blog-banner

Are you looking for a contractor?

Submit our quick form and get quotes now!

Table of Contents

Prompt Payments in Construction and Project Execution

paiement by card
paiement by card

Prompt Payments in Construction and Project Execution

Information and news on the construction sectorPrompt Payments in Construction and Project Execution

Construction projects undertaken by the federal government of Canada are paramount for developing and preserving essential public infrastructures. Public Services and Procurement Canada (PSPC) is key in overseeing such projects, ensuring construction contracts are awarded and supervised accordingly. However, a crucial component of said process involves payments made to contractors and contract-holding companies. A prompt and fair payment system is mandatory for ensuring projects are completed successfully while healthy relationships with the construction industry are maintained.

Prompt Payment for Construction Work Act: New Legislation in Canada

two contractor in front of a house 

Public Services and Procurement Canada announced that the Federal Prompt Payment for Construction Work Act was instated on December 9, 2023. 

Under this law, the federal government will have 28 calendar days to pay contractors after receiving their undisputed invoices. 

Contractors will then have 7 days to pay their subcontractors, and they, in turn, will have another 7 days to issue payment to their subcontractors, and so forth according to the contractual payment chain. 

All existing construction contracts must be compliant with the Act no later than one year following December 9, 2023.

In Quebec, the government launched a pilot project with the purpose of experimenting with a solution to solve any delayed payment issues in the construction industry. Said pilot project, which applied to public construction project contracts and public organization sub-contracts subjected to the Act respecting contracting by public bodies, aimed to appraise two elements:

  • a mandatory payment calendar; and

  • a dispute resolution process (adjudicator authority). The 52 public construction work contracts that were targetted by the pilot project were designated by decision by the Treasury Board on August 21, 2018, and January 15, 2019.

The Institut de médiation et d’arbitrage du Québec (IMAQ – arbitration and mediation services) was designated as the neutral third party responsible for making adjudicator authorities available to the parties within the pilot project. The pilot project, which lasted 3 years, was terminated on August 1, 2021. 

Understanding Public Services and Procurement Canada

somebody on a computer 

Public Services and Procurement Canada is the federal agency responsible for purchasing, overseeing, and handling real estate assets, services, and construction work for the Government of Canada. PSPC oversees a vast portfolio of construction projects, ranging from minor renovation work to large-scale, complex infrastructure projects. 

As part of their responsibilities, PSPC is expected to ensure that payments are made to contractors and construction contract-holding companies in a fair and timely manner. Despite the efforts deployed by the PSPC, construction project payments are still somewhat of a significant hurdle. Detailed below are a few of the primary challenges experienced.

Construction projects undertaken by the federal government can be extremely complex and involve numerous stakeholders, have tight turnarounds, and mandate strict technical requirements. Said complexities may be related to the payment process, especially when changes or delays are factored in.

A lot of construction projects account for extended supply chains, involving several subcontractors and suppliers. This can culminate into complex payment chains and make it more difficult for participating parties to be paid fairly and promptly.

The PSPC—as a government agency—is subjected to budgetary constraints and strict regulations. Said constraints can, at times, delay the payment process or call for additional requirements, which can lead to tension between contractors and businesses. 

Contractual disputes are common in the construction industry. When such situations arise, it can delay or complicate payments, which can have negative repercussions on contractor and company relationships. 

PSPC’s Initiatives to Improve Payment Process

paiement by card 

PSPC is well aware of said challenges, and for that reason has put together several initiatives to improve payment processes for construction projects.  

Improving Contract Management Processes

PSPC improved its processes in terms of contract management to ensure payments were closely monitored and better communication was had between contractors and companies. This includes establishing invoice monitoring systems, more effective approval procedures, and dispute resolution mechanisms. 

Using Digital Technologies 

PSPC also started using digital technologies to rationalize payment processes. For example, using online platforms for submitting and processing invoices can streamline the process and limit mistakes.

Training and Awareness

PSPC put together training and awareness programs for its personnel and contractors to educate them regarding payment processes, contractual requirements, and best practices. Said programs were established to promote better mutual understanding and prevent payment delays or errors. 

Industry Collaboration

PSPC closely collaborates with the construction industry to gather payment process-related comments and suggestions. Said collaboration facilitates the identification of areas needing improvement and the implementation of solutions suited to the needs of contractors and companies.

Benefits of a Prompt Payment System for Construction Work

two contractor watching a tablet

An effective and fair payment system meant for construction projects undertaken by the PSPC has several advantages for all stakeholders as detailed below.

Fostering Healthy Relationships with the Industry

By ensuring payments are processed fairly and promptly, the PSPC can maintain healthy relationships and mutual trust with the construction industry. It streamlines future collaborations and encourages qualified contractors and companies to bid on government projects. 

Reducing Risks of Disputes and Delays

A prompt payment system can limit the risks of disputes and delays linked to contractual disagreements or cash flow issues. This means bypassing additional costs and project timeline disruptions. 

Improving the Quality of Projects

When contractors, companies, and subcontractors are paid fairly and in a timely manner, they can focus on executing the construction job at hand without worrying about cash flow issues. The latter fosters quality projects and ensures they’re completed according to the timelines established. In conclusion, payments made to contractors and construction contract-holding companies with Public Services and Procurement Canada are crucial components of construction processes. A prompt and fair payment system is paramount for maintaining healthy relationships with the industry, limiting the risks of disputes and delays, improving project quality, and strengthening public trust.


Get 3 quotes for your renovation project

RenoQuotes.com can help you get quotes from a general contractor. By submitting your project, we’ll put you in contact with top-rated contractors. Fill in the form on the homepage (it only takes a few minutes) and get estimates from trusted professionals.

Dial 1-844 828-1588 to speak with one of our customer service representatives.

Get 3 free quotes for your project!

Submit a project and get 3 free quotes!


Last modified 2024-05-31

List of sources


Get 3 free quotes for your project!

Submit a project and get 3 free quotes!

Looking for something else?


Table of contents


Get 3 free quotes for your project!

Submit a project and get 3 free quotes!

Are you a contractor?

Join our network and receive real leads!

Download the price guide for renovations

We’ll be emailing you the latest market price guide for renovations.



Related articles

The latest industry news, interviews, technologies, and resources.

7 min read

Cynthia Pigeon • 07 Nov 2023

Mental Health in the Construction Industry

Despite efforts in recent years to dispel stigmas and raise awareness regarding mental health issues amongst the general population, of the five assessed work sectors, the construction industry has one of the highest suicide rates. What could possibly explain the alarming results shown by these studies?

9 min read

SoumissionRenovation.ca • 07 Nov 2023

Renovation projects in the time of COVID-19

Note: this article will evolve as we get new recommendations from government authorities. Please note that the information you are reading now could be different tomorrow. The advice presented in this article should be interpreted as a suggestion. 

3 min read

RenoQuotes.com • 04 Mar 2024

Financial Assistance for Home Retrofits Awarded by the Société d'habitation du Québec (SHQ)

Are you planning on carrying out a large-scale renovation project in the near future? Without a doubt, you already know it's bound to be a financial burden, and for the majority of us, it can significantly curtail our dreams. 

4 min read

N/A • 07 Nov 2023

Affordable bathroom renovation ideas for tenants

The idea of renovating your house can sometimes spring up at an unexpected moment. Next thing you know, you find yourself browsing the internet looking for inspiration on Pinterest. However, if you're renting your apartment, it could be difficult to start any renovation projects. The final decision will be up to your landlord if you need to make any major changes to your space.

4 min read

N/A • 07 Nov 2023

4 Home Renovation Ideas For Your Entryway

With so many rooms in a home and plenty of decor choices to take care of, the entryway is one area that’s sure to be overlooked time and time again. It’s only natural to underestimate this space, but it’s important to remember that this is the first area of the home guests will encounter as well as the one which will greet you at the end of a long day.


Looking for a contractor?

Submit a project and get 3 free quotes now!