ALBERTA
Trade Contractors Coalition
Action on Prompt Payment – Public vs private investment in Alberta construction projects
Alberta Infrastructure procures a significant amount of construction services annually and has demonstrated real
leadership by adopting prompt payment protocols in all their contracts. These protocols are significant for trade
contractors who have contracts with the public sector but what is the monetary value of these prompt payment
protocols in terms of public vs private sector construction?
Statistics Canada data from 2005 to 2015 place the average annual value of construction in Alberta at 14.17 billion
dollars, not including an estimated 8 billion dollars spent annually on oil and gas sector construction. During this
same period, construction funded publicly, through municipal, provincial and federal governments, has averaged
7.6% of this total annual construction budget.
A 2015 survey by the Alberta Trade Contactors Coalition titled “Evidence-based impacts of Slow Payment Practices
in Alberta’s Construction Industry” concluded that Alberta’s construction trade contractors currently wait on
payment for completed work an average of 78 days. On any given construction project, trade contractors carry 90%
of the total labour and material cost needed for project completion, not including land and services. Assuming
private sector accounts are, on average, 48 days in arrears, the cost of financing contractors need to build into their
bid pricing, at Bank of Canada interest rates plus 2%, is more than $38 million annually. On the other hand, the
savings to the public sector if all municipal, provincial and federal government project accounts were always current
and paid within 30 days, as opposed to 48 days in arrears, would be $3.5 million annually.
The interest alone is significant but does not include lost opportunity. These dollars could otherwise be invested in
human resources, training, innovation and capital purchases that would increase construction industry efficiency
and competitiveness; ultimately providing better value to both public and private owners of construction projects.
Action on prompt payment will foster a more competitive, robust and ethical construction industry. Government
leadership on prompt payment legislation now, will make Alberta a preferred business location.
Alberta Building Permits by Sector and Year (Dollars x 1000)
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Privately Funded (Res, Ind, Comm)
9,431,833 13,009,188 15,016,419 11,721,048
9,680,616 10,926,991 12,295,583 13,826,849 16,036,347 17,178,647 14,965,540
Publicly Funded (Gov.)
803,442
896,853
758,590
1,464,297
1,642,366
550,577
516,860
888,611
1,279,979
1,124,127
1,862,553
Total $ Building Permits 10,235,275 13,906,041 15,775,009 13,185,345 11,322,982 11,477,568 12,812,443 14,715,460 17,316,326 18,302,774 16,828,093
Government Permits % of Total
7.85%
6.45%
4.81%
11.11%
14.50%
4.80%
4.03%
6.04%
7.39%
6.14%
11.07%
Source: Statistics Canada. Table 026-0005 – Building permits, non-residential values by type of structure, annual (dollars). (Data does not include the value of construction in the oil and gas
sector which represents an additional 80 billion dollars invested in Alberta over the last ten years.)