New 2025 CCDC Contracts: What You Must Know

The Canadian Construction Documents Committee (CCDC) has released a new series of updated contracts that represent a significant evolution in Canadian construction project management. These updates aim to provide greater clarity, ensure they are consistent with modern industry practices, and address the most recent legislative changes.

• Ready for Takeover shifts the focus of project completion from Substantial Performance to full operational readiness for the owner.
• Progressive Holdback Release is now standard, and in alignment with prompt payment legislation.
• Liability for Uninsured Losses is now clearly capped, more clearly allocating risk. 
• Termination for Convenience clauses provide owners with increased flexibility, while construction managers may now obtain a Break Fee for termination before construction commences.

"Ready-for-Takeover": The New Milestone for Project Completion

The most significant change is the introduction of the Ready-for-Takeover (RFT) milestone to CCDC 5A, 5B and 17. Originally introduced in 2020 to CCDC 2, it is now a cornerstone of the updated construction management contracts and is more closely aligned with the operational needs of project owners.

Previously, a project was considered substantially performed when it was ready for its intended use (or already in use) and the cost to finish all remaining work and fix any defects was less than a specific threshold defined under the Construction Act. 

The RFT standard builds on the substantial performance requirement but lists further steps necessary to achieve completion of the project. These steps include obtaining occupancy permits, performing final cleaning and waste removal, providing operations and maintenance manuals, and conducting necessary training for the owner's personnel, among other things.

The RFT framework set out a clear and comprehensive list of items that need to be done in order to complete closeout. This will reduce the potential for post-handover chaos. The updated contracts also permit project owners to take early occupancy of a part of the project before the RFT milestone is achieved. 

Progressive Release of Holdback

The updated contracts now incorporate the progressive release of holdback, in line with prompt payment legislation. This allows holdback amounts to be released as specific portions of work are completed, rather than waiting for a single final release at the close of the project. This improves contractors’ cash flow throughout a project, reducing the financial burden of waiting for a single, final holdback release. 

Changes to Liability and Risk

The 2025 contracts introduce significant changes to the limitation of liability clauses, providing a clearer allocation of risk.

CCDC 5A: The Construction Manager's liability for uninsured losses is limited to the greater of their fee for services or $2 million, up to a maximum of $20 million.

CCDC 17 & CCDC 5B: Liability for uninsured losses limited to the greater of the contract price or $2 million, up to a maximum of $20 million.

Termination for Convenience

The CCDC 5A and CCDC 5B contracts now expressly permit Termination for Convenience (termination without cause). This provision allows an owner to suspend or terminate a contract even if the construction manager is not in default, giving owners more flexibility to address unforeseen circumstances or changes in project viability.

This can serve as a contractual “off-ramp” that can help to avoid messy legal disputes. Without this clause, typically the only way for an owner to terminate a contract is to prove that the contractor is in default, which often leads to protracted litigation.

For construction managers, the new CCDC 5B contract includes a Break Fee. If the owner terminates during the preconstruction phase, the construction manager may be compensated for the time, resources, and overhead already invested. If you’re working under a CCDC 5B, negotiate the pre-construction break fee carefully. Ensure that it covers your initial investment if the owner decides to cancel the project before construction begins. 

Other Noteworthy Updates

Execution Plan: The CCDC 5B contract now gives owners the right to request a formal execution plan from the construction manager, which outlines the project methodology, procurement strategy, and cash flow. This promotes better planning and collaboration from the start.

Dispute Resolution: These provisions now contemplate adjudication pursuant to applicable legislation, including Ontario’s Construction Act.

The Bottom Line

These CCDC updates are more than administrative tweaks. Developments in completion milestones, progressive payments, and termination will shift the manner in which construction projects are planned and managed in Canada. By understanding these key changes, contractors and project owners can better navigate the new contracts, manage their projects more effectively, and mitigate against project risks as they arise.

Here's How We Can Help

RAR Litigation Lawyers have extensive experience in both preparing and negotiating CCDC contracts. Whether you’re an owner, construction manager, or contractor, our objective is to protect your interests, and leverage your position.

Contact RAR Litigation to discuss strategy.