Significant Amendments to Prompt Payment and Public Works Legislation in Alberta: Impact on Consulting Professionals, the Tender Process, and Adjudication

Effective April 1, 2025, prompt payment requirements in Alberta are extended to Public Works projects, and the legislation is amended to provide flexibility to engineers and architects. Amendments relating to the adjudication process leave room for interpretation. Other amendments of interest are discussed below.

The Service Alberta Statutes Amendment Act, 2024 (“Bill 30”)[1] was introduced on November 4, 2024, and received royal assent on December 5, 2024. As of April 1, 2025, Bill 30 has been proclaimed in force.

Bill 30 amends three Alberta statutes that fall under the Ministry of Infrastructure: the Condominium Property Act, the Prompt Payment and Construction Lien Act (“PPCLA”), and the Public Works Act (“PWA”).[2] This article will focus on the changes to the PPCLA and the PWA. The amendments to the Condominium Property Act have not yet been proclaimed in force.

Key Changes to the PPCLA

When introducing Bill 30 for second reading, Mr. Dale Nally, the Minister of Service Alberta and Red Tape Reduction, explained that his government had been working with industry leaders to identify concerns with the PPCLA.[3] Mr. Nally emphasized that these concerns included, “shortfalls in the adjudication process, rigidity around payments to consulting professions like engineers and architects, ambiguity around when a construction contract is complete under the act, and other uncertainties that have caused confusion.”[4]

Consulting Professionals’ Right to Opt Out

One key change to the PPCLA is section 5(2). This section as amended now states, “A member of a prescribed class of professionals acting in a consultative capacity may, in accordance with the regulations, waive any right or obligation under Part 2.” However, it is important to note that section 5(3) states that any waiver under section 5(2) must be set out in a contract or subcontract and be in accordance with the regulations. In effect, this amendment gives engineers and architects the ability to opt out of the lien and holdback provisions of the PPCLA, with the agreement of the other contracting party. This is a reflection of practical difficulties with the application of the PPCLA to professional consulting services, and the fact that, in practice, engineers and architects were rarely subjected to lien holdbacks under the prior Builders’ Lien Act.

Adjudication Time Extended

Regarding adjudication, Mr. Nally emphasized the importance of streamlining adjudication processes to resolve disputes, as opposed to using the Court system.[5] As such, the PPCLA no longer prohibits adjudication where a party has already commenced an action in court with respect to the same dispute; adjudication may proceed concurrent with a lawsuit (section 33.4).

Additionally, prior to the passing of Bill 30, section 33.4(2) of the PPCLA stated that adjudication could not be commenced if the notice of adjudication was provided after the date the contract was “completed.” This provision was criticized as being ambiguous. Section 33.4(2) now indicates that adjudication may not be commenced more than 30 days after the “date of final payment” under the contract or subcontract. The “date of final payment” is defined and “final payment” excludes payment of lien fund holdbacks and payment for work done after the certificate of substantial performance is issued (this amendment supposedly expands the time to commence adjudication, but it is still ambiguous. Adjudication exists to address payment disputes, and so it is likely that in the context of a payment dispute the “date of final payment” might also be the subject of dispute).

Confusingly, the “date of final payment” also excludes, in a case where a certificate of substantial performance is not issued, the date of any payment after the work to be done under the contract or subcontract is capable of completion or correction at a cost of not more than:

• 3% of the first $500,000 of the contract or subcontract price,
• 2% of the next $500,000 of the contract or subcontract price, and
• 1% of the balance of the contract or subcontract price.

In effect, respecting the deadline to commence adjudication, this amendment treats a case where a certificate of substantial performance is not issued the same as a case where it is issued, but without the benefit and clarity of a certificate establishing the date of substantial performance.

Interim Binding Adjudication?

Section 33.6(5) has been amended in an attempt to clear up confusion regarding the interplay between adjudication on one hand, and court proceedings or arbitration on the other. As amended, this section now provides:

“The determination of a matter by the adjudicator is binding on the parties to the adjudication, except where (a) the court directs otherwise, (b) an arbitrator has been appointed by the parties under the Arbitration Act and the arbitrator has made an award in respect of the matter, or (c) the parties have entered into a written agreement that resolves the matter.”

This amendment still leaves room for interpretation. If it is the intent of the legislature that an adjudication decision is only interim binding (i.e. binding on the parties unless or until a final decision is made by a court or arbitrator), it is unfortunate that this is not expressly stated in the legislation.

Key Changes to the Public Works Act

Mr. Nally explained that the changes to the PWA were a result of “interest from industry members in seeing the current prompt payment rules that apply to private-sector construction projects extended to government-owned construction projects.”[6] There are several important amendments that have been made to the PWA.

Public Works Subject to Prompt Payment

In practical terms, the most significant change brought in with Bill 30 is to make public infrastructure projects subject to prompt payment rules. Amendments to the PWA generally mirror the prompt payment provisions of the PPCLA, e.g.:

• “Proper invoices” must be given to the Crown at least every 31 days
• The Crown is required to pay proper invoices within 28 days (or give notice of dispute within 14 days)
• Contractors are required to pay subcontractors the undisputed amount payable no later than 35 days after receiving the subcontractors’ proper invoice

These amendments differ from the PPCLA by expanding the concept of the “proper invoice” under the PWA to include invoices submitted by subcontractors. Under the PPCLA (i.e. for non-public works), a “proper invoice” is defined as an invoice submitted by the contractor to the owner.

Section 14.5(2) of the PWA as amended provides that the prompt payment and adjudication rules do not apply to a “capital asset upkeep contract” or a “special scope contract.” These are contracts that relate to the management or care and maintenance of a capital asset (e.g., facility maintenance and cleaning contracts), or contracts where a contractor provides financing with respect to a public work (e.g., certain Public Private Partnerships).

Additionally, the adjudication procedure under the PPCLA will apply to the PWA. However, the adjudication procedure under the PPCLA will only apply up to the monetary limit set out in section 9(1)(i) of the Court of Justice Act, which is currently $200,000. Interestingly, although in many ways the rules governing adjudication for Public Works are closely in line with the PPCLA, there are exceptions as set out in section 14.3(2). This section stipulates several matters that cannot be referred to adjudication on Public Works projects, including any dispute seeking a determination, order, or other declaration in respect of:

1. The validity of the termination of a contract or subcontract
2. The validity or enforcement of a determination, order or declaration of another decision maker, including a court or an arbitrator
3. Any delay or modification of a construction schedule under a contract or subcontract
4. The achievement of any milestone date under, or the completion of, a contract or subcontract
5. The interpretation of any of the following in a contract or subcontract:

• A relief event
• A designated change in law
• A remedial action
• A force majeure event

It should be cautioned that the timelines for commencing adjudication are also different for Public Works than the corresponding timelines for private projects under the PPCLA. Respecting a Public Works project, section 14.4 states that an adjudication may be commenced any time after delivery of a notice of claim in accordance with the act, until (a) a determination of the dispute to be adjudicated is made by the court; (b) after 180 days have passed since the notice of claim was delivered, or (c) a notice is given under section 15(1) that the Crown intends to pay the claimant the amount the Crown considers proper.

Interestingly, subsection 15(5) provides prompt payment claimants with priority over other creditors on a Public Works project. This section states that a prompt payment claimant “has priority over any person, other than the Crown, having a claim under any other enactment or at common law with respect to any money payable under the contract or subcontract.”

Opening Tenders

Another significant change, aimed at limiting tendering disputes, is found in section 6 of the PWA. Previously, the Crown had to publicly disclose all tender amounts when opening tenders on Public Works projects. This has been amended to require the Crown only to disclose the identity of “compliant” tenderers and the amount of the successful tender.

Right to Withhold Payments

The former version of the PWA stated that the Crown was able to withhold money payable “under the contract” for a contractor’s failure to complete the work or supply material on time. As amended, section 11(3) of the PWA expands the Crown’s right to withhold payment, in the event of a contractor’s failure to complete the work or supply material on time, to include “any” money payable to that contractor, whether it is under the specific contract or not.

Conclusion

The PPCLA and the PWA have been amended:

• allowing engineers and architects to opt out of lien rights and obligations
• expanding prompt payment to Public Works projects (with some exceptions)
• expanding protections to the Crown upon tender opening and respecting rights to withhold payments
• attempting, with questionable success, to clarify the adjudication process

Please contact a member of the McLennan Ross Construction Law group if you have any questions regarding this legislation.