Just as the sudden surge in grocery prices can catch shoppers off guard, the construction industry in British Columbia is experiencing its own version of sticker shock. Since 2020, construction costs have spiked, driven by significant increases in prices for building materials and wages for essential roles within the industry. In this article, we will look at some specifics to help you better understand the sticker shock the last time you tendered a project.
Building Materials
Similar to the eye-popping increases seen in grocery aisle prices, building materials like lumber, paint, sealants, concrete and drywall have experienced unprecedented price hikes. Lumber prices have jumped since 2020, with some reports indicating a surge of over 100%. Paint and coatings costs have soared by approximately 35%, sealants are not far behind concrete prices have climbed by close to 30%. These substantial increases, driven initially by global supply chain disruptions and then heightened demand, pose significant challenges for construction firms in British Columbia and of course, their customers
Equipment
Equipment cost have also experienced substantial price increases While specific cost increases for rental equipment like aerial lifts, generators, and onsite storage since 2020 may vary based on factors such as location and market conditions, industry reports and market analysis provide some insights into the general trends:
| Aerial Lifts | Rental costs for aerial lifts have seen a noticeable increase since 2020, with reports indicating a surge of approximately 20-25%. | ||
| Generators | Similarly, rental costs for generators have also experienced an uptick, with estimates suggesting an increase of around 15-20% since 2020. | ||
| Onsite Storage | Rental rates for onsite storage solutions, such as shipping containers and modular storage units, have seen a significant rise since 2020. Reports indicate an increase of approximately 20-30%, driven by growing demand from construction sites, events, and other industries requiring temporary storage solutions |
Salaries and wages
Wages for key roles within the construction industry have also seen notable increases. First and foremost, wages for skilled workers have risen 20% – 35%, depending on the trade. The cost of entry level labor, in particular, has spiked.
Project managers have witnessed their wages rise by an average of 15%, while sales representatives have experienced increases ranging from 12-18%. Administrative staff, essential for keeping operations running smoothly, have seen their wages rise by around 10-15%. These wage hikes mirror the growing demand for skilled labor, the process of keeping pace with inflation and government wage standards and the necessity to retain talent amidst labor shortages.
When will this inflation end? What can be done?
The million dollar questions. Inflation has affected every sector of the building economy including new construction, building renewal and commercial painting. Building maintenance and restoration projects are also experiencing higher price tags due to cost increases.
Buildings and real estate assets must be maintained, regardless of the economic conditions and deferring work typically leads to more costly projects. So, to navigate the challenges, building renewal companies have closely monitored market conditions and negotiated hard with suppliers, to find cost-saving strategies that can be passed on to end users. Customers are choosing to phase larger building renewal projects over longer periods and projects are being budgeted far in advance to better manage cashflows.
Is there an end in sight? Yes. The industry is seeing the beginnings of stabilizing prices for materials and wages linked to flattening inflation and interest rate hike slowdowns. Canada’s high inflation rate, which stood at 3.9% in the year 2023, is dropping and the Bank of Canada predicts inflation to be at 3% in the year 2024. Unfortunately, if you are waiting for price decreases or deflation, that is unlikely. So, despite the challenges, there’s optimism that construction costs have stabilized.
If you’re interested in learning more about how you can save on the costs associated with building renewal projects, we would be happy to help. Contact us at [email protected] and 604.420.5552.
