Introduction
The CCDC5B has for long been loved by the industry but derided by construction lawyers.
What’s a CCDC5B? It’s a standard form contract for construction managed projects that allows a contractor to act as an advisor at the early stages of the project, and then transition into a builder and, potentially, a fixed price contract.
The industry loves the CCDC5B because it works well with how a contractor actually engages with owners on many projects. Construction lawyers generally deride it because, by seeking to do too much in one agreement, the CCDC5B arguably fails in the primary goal of clearly establishing the parties’ rights and obligations.
On June 30, 2025, the Canadian Construction Documents Committee (CCDC) released consequential changes aimed at modernizing the contract and aligning its provisions with the realities of today’s construction practices. Those who loved the earlier versions of the CCDC5B will likely be happy with the updates. However, the changes generally fail to address the more substantive issues with the contract.
Key updates include:
Pre-Construction Services and Fee Structure
A consequential update in the CCDC 5B-2025 involves the formal separation of Pre-construction Services and Construction Services.
In the update “Pre-construction Services” is more clearly defined as a standalone contractual concept, with additional provisions addressing scope, compensation (either a fixed or time-based fee), invoicing and administration. Practically, this revision provides clearer alignment of expectations among the parties during the pre-construction phase.
Before 2025, the pre-construction services were acknowledged in schedules but not treated as contractually distinct.
Driving this change is a desire for greater transparency in regard to compensation, and recognition that construction management services often commence during the design phase if not earlier.
Updates specific to the pre-construction phase include:
- a separate fee model and payment structure for Pre-construction Services;
- the Consultant will no longer have responsibility to interpret disputes relating to pre-construction compensation;
- reimbursable expenses are limited to Pre-construction Services only; and
- the definition of “Work” now expressly excludes Pre-construction Services
Ready-for-Takeover
The new contract introduces the “Ready-for-Takeover” (RFT) milestone. While this concept was previously included in the CCDC 2-2020 Stipulated Price Contract, it is refined in the CCDC 5B-2025.
The new CCDC 5B recognizes, and aims to address, variations in the definition of Substantial Performance across the provinces and potential misalignment of the many legislative definitions with practical handover needs.
The new Ready-for-Takeover milestone requires that :
- the Consultant has certified Substantial Performance;
- the Work satisfies occupancy requirements, or an occupancy permit has been issued;
- cleaning and waste removal are complete;
- key operations and maintenance materials are provided;
- as-built drawings to date are made available; and
- the required training, demonstrations, and commissioning activities are completed or reasonably scheduled.
Once RFT is achieved, there are a number of contractual consequences, including commencement of the warranty period, indemnity claim periods, and the waiver of certain claims.
Payment Obligations (Prompt Payment) and Progressive Holdback Release
The 2025 version marks a significant alignment of the CCDC 5B payment provisions with increasingly commonplace provincial prompt-payment laws.
In the new version, the Owner is required to make payment within 28 calendar days of receiving a proper invoice instead of the old 20-day period.
Additionally, where legislation allows for the progressive release of holdback, the new 5B contract compels the Owner to release the applicable portion once the Consultant has certified/verified that the corresponding part of the Work has been performed.
Termination for Convenience and Damages
Owners are granted expanded power under the 2025 version to terminate the Contract if they are unwilling or unable to proceed with the Pre-construction Services or the Work. This includes the ability to suspend or terminate contracts even if the Construction Manager is not at fault, providing increased flexibility to respond to changes in project viability.
The cost of termination is dependent on the project phase:
- Pre-construction Phase: a break fee, calculated as a percentage of the most recent Class Construction Cost Estimate.
- Construction Phase: direct damages (including reasonable loss of profit).
Conclusion
The CCDC 5B-2025 contains a number of material changes that represent a conscious shift to bring this well-known contract document into better alignment with legislative requirements, industry standards, and practical project delivery practices.
While the changes will be welcomed by industry participants, they fail to address a common criticism of the CCDC5B that it tries to do much in one agreement. Owners and contractors should ensure that they fully understand the risks involved with the CCDC5B model and carefully think through whether the contract has brought sufficient clarity to the parties’ evolving mutual rights and obligations.
This article originally appeared in Construction Business. It was co-written with Norm Streu, associate counsel with the law firm Harper Grey and past chair of the Vancouver Regional Construction Association. Chris Hirst is a partner and leader of the Construction and Engineering practice group at the law firm Alexander Holburn LLP. Chris has been recognized in “Best Lawyers in Canada” since 2020 in Construction Law. This article was prepared with the assistance of Austin Sutherland, articled student.
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