, the PQS designation will enable me to successfully utilize my financial training and accounting experience in a manner beneficial to my chosen profession .

The knowledge I gained in preparation for my PQS exams was a great opportunity to learn how construction operates from the ground up and in a manner that has been structured and aimed at expanding my horizons as

I strive to work on many more varied projects in the future . For example, I am particularly interested in the development of Project Monitoring .

With over 20 years of involvement in commercial real estate, I have noticed a tremendous transformation that I believe will accelerate and provide excellent opportunities for Professional Quantity Surveyors .

Globally, real estate and infrastructure have developed into an asset class that is here to stay, certainly for as long as bond yields remain low . This will heighten the need for increased transparency and will create opportunity for Professional Quantity Surveyors as they have the skills to estimate, monitor, control and report costs .

In parallel, cities are becoming more concerned with density as they contend with providing increased services with lesser budgets . Finding creative and cost-effective solutions is becoming increasingly important – in my opinion, Professional Quantity Surveyors are well positioned to be part of these solutions .

I look forward to continuing my effort to achieve my PQS designation and am very appreciative of the continuing support I have received from family and friends, as well as current members of the CIQS . It is a testing time for our profession and I very much look forward to being a part of the success story!

By becoming a Professional Quantity Surveyor, the opportunity of establishing my own practice becomes a reality.

Aspiring Professionals Corner

ASPIRING PROFESSIONAL QUANTITY SURVEYOR

GAVIN BAIRD(Newfoundland and Labrador)

I

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 21CLICK HERE to return to Table of Contents

onstruction projects give rise to many risks at the best of times, for the owner, for the general contractor and for

the subcontractors . Provincial law in the form of builders’ lien legislation is designed to manage some of those risks, and protect some of the stakeholders . But when one of the involved parties becomes insolvent, it becomes a supervening event that can give rise to unique and complex issues as to how (and whether) the other parties in the chain of contractors and subcontractors will get paid for their work .

The decision in Iona Contractors Ltd. (Receiver of) v. Guarantee Co. of North America1 – which the Supreme Court of Canada has recently refused to consider on appeal2 – gave the Alberta Court of Appeal the unique opportunity to clarify the law on the interplay between the provincial law on statutory trusts that arise under builders’ lien legislation, and the federal law relating to insolvency .

The underlying lawTo fully appreciate the outcome of Iona, it is important to first lay the groundwork as to the legal context in which it arises .

In virtually any construction project, there are many parties who contribute to improving the land, including contractors and subcontractors, and there are just as many opportunities for disputes to arise among them . Although the wording may differ slightly from province to province, each common-law jurisdiction in Canada has passed builders’ lien legislation which exists to protect the payment of these parties, by creating a statutory ‘trust’ over the funds in the right circumstances . Using subcontractors and suppliers as an example, the effect of the legislation is that monies paid or received by a contractor on

account of construction-related work done by subcontractors and suppliers are impressed with a legal trust for the benefit of those latter parties .

Things become suddenly more complicated if the contractor becomes insolvent along the way, because it raises the key question of how the provisions of the federal Bankruptcy and Insolvency Act3 (the “BIA”) affect the trust that has been statutorily created under that provincial lien legislation . In particular, section 67(1)(a) of that federal legislation expressly provides that property held in “trust” by a bankrupt for another person does not form part of the bankrupt’s estate for the purposes of distribution .

The interplay between the provincial builders’ lien legislation establishing a trust, and the federal insolvency law provisions excluding money held in trust, was the precise narrow question addressed by the Alberta Court of Appeal in Iona .

The Iona ScenarioThe facts in Iona were not unduly complex . At its core, it involved a contest between two competing parties, each of whom claimed entitlement to about $998,000 in holdback funds that had not been paid to a then-bankrupt general contractor, and which were still in the hands of the owner of a construction project .

That owner was the Calgary Airport Authority (the “Airport”), which contracted with the general contractor, Iona Contractors (“Iona”) to have it construct improvements to the airport . In order to guarantee that suppliers of the labour and materials for the project would be paid, the contract required Iona to deliver a Performance Bond and a Labour and Material Payment Bond (collectively, the “Bonds”) . The Bonds were issued by the Guarantee Company

of North America (“Guarantee”) which served as a surety .

Iona proceeded to perform its obligations under the contract, but was struggling to stay solvent . By October of 2010, the work was substantially complete, but some of the subcontractors had not yet been paid . Having learned of this, the Airport withheld payment to Iona and instead used $183,000 of the money it would otherwise have paid Iona to complete the deficiencies in the work . This still left the Airport with almost $998,000 in holdback funds still in its hands (the “Holdback Funds”) .

Two parties stepped forward to claim entitlement to those Holdback Funds: The first was Guarantee, which in the meantime had taken steps to compensate the still-unpaid subcontractors on the project . In the role of surety, it paid out $1 .48 million under the Payment Bond to settle their claims, and sought to recoup some of those payments from the $998,000 in Holdback Funds still being held by the Airport .

The second was a Trustee in bankruptcy, which had been appointed after Iona finally declared insolvency in December 2010 . On behalf of the now-bankrupt Iona, the Trustee also staked a claim to the Holdback Funds which it sought to make part of Iona’s estate for distribution to various creditors .

Thus, the dispute was between Guarantee as surety and the Trustee for entitlement to the Holdback Funds . The matter was initially heard by an Alberta lower court, which vindicated the Trustee . Guarantee then brought an appeal .4

The arguments on appealIn seeking to establish its claim, Guarantee’s main argument was that the Holdback Funds were subject to a ‘trust’ under the provincial Builders’

Builders’ liens vs. bankruptcy: Appeal Court untangles the priorities

Legal Corner

Emilio Bisceglia

C

22 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

Lien Act5 (“BLA”), which excluded them from Iona’s distributable assets after bankruptcy . It asserted that the contract allowed the Airport the right to cure Iona’s breach by paying its unpaid subcontractors directly, which meant that Iona no longer had any claim to the Holdback Funds and that Guarantee should be entitled to them instead .

In contrast, the Trustee in Iona’s bankruptcy argued that since Iona’s work was substantially complete, and a certificate to that effect had been issued, Iona was still entitled to be paid by the owner Airport . More to the point, the Trustee claimed that if the leftover funds in the Airport’s hands were impressed with a statutory trust under section 22 of the BLA, this would operate to re-order or offend the priority regime for creditors under the bankruptcy legislation, and as such was not constitutionally valid and could not assist Guarantee in the circumstances .

The difference between an ‘Obligation’ and a ‘Right’ to pay unpaid subcontractorsIn unravelling the parties’ competing claims, the majority of the Court of Appeal considered the contract-based argument first, which involved determining whether Iona was still owed money under the contract, or whether that obligation had been eliminated by the Airport’s direct payment to subcontractors, essentially on Iona’s behalf .

The Court of Appeal noted that the question was not whether the Airport had a contractual ‘obligation’ to pay the subcontractors, but rather whether under the wording of the main contract with Iona it had the discretion or the ‘right’ to do so, which in this case the Court found it did . However, even if the Airport was ‘allowed’ to pay the subcontractors under its contract with Iona, the Court observed that

the contractual provisions became inoperative once Iona went bankrupt, since the BIA takes over at that point to govern the determination of creditors’ priorities .

The Court of Appeal thus disagreed that Iona had no money owing to it under the contract, as Guarantee had asserted .

Whether holdback funds held in ‘Trust’However, this still left the BLA trust argument, and required the Court to consider how the funds originally owed to Iona were to be treated under the provincial lien legislation in the circumstances . The specific question for the Appeal Court was whether the Holdback Funds in the hands of the Airport were funds held in ‘trust’ for the unpaid subcontractors, within the meaning of section 22 of the BLA . If so, Guarantee claimed that having paid the subcontractors directly, it was now subrogated to their position .

Legal Corner

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 23CLICK HERE to return to Table of Contents

The Court examined the overall provisions of the BLA, which it concluded creates a “comprehensive, integrated system that provides some assurance to subcontractors that they will get paid for improving land .” Part of that comprehensive regime is section 22, which sets up a statutory trust over payments that have been received by a party in relation to work provided or materials furnished by another person, where that payment has been made by the owner after a certificate of substantial performance has been issued . The section effectively uses the trust mechanism to avoid holdback funds from being diverted after the certificate of substantial completion has been issued, and ensures that when remaining funds are being paid out, they end up in the hands of any unpaid subcontractors .

With the overall legislative regime in mind, the Court held that a trust could indeed arise under section 22 even in these relatively unique circumstances . Even when viewed from a common-law perspective, such a trust featured the necessary elements to make it legally valid . The Court then turned to the issue of how the existence of such a trust would interact with the priority scheme set out in the federal bankruptcy legislation .

The constitutional issueIn addressing the tension between the BLA and the federal Bankruptcy and Insolvency Act, the court had to first determine whether the trust provisions in section 22 of the BLA were in conflict with the BIA’s regime for establishing the priority of creditors’ claims to a bankrupt’s assets . If they were, then they could not assist Guarantee in claiming entitlement to the Holdback Funds here .

Under this examination, there are two competing principles: 1) the federal BIA must operate in the context of, and subject to, the general provincial property laws, including the law relating to trusts; and

2) the provincial BLA cannot contradict the federal BIAs priority regime, which remains paramount .

In contrast to the provincial BLA, which sets up a comprehensive regime to assure payment to stipulated parties after a certificate of substantial completion has been issued, the federal BIA governs the orderly distribution of the estates of bankrupt persons, and specifies the priority in which competing claims are to be paid . In the event of operational conflict between the BIA legislation and provincial law dealing with property and civil rights, the federal BIA must prevail .

This applies to the definition of what is a ‘trust’ for the purposes of distributing a bankrupt’s assets . Provincial law such as the BLA cannot purport to define what a ‘trust’ is for the purpose of the federal bankruptcy law . This ensures the uniformity of bankruptcy law across Canada . And although provincial legislation may validly affect priorities in a non-bankruptcy situation, once bankruptcy has occurred the provisions of the BIA determine the status and priority of certainly kinds of claims specifically brought under that legislation’s umbrella .

Nonetheless, the Appeal Court ruled that section 22 of the BLA was still valid since it did not does not reflect a deliberate attempt by the provincial legislature to change that, or to directly or indirectly re-order the priorities in bankruptcy; nor was there any operational conflict between it and the federal BIA .

The Court also pointed out that the trust mechanism did not purport to operate in an objectionably over-broad fashion, since it attached only to the discrete sum of money paid by the Airport after the certificate of substantial completion had been issued . The other assets of the Airport (as owner) and Iona (as contractor) were unaffected, and there was no attempt to “throw a general trust over all the assets” of the now-bankrupt Iona .

The Appeal Court accordingly held that the statutory trust mechanism set

up by the BLA was constitutionally valid and enforceable, since it was a component of the provincial law that was not in operational conflict with the federal law .

The outcomeIn the result, after considering the provisions of both pieces of legislation, the Court held that the disputed Holdback Funds in the Airport’s hands were impressed with a trust under section 22 of the BLA, and that they were not the property of Iona .

That trust essentially took precedence to the claims of Iona’s Trustee in bankruptcy in those same Holdback Funds, which were still intact, and were available to discharge the trust and pay the subcontractors . But since they had already been paid by Guarantee directly under one of the Bonds it issued, Guarantee became entitled to enforce all of the rights that the subcontractors would themselves have had under the BLA .6 Guarantee was therefore entitled to the Holdback Funds .

PostscriptAfter receiving the unfavourable Alberta Court of Appeal ruling, the Trustee launched an appeal to the Supreme Court of Canada, asserting that issue of the correct legal interplay between the BLA trust provisions (and their equivalent in other provinces) and the provisions of the BIA were of national importance and involved resolving conflicting legal authorities on-point .

However, the Supreme Court of Canada denied the Trustee’s application for permission to appeal, evidently finding that the Alberta Court of Appeal’s reasons were persuasive and sufficient to guide the application of statutory trust provisions across the country .

What’s happened since Iona?The Iona decision has been considered by only a handful of subsequent decisions since it was decided . For the most part, these have reflected

Legal Corner

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largely-unsuccessful attempts to expand and extrapolate the articulated principles into other unrelated areas in which a trust is set up, such as under condominium legislation,7 in relation to a Requirement to Pay by the Canada Revenue Agency,8 and in relation to dissimilar builders’ lien legislative provisions in other provinces .9 Because none of the cases was directly on-point, the courts were positioned to distinguish the cases from Iona but there will likely be more opportunities for other courts to consider its impact in the future .

What does it all mean?Although the Iona ruling dealt specifically with Alberta law as it relates to federal bankruptcy legislation – and to the extent that the wording of the builders’ lien legislation in other provinces is similar – it will likely apply with equal relevance outside that province as well .

The decision is important because it reflects the fact that for unpaid subcontractors and suppliers, and in cases where a contractor general contractor has become insolvent, the provisions of provincial lien legislation may provide an effective remedy for pursuing funds still owed under the contract . Especially where funds yet-unpaid to an insolvent contractor are sufficiently isolated in the hands of the owner, they may be impressed with a statutory trust and shielded from distribution to the insolvent contractor’s creditors in the normal course of a bankruptcy .

Of particular note arising from the scrutiny of the BLA regime is that the Appeal Court seems to conclude that a valid trust can be created even without a party deliberately or subjectively intending to, provided the party deals with property in a manner that falls within the provincial statute that creates such trusts .

The outcome in Iona will be comforting to contractors and subcontractors, but may be troubling for secured creditors who may be unknowingly advancing funds to a contractor on brink of insolvency .

Sources1 2015 CarswellAlta 1286,

2015 ABCA 240 .2 Ernst & Young Inc., in its capacities

as Receiver and Manager, and Trustee in Bankruptcy of Iona Contractors Ltd. v. The Guarantee Company of North America, 2016 CanLII 20441 (S .C .C .) .

3 R .S .C . 1985, c . B-3 .4 2015 ABCA 2405 R .S .A . 2000, c . B-7, s . 22 .6 Note that one Alberta Court of Appeal

judge disagreed, finding that the Holdback Funds were payable not to Guarantee, but rather to Iona’s bankruptcy trustee, having found that the Builders’ Lien Act provisions were not constitutionally enforceable .

Legal Corner

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About the authorEmilio Bisceglia is the principal of the law firm of Bisceglia & Associates Professional Corporation . Emilio’s practice focuses on the resolution of business disputes through trial, appeal, mediation and arbitration . He has an extensive commercial litigation practice involving shareholder disputes, construction law litigation, construction liens, insolvencies, and advising in connection with construction and commercial disputes . He represents developers, suppliers, general contractors, subcontractors, and owners during all phases of a construction project . Emilio has appeared before various tribunals in the Province of Ontario . In addition, he has appeared in the Ontario Superior Court of Justice, Ontario Divisional Court and the Ontario Court of Appeal . Emilio completed his education at Osgoode Hall at York University in 1990 and was called to the Bar in 1993 at the Law Society of Upper Canada .

Legal Corner

This dissenting opinion may be used by future courts in other Canadian jurisdictions, which may wish to arrive at a different result than the one obtained in the Iona case .

7 1864684 Alberta Ltd. v. 1693737 Alberta Inc., 2016 CarswellAlta 1359, 2016 ABQB 371 .

8 Manitoba Housing and Renewal Corp. v. Able Eavestroughing Ltd., 2017 CarswellMan 56, 2017 MBQB 27 .

9 Kel-Greg Homes Inc., Re, 2015 CarswellNS 814, 2015 NSSC 274 .

This year’s Congress in Vancouver was the second and final year of my term as chair for the

Pacific Association of Quantity Surveyors . By the time you read this, the event will have passed and I will have handed over the chair to Francis Leung of the Hong Kong Institution of Surveyors .

The CIQS was proud to have been the host of Canada’s second PAQS Congress

PAQS update from the Chair – PAQS 2017

and trusts that all the delegates enjoyed the experience and hospitality of Canada’s diverse culture .

In addition to the main event, we were honoured to have been selected as the venue for the official launch of the International Cost Measurement Standards by the ICMS Coalition .

For those CIQS designation holders who attended the event, I am sure you will agree that it was well worth

attending and truly established the CIQS on the international stage for Quantity Surveying and Construction Estimating .

Next Year’s PAQS Congress will be held in Sydney, Australia and then Kuching, Malaysia in 2019 .

I look forward to your continuing support .

Ian B . Duncan PQS(f) MRICSPacific Association of Quantity Surveyors – Chair

Ian B . Duncan

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A lan began his career as a Quantity Surveyor on the other side of the Pacific Ocean in

Perth, Australia . Though he had the opportunity to study Architecture, Alan decided after some contemplation and number crunching (a sign of things to come) that he would be better off with a degree in quantity surveying, which he earned from the Western Australian Institute of Technology .

After several years of successful practice in his chosen field, Alan did what many Aussies do: he quit his job to travel the world . With that innate itch scratched, Alan resumed his QS career on this side of the Pacific when he started a consulting firm with two partners in Calgary, Alberta .

In early 1987, Alan heard that a fellow CIQS member was looking to expand on his consulting firm, which at that time was operating as a sole proprietorship . Alan made contact with the Ontario-based industry colleague and promptly set up a face-to-face meeting to discuss the opportunity . The pair hit it off and, a short time later, Alan packed his bags and flew east to his new gig at Arthur W . Hooker Quantity Surveying .

Alan Hand’s

with A.W. Hooker Associates Ltd.

May 2017 marked Alan’s 30th anniversary at the renamed A .W . Hooker Associates Ltd . Over that time, Alan has been at the helm of the ship and has grown the firm to annual revenues greater than 20 times those of the early years . Alan’s experience and success in risk management, cost control, project monitoring, peer review and as an expert witness have played a paramount role in the firm’s success .

Combining a strong desire to visit his homeland ‘down under’ with his passion for sailing, Alan took a year sabbatical in 2001 and set sail in his 39’ Corbin sail boat . He sailed from Canada to the Caribbean, then through the Panama Canal and across the South Pacific to Australia . Looking back at the experience, Alan is adamant that his quantity surveying skills were instrumental in the successful planning, budgeting, stocking of supplies, navigating and captaining his boat with a five-person crew across the largest ocean on the planet .

Throughout his career, Alan has poured his heart into developing the Quantity Surveying industry in Canada . As Past President of the Association of Quantity Surveyors of Alberta, and Past President of the Canadian Association of Consulting

Quantity Surveyors (CAQCS), he has worked tirelessly to promote the industry and is proud to see how the role of the Quantity Surveyor has become a key part of the construction fabric .

On a more personal level, Alan is a gentle and kind man, compassionate, caring and supportive . His management skills reflect in the office ambience and longevity of staff retention . Always willing to help and mentor, he leads by demonstration and wisdom of the many years of practice .

They say, “Behind every successful man is a strong woman,” and Alan has had great support through the years; namely, his lovely wife Yvonne . Alan and Yvonne were married 1979, are the parents of three children and recently became grandparents .

On behalf of the staff of A .W . Hooker, we congratulate and thank Alan for his 30 years of service, wish him continued success in business and health and happiness in the years to come .

Cheers mate .

Alan & Yvonne

Award Honouring 30 Years of Service.

Written by Malcolm Yates, PQSSenior Partner A .W . Hooker

30th anniversary? ?

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 27CLICK HERE to return to Table of Contents

MEMBER INTERVIEW

Philip Nixon

Philip NixonMRICS, PQS

When was your first introduction to construction?I was always keen on construction from a young age . My uncle is a civil engineer who has worked around the globe, I always admired that his chosen career took him to exotic places and made him a good living . I always wanted to have some sort of role in the construction industry and, probably like most Quantity Surveyors, I did not set out to be one, but somehow fell into it along the way . Quantity Surveying provides a great mix of daily tasks .

When did you begin your Quantity Surveying career?Growing up in Belfast, I had the opportunity to undertake a dedicated Quantity Surveying degree course . There was one close to home but I decided to go to Nottingham to study . My first role as a QS was in the late 90’s with Franklin and Andrews as a cost manager in Manchester working on a number of rail projects in northwest England .

What types of roles and responsibilities have you held?After Franklin and Andrews, I worked with Currie & Brown in Birmingham and successfully gained the MRICS designation through the RICS whilst working on numerous commercial projects . My first exposure to P3/PFI projects also occurred in the early 2000s .

After that I moved back to Belfast for three years to work with a smaller, more traditional QS practice and led QS teams working on residential and commercial projects .

I will be forever thankful to BTY who brought me over to Canada from the UK in 2008 and gave me the opportunity to be the first person in their Toronto office . During my seven years there, I specialised

in providing advisory services for P3 projects along with cost management for traditionally funded projects . During that time, the Toronto office grew to 17 staff members . We also opened an office in Ottawa .

In 2015, I was lucky to get the opportunity to establish WT Partnership in Canada (we also opened in the US shortly thereafter) . WTP was established in 1949 and is a privately owned global consulting QS company providing consultancy services on a wide range of commissions for public and private sector clients worldwide, drawing on the resources of over 1,350 staff operating from offices throughout the United Kingdom, Europe, Asia, India, North America, Central America, Australia and the Pacific .

In North America, we have generated significant momentum in the cost consulting and P3 advisory market in the last two years having worked on eleven P3 projects across a variety of sectors and four projects each with a capital cost of over a billion dollars .

What types of projects have you worked on?I have probably worked in almost every sector on many different project types and sizes in various QS related service line roles: everything from hospitals to highways, and so much in-between .

Is there a particular project that you would like to tell us about?One of my personal favourites is the Bridgepoint Hospital P3 project in Toronto delivered using a Design-Build-Finance-Maintain model . It is a LEED-Silver new-build/renovation hospital project on a brownfield site with Plenary Group as the developer and PCL as the design-builder . The hospital itself, completed in 2013, is a 10-storey, 680,000 sq ft, 472-bed,

state-of-the-art facility for the treatment of complex chronic diseases .

The most impressive component of the project in my opinion was the extensive restoration and adaptive reuse of the old Don Jail (originally built in 1864), a 5-level, 84,000 sq ft architectural landmark and heritage site in Toronto, which now houses the hospital’s administrative and support office space . I would highly recommend a visit if you get the chance .

How do you see the CIQS as being the advocate for our profession?I think the CIQS has done an excellent job with the limited resources that it has .

I would like to see more interaction with other professional bodies and not just the other QS related organisations like the RICS, but also engineering and architectural professional bodies .

We need to make more of an effort to increase awareness of what a Quantity Surveyor does and can do within the construction industry . We are capable of so much more . I would like to see more client groups engaging consulting QSs directly, rather than as a sub-consultant to a direct consultant .

What has been your approach to Continuing Professional Development?CPD is key . Many Quantity Surveyors seem to view it is a chore or burden . Frankly, I believe that no matter how much you know, it is not enough . Ultimately, as a QS, you are engaged by clients as an advisor to provide professional guidance to achieve the most successful outcome for their projects . Just doing your job day-in, day-out, is not good enough . You must find time to keep on top of the latest industry news and trends, procurement methods, contractual arrangements etc .

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What challenges do you see for Quantity Surveying?Unfortunately, as far as consulting QS firms go, we have quite a number of challenges .

Not many people actually know what a QS is, and not many Quantity Surveyors can effectively and concisely sum up what a QS does . In a bid to reposition ourselves to attract higher fees from clients, many practices have simply stopped calling themselves QSs; some firms even steer away from the nomenclature ‘Quantity Surveyor’ altogether and would rather call themselves cost engineer, building economist, cost manager, or construction accountant, which can lead to more confusion as to what we actually do and who we are . In spite of the different names, we have significant skills that have evolved to meet the increasing and changing needs of clients, especially in the international construction arena .

Our traditional service offerings are becoming a commodity rather than a professional skill . Some major client bodies are now prepared to pay more per hour for a car mechanic than for a QS, furthermore consulting QS firms seem to be more and more willing to ‘shave a bit off’ the fee just to secure the work which over time has led to a devaluing of our services .

In my opinion, one of the biggest issues we have in the consulting QS industry today, irrespective of service line, is over-competitiveness followed up by under-delivery . We have a number of consulting QS firms all competing intensely for work, quite often the key separator in terms of securing a mandate is fee, ultimately service delivery is dictated by fee . My worry is that eventually corners are cut and a ’do minimum’ attitude is taken just to produce the required deliverables; one bad experience can affect Client attitude and tarnish the QS industry as a whole .

A shift away from traditional procurement has seen clients that are increasingly looking to start projects sooner and many are entering into contracts before the design development and quality assurance checks are complete, which leads to challenges down the road as it can be difficult to make changes to the way projects are built once the contract has been let . This has by

extension led to the drying up of work for some consulting QS firms in terms of the traditional cost planning role .

What opportunities do you see for Quantity Surveying?I believe that we need to do a better job of promoting ourselves as an industry to client groups as a key advisor, rather than a marginalised, add-on, component of an architectural contract for instance . The primary constraint on any construction project is always cost but traditionally in Canada the QS is the last player to the table in terms of any appointed professional service, which is in stark contrast to the way it is done in some other countries . I have started to see this change over the last decade and the driving factor behind that is global clients who have seen the benefit of a good QS on a direct contract elsewhere in the world, or local clients who have seen the benefit on their projects .

The hard part for us is changing mindsets and the status quo . This takes a significant amount of time and effort . The benefit of a QS in a traditional sense is being directly engaged by the client from project inception to completion, having a proactive opportunity to guide the project to its most efficient outcome and driving value rather than a step-in, step-out process providing Class D through A estimates (and on some occasions not even providing a full suite of those) . Furthermore, I think that QSs often focus too much on capital cost, and of course that is key for the client in terms of making its facility a reality, but what about the operating and maintenance costs of keeping that facility functional at maximum efficiency for its lifespan?

Many firms have diversified their service offerings into various specialist roles to respond to the current market place . They are increasingly becoming integral to project management and are moving beyond traditional measurement and costing role toward advising on matters such as the structure of contracts, as well as ways to reduce construction costs and improve project delivery .

Do you have any concluding thoughts?Change is inevitable and should be embraced…

Consulting QS firms were (and some still should be) concerned about the rapid erosion of their traditional role, our inability to persuade clients that we can significantly contribute to their construction projects, and the threat posed by acquisitive rivals, and by other professionals such as management consultants and accountants .

As such, people have been predicting the demise of the Quantity Surveyor for 20 years but we have proven to be extraordinarily resilient . As long as clients spend their capital on construction, which for most is a necessity of their being, and at the same time care what it costs, QSs will be busy, perhaps just not in our traditional way of doing things .

As a profession, we are at a crossroads . The successful consulting QS firms of the 21st century have seen this over the last 20 years and specialised to provide the likes of life-cycle costing, facilities management, project management, dispute resolution, claims advisory, P3 procurement advisory/delivery and project monitoring . Inevitably our business is going to be a series of specialisms suited to the market . A QS actually has a core skill-set that is so much more than just cost planning .

I would like to see the QS as the industry-recognised first point of contact for any client contemplating a construction project . I think our profession is (and should be) heading towards management consultancy in a construction advisory capacity, and I hope that we will end up being properly rewarded for the role that we can provide .

Philip is a Chartered Quantity Surveyor with over fifteen years of construction cost management and project advisory experience in Europe and North America . Philip heads up WT Partnership’s Toronto office and leads the company’s efforts in Canada .

Having qualified as a Chartered Quantity Surveyor (MRICS) with the RICS in 2004 and Professional Quantity Surveyor (PQS) with the CIQS in 2010, Philip’s experience is grounded in providing traditional construction cost consultancy services in a wide variety of sectors .

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 29CLICK HERE to return to Table of Contents

IN MARCH 2017, the CIQS Prairies and NWT Chapter and the RICS held a joint event at the University of Calgary to discuss the topic of “Payments – Contract Provisions, Best Practices and Pitfalls.” Panelist presenters Mr . Philip Carson, Partner, Miller Thomson LLP and Sean Fitzgerald, Partner, Miles Davison LLP delivered an insightful overview of the various acts and operating business risk associated with payment clauses or in the event of insolvency . The following themes are captured and expanded upon to illustrate the complexities associated with the payment process .

1] Securing payment: The timing for payment comes down the contracting chain with the General Contract or invoice triggering the request for payment . The normal billing cycle process industry standard allows the Owner to pay the General Contractor (GC) within 28 days and the GC subsequently pays the Subcontractor in seven days . The possibility of set-off against the GC (set-off is the right of a debtor to balance mutual debts with a creditor) by the Owner can impede payment to both the Contractor and Subcontractor . Options and recourse to secure payment can be available to various creditors depending on the jurisdiction and wording contained within the provisions of the prevailing contract recognizing specific geographical nuances relative to Builders Lien, Possessory Lien and Construction Bonding (Performance, Labour and Material) .

It is therefore vital to carefully review payment terms on a ‘Clause by Clause’ analysis . Change orders, late in the project in particular, can really drag out final payment and holdback to the Subcontractor . One way Subcontractors can effectively mitigate requests for Change Orders and the impact on the contract cash flow is to request that any changes after a certain stage are effected as purchase orders outside the contract .

2] Trust obligations under lien statutes: In Ontario, Saskatchewan and British Columbia, money from the Owner all the way down the contracting chain to the appropriate parties is held in a Construction Lien Trust . Holdback trust accounts are required in the provincial jurisdictions of B .C . and Saskatchewan . Trust obligations can be complex . Ontario, in particular, has five unique features regarding trust obligations:a) Trust obligations can arise in unexpected circumstances b) Paying overhead expenses with trust funds is a breach of trust c) There is no obligation to create a separate trust fund accountd) A corporation does not shield you from personal liabilitye) The Ontario Court of Appeal has held a breach of trust

claims can survive bankruptcy

3] Pay when paid contracts create a unique allocation of risk and can be enforceable, depending on the specific contract wording . For contracting and subcontracting parties, when

faced with ‘pay when paid’ clauses, the timely preservation and perfection of lien rights are still vital in the interest of getting paid . Contracting and subcontracting entities should press forward with their lien rights . It is not unknown for a developer to set up one company to own the land and another to act as general contractor . By the simple introduction of a ‘pay when paid’ clause, a developer could maintain a questionable discretionary control over all contract funds .

Negligence action disputes between Owner, Engineers and Contractors can undermine, and have undermined, a Subcontractor’s ability to realize final payment and holdback in a number of projects . Lastly Courts and Courts of Appeal have heard numerous cases regarding the timing on payment disputes on what is reasonable or unreasonable .

4] Contract administration: It is vital that all parties and stakeholders involved in payment preparation, processing, and certification read and follow the contract terms and conditions . Given the tighter operating margins in today’s business environment, combined with applied liquidated damages, claims are going to be more common place and it is vital to act promptly, document well and be aware of all pending claims . Link sub-contracts to the general contract and look for consistency of terms and conditions . Subcontractors need to be aware of the terms and conditions in the prime contract and request copies of the document for close examination review in advance of signing any subcontract .

Watch for incompatible or inconsistent terms, definitions and clauses between the prime contract and subcontract or within each of these respective documents . Claims can be denied by the courts, however compelling the narrative and supporting facts . Courts can deny, and have denied, otherwise-legitimate claims by Contractors and Subcontractors based on improper procedure .

5] Corporate insolvencies: There are various corporate insolvencies/creditor protection provisions that could impede payment in the event of bankruptcy or insolvency listed as follows:a) Division 1 Proposals – Bankruptcy and Insolvency Act (“BIA”)b) Bankruptcy – BIA

CIQS Prairies and NWT Chapter

Another successful joint CIQS/RICS eventPayment – Contract ProvisionsSubmitted by Jerry Crawford PMP, PQS, GSC

30 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

c) Receiverships (private, court Appointed)d) Companies’ Creditors Arrangement Act (“CCAA”)e) Debt restructurings, liquidations and dissolutions (Canada

Alberta, Other Business Corp. Act)f) Winding-up and Restructuring Act (Canada)g) Other insolvency/liquidation options

There are common threads to the insolvency proceeding process which can come into question:a) A Stay (halt) of proceedingsb) Triage of creditor claimsc) Debtor corporation may or may not continue after the

proceedings processd) Debtor corporation may no longer be in control of its

operations/decision makinge) Payment likely delayed, reduced or eliminated .

A recent bankruptcy case under way: In 2017, Saskatoon trade contractors were owed money by a heavily-indebted landlord group, Block 1 Management, owners of more than 900 local apartment units, are exposing local trade contractors to substantial losses . The current bankruptcy restructuring plan would permit the sale of the apartment buildings without honouring millions in liens held by the trade contractors . PWC Inc . was appointed by the court to oversee the creditor protection proceedings while the restructuring process is underway .

The landlord was granted protection under the CCAA last year after telling the court it could not pay its debts . The landlord group is financed by a Vancouver lending group, New Summit Partners Corporation . Court documents revealed the landlord group was in default on a $104 million loan, had other major loans due and owing, and owed $12 .7 million to unsecured creditors, including dozens of Saskatoon-based companies . Some of those firms had previously registered at least $4 .5 million in liens against three of the group’s apartment properties in Saskatoon .

The B .C . Supreme Court heard an application in June of 2017 by Ontario-based KingSett Mortgage Corporation to have 14 of the landlord’s Saskatchewan buildings sold . While the hearing process was scheduled to proceed, it was abruptly adjourned by the B .C . court . Of an interesting note, solicitors representing the KingSett business interest as a secured mortgage creditor issued

letters to trade contractors with registered liens informing them; “If any of the properties are sold, the process of sale will have the effect of discharging all liens filed on any of the properties, including the Lien that you may have filed on any of the above properties, without payment of any monies to the lienholders .”

In Summary: For Contractors and Trade Contractors operating in good faith in any jurisdiction, it is still vital to verify the solvency and the ability of the ‘Paymaster’ on any new contract award, prior to signing . It is critical for contracting entities to undertake the necessary financial due diligence at the outset of signing any contract or on-going service agreement, no matter the satisfactory previous payment history track record .

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About Myself:• Current Employer:

The Concosts Group• Qualifications: Diploma of Tech . in

Engineering and ABET . PQS Fellow .• Years of Experience: 15• Board Involvement: 2012–present• Interests: Music, athletics and family

My Vision:CIQS as the premier association for construction professionals, incorporating a polished website and mobile app experience for our members .

Primary Achievements:1 . Helped oversee the restructuring

of the Institute financials 2 . Produced Marketing videos for

our profession 3 . Overhauled Institute marketing4 . Created a strategic plan for

the Institute

Current Initiatives:1 . Restructuring of the Institute2 . Updating tests for education3 . Government relations4 . Marketing of our profession

Thoughts on the future of CIQS & Quantity Surveyors: We need to re-engage our membership and expand awareness of our profession for the average person . In particular, we must nurture our young membership base as we build for the future of our industry .

About Myself:• Current Employer: Altus Group Limited• Qualifications: PQS, MRICS, GSC• Years of Experience: 15 years Cost

Consulting/Estimating, 25+ years in the field of construction

• Board Involvement: President CIQS – Maritimes & Member of CIQS National Board since 2013

• Interests: Building a better community

My Vision:To ensure that the road of the construction economist will remain true and strong for the next 100 years .

Primary Achievements:1 . Becoming a husband and father2 . Honours & Highest Achievement

NSCC CAT3 . Earning my PQS and being recognized

for my skills4 . Volunteering with CIQS on the local

and national level

Current Initiatives:1 . Enjoying the summer of 2017 with

my family2 . Attending PAQS20173 . Preparing for CIQS Congress 2018

in Halifax4 . BIM certified

Thoughts on the future of CIQS & Quantity Surveyors:Mentoring and apprenticeship are important to the success of our industry . Information is everywhere but successful application of that knowledge can only be accomplished through experience .

About Myself:• Current Employer: Director with

Hanscomb Limited• Qualifications: PQS(F), Senior QS• Years of Experience: 34• Board Involvement: CIQS Board

since 2013: President, Vice President and Registrar, Chair of Staffing, Membership, Governance and Business & Long Range Plan Committees . General Secretary for ICMS since 2015 . CIQS-Ontario Board

since 2011 served as President, Vice & Past President, Secretary/Treasurer and Registrar

• Interests: Golf, Travel

My Vision:For the Profession of Quantity Surveying to be better recognized in Canada . Expanding our role in the industry would generate more opportunities for the professionals and youth we are trying to recruit .

Primary Achievements:1 . Presented at Information Session in

Montreal and involved with CIQS-Quebec re-entering CIQS .

2 . Chair of CIQS Staffing Committee involved in search and hiring of new CIQS Executive Director .

3 . Representing the CIQS as General Secretary of ICMS

4 . Participated in creation of new CIQS National Standards

Current Initiatives:1 . Member of CIQS Restructuring

Committee2 . Liaise with CACQS to promote

Quantity Surveying in Canada3 . ICMS General Secretary4 . Chair CIQS Staffing Committee

Thoughts on the future of CIQS & Quantity Surveyors:Being at the forefront of the growth of Professional Quantity Surveying in Canada and the world .

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CIQS – ChairMatthew K. Weber

CIQS – Vice ChairDavid Dooks

CIQS – Past ChairCraig Bye

32 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

CIQS – British ColumbiaIndu ElapathaPresident

About Myself:• Current Employer: The Concost Group• Qualifications: Professional Quantity

Surveyor, National Diploma in Technology (Sri Lanka), City & Guilds of London Advanced Technician Diploma (quantity Surveying)

• Years of Experience: Over 20• Board Involvement: Director, By-Laws

and Communication – CIQS-BC board, 2016/2017

• Interests: Dress making and pattern designing, Playing Oriental music instruments, practising Mindfulness .

My Vision:Provide, with quality, comprehensive quantity surveying services, and maintaining highest levels of professionalism, integrity, honesty and fairness . To endeavour to deliver focused professional expertise and advice in project cost, time and risk management, and strive to ensure that services translate to a better, sustainable, built environment .

Primary Achievements:1 . Finalized the new by-laws for CIQS-BC 2 . Connected CIQS-BC with AACEI as a

collaborative partner3 . Gained wide range of experience

encompassing ICI, heavy construction, TI, and residential development projects working as a cost consultant, construction estimator, and professional quantity surveyor within eight years since move to Canada

Thoughts on the future of CIQS & Quantity Surveyors:With the recent developments in the profession, we would expect to see a rapid growth in the CIQS and Quantity Surveying profession in the next 10–15 years . Areas such as information technology and sustainable construction would favour the growth . We also need to focus on ways to encourage women to join the quantity surveying profession . Overall, quantity surveyors should improve and diversify their roles more to provide greater value to stakeholders .

CIQS – Prairies & N.W.T.Michael GabertPresident

About Myself:• Current Employer: BTY• Qualifications: PQS• Years of Experience: 9• Board Involvement: 4 years in the

positions of Treasurer, Vice President, and currently as President

• Interests: Camping, Fishing, Traveling

My Vision:To be a global leader in providing trusted professional expertise in property and infrastructure development through developing a body of professionals with diverse backgrounds, multidisciplinary expertise and integrated business and technology acumen that will provide a resilient foundation for growth in the future .

Primary Achievements:1 . Obtaining PQS Designation2 . Establishing a successful practice that

is seen as a leader in the industry for service excellence, thought leadership

and a unique culture appreciated by employees and clients

3 . Leasing a number of large scale mandates in the infrastructure and transportation sectors

4 . Using my professional expertise and network to expand into new markets and innovate on services

Current Initiatives:1 . Promoting Quantity Surveying2 . Member representation/Advocacy3 . Increasing membership events in the

Prairies & N .W .T chapter4 . Continuing to advocate for CIQS as a

thought leader in the industry

Thoughts on the future of CIQS & Quantity Surveyors:The top challenges facing our industry include:• Developing a diverse, multi-

disciplinary work force of professionals• Adapting to new technologies and

integrating them into our workforce• Promoting the significance of our

profession in delivering successful projects to ensure we continue to play an influential role in shaping the future of property and infrastructure markets across the country

QS Online Cost Consultants Inc.Halifax, Nova Scotia

p. 902 405-1504 halifax@qsonlinecostconsultants.com

www.qsonlinecostconsultants.com

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 33CLICK HERE to return to Table of Contents

CIQS – OntarioArran BranniganPresident

About Myself:• Current Employer: BRC Restoration Inc .• Qualifications: LL .M ., MBA, PQS• Years of Experience: 20• Board Involvement: Former Vice

President and Current President• Interests: Family, community, our

National heritage, the Canadian construction industry and the CIQS

My Vision:Improving the visibility and value of the PQS and CEC designations throughout the Canadian construction industry, and abroad

Primary Achievements:1 . Led the start-up of a successful

construction company2 . Oversaw annual constructionrevenues in excess of $100 m3 . Executive & Board of Directors

CIQS: Ontario4 . Articles published in the

Construction Economist

Current Initiatives:1 . Improve member engagement2 . Assist in member development3 . Facilitate member networking4 . Lead member success

Thoughts on the future of CIQS & Quantity Surveyors:The CIQS should lead the Canadian construction industry by ensuring its designation holders are the first members appointed to all construction project teams, thus delivering a highly valued and sustainable profession .

CIQS – QuébecWassim SultaniPresident

About Myself:• Current Employer: GLT+• Qualifications: Civil Engineer,

PQS, PMP• Years of Experience: 30• Board Involvement: Director Marketing

CIQS Quebec 2013–2014 . President - CIQS Quebec 2017

• Interests: Community work

My Vision:To collaborate with other professions and organizations in the interest of the construction industry on national and international levels .

Primary Achievements:1 . Worked in Project Management

in different countries2 . Was involved in construction

projects in Quebec, Ontario, Manitoba and Alberta

3 . Master’s degree in construction management

4 . Recognised as expert witness

Current Initiatives:1 . Increase marketing efforts for

CIQS Quebec2 . Increase membership of CIQS Quebec3 . Organize networking activities

Thoughts on the future of CIQS & Quantity Surveyors:1 . Promote CIQS best practice2 . Promote professional development to

ensure quality of services provided by CIQS designation holders

About Myself:• Current Employer: Crombie REIT• Qualifications: PQS, GSC, C . Tech• Years of Experience: 19• Board Involvement: Treasurer,

CIQS – Maritimes (2004), CIQS Representative for Maritimes (2016)

• Interests: Travel, community volunteering, enjoying life with family

My Vision:To have a balanced representation across Canada for all members, regardless of their profession in the industry, and to provide access to education and support for all designation holders .

Primary Achievements:1 . Worked collaboratively as part of a talented

team to secure very large construction projects across Atlantic Canada and Ontario with general contractors

2 . Initiated and led a local volunteer group to raise funds and construct a safe place for children to play and engage in the community

3 . I am very fortunate to have found the career for which I was meant

Current Initiatives:1 . Recognition of Professional

Quantity Surveyors as a defined and qualified occupation within industry, government organizations and internationally

2 . The voice for CIQS – Maritimes

Thoughts on the future of CIQS & Quantity Surveyors:As technology continues to develop and change in our field, we will need to ensure our members have proper education and access to information . The way we learn and the way we do our jobs are always changing . Mentoring future quantity surveyors and adjusting to these changes will be the key to our success .

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CIQS – MaritimesErin BrownlowRepresentative

34 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

CIQS – Newfoundland and LabradorRoy LewisPresident

About Myself:• Current Employment: CAMBRIAN

Management Services Limited• Qualifications: PQS (F) Ret .• Years of Experience: 50• Board Involvement: Past Chair;

Governance Team

• Interests: Family; Monitoring Colleagues; Choral Singing; Gardening (Vegetable)

My Vision:Cross-Canada recognition and application of PQS skills in Industry and Business

Primary Achievements:1 . PQS (F)2 . Gordon Pattison Award of Merit3 . National Coach – Bermuda RFU4 . Member of PCNSO (Choir)

Current Initiatives:1 . Retirement2 . CIQS Governance3 . Monitoring of associates and

member colleagues Thoughts on the future of CIQS & Quantity Surveyors:Full understanding and integration of all PQS skillsets within the CIQS Membership .

Did you know the CIQS is now

on Twitter and LinkedIn? If you want to stay connected and contribute to discussions across Canada, follow us on Twitter or join our LinkedIn Group. We look forward to hearing from you.

Stay Connected

As we are all aware, the ways in which construction projects are costed and reported varies in

different markets, and in different parts of the world, significantly in some instances . These differences make it difficult to compare projects on a global basis world, potentially increasing investment risk .

In May 2015, I represented CIQS as part of a group of professional and not-for-profit organizations from around the world that met at the International Monetary Fund in Washington D .C ., where they officially formed the International Construction Measurement Standards Coalition (ICMSC) . The intent was to form a Coalition that would work collaboratively to develop, through a transparent and inclusive standard-setting process, an international standard for benchmarking, measuring and reporting construction project costs .

During the development of the Standard, ICMS held public consultations,

International Construction Measurement Standards Coalition update

seeking input from professionals and all stakeholders in the built environment to help draft the standard and establish international best practice . Feedback was received from hundreds of organizations and individuals .

The ICMS Standard Setting Committee was comprised of 23 experts including academics, construction cost managers and consultants, project managers, civil engineers, quantity surveyors and information managers and included Mark Gardin and Roy Howes from CIQS . They reviewed all comments received and finalized the International Construction Measurement Standards .

It was my great pleasure to be a part of the official launch of the ICMS Standard that took place at PAQS hosted by CIQS on July 25, 2017 .

ICMS documentation is available through the CIQS and ICMS Coalition websites .

About the authorCraig Bye has been a member of the CIQS Board since 2013 . During this time, he has served as Chair, Vice Chair and Registrar .

He has served as Chair of the CIQS Staffing, Membership, Governance and Business and Long Range Plan Committees . Craig has served on the CIQS-Ontario Board since 2011 serving as President, Vice and Past President, Secretary/Treasurer and Registrar . He is also currently the General Secretary of the International Construction Measurements Standards Coalition . Craig is one of the country’s top Senior Electrical Cost Consultants . He is a Director with Hanscomb Limited, overseeing its Hamilton office .

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 35CLICK HERE to return to Table of Contents

It is generally acknowledged that the productivity of labour and equipment is one of the major risk factors in the

success or failure of a project, but is it possible to evaluate, on an overall basis, how this productivity is affecting the project trend? In this article, the author reviews a methodology for measuring and interpreting the overall productivity of the Project, known as Earned Value Management (EVM) or Earned Value Analysis (EVA) . This methodology is available in most ‘high end’ planning packages .

The Baseline ScheduleIn implementing EVM, the first challenge is the creation of the Baseline Schedule on which the ‘planned labour units’ (normally expressed in hours) and ‘quantities to be executed per activity’ are included for every activity of the Work Breakdown Structure (WBS) . For example – Activity 001: ‘installation of secondary cable trays’ has a planned labour unit of 0 .80 hour/m .

This means that the plan is to spend 48 minutes (60 minutes x 0 .80) for the installation of every metre of secondary cable tray . The same planned labour unit and quantity evaluation is made for all the activities of the WBS so that the ‘total planned hours’ to be spent on the project can be identified . Obviously, it is mandatory to align these hours at the moment that the contractor was chosen .

The Planned S CurveOnce the baseline schedule is defined, and the planned quantities and labour units inserted for each activity, it is possible to create a Planned S Curve, using the formula below:• Planned Hours (PH) = Planned

Quantities x Planned Labour UnitsGoing back to the example, let s consider that the planned quantity was 5,000m of secondary cable trays, so we would have:

Using Earned Value Management for evaluating the overall productivity of a project

• Planned Hours (PH) = 5,000m x 0 .80 hours/m = 4,000 planned hours

Doing the same exercise for all the activities of the project, and cumulating the working hours on a monthly basis using the planning software, it is possible to create an S-Curve for the Planned Hours (PH) . The graphic below is an example of an S Curve forecasting almost 250,000 working hours for an entire project .

The Baseline Schedule – Planned Hours ‘S’ CurveUsually on a monthly basis, the actual progress (or quantities executed per activity) is recorded/monitored . In EVM, the actual progress is measured by the ‘Earned Hours,’ and it is a measure of the quantities installed multiplied by the Planned Labour Units . Using EVM, the simple formula for calculating the progress (EH) using this recorded data is therefore as follows:• Earned Hours (EH) = Actual Quantities

Executed x Planned Labour UnitsContinuing with our example, let s say that the production of ‘secondary cable trays’ during the first month of the project was 400m . Our progress (Earned Hours) would be:• Earned Hours (EH) = 400m x 0 .80

hour/m = 320 hoursMaking the same calculations across all activities in the Schedule for the month, we would have an overall result of the ‘Earned Hours’ . But why is this information needed? Let s compare both formulas:

• Planned Hours (PH) = Planned Quantities x Planned Labour Units

• Earned Hours (EH) = Actual Quantities x Planned Labour Units

Comparing one formula to the other it is clear that the only variable is the difference between the ‘planned’ and ‘actual’ quantities . Therefore if the ‘actual’ quantities installed are more than the ‘planned’ quantities in the reporting period, the Earned Hours will be more than the Planned Hours . Common sense tells us that we would be ahead of our planned progress because we had installed more work than planned . More importantly, if Earned Hours were less than Planned Hours we should be aware that we are behind programme .

The Efficiency Analysis or the Actual Hours (AH) CurveEVM goes a little further than that . The next step is to identify the efficiency of the direct labour or, in other words, verify if the hours spent in relation to the quantities executed are as per planned . The formula for this part of the EVM process is simply:• Actual Hours (AH) = Actual

Quantities x Actual Hours (Actual Labour Units)

The Actual Labour Units can be measured on a daily or weekly basis per activity depending on the level of accuracy required . It should be noted that this analysis requires a significant commitment from the foreman of the project and that an administrator will

36 | CONSTRUCTION ECONOMIST | www.ciqs.org | Summer 2017 To return to Table of Contents CLICK HERE

be required for every 200 workers to record and monitor the data .

Comparing the DataIt is now possible to compare the 3 formulae, as follows:• Planned Hours (PH) = Planned

Quantities x Planned Labour Units • Earned Hours (EH) = Actual

Quantities x Planned Labour Units • Actual Hours (AH) = Actual

Quantities x Actual Hours (Actual Labour Units)

Comparing Planned Hours (PH) with Earned Hours (EH) provides us with an indication of progress . If the EVM analysis shows we are behind schedule then we need to know why and take corrective action . Comparing Actual Hours (AH) with Earned Hours (EH) gives us an indication of productivity . Common sense tells us that if we spend more time than planned on an activity our productivity is below par . Similarly if we spend less time than planned our productivity is above par . If the EVM analysis shows we are below par we need to find out why and take corrective action . In both cases, if we are above par we also need to know why and maintain it . Let s go back to our example, and consider that for the production of 400m of cable trays, we spent 360 ‘Actual Hours’ instead of 320 ‘Earned Hours’ . This gives us a production factor of 89% when ideally we want 100% or more . Not good – we need to know why and implement corrective action .

Bringing all the Data TogetherThe summary of this methodology is presented below in another example on a project with 45,000 man hours to be constructed over a 4 month period . The data recorded in each period is shown in the table below:

Month 1 Month 2 Month 3 Month 4

Planned Hours (PH)

5,000 13,000 25,000 45,000

Earned Hours (EH)

3,000 18,000 35,000 40,000

Actual Hours (AH)

1,000 18,000 30,000 50,000

By plotting this data each month the following graph emerges over time:

About the author

Ricardo Delarue is the Country Manager of Systech International in Latin America, He is Master Civil Engineer and is Certified in Remarkable Knowledge (CRK) in Time & Cost Management by ICEC – International Cost Engineering Council, PHD level . As a Consultant, Ricardo worked in projects in Canada, Costa Rica, Panama, Brasil, Peru, Chile, Scotland, England, Spain, Morocco, Kuwait, Iran, Dubai, Indonesia and China, in the last 35 years . Ricardo

is member of the British SCL – Society of Construction Law . He wrote a book in Portuguese about efficiency, delay & forensic analysis, based on the content of the SCL Delay & Disruption Protocol . His last lecture was in October 2016 at the World Congress of ICEC in Rio de Janeiro, about the same subject as this article .

What we can tell from the data and graph in each month is:

Progress & Delay Productivity

Months PH x EH EH x AH

1 5,000 > 3,000 = delay

3,000 > 1,000 = good

2 13,000 < 18,000 = ahead

18,000 = 18,000 = as planned

3 25,000 < 35,000 = ahead

35,000 > 30,000 = good

4 45,000 > 40,000 = delay

40,000 < 50,000 = bad productivity

In addition:• In Month 1 – the delay and the

good productivity indicates a lack of manpower .

• In Month 3 – indicates the perfect world: good progress and good productivity .

• In Month 4 – indicates a disaster; delay and bad productivity .

Why Use EVM?EVM is informative and allows the Project Manager to make decisions and take corrective actions where needed during the execution of the works . Like all things that are good, EVM comes at a cost, requiring good and accurate administration to be effective . Moreover, poor administration of EVM will result in poor information and inappropriate management decisions and actions . In the author’s experience one EVM Administrator working closely with the site superintendent, will be able to evaluate the daily EVM data for a work force of 200 workers .

“If the EVM analysis shows we are behind schedule then we need to know why and take corrective action.”

Summer 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 37CLICK HERE to return to Table of Contents

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Leslie Rueben White

In memoriamIt is with great sadness that we announce the passing of Leslie R . White on April 28, 2017 in the QE11 Health Sciences Centre at the age of 88 . Born in Halifax, he was the son of Ethel and Leslie R . White Sr . Leslie spent his life building churches, schools and hospitals for the benefit of others . He is survived by his loving wife Jean (McConnell); daughters Lynda Landry (Joe), Dartmouth and Deborah Aggas (Roger), Truro; son William L . White, Vancouver, B .C .; grandchildren Craig, Christopher, Holly, Becki and Robbie; great-grandchildren Clara, Charlie and Henry; and several nieces and nephews .

Leslie was a founding member and the first president of CIQS Maritimes (formerly Nova Scotia Association of Quantity Surveyors) in 1979 . He served a second term as President in 1986-87 and was presented the CIQS Award of Merit in 1992 . He worked tirelessly to keep CIQS Maritimes active during lean years and was well respected in the construction industry . Our heartfelt condolences go out to Leslie’s family and friends .

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