On-Site Magazine

On a good tack

April 27, 2022   Adam Freill
Construction

Unlike some construction segments where permits and builds can happen relatively quickly, commercial construction, or more accurately ICI and infrastructure markets, tend to take longer to approve, plan and build. I liken these sectors to steering a ship, rather than piloting a boat.

If you want to turn a ship, planning needs to happen long before the actual physical turn. The process to build up the necessary momentum can take a long time, and the ship won’t stop on a dime — or at least it is hoped that it won’t slam to a sudden stop.

Much like a ship leaving a port, recent developments have us building momentum and setting us up for a good run in the ICI and infrastructure sector, assuming there’s no iceberg lying in wait for us.

While most people would gladly have gone through the past two years minus the impact of COVID, it did push governments to look for ways to boost the economy, and spending on infrastructure and institutional projects has landed front and centre. Plans have been announced and programs introduced, and dare I say, momentum is building.

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It’s hard to have missed news about the infrastructure plan south of the border. According to Deloitte, the U.S. spends more than $400 billion each year on public infrastructure, with roughly a quarter of that funding coming from federal contributions, but it’s never been enough to keep up with the infrastructure already in place. The allocation of an additional half-trillion federal dollars over a five-year period for new infrastructure projects — part of the $1.2 trillion in overall infrastructure spending planned for the decade to come — will provide a significant bump to our peers in the U.S.

But the governmental spending doesn’t stop at the border. I can’t recall a time when my inbox has ever been hit with such a steady stream of spending announcements from the federal and provincial governments. Part of that could be more zealous media targeting, but there’s no denying the level of spending commitment across provincial and federal levels of government is on the rise. And it’s happening in all areas of the country.

For example, Alberta’s 2022 Capital Plan includes approximately $21 billion for the construction of roads, schools and hospitals over a three-year period, and specifically earmarks $2.4 billion for roads and bridges, and $3 billion for capital maintenance and renewal of public infrastructure.

Where I’m located, in Ontario, plans for new highways have been announced, and construction on new transit lines is underway in Toronto. Add that onto the numerous healthcare facilities in various states of procurement and construction, new correctional facilities that are progressing through their planning stages, and other transportation-related spending, and more. We’re going to be busy.

Will there be headaches and hiccups? Absolutely.

Despite having advanced knowledge of labour needs for the various projects, as more projects get underway, it may put a more concentrated spotlight on the growing shortage of skilled tradespeople. And just ask any project estimator about the need to include tight limits on quotes for material costs. I recently heard about an estimate where the pricing was valid for a full 24 hours — that’s hours, not days, weeks or even months. If the basics of supply and demand hold true, as more projects compete for those supplies, the higher prices will go, and pricing instability will continue.

That said, I’d still rather be navigating the challenge of being in demand than facing a dearth of projects, and several of the exhibitors I spoke with at the recent National Heavy Equipment Show (see page 14 in our April edition) seemed to be of a similar mindset. It’s always better to be busy; and busy will continue into the foreseeable future.

Until next time, stay safe and do good work.

 

Adam Freill

Editor

On-Site Magazine

afreill@annexbusinessmedia.com