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SaskaBoom 2.0 is just a bit more evident now that we’ve seen the mid-year accounting of the provincial government’s income and expenditure.

The big story emerging from the Q2 summary is on the revenue side.

Tax revenues – income and sales levies – rose sharply, more than $600 million ahead of the budgeted estimate only six months ago. Add to that a dramatic rise in resource royalties. They were up $669 million. All other income streams – Crown corporation profits, transfers from Ottawa and other own-sources – were also ahead of estimate.

On the downside, spending on healthcare due to COVID was up and the drought triggered payments of $2.4 billion directly to farmers from the provincial treasury. That cash flow will no doubt result in further sales tax revenues down the road, when the bills for crop year 2021 are paid.

The underlying story in this, though, is the upward trend line. Droughts, while financially painful, tend to be short-lived (the Dirty Thirties excepted) so the next 18 months should be interesting. And here’s what to watch.

Government accounts are an indicator of an economy’s direction but they are a lagging indicator. When tax revenues, for example, are rising, it signals growth in income levels across the economy. But it can take a while for the numbers to show up. Consider this: A dollar of income earned in January is included in the annual total which is tallied at the end of December of that year, and then reported on a tax return the following April. So, that dollar generated in January doesn’t show up in the government’s books until at least 16 months after it is earned … a lagging indicator. Technically, it is a bit longer, but you get the drift.

Resource revenues tend to have shorter reporting cycles but are still a trailing indicator.

Nonetheless, what the mid-year report with a $2.4 billion increase in revenue compared to the spring budget shows is that the boom has been entrenched for months. We’re just getting the numbers to define its magnitude now.

Many in commodity-based industries in this province – sectors such as mining – operate on a theory that commodity cycles tend to last 15 years … seven up, seven down and one in transition. History tells us that the last downturn came in November of 2014, exactly seven years before the Finance Minister tabled her mid-year report.

In other words, we’re in the early stages of a cycle that shifted our economy from the doldrums to the upcycle and now we have the numbers to prove it. Enjoy the ride. 

The boom has been entrenched for months. We’re just getting the numbers to define its magnitude now.

Interested individuals are invited to register to observe public hearings

Have you ever had a Saskatchewan Workers’ Compensation Board (WCB) claim go sideways and upon inquiry, you were told it was adjudicated with reference to specific legislation, policy and/or procedure? Are you frustrated with the Saskatchewan WCB policies and/or legislation?

Injury Solutions Canada helps employers with claims they are disputing. We often fight claims where legislation, policy or procedure do not make sense or were not applied correctly. Currently, we are preparing to participate in the next Workers’ Compensation Act Committee of Review, which will hold public hearings in early 2022.

The Saskatchewan government establishes a WCB Committee of Review every five years. The committee may inquire into any and all aspects of the WCB’s operations. It can recommend amendments to legislation or changes to the WCB’s policies or practices. However, even though recommendations are made, the Saskatchewan Workers’ Compensation Board does not necessarily have to implement them. In fact, there have been some items recommended during every Committee of Review that were never implemented.

Nevertheless, the Committee of Review is an opportunity for employers and/or their industry organizations to be heard. An example of the type of claim we often run across is when two employers are involved in an auto accident. When fault is assigned, the employer not at fault often still bears their employee’s claim costs, even though they were not at fault. This type of situation is often hard to understand. Why should an employer, who did everything right, be held financially responsible for claims costs associated with an accident they did not cause? 

There are lots of these examples that punish innocent employers for the fault of another. Is there a policy that makes you absolutely crazy and you cannot believe it is an accepted policy? Now is the time to have your say!

Public submissions to this Committee of Review were invited; but unfortunately, due to the short submission window, many people may have missed this opportunity. Submissions were due by Dec. 15, 2021. Public hearings will be held by the Committee of Review in early 2022, and interested individuals may register to attend as an observer. Locations, dates, times and format of the public hearings will be confirmed online. 

If you have concerns and have missed the submission deadline, make them known to your association or the Committee of Review itself, at wca-cor@gov.sk.ca or call 1.866.919.1920 (toll-free across Canada). 

Most industry associations, as well as business associations, already have time slots to speak. Even though the deadline may have passed for presentations, you can still reach out to them and be heard. They may even include your input in their presentations to the Committee of Review. 

Information and updates regarding Committee of Review reports are included in the Workers’ Compensation Board’s annual online report. Now is the chance to influence change and have your say about the Saskatchewan Workers’ Compensation Board. 

Explore common themes that define the foundation of leadership

For the past decade, I have worked internally with leaders from some of Saskatchewan’s largest organizations and engaged in countless discussions on the topic of leadership. Each conversation has been fulfilling and unique and left me increasingly curious about how we can continue to develop our collective leadership capability. 

Yet, despite all the unique perspectives, several common themes have emerged that have shaped my core beliefs about leadership. These beliefs guide my messaging in my new role as an HR consultant and leadership speaker and reflect the contributions of the amazing leaders I have had the benefit of connecting with over my career.

1. Leadership is about personal empowerment

There are thousands of definitions of leadership, and I have spent far too much time (and drank far too many cups of coffee) seeking the perfect definition. At one point I had the hubris of thinking I could create my own, before giving up entirely on the task and simply focusing on the actions and behaviours of leaders that have inspired me the most. And upon that reflection, what become clear is that the most impactful leaders I have encountered lead from a place of personal empowerment.

My favourite definition of empowerment comes from Bob Anderson, founder and CEO of the Leadership Circle. He simply defines empowerment as, “Learning how to create what matters most in our life through our work.” What I appreciate most about this definition is that it encourages me to embrace the perspective that it is our responsibility to create what matters in our lives. So often I find leaders thrown off centre and feeling victim to external circumstances. Running from one fire to another, exhausted and joyless. Yet, our rational selves understand that the only thing we can truly control is our own actions and choices. The best leaders find the resiliency and strength, regardless of their circumstance, to regain control over their capacity to bring a desired future to life.

Take ownership and accountability over your actions and behaviours, and just watch as the organization begins to shift around you. It is truly a powerful thing.

2. Culture change doesn’t have to be complicated

If you work for an organization for any reasonable length of time, you inevitably will have experienced some kind of “cultural transformation” effort by the organization. Perhaps it was the unveiling of new corporate values, a new leadership competency model, or maybe a shift in organizational strategy. At the heart of these efforts is a change management strategy (or in many cases an absence of one), which is focused on changing the culture of the organization. And, in almost every case, these initiatives fail.

So, why do culture change efforts often fail? Through my discussions with leaders, I would argue that we make culture change out to be far more complicated than it needs to be. The most commonly quoted definition of culture is simply, “the way we do things around here.” Culture is the collective actions and behaviours of the people within it. In theory, if we want to change the culture, it starts by changing ourselves.

The problem is that we often focus on factors outside of our control, such as other people’s behaviour, judgments on executive leadership decisions, or generally anything that absolves us of the responsibility to take ownership over our own contributions to the culture. Coming back to the first point on empowerment, leadership is all about taking responsibility for how our actions and behaviours influence our outcomes. To this day, I have yet to meet an influential leader that didn’t take full responsibility for how their actions and behaviours contribute to the current state of an organization’s culture. Ultimately, our actions and behaviours are the only things we can control. Take ownership and accountability over your actions and behaviours, and just watch as the organization begins to shift around you. It is truly a powerful thing.

3. It all comes down to values

We seem to be living in the age of authenticity, with countless amounts of new content emerging on the topic. Authenticity seems to be the emerging leadership development topic trend, based on a positive shift to improve cultures of inclusivity, psychological safety and personal belonging. However, I seldom see practical guidance on how people can develop the ability to show up more authentically in their work environments. To me, this is where personal values come in.

At the heart of my personal purpose is helping people gain clarity over their personal values, which results in people gaining a sense of empowerment over their lives. I am a big believer in personal values, as I see them as our personal criteria which guides our actions and decisions. Consider your personal values your blueprint for authenticity. Yet, most people haven’t taken the time or haven’t known how to gain clarity over their personal values. When our values aren’t clear, we are vulnerable to being thrown off centre by external forces outside our control. It might be production demands, a toxic co-worker, an overly demanding boss or any number of factors. The reality is that if we haven’t taken the time to clearly identify who we are at our best, we can easily show up inauthentic to who we truly are. Therefore, if you want to be more authentic, start by defining your values.

I also believe organizations can, and should, play a meaningful role in facilitating processes for people to gain clarity over their personal values. The best organizations reverse the trend of attempting to assimilate people to a set of generic organizational values. Instead, they facilitate a process for people to identify their personal values first and then connect them to the collective values of the organization. In doing so, organizations demonstrate a deep respect for the individuality of each unique person, while aligning collectively on a shared purpose.

Think about the best leaders you know – the ones that have made an immeasurable impact on your life. I am willing to bet at the heart of their leadership is a strong sense of personal empowerment, responsibility over their behaviours and clear personal values guiding their actions. These are just a few of the lessons I have been grateful to learn from the amazing leaders across the great province of Saskatchewan – and these lessons continue to guide how I show up in support of others. Thank you to each of you for your leadership. 

Brett Elmgren, CPHR is the president of Axom Leadership Inc. and can be reached at brett.elmgren@axomleadership.com.

This article was previously published in the Fall/Winter 2021 edition of HR Saskatchewan magazine, the official publication of the Chartered Professionals in Human Resources (CPHR) Saskatchewan, and is reprinted with permission.

Saskatchewan’s prompt payment legislation will be in force in March 2022

Introduction

The Government of Saskatchewan has announced that the Builders’ Lien (Prompt Payment) Amendment Act, 2019 (the “Act”) will be proclaimed in force on March 1, 2022. The Act received Royal Assent in 2019, but was not immediately proclaimed in force due to logistical and administrative preparations that had to be set in place.¹ The Act is accompanied by a set of regulations, The Builders’ Lien Amendment Regulations (the “Regulations”), that offer detail and elaboration to many of the new provisions. The legislation has two main purposes:

1. Ensuring the prompt payment of contractors and subcontractors; and
2. Establishing an efficient adjudicative process to resolve disputes between owners, contractors and subcontractors.

Key features – Prompt payment and invoices

The Act requires that owners pay contractors within 28 days of receiving a “proper invoice.”² It also requires that contractors pay their subcontractors who supplied services or materials that were included in the “proper invoice” within seven days of receiving payment from the owner.³ The same seven-day deadline applies to payment of subcontractors by subcontractors.⁴ A “proper invoice” is an invoice that satisfies certain conditions outlined in s. 5.1 of the Act and must be rendered to the owner on a monthly basis unless the contract states otherwise.⁵

If a payor disputes an invoice, they may refuse to pay all or a portion of the amount payable under the “proper invoice.” The payor must, however, give written “notice of non-payment”to the payee no later than 14 days after receiving the “proper invoice” and must “[specify] the amount of the proper invoice that is not being paid and [detail] all of the reasons for non-payment.”⁶The dispute may then be resolved through “adjudication.” Any undisputed amount is to be paid within the 28-day period.

If a contractor or subcontractor does not receive payment from the level above, they must still pay their subcontractor(s) within defined deadlines,⁷ unless they undertake to refer the matter to adjudication within 21 days, after giving the Notice of Non-Payment to the subcontractor(s).⁸

Key features – Exemptions

The Regulations exempt the following professionals from the prompt payment and adjudication regime:

1. Persons supplying services or materials in relation to a mine or mineral resource (other than oil and gas);
2. Architects, engineers and land surveyors; and
3. Persons supplying services or materials in respect to an improvement related to infrastructure for the generation and distribution of electrical energy by SaskPower.⁹

Key features – Adjudication

The Act establishes an adjudicative body and procedure to resolve certain disputes between owners, contractors and subcontractors. This avenue is intended to offer an efficient and cost-effective means for dispute resolution.

The adjudicative regime is to be administered by the “Adjudication Authority” (also referred to as the “Authority”), which is to be designated by the Ministry of Justice. The Saskatchewan Construction Dispute Resolution Office (SCDRO) has been designated as the Adjudication Authority. To serve as an adjudicator, the Regulations require that an individual must have 10 years of relevant experience in the construction industry and must have completed a training program specified in s. 5.43 of the Regulations, in addition to other conditions.¹⁰

The disputes that are covered by this regime include: valuation of services or materials, payment disputes, disputes about the failure or refusal to issue a certificate of substantial performance and anything else the parties agree to address.¹¹ Parties may set their own adjudication procedure in the contract or subcontract, so long as the procedures comply with the requirements of the Act. If the parties did not agree to a procedure, or the procedure to which they agreed does not meet the requirements of the Act, then the procedure set in the Act and Regulations will apply.

The adjudication process includes five steps:

1. The Notice of Adjudication is served.¹²
2. An adjudicator is appointed, either by consent of the parties or by the Authority.¹³
3. Within five days after the appointment of the adjudicator, the moving party must provide to the adjudicator and the other party a copy of the notice, contract or subcontract, and any other documents they wish to rely on during the adjudication.¹⁴
4. Within the following five days, the responding party may serve the adjudicator and the moving party with a written response and any documents they wish to rely on.¹⁵
5. The deadline for the adjudicator’s determination is 30 days after receiving the moving party’s documents,¹⁶ although this deadline may be extended.¹⁷ The determination must be delivered in writing and, if filed in court, is enforced like a court order.¹⁸
6. Each party to an adjudication is to bear its own costs unless the adjudicator orders otherwise.¹⁹

An application to the Court to set aside the adjudicator’s determination may be made within 30 days of the determination,²⁰ and can be made on various grounds enumerated in the Act. Those grounds include a reasonable apprehension of bias on the part of the adjudicator, the contract or subcontract is invalid, and that the procedures followed in the adjudication did not comply with the procedures to which the adjudication was subject pursuant to the legislation.

Key takeaways

The implementation of Saskatchewan’s prompt payment legislation has been highly anticipated by the province’s construction industry. The objective is that the new regime will enhance fairness in the payment of contractors and facilitate access to efficient adjudication in the construction industry. Whether those objectives have been attained in other jurisdictions where prompt payment regimes have already been effected, such as Ontario, is not yet clear. Time will tell the extent to which the prompt payment regime will impact the construction industry in Saskatchewan, and the extent to which owners, contractors and subcontractors will develop new practices in order to comply with the regime. 

The team at Miller Thomson has a reputation for providing practical, timely and responsible advice and services to our clients.  If you have any questions or need assistance, please do not hesitate to reach out to one of our experienced construction law lawyers. For inquires contact Khurrum Awan, a partner in the Regina office of Miller Thomson LLP, kawan@millerthomson.com, or Amir Aboguddah, at aaboguddah@millerthomson.com.

Disclaimer: This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice.

References

1. Similar legislation has been enacted in Alberta (the Builders’ Lien (Prompt Payment) Amendment Act, 2020, SA 2020, c 30). This legislation has received Royal Assent but a date for proclamation into force has not yet been set, and the accompanying regulations have yet to be released.
2. The Act, s. 5.4(1).
3. The Act, s. 5.5(1).
4. The Act, s. 5.6(1).
5. The Act, s. 5.3(1).
6. The Act, s. 5.4(2).
7. The Act, ss. 5.5(4) and 5.6(4).
8. The Act, ss. 5.5(5) and 5.6(6).
9. The Regulations, ss. 5.1 and 5.3.
10. The Regulations, s. 5.41(1).
11. The Act, s. 21.21(1).
12. The Act, s. 21.4(1).
13. The Act, s. 21.32(1).
14. The Act, s. 21.41(1).
15. The Regulations, s. 5.61(1).
16. The Act, s. 21.5(1).
17. The Act, s. 21.5(2).
18. The Act, s. 21.71(1).
19. The Act, ss. 21.6 – 21.61.
20. The Act, s. 21.62.

What heavy construction operators need to know about owner-controlled insurance programs

Although owner-controlled insurance programs (OCIP) have been around for decades they have not been used very often in Saskatchewan, despite their many benefits.

“When structured properly, an OCIP best protects the interests of everyone on the project,” said Greg van Ginkel, a managing partner and the construction leader at EQUA Specialty Risk Partners Corporation (EQUA).

An OCIP is a set of insurance policies that applies to an entire construction project and protects all parties involved. This begins from the date of first design, continues through the construction period, and can be extended even after the project has been completed.

“Using OCIP is an intelligent approach to insuring a project, because it has a number of benefits for contractors and the project owners,” continued van Ginkel. “A few of the most notable benefits include cost efficiency, the reduction of administrative delays, an increase in the consistency of safety requirements on-site, coverage for critical equipment, and the protection for contractors from any future premium resulting from an adverse claims history.”

Contractors who have a strong understanding of risk and risk allocation, including OCIP, are better able to protect themselves and project owners. OCIP can be a real competitive advantage for contractors and can help to protect their relationships and brand. Private industry owners working with insurance professionals who are well versed in construction insurance are very likely to maintain this form of coverage for all parties.

Typically, on larger projects, van Ginkel said that owners want a specific type of insurance that contactors may not carry, such as environmental liability or professional liability. Subcontractors are also impacted because they need to increase their insurance coverage to meet the specifications for a project. This drives up their costs and reduces their competitive advantage, since they might not be able to purchase insurance as efficiently as their competitors.

For smaller contractors, this increased coverage requirement becomes problematic because they do not carry it as part of their operational insurance program. The result can be a significant minimum premium for a contract with a low dollar value.

“For a contractor, OCIP puts them on a more even playing field when bidding for projects, as there is one less subjectivity to worry about. The owner can also buy coverage more efficiently because it is purchased on the value of the project or the value of their portfolio of projects. From a cost perspective, OCIP eliminates that stacking of insurance costs for all subtrades that require certain limits,” said van Ginkel.

How OCIP works

For example, a mid-sized project could involve 50 subtrades, of which 45 carry $2 million of general liability insurance. If the project owner requires each to maintain $10 million liability, all subtrades would likely need to buy additional limits for this project. With a minimum premium of $1,000 per million, the costs would be $8,000 x 45 subtrades for a total of $360,000. With OCIP, the owner may be able to buy coverage for everyone involved in the project for $50,000 or less, while providing consistent coverage for all contractors, subcontractors and suppliers.

“With OCIP, contractors are covered under that program in a primary way and, if stated in their own insurance policies, have additional coverage should the owner’s program not be sufficient,” explained van Ginkel. “Contractors don’t have to pay for this coverage and any losses won’t be connected to their records. It’s important to maintain your own insurance on a contingency basis and, with OCIP in place, you will pay much less for it.”

He also noted that contractors often suffer the consequences of workmanship, material or even design defects by having to redo the work, through project delays, or even cancellations. With OCIP, everyone is protected and even design defects can be covered.

There are numerous benefits for owners including being able to specify insurance requirements without precluding any contractor from bidding; front-end risk allocation in the contract so all parties know the extent of their acceptance of risk; and higher limit availability and consistent coverage for all parties. Owners can also cover risks that may not otherwise be considered, such as a delay in start-up or an extra expense if critical contractor equipment is damaged.

For contractors, there are the benefits of having less risk management administration in determining whether parties have appropriate insurance coverage; there is coverage assurance for years after final completion (recourse falls to OCIP rather than their own practice policies and there is no record on their files); claim handling consistency which can help expedite the claims process; and the claims loss record does not become attached to any single party, which prevents the future syndication of operational insurance from being hindered for any of the parties involved.

OCIP benefits

One of the most notable benefits, according to van Ginkel, is a streamlined administrative process.

“Typically, before contractors are allowed on a project site, they must provide proof of having obtained the insurance required within their contract. As a result of inconsistency, showing certificates to comply with specs can result in a horrendous amount of administrative work and delays. OCIP eases this burden since less contract compliance for insurance is required.”

There is also an impact on safety. With consistent measures in place for all contractors, the overall team is safer due to consistent safety requirements (which are usually dictated by the insurer).

Van Ginkel said there is really no downside to a contractor being covered under an OCIP as the coverage under the OCIP is the first to respond to a claim. However, the contractor’s insurance professional should be well versed in how to protect the contractor for potential gaps.

“As a general statement, more sophisticated and larger contractors will be able to address these potential gaps. Smaller contractors may have difficulty addressing these potential gaps because the insurance companies providing coverage to smaller contractors or subcontractors may not understand the concept of OCIP. It is critically important to work with a broker who understands the difference between first- and thirty-party policies and exclusions,” he concluded. 

Construction activity in Saskatchewan has remained at historically high levels, even during the COVID-19 pandemic. There were 151,282 requests for line locates in 2020, a close to seven per cent increase from the previous year, and about 700 contacts with underground facilities.

The Saskatchewan Common Ground Alliance (SCGA) and its 95 members – which include our province’s pipeline and utility companies – continue to advocate for Click Before You Dig and Dig Safe Best Practices.

We want to be sure those frontline workers, safety managers, emergency personnel and the general public are aware of the importance of working safely around underground and overhead infrastructure.

At the SCGA we often hear, “What can I share at a safety meeting?” or, “What is a good topic to discuss during our tailgate meetings?”

The SCGA has a number of videos prepared for anyone’s use. Why not check out the SCGA YouTube page and choose a playlist? You’ll find great content for any safety-related meetings.

If you are interested in finding out more about the SCGA and its membership benefits, visit scga.ca or find us on social media at SCGA (@SaskCGA) on Twitter, SK Common Ground Alliance on Facebook, or Saskatchewan Common Ground Alliance: Overview on LinkedIn.