Ottawa

No slowing construction despite rising costs, city says

The City of Ottawa has "primed the pump" with capital projects from light rail to repaving roads, but now it's on the hook for rising construction costs as fewer bids come in.

Industry under pressure as major projects multiply

Old Richmond Road in Ottawa was under construction during the summer of 2019. (Kate Porter/CBC)

The City of Ottawa has "primed the pump" with capital projects from light rail to repaving roads, but now it's on the hook for rising construction costs as the industry scrambles to get the work done.

"It's booming," said Steve Goodman of the National Capital Heavy Construction Association, whose members include such major players as AECON, Tomlinson and Thomas Cavanagh Construction.

"They're full. They have enough work for the year. They couldn't possibly get any additional work done, so there are fewer bidders on some projects, absolutely,"

The city can't scrimp on its transportation network and has to put the money in to keep our assets in shape.- Coun. Riley Brockinton

Locally, those projects include Stage 2 of light rail and the city's sewage storage tunnel, as well as the federal government's lengthy and expensive renovation of Parliament Hill, Goodman said.

At the same time, the city is trying to catch up on day-to-day infrastructure repairs including bumpy roads and ancient waterworks.

Labour costs are also causing prices to rise, Goodman said, as construction workers and tradespeople work evenings and weekends to get the jobs done.

Priming the pump

"When we prime the pump and draw more capital work out there, what you see is the construction community reacts to it and the prices go up," acknowledged city treasurer Marian Simulik in September as she laid out the pressures facing the municipal budget.

Based on inflation data from Statistics Canada, the draft 2020 budget projects the need for an added 5.8 per cent or $7 million for capital projects.

Ottawa construction companies have more than enough work but not enough workers, according to Steve Goodman, president of the National Capital Heavy Construction Association. (Jean Delisle/CBC)

But there's no chance to slow down, according to Coun. Riley Brockington.

"My residents have told me loud and clear this is a priority. The city can't scrimp on its transportation network and has to put the money in to keep our assets in shape," he said.

That comes as no surprise to Coun. Allan Hubley, who points out Otttawa's skyline is bristling with cranes.

"It's part of being a successful city, so that's going to happen," he said. 

Effect on taxes

Coun. Jeff Leiper agrees the ongoing projects are "not luxuries" — residents want pedestrian bridges and improved drainage — but he does wonder if the city should be more clear about the true costs, if only to explain how it affects taxes.

"We used to have a municipal price index that was cancelled," said Leiper.

"I think we need to bring that back in order to be able to have honest conversations with residents about what it costs to provide the services that they expect us to deliver."

Construction costs are rising more quickly than household costs, Leiper pointed out, yet the two per cent consumer inflation figure is still used to explain city spending.

At the same time, construction costs in Ottawa are rising faster than in other Canadian cities, according to the construction price index maintained by Statistics Canada.

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