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Questions and Answers
What does WSIB provide to workers who are injured at work?
What does WSIB provide to workers who are injured at work?
Employers are not required to pay any premiums once registered with the WSIB.
Employers are not required to pay any premiums once registered with the WSIB.
False
What must employers submit annually to the WSIB?
What must employers submit annually to the WSIB?
Annual reconciliation statement
A current WSIB clearance certificate has to be provided by the contractor to the __________ with each progress payment.
A current WSIB clearance certificate has to be provided by the contractor to the __________ with each progress payment.
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Match the following WSIB roles with their descriptions:
Match the following WSIB roles with their descriptions:
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What might happen if an employer fails to comply with WSIB registration?
What might happen if an employer fails to comply with WSIB registration?
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What is the consequence of making a false statutory declaration in Canada?
What is the consequence of making a false statutory declaration in Canada?
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A Schedule of Values (SOV) is used to represent the total contract amount in various categories.
A Schedule of Values (SOV) is used to represent the total contract amount in various categories.
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What is the purpose of the Schedule of Values in a construction project?
What is the purpose of the Schedule of Values in a construction project?
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Which of the following is NOT a document required for progress payments to start?
Which of the following is NOT a document required for progress payments to start?
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A statutory declaration is only required during the first payment of a contract.
A statutory declaration is only required during the first payment of a contract.
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What is the primary purpose of a statutory declaration provided by a contractor?
What is the primary purpose of a statutory declaration provided by a contractor?
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The WSIB is responsible for regulating employment standards in Ontario.
The WSIB is responsible for regulating employment standards in Ontario.
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What is required to demonstrate compliance with workplace safety insurance in Ontario?
What is required to demonstrate compliance with workplace safety insurance in Ontario?
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The _____ is money held back by the owner from each progress payment submitted by the contractor.
The _____ is money held back by the owner from each progress payment submitted by the contractor.
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Match the holdback types with their descriptions:
Match the holdback types with their descriptions:
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The Ministry of Labor, Immigration, Training and Skills Development in Ontario requires a completed _____ for constructors engaged in construction.
The Ministry of Labor, Immigration, Training and Skills Development in Ontario requires a completed _____ for constructors engaged in construction.
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Who is responsible for providing a statutory declaration?
Who is responsible for providing a statutory declaration?
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Match the following documents with their purposes:
Match the following documents with their purposes:
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Which agency is responsible for the WSIB in Ontario?
Which agency is responsible for the WSIB in Ontario?
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A statutory declaration helps to preserve lien rights under the Construction Lien Act.
A statutory declaration helps to preserve lien rights under the Construction Lien Act.
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What is the percentage of statutory holdback mandated by the Construction Lien Act?
What is the percentage of statutory holdback mandated by the Construction Lien Act?
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MOL Form 1000 must be present at the project site while work is ongoing.
MOL Form 1000 must be present at the project site while work is ongoing.
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List one mandatory document required by the General Contractor before starting work.
List one mandatory document required by the General Contractor before starting work.
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What is the primary purpose of the Schedule of Values (SOV)?
What is the primary purpose of the Schedule of Values (SOV)?
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The Schedule of Values can only be used for final payments at the end of a project.
The Schedule of Values can only be used for final payments at the end of a project.
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What can be done if changes are made to the scope of work during a project?
What can be done if changes are made to the scope of work during a project?
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Front loading gives undue advantage to the __________.
Front loading gives undue advantage to the __________.
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Match the purposes of the Schedule of Values with their descriptions:
Match the purposes of the Schedule of Values with their descriptions:
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What is a disadvantage of front loading?
What is a disadvantage of front loading?
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The Schedule of Values is used solely as a billing document.
The Schedule of Values is used solely as a billing document.
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How does the Schedule of Values assist in progress tracking?
How does the Schedule of Values assist in progress tracking?
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The certificate of substantial completion is issued before the work has been completed.
The certificate of substantial completion is issued before the work has been completed.
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What is the percentage holdback period that starts after the substantial completion certificate is issued?
What is the percentage holdback period that starts after the substantial completion certificate is issued?
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The percentage of substantial completion required to stop potential __________ is essential.
The percentage of substantial completion required to stop potential __________ is essential.
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How much is the contractor expected to receive for progress payments?
How much is the contractor expected to receive for progress payments?
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Match the following contract amounts with their corresponding work required to be done for substantial completion.
Match the following contract amounts with their corresponding work required to be done for substantial completion.
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What is the total amount that has been paid to the contractor for a waterline project valued at $3 Million?
What is the total amount that has been paid to the contractor for a waterline project valued at $3 Million?
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The owner pays the general contractor directly through a cheque after payment approval.
The owner pays the general contractor directly through a cheque after payment approval.
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What is a primary reason for using unit prices in construction contracts?
What is a primary reason for using unit prices in construction contracts?
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Front loading is a bidding practice where contractors assign lower values to items likely to increase in scope during a project.
Front loading is a bidding practice where contractors assign lower values to items likely to increase in scope during a project.
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What document is typically made by the contractor in the form of a written sworn affidavit?
What document is typically made by the contractor in the form of a written sworn affidavit?
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Unit prices are invaluable during ______ orders to calculate additional costs based on unit rates.
Unit prices are invaluable during ______ orders to calculate additional costs based on unit rates.
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Match the following terms with their correct descriptions:
Match the following terms with their correct descriptions:
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What does a contractor submit to receive progress payments based on completed work?
What does a contractor submit to receive progress payments based on completed work?
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Unit rates can simplify the negotiation and processing of change orders.
Unit rates can simplify the negotiation and processing of change orders.
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Why are contractors vigilant against front loading during the assessment of schedules?
Why are contractors vigilant against front loading during the assessment of schedules?
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Study Notes
Lecture 7: Progress Payments & Construction Site Entities
- Lecture objectives include familiarizing students with progress payment requirements, the Construction Lien Act, and handling progress payments on construction sites.
- A class discussion will cover schematic entities on construction sites.
- Progress payment document requirements include a project schedule, health and safety policy & program, MOL form 1000, Certificate of Liability Insurance, proof of WSIB registration, a Schedule of Values, and a statutory declaration.
MOL Form 1000
- The Ministry of Labour, Immigration, Training and Skills Development (MOL) is responsible for labor-related matters, employment standards, occupational health and safety, and workers' rights in Ontario.
- All constructors/employers working on Ontario construction projects must complete and present MOL Form 1000 (Registration of Constructors and Employers Engaged in Construction) at the project site.
Proof of WSIB Registration
- WSIB stands for Workplace Safety and Insurance Board.
- WSIB registration is the process of employers registering with the government agency responsible for workers' compensation and workplace safety and insurance in Ontario.
- The process involves registering using the WSIB website or contacting them directly with details about the business, number of employees, work nature, and payroll.
- Premiums are based on business type, industry, and payroll, funding the workers' compensation system.
- Annual reporting is required; the form includes payroll information and determines annual premium payments.
- Compliance with health and safety regulations is crucial regarding preventing accidents/injuries.
- Failure to comply results in penalties and legal consequences.
Schedule of Values (SOV)
- A Schedule of Values (SOV) provides a detailed breakdown of the total contract amount into line items or categories, representing work portions in a construction project.
- Each line item has a specific dollar amount representing its value/cost.
- The sum of all line items equals the contract total.
- Purposes of an SOV:
- Billing and Payment: The SOV serves as a benchmark for progress payments, determining payments via percentage of completion.
- Budgeting and Cost Control: Contractors track project costs using the SOV, identifying over/under budget areas and making necessary adjustments.
- Progress Tracking: This tool helps stakeholders track completed, in-progress, or upcoming work components.
- Documentation: The SOV prevents disputes by providing a clear and transparent cost and work breakdown, facilitating resolution of payment/performance issues.
- Change Orders: If changes are in scope of work, the SOV can be updated to reflect adjustments in contract amounts.
- Front Loading - Undue advantage to contractor, leading to higher initial payments compared to work done, potential indirect financing and abandonment of future work. Contract administrators remain vigilant against front loading when assessing contractors’ schedules of value.
Unit Prices/Unit Rates
- Schedule of Values (SOV) may include unit prices/unit rates, like for items such as doors, windows, paving—indicating associated total costs (labor, materials, equipment, overheads, contractor's profit).
- Unit prices are typically used in the bidding process, helping owners compare bids more easily.
- Unit prices also support progress payments by linking payment calculations/invoices to the completed quantities of work.
- They facilitate change order processing, easily calculating cost changes.
Statutory Declaration
- A statutory declaration is a written sworn affidavit where the contractor declares information is true and accurate.
- The purpose includes:
- Owner Protection: The contractor declares distributing monies to others, safeguarding owners from third-party lien claims.
- Preservation of Lien Rights: Allows contractors, subcontractors, or suppliers to preserve lien rights related to work.
- Project Financing: Project financiers often require this for further payments.
Holdbacks
- Holdbacks are amounts held by the owner from progress payments, typically released to the contractor later.
- Two categories:
- Statutory holdback (10%, mandatory): Safeguards the owner in case of contractor default or lien claims, held in a separate account under the owner's control. The Lien Act allows the owner to settle the lien claims from the statutory holdback account.
- Deficiency holdback (optional negotiated beforehand): Amount over and above the statutory holdback.
Substantial Completion/Performance of Work
- Substantial performance is when the improvement is ready for use or being used for intended purposes, or (alternative) when the cost to correct defects does not exceed 3%, 2%, or 1% based on contract prices.
- Certificate of substantial completion issued by the contract administrator when work is finished; this triggers a 45-day time period for releasing statutory holdback and creates a warranty period.
- This completes the 2nd and subsequent progress payment process.
Progress Payments
- Applications for progress payments are made monthly to the contract administrator by the general contractor.
- General contractors consolidate invoices from trades and suppliers and submit them for review and approval.
- Once the payment is approved, the owner issues a cheque to the general contractor, who then pays out suppliers directly.
- The payment processing timeline is 30-45 days.
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Description
This quiz covers the essential aspects of progress payments in construction, focusing on the Construction Lien Act and required documentation such as MOL Form 1000 and WSIB registration. Students will also engage with schematic entities related to construction sites. Prepare to test your understanding of these critical components in construction management.
