Infrastructure projects face steep cost increases, says TBM official

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Ontario Construction News staff writer

The Town of Blue Mountains is facing a 30 per cent increase in construction costs for capital projects because of inadequate supply and COVID-induced backlogs.

Town staff will be present a report to council April 6 to share project-specific budget impacts for the 2021 capital projects that are currently underway.

“Since the onset of COVID-19, staff have experienced significant cost increases based on several recent bid responses to town capital projects,” Shawn Carey, director of operations said at a council meeting last week.

Increases of 30 to 40 per cent are typical, with the cost of a two-by-four tripling over the past year – as an example. Bids received on an town approved project recently were about 34 per cent higher than the pre-tender estimate.

An informal survey of suppliers and contractors revealed a 30 per cent increase in plastic and metal pricing and 10 to 15 per cent increase in aggregate pricing, Carey told council. Contractors are also reporting 25 to 30 per cent increase in labour costs, due in part to recently updated union boundaries.

Municipalities across Ontario are dealing with work backlogs and contractors are in positions to select and bid on projects with the least amount of risk due to the number of projects available.

“Large infrastructure projects in urban areas and changes in the demographics resulting from the pandemic will keep these prices high for the foreseeable future and it is not anticipated that the labour costs will abate,” Carey said.

The April 6 staff report will include cost impacts on capital projects planned for the year. Pressure Zone 4C, Price’s Subdivision wastewater servicing extension and the Arthur Street parking lot have already reported cost impacts. Previously-approved projects will be re-budgeted as necessary.

“This is not an engineering fail,” said councilor Peter Bordignon. “This is just a matter of the nature of today’s business, unfortunately.”

At the same time, a development charges background study will continue this year and will include new benchmarks and project costs.


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