Nationwide – Canada: A Construction Overview

Over the past year, the Canadian construction industry has navigated a shifting risk landscape, which has been driven by broader national and global developments. As interest rates have stabilised and financing conditions have improved somewhat, the industry’s focus has shifted from the cost of capital to the impact of tariffs and trade uncertainty. Growth in the non-residential construction industry has remained steady with investments increasing slightly this year, along with an ongoing focus on public infrastructure (at all levels of government) and private infrastructure (including data centres).

The principal legal trends and developments impacting the construction sector include the following:

• the persistence of tariffs and trade uncertainty in the Canadian and global economies;
• the maturing of statutory adjudication as a dispute resolution mechanism for construction disputes, including significant amendments to Ontario’s prompt payment and adjudication legislation; and
• the development of collaborative and progressive project delivery, including in relation to standard forms.

Tariffs and Trade Uncertainty

The persistent and unpredictable cycle of tariffs on construction materials (eg, steel and aluminium) has increased costs across the Canadian construction industry, particularly in the residential and infrastructure sectors, and has affected both project risk and contract negotiations. For example, the United States introduced new tariffs on certain Canadian goods, including cement and plywood, in August 2026. Canada has indicated that it will respond in kind; the impacts are not yet known.

A July 2026 review of the Canada–United States–Mexico Agreement (CUSMA) failed to resolve these trade tensions. Although the agreement remains in force until 2036, the parties did not renew it, resulting in continued market uncertainty.

As Canada is a net importer of many materials for its construction projects, the primary impact has been on budget certainty for all types of projects. Bidding on long-term projects has become less predictable, as the threat of new tariffs being imposed after a contract is signed has made material price-escalation clauses a point of contention in contract negotiations. Parties are increasingly resistant to bearing this risk, leading to protracted negotiations and, in some cases, delays as parties struggle to find compromise. The extent of the risk that each party is willing to accept has become a flashpoint in negotiations.

Tariffs have also generated disputes under existing contracts, particularly where force majeure, changes in law, and price-adjustment clauses do not expressly address trade restrictions. As a result, parties now devote greater attention to tariff-allocation provisions and to evidentiary requirements to prove that there was a direct impact on the price of the goods or materials due to the tariff(s).

The industry’s response has been structural as well as contractual. To limit tariff exposure, parties have moved to reshape supply chains, with a push to source materials domestically (including through efforts to reduce interprovincial trade barriers) and from alternative suppliers. Regulations enacted under the Free Trade and Labour Mobility in Canada Act, which have been in force since 1 January 2026, have supported these efforts. This interest in managing the trade risk has also spurred innovation in alternative construction methods (such as modular building and mass timber construction), as well as the stockpiling of key materials.

The Continued Growth of Statutory Adjudication

Several Canadian provinces and the federal government have adopted prompt payment legislation and mandatory statutory adjudication regimes over the past decade to support timely payment in the construction industry. Adjudication proceeds on compressed timelines and produces interim-binding determinations pending final resolution.

Ontario operates the oldest and busiest adjudication regime in Canada. Amendments to the Ontario Construction Act that came into force on 1 January 2026, broadened the scope of adjudication. The amendments also:

• permit parties toappoint privately retained adjudicators alongside those on the public registry;
• extend the deadline to commence adjudication to 90 days after a contract is completed, abandoned or terminated;
• require the adjudicating authority (the Ontario Dispute Adjudication for Construction Contracts, or ODACC) to publish adjudication determinations for adjudications commencing on or after 1 January 2027; and
• limit a party’s ability to challenge an adjudicator’s jurisdiction on judicial review if the party failed to raise the objection at the prescribed time during the adjudication.

The amendments coincide with continued growth in the use of adjudication across residential, commercial, industrial, public, transportation, and infrastructure projects. The ODACC’s 2025 Annual Report recorded a 17% increase in adjudications commenced, with claims totalling approximately CAD205.6 million, up from approximately CAD171 million in the previous year. Residential and commercial projects continue to account for the majority of adjudications commenced.

By expanding the scope and accessibility of adjudication, the amendments to Ontario’s Construction Act are likely to accelerate this already growing trend.

Statutory adjudication case law continues to develop. The courts have generally deferred to adjudicators, while focusing on protecting procedural fairness and compliance with the statutory regime. The publication of adjudication determinations (which will now be required in Ontario as a result of the recent amendments) may further shape the law. Although those determinations will not be binding precedents, parties and courts may treat them as persuasive authority.

Collaborative Contracting Developments

Many large Canadian public infrastructure projects continue to use public-private partnership (P3) as a project delivery model, which often involves the transfer of significant project risk from the owner to a special-purpose contractor in exchange for a premium on a fixed-price contract. At the same time, public entities in Canada continue to explore collaborative contracting models, such as alliancing and integrated project delivery (IPD).

In 2025 and 2026, the Canadian Construction Documents Committee (CCDC) released a substantially revised integrated project delivery (IPD) contract and Canada’s first standard-form progressive design-build (PDB) contract, giving owners standardised documentation for delivery models.

The revised IPD contract reflects the model’s core principles. Key project participants enter into a single contract, share decision-making authority and project objectives, place profit at risk through a shared incentive pool, and resolve disputes through a negotiation-first process. The model proceeds through four phases: validation, design and procurement, construction, and warranty.

The new PDB contract promotes early collaboration by allowing the owner and design-builder to work together during an initial project development phase to refine the design, budget, schedule, and risk allocation before agreeing on a final project price and proceeding to construction.

Together, these new standard forms reflect a broad shift towards earlier collaboration and greater cost transparency. The introduction of new standard forms may reduce the perceived risk of adopting these project delivery models, and may well accelerate the use of collaborative procurement.

However, their growing use may also expose an unresolved legal tension. Collaborative contracts often restrict or prohibit disputes among project participants, while prompt payment and adjudication rights are statutory and cannot be contracted out of. How those principles will co-exist remains an open question.