Quebec expects to introduce prompt payment legislation for public building construction within a year.
In April, addressing a public accounts committee meeting, Quebec finance minister Carlos Leitao, chair of the Treasury Board, said the province would be introducing new prompt payment rules by the spring of 2017.
Leitao said he was responding to recommendation number 15 in the report of Quebec’s Charbonneau Commission on corruption in the construction industry.
As reported in the January issue of P&HVAC, the Commission listed four reasons that slow payment draws organized crime into construction. Firstly, site supervisors must approve progress payments, giving them considerable power to intimidate contractors.
Secondly, it restricts competition because contractors that don’t have the cash flow to pay their employees and suppliers while waiting for payment can’t bid on projects where they know payment is going to be slow.
In 2013 over three-quarters of contractors refused to bid on a tender because they feared payment problems, reported the Commission. And it penalizes smaller contractors that don’t have easy access to credit.
That leads to the third problem for the Commission. Contractors end up seeking funding from non-traditional sources, which can bring organized crime into construction projects. Fourth, contractors include these higher borrowing costs in their bids, which causes a significant problem for government in that, among other things, it drives up the cost of public projects.
The commitment applies only to public sector projects. The Quebec Coalition Against Payment Delays has also been fighting for prompt payment in private sector contracts. However, it’s complicated. Private contracts come under civil law and different government ministries.