The Government of Alberta announced a new prompt payment framework, saying it ushers in payment timelines and a dispute resolution process for Alberta’s construction sector.
Formerly known as the Builder’s Lien Act, the Prompt Payment and Construction Lien Act is now in force. The new act creates rules for the timing of payments and sets out a streamlined adjudication process for disputes related to payment or work performed as an alternative to court.
“Albertans in the construction industry have been advocating for prompt payment legislation for nearly 10 years, so I am excited to celebrate this important milestone. I am proud of the work that Alberta’s government did, collaborating over the last three years with members of the construction industry to develop and pass legislation that will protect jobs and unlock cash flow in this multibillion-dollar industry that employs hundreds of thousands of Albertans,” said Nate Glubish, Minister of Service Alberta.
Prompt payment is introduced by mandating owners to provide payment to their contractors within 28 days of receiving a proper invoice for construction services and requires that those contractors who receive payment from an owner subsequently pay their subcontractors within seven days.
“Payment practices in Alberta have deteriorated over many years. Accounts receivable frequently in excess of 60 days shifts the burden of project financing to contractors and subcontractors. This legislation provides certainty of regular payment for work properly performed and invoiced. The new prompt pay provisions will play an essential role in keeping cash flowing through the life of a construction project. Annual release of lien holdbacks will also free up cash much earlier than under the past legislation,” said Terry Doucette, senior vice-chair, Alberta Construction Association.
The new act applies to all private construction contracts in Alberta created on or after Aug. 29, 2022. Current contracts that extend past two years must become compliant with the new rules by Aug. 29, 2024.
“As general contractors, we are prepared to implement prompt payment for our subcontractors and suppliers, ensuring we continue to lead by example in the industry. We look forward to the successful implementation of prompt payment and adjudication in Alberta, which would not have happened without this partnership between industry and government,” said Jason Portas, Alberta chair, General Contractors Alliance of Canada.