Construction costs and delays: minimizing their impact on your projects


Construction costs and delays: minimizing their impact on your projects

1 min.

Since 2020, construction costs for all types of projects have increased significantly, by 10% to 25%. The main reason: the surge in building material costs. As an example, the price of steel has simply doubled between November 2020 and October 2021. Nevertheless, it does not appear to have curbed developers’ enthusiasm as steel suppliers are already booking orders for June 2022. Of course, not all materials have seen such significant spikes. It should also be noted that material costs only represent about 30% of the overall cost of a construction project. So, what is causing this price escalation?

Impact of Labour Shortages

It would be mistaken to think that the cost of labour is also a contributing factor, as it has remained relatively stable over the past year. Regulated by the Commission de la construction du Québec, the wage rates have recorded a rise of about 2.15% as of August 1, 2021, which is very reasonable. While the cost of labour has not increased drastically, the labour shortage, however, continues to deeply affect the construction industry. Indeed, contractors who are now forced to limit their contracts must also deal with numerous and lengthy delays.

Minimizing Costly Delays

It is these delays that we believe will become the most important issue in your upcoming construction projects. Even though we can’t predict the future, we don’t expect costs to decrease in 2022 nor in 2023. You should therefore be focusing all your efforts on implementing various strategies that will minimize these costly delays, allowing you to still achieve a competitive construction cost. Preparation is the key to success. There are various solutions available: pre-orders, determining the right period to call for bids, establishing agreements with suppliers, developing partnerships with suppliers, etc.

JCB can help you get the most out of your project.