Prompt Payment Awareness ALBERTA Trade Contractors Coalition Prompt Payment Awareness This presentation is presented to all political parties and government agencies to introduce and raise awareness of the ATCC Prompt Payment issues.

Trade Contractors Coalition ALBERTA Trade Contractors Coalition The ATCC met informally before 2014, and with funding from founding members was formed on January 1, 2014 by 10 provincial trade associations. Mechanical Contractors Association of Alberta Sheet Metal Contractors Association of Alberta Electrical Contractors Association of Alberta Alberta Roofing Contractors Association Masonry Contractors Association of Alberta Thermal Insulation Association of Alberta Provincial Glass Association of Alberta Alberta Wall and Ceiling Association Heating Refrigeration and Air Conditioning Contractors of Canada Canadian Automatic Sprinkler Association

A Unified Voice ALBERTA Trade Contractors Coalition ATCC represents: Over 3000 trade contractor businesses and 10s of thousands of employees Involved in over $10 billion of construction projects in Alberta Construction employs approximately 256,000 people in Alberta, 11.3% of the labour market ATCC Facts: Over 3000 trade contractor businesses in Alberta employing over 256,400 people. (11.3% of labour market) Contribute annually to over $1 Billion of construction projects. Construction

Goal  All trade contractors being treated equally and fairly. ALBERTA Trade Contractors Coalition Current Situation Trade Contractors are working independently to solve payment issues. Goal  All trade contractors being treated equally and fairly. Currently, trade contractors are working independently on solving payment issues. It is a widespread issue, many trade contractors are facing issues with receiving payment under 60 days.

Current Situation ALBERTA Trade Contractors Coalition Accounts receivable over 30 days continue to increase 2014 ATCC member survey – 78.6 – average number of days for accounts receivable Overdue accounts averaged $233,820 with gross sales of $6,866,426 In the ATCC survey, average number of days for member’s 2014 A/R grew to 78.6 days. Overdue balances on accounts of more than 60 days held an average balance of $233,819.92 On average gross sales of $6,866,426.62 Trend is only getting worse.

Impact on business ALBERTA Trade Contractors Coalition Trade Contractors are providing short term unsecured project financing that can cycle in the neighborhood $1,000,000,000 – $1 Billion Under existing legislation contractors must continue to work until contract obligations have been fulfilled regardless of payment in arrears. Net effect  reduced cash flow Reduces cash flow, Can’t bid, cant pay employees, cant train, cant maintain (Same as Ontario study) Skills – overall less competitive and more costly for eve Smaller business have a tougher time …

Impact on construction ALBERTA Trade Contractors Coalition Impact on construction Construction rates increase Project costs increase Reduces cash flow, Can’t bid, cant pay employees, cant train, cant maintain (Same as Ontario study) Skills – overall less competitive and more costly for eve Smaller business have a tougher time …

Impact on public spending ALBERTA Trade Contractors Coalition Impact on public spending Good employers may go out of business Fewer competitive bids on every project Unnecessary project delays Higher costs for all publically funded projects Reduces cash flow, Can’t bid, cant pay employees, cant train, cant maintain (Same as Ontario study) Skills – overall less competitive and more costly for eve Smaller business have a tougher time …

Project Funding – Labour ALBERTA Trade Contractors Coalition Project Funding – Labour $10 million public school $9 million is work allocated to trade contractors Of the $9 million, $6 million is labour costs Trade contractors pay employees every 2 weeks Example: Labour January 1 to 14, payed on Jan. 15 T.C. invoice for labour on January 20th TC Receives labour payment in 75 days, April 5th T.C. finances project labour costs Clearly explain how the financing / funding model affects trade contractors. Example - New school - $10M GC fees - $1M $9M Trade Contractors 60% Labour - $6M Paid every 2 weeks. Jan. 1 to 14 – pay then 75 days – do not see money until March 15 (financed) If you have consistently the same $$, it will right itself, no consistency – does not right itself. 40% Materials - $3M Have to pay upfront for all materials and labour (up front) to obtain labour and equipment.

Project Funding – Material ALBERTA Trade Contractors Coalition Project Funding – Material $10 million public school $9 million is work allocated to trade contractors Of the $9 million, $3 million is material costs Trade contractors pay upfront for material. Example: Material installed by T.C. in January T.C. invoices for material on January 20th, T.C. receives payment 75 days later, April 5th T.C. finances project material costs Clearly explain how the financing / funding model affects trade contractors. Example - New school - $10M GC fees - $1M $9M Trade Contractors 60% Labour - $6M Paid every 2 weeks. Jan. 1 to 14 – pay then 75 days – do not see money until March 15 (financed) If you have consistently the same $$, it will right itself, no consistency – does not right itself. 40% Materials - $3M Have to pay upfront for all materials and labour (up front) to obtain labour and equipment.

Prompt Payment Legislation ALBERTA Trade Contractors Coalition Prompt Payment Legislation A legislated payment cycle Interest payment on overdue accounts The right to suspend work Reasonable financial disclosure Payment transparency A regulated payment cycle (not legislated), commitment by A.I. entering contracts, carve out disputed costs The right to suspend work with no replacement workers until finances have been resolved. Reasonable financial disclosure on all public documents.

Prompt Payment Legislation ALBERTA Trade Contractors Coalition Prompt Payment Legislation Mandatory notification of disputed elements Progressive release of holdback Mandatory dispute resolution process Mandatory use of Standard Documents (i.e. CCDC) Financial disclosure for private projects Government write regulations that enforce .. 45 days from invoice approved with mandatory timeframe of approval. 15 days to approve, 45 days to pay – If not –lien process will be initiated. Create a good public policy that would treat fairly, ensure private contractors follow suit. Clarification that we do not want someone to arrive on our jobsite and take on our work. Not a problem with Surety.

Moving Forward … ALBERTA Trade Contractors Coalition The ATCC brings this issue to your attention to: Enlighten you on this serious construction trade issue Seeking your support, guidance and Your active pursuit to resolve this issue on behalf of your constituents. By regulation If not by ethics and legislation ** Look at bylaws, partnerships **

Concluding remarks Questions / Comments Thank you ALBERTA Trade Contractors Coalition Concluding remarks Questions / Comments Thank you