Canada: Contract Strategy

Selecting the right construction contract model for a particular project can be the difference between harmony and discord among project participants, and the difference between the financial success and failure of the project. Too often, we see litigation arise because of different expectations or understandings as to risk allocation, which is primarily a factor of contract strategy.

Contract Models

What does contract strategy mean? It is the selection (and perhaps customization) of the contract model or models to be employed on a particular construction project. For example: 

  1. The Design-Bid-Build model, often described as the “traditional” model of construction, involves an owner contracting with one or more professionals for project design, followed by a competitive process to engage a general contractor, and then a separate contract between owner and general contractor. 
  2. The Design-Build model, on the other hand, involves the owner contracting a single entity (Design-Builder) to complete design, procure the necessary services and materials, and complete construction. 
  3.  The Construction Management model involves the owner contracting a construction manager to handle construction management activities (and often procurement) on the owner’s behalf. Construction Management is further broken down into “construction manager as agent” and “construction manager at risk” contracting models.
  4.  Integrated Project Delivery (such as CCDC 30) is an alternative contract model in which the owner contracts with other project participants (for both design and construction) in a collaborative team with shared risks and rewards. 

These are several of the most common contract models, but there are numerous potential variations on each of these models. In addition to industry standard forms, there are of course infinite variations possible when owners or contractors introduce custom contracts, or unique supplemental conditions to the standard forms. In addition to the question of contract strategy as between owner and contractor, there is a similar (but usually more constrained) question of contract strategy for contractors and construction managers in their contracts with trade contractors. Whether we are talking about a prime contract or a subcontract, it is worthwhile noting that the contract pricing mechanism (i.e. stipulated price vs unit rate vs cost plus fee, etc.) is an important part of the contract model, but the question of contract strategy is much broader than just the selection of the pricing mechanism.

Risk Allocation

The allocation of responsibilities and risks varies significantly among the different contract models. For example, in a Design-Bid-Build model where the contractor is engaged on a stipulated price basis, the owner is generally contracting to obtain a completed project within the allocated time, for the agreed price. But the owner carries risks associated with accurately defining project scope and specifications, and associated with potential gaps or changes in design. With a Design-Build model, the owner carries relatively less risk associated with the definition of project scope or incomplete design, but the owner gives up a degree of certainty as to project price and schedule. Key factors which affect the selection of the right contract model include complexity of the project, the capabilities of each project participant, the owner’s objectives and priorities, project constraints (time, budget, etc.) and particular project risks.

Often Overlooked

Too often contract strategy is not given the consideration it deserves. An owner or contractor may use a form of contract recommended to them, or employed successfully on some past project, without thinking about the particular risk profile of the current project and the relative advantages of different contract models. We have seen many cases where disputes arise due to a fundamental difference of expectations, or a misunderstanding by one of the parties, regarding the contractual allocation of risks. This may result from a front-end failure to consider the suitability of the chosen contract model to the project at hand, or a simple misunderstanding of the risk allocation inherent in the chosen contract model.


There are resources available to assist owners and contractors alike with selecting the right contract model for their project. For example:

  1. CCDC 10 provides a good discussion of the suite of CCDC contracts and some of the key risk allocation issues under each one. This document is valuable both as a primer on the subject of contract strategy and as a guide for selecting among the alternative forms offered by CCDC.
  2. For a more advanced discussion of contract strategy considerations and best practices, the Construction Owners Association of Alberta has published a Contracting Strategy Best Practice, including useful tools such as a work process flow diagram for developing a project contract strategy.

Although the COAA Contracting Strategy Best Practice is targeted at owners on major industrial projects, both owners and contractors on any substantial construction project can benefit from this resource. I had the pleasure of participating in the development of this guide for a short time as a member of the COAA Contract Strategy Committee. I am thankful to the other committee members, all of them experienced contract management professionals for major construction owners and contractors, for allowing me to learn more than I was able to contribute. For better or worse, lawyers are rarely engaged in a project before the contract model has been chosen.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions