Prompt Payment will apply to contracts in Alberta starting Aug. 2022

Alberta Municipalities worked with Service Alberta over the last two years to develop the Construction Lien and Prompt Payment Act and accompanying regulations.

The intent of this legislation is to reduce the number of liens filed annually in Alberta, and ensure that there is adequate liquidity in the construction industry. The new legislative framework will come into effect for all contracts signed after August 2022, with grandfathering provisions in effect for existing contracts for two years.

We support the government’s intent to reduce the number of liens filed in Alberta annually, to ensure that payments are processed efficiently, and to provide a potentially quicker method for resolving payment disputes. Nevertheless, we believe that some of the requirements of this legislation represent an unfair burden on municipalities as infrastructure owners.

This new legislation will require invoices to be issued at least every 30 days and to be paid in 28 business days throughout the course of construction on all projects – large and small. In the event of a dispute, both parties will be subject to an adjudication process managed by a third party, referred to as a Nominating Authority.

We are concerned that these requirements will slow down project timelines and affect relationships between municipalities and their local business communities. Notably, the province has exempted itself from this legislation, even though municipal projects are similar in scope and complexity.

Alberta Municipalities will develop educational materials for our members about their responsibilities under this new legislation. Watch for more information about Prompt Payment later this spring.