Construction Management Contracts: Updated, Refined, and Reflective of Modern Practice

The Canadian Construction Documents Committee (CCDC) recently issued updates to four of its standard form contracts. This article focuses on changes to the following three contracts:

• CCDC 5A – Construction Management Contract – For Services;
• CCDC 5B – Construction Management Contract for Services and Construction; and
• CCDC 17 – Stipulated Price Contract Between Owner and Trade Contractor for Construction Management Projects (collectively, the “2025 CM Contracts”).

These updates (the first since 2010) reflect efforts to align the construction management suite with CCDC 2 – 2020, to integrate modern risk allocation principles, and to address prompt payment legislation (now adopted in many Canadian jurisdictions).

While most of the changes focus on structure or style, there are a number of substantive revisions.

Alignment with CCDC 2 – 2020 and other CCDC contracts

The 2025 CM Contracts have been modernized to ensure consistency with CCDC 2 – 2020. Three key areas of alignment include:

1. Ready for Takeover: The 2025 CM Contracts introduce the concept of “Ready-for-Takeover” and shift away from “Substantial Performance of the Work” for project handover, occupancy, warranty and insurance.[1] This change expands the Construction Manager’s obligations by requiring additional steps before the project can be considered complete. These include obtaining occupancy permits, performing final cleaning, delivering operations and maintenance manuals, providing as-built documentation, and conducting demonstrations and training for the owner’s personnel. This change formalizes expectations that were often imposed through supplementary conditions. Although it heightens procedural requirements, it may ultimately improve project closeout transparency and mitigate disputes over readiness milestones. The concept of Substantial Performance continues to dictate the commencement of lien periods and the release of holdbacks in accordance with applicable lien legislation.

2. Early Occupancy: The Owner’s ability to occupy part or all of the Work before “Ready-for-Takeover” is now codified, requiring the Construction Manager’s consent (not to be unreasonably withheld) and approval by authorities having jurisdiction.[2] If the Owner seeks to occupy a portion of the Work, the Construction Manager is no longer liable for the care of that portion and the warranty period for those areas will commence. If the entirety of the Work is occupied early, the Work is deemed to have achieved “Ready-for-Takeover”. This codification provides clarity to an area that previously relied heavily on ad hoc agreement. It balances Owner flexibility with Construction Manager protection.

3. Payment Obligations: The concept of “Payment Legislation” is introduced to better reflect the prompt payment legislation that has been implemented across multiple Canadian jurisdictions. Contracts now require construction managers and trade contractors to submit monthly applications for payment, resulting in owners being required to pay within 28 calendar days of receipt.[3] Incorporating statutory payment timelines directly into these standard forms promotes national consistency and reduces the need for supplementary terms. However, practitioners should ensure compliance workflows align with provincial variations.

Clarification of Services, Contract Price and Schedule

The 2025 CM Contracts provide clearer guidance regarding the scope of services to be performed by the Construction Manager and the determination of the Contract Price and the Schedule of Work.

In the previous versions of CCDC 5A and 5B, the pre-construction services were included within the overall services and compensation but lacked a distinct contractual definition or a mechanism to properly allocate payment.

The new CCDC 5B replaces the defined term “Services” with “Pre-Construction Services” (which is set out in a completely redrafted Schedule A1 – Pre-Construction Services) and “Construction Services” (which is set out in a completely redrafted Schedule B - Construction Services). Since these services are delineated, there is greater flexibility in specifying whether fees are fixed, time-based (for Pre-Construction Services), or percentage based (for Construction Services).[4]

Although the new CCDC 5A does not bifurcate the definition of “Services”, there is a revised Schedule A1 to improve clarity on the services to be provided. The new document also provides greater flexibility in pricing by permitting the parties to specify a fixed fee for the Pre-Construction Phase, and either a fixed or percentage fee for both the “Construction Phase” and “Post-Construction Phase”.[5]

In addition to clarifications in scope and price, both the new CCDC 5A and 5B contracts provide greater schedule certainty by introducing separate Construction Schedules (provided by Construction Manager and periodically updated) and Project Schedules (provided by Owner and may include Owner’s activities).

These refinements enhance transparency and better reflect industry practice by delineating project phases and associated compensation models. The approach is intended to promote clearer budgeting, billing, and accountability.

Termination for convenience

In both the CCDC 5A and 5B, the Owner has a new right to terminate for convenience (i.e. if the owner is “unwilling or unable to proceed”). The compensation payable to the Construction Manager upon such termination is as follows:

• In CCDC 5A, the Owner is required to pay the Construction Manager for all services performed up to the effective termination date, as well as any direct damages, in the form of a “break fee” pre-agreed by the parties at the time of execution of the contract, which is calculated based on a predetermined percentage of the latest accepted Construction Cost Estimate.[6] For instance, the parties might agree to a break fee of 10% of the construction cost estimate if the termination occurs prior to the Class A Construction Cost.[7]

• In CCDC 5B, the Owner is similarly required to pay the Construction Manager for all services performed up to the effective termination date, but the Owner’s additional obligations depend on whether the termination occurs during the Pre-Construction Phase or Construction Phase.[8] In the Pre-Construction Phase, the Construction Manager’s entitlement mirrors the entitlement under CCDC 5A. In the Construction Phase, the Construction Manager is entitled to “such other direct damages as the Construction Manager may have sustained as a result of the termination including reasonable loss of profit”.

For both contracts, the addition of a defined break-fee structure is intended to provide predictability for both parties and to mitigate potential disputes over lost opportunity or indirect damages.

Limitation of Liability

The limitation of liability has undergone substantial modification and clarification, which can be categorized into the following three concepts.[9]

First, the application of the limitation of liability has been revised from “the obligation of either party to indemnify” to “the liability of either party … under any legal theory”. This is a significant change which is intended to cap all potential liability (i.e. in contract, tort, etc.), and not only indemnity claims.

Second, the minimum and maximum liability for uninsured losses has been standardized across the construction management contracts by revisions to CCDC 5A. In CCDC 5A – 2025, the Construction Manager is now responsible for uninsured losses under any legal theory for the greater of the amount paid to Construction Manager[10] or $2 million, with an overall liability cap of $20 million. These minimums and maximums already existed for the Construction Manager in the prior CCDC 5B and the Trade Contractor in the prior CCDC-17 and remain in both of these updated contracts.

Third, the exclusions to the limitation of liability are more clearly identified and now specify that limitation of liability does not extend to particular types of conduct (e.g. wilful or criminal acts).

These changes offer greater certainty to both Owners and Construction Managers and bring coherence across the CCDC suite of contracts. Nonetheless, parties should ensure that caps align with project scale and insurance coverage.

Waiver of Consequential Damages

The 2025 CM Contracts now include a waiver of consequential damages (subject to the same exclusions as the limitation of liability), which states that “…neither party shall have any liability to the other for indirect, consequential, punitive or exemplary damages.”[11]

Conclusion and Takeaways

The CCDC updates codify established practices, improve contractual symmetry within the CCDC documents, and increase alignment with recent legislative developments.

Practitioners should remind their clients to review their processes and ensure that their standard practices align with the new definitions (and the associated pricing) and the prompt payment workflows.

Despite the changes, supplemental conditions are likely still necessary for project-specific adjustments, however, the revised CCDC forms should hopefully reduce the need for extensive customization and improve baseline clarity.

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