The Canadian industrial-commercial-institutional (ICI) construction world understands the necessity to keep up with prequalification and standard requirements to stay competitive. Major buyers of construction services across Canada often require those who bid on high valued contracts to have specific certifications, whether it is a quality assurance requirement or an environmental standard (such as LEED). Recently, things have changed and major buyers of construction across the country have begun requiring a different type of prequalification requirement: safety standards.
A prime example of this is the increasingly common prequalification requirement of the Certificate of Recognition (COR). COR began in Western Canada more than 20 years ago and is the national health and safety standard of the Canadian Federation of Construction Associations. Out West over 10,000 companies are COR certified, a majority of which are within the construction industry.
Since COR was first adopted, it has gained in popularity across Eastern Canada, particularly within the Maritimes. In fact, COR has become so ingrained within the prequalification process of B.C., Alberta and the Maritimes, that it is close to becoming a must-have for companies in these regions to be successful. In 2016, this trend has finally reached Canada’s biggest construction market: Ontario.
This evolution is a game changer for players in Ontario’s ICI construction market as many major buyers of construction such as Metrolinx, the Toronto Transit Commission (TTC), York Region and Infrastructure Ontario have begun requiring COR for specified high valued contracts. Together, these project owners represent approximately $15 billion in infrastructure spend, which is nearly 40 per cent of the total construction spend in Ontario for the year. Additionally, the Greater Toronto Airport Authority and the City of Toronto announced that they will start to require COR as a prequalification for specified contracts in 2017. Together, these two project owners represent $1.2 billion dollars of infrastructure spend for 2017.
As a result of this shift, safety performance has become a competitive advantage for companies bidding on ICI. Subcontractors are already beginning to feel the pressure to pursue COR to remain competitive and be able to bid on these high-value contracts, and safety prequalification requirements like COR not only reduce safety risks across ICI organizations, but also the risk of losing business to competitors.
Moving to “must have”
Ontario general contractors and subcontractors have been aware for nearly two years that these requirement changes were going to come into effect and there are those that have begun the certification process. Yet despite the fact that major buyers of construction are increasingly requiring COR, there are many who view it as more government red tape to jump through in order to get work. As COR remains in its infancy in Ontario many people are still confused about the process, which naturally leads to misconceptions about COR.
Misconception: COR-certified ICI construction companies in other provinces can now bid on COR-mandated Ontario projects.
Although it is a national standard, COR differs by province and industry. Most health and safety laws are provincial, not federal, so the standards tend to mimic the provincial terminology and areas of priority. Therefore, to operate within a certain province, companies must meet the specific standards of that province to be COR certified. And companies operating across multiple jurisdictions must be COR certified in each respective province. That said, once a company is COR certified in one province, it is easier to become certified in other provinces.
Misconception: COR is simply an unnecessary administration.
Many ICI construction executives view safety in one of two categories: common sense on-site decisions that ultimately result in safe workplaces; or a series of rules passed along by government. COR often falls into the latter category, seen as redundant loops they must jump through. However, at the root of it, COR is an independent audit of how a company operationalizes safety, or simply their safety management system. A company needs a plan with the proper policies in addition to daily evidence that the plan is in place and that risk is systematically being identified and addressed every day.
Regardless of the province or industry, COR doesn’t require companies to do anything that they shouldn’t already be doing for health and safety. The primary requirement of COR is that management must show a genuine involvement in the safety process. While delegation is inevitable for any organization, this simple requirement is what distinguishes best-in-class companies from average companies in building a reputation for outstanding safety performance. Unlike other mandatory programs, safety requirements are geared towards ensuring that companies truly have operationalized health and safety programs, programs that are more than binders gathering dust in a corner. One piece of proof is how COR-certified companies in Western Canada report an impressive 57 per cent lower injury rate than their peers, according to a Government of Alberta report on lost-time claims and disabling injury rates.
Misconception: The only benefit COR provides is verification of a safe workplace.
Fundamentally, safety standards commitments improve the bottom line. Companies notice when they have a better health and safety program, they start saving money (through lower insurance premiums, reduction in administration time and fines) and reduce risks (construction defects, civil liabilities from delayed work, and so on). COR is an example of how a construction company can simultaneously build and protect its reputation, gain access to more work and save money at the same time. Despite buyers of construction incentivizing standards for work, many companies will also likely begin voluntarily improving their safety programs to realize the tangible benefits of having a best-in-class program.
Misconception: An investment in COR does not yield a return on investment.
Stats Canada found that the average profit margin for Canadian construction companies is 6.2 per cent. All TTC contracts over $5 million will require COR in 2016, and an investment in COR (to achieve it and maintain it yearly) can range from $20,000 to $60,000 per year, depending on the size and safety measures necessary to be certified. To be on the conservative side, let’s estimate it would cost a company $60,000 per year to be COR certified. Taking into account the average profit margin, winning a single TTC contract could yield 5.2 times the original investment into COR. At the end of the day, this shows that safety requirements are not just another “cost of doing business.”
COR is becoming an increasingly popular standard with major buyers of construction throughout Canada. Project owners in Canada are recognizing that safer companies tend to produce higher quality work on time and on budget. By operatizing health and safety, ICI construction companies can save money, reduce risks and expect to make a return on their investment in COR once they’ve secured a contract. COR also benefits from a proven track record of reducing the injury rates for companies across Canada.
The goal of any safety requirement is to ensure that workers in at-risk industries are employed in the safest environment possible and that business owners are taking every last precaution to create that environment. Whether it’s a prequalification requirement or an executive corporate initiative, safety performance will continue to become a competitive differentiator between successful and average ICI construction companies in Canada.
Adrian Bartha is the CEO of eCompliance, which specializes in the creation of web-based occupational health and safety software for organizations across North America. www.ecompliance.com.