The non-residential building construction price index has just broken a 40-year-old record, and the worst is yet to come if we are to believe the price of lumber, which has jumped 60% in three months.
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“The effect of the war in Ukraine has not even been taken into account yet, so it might be worse on the ground,” warns the CEO of the Corporation of General Contractors of Quebec (CEGQ), Éric Côté.
After the floods in British Columbia last fall, the price of wood rose by 60% in the space of barely three months, notes the CEGQ.
“Wood, gasoline and steel are likely to explode once more with the figures for the last quarter,” said Éric Côté.
On the ground, these increases are being felt, as noted by Luc Brunelle, site manager for Leclair Constructions, on the South Shore of Montreal.
Photo Francis Halin
Luc Brunelle, site manager for Leclair Construction.
“Everything has increased, the price of fuel, it’s crazy. For concrete, there is a surcharge for everything related to transport,” he said on Thursday.
Figures from the Corporation of General Contractors of Quebec prove him right. Prices for crude oil (+62%), gasoline and natural gas (+58%) have jumped over the past twelve months.
- Listen to Yves Daoust, director of the Money section of the Journal de Montréal and the Journal de Québec, on QUB radio:
Unsurprisingly, these cost increases are causing project bills to skyrocket.
“Once it’s signed, we keep the price. It’s the profit margin that’s shrinking. We absorb the costs,” explains Luc Brunelle, adding that some entrepreneurs “leave the contract open” for increases.
“If it costs more to build, we have to pass on the bill a little. We don’t work for free”, jokes the site manager.
In public contracts, the situation is worse, according to Éric Côté of the CEGQ. “Material price adjustment clauses are rare,” he says.
At the Association de la construction du Québec, we are worried. “It becomes extremely difficult. We sometimes have to bid up to six months in advance for public contracts, ”illustrates its spokesperson Guillaume Houle.
For Marco Lasalle, director of the technical service of the Association of construction and housing professionals of Quebec, it is often the pre-assembled materials that are more difficult to obtain.
“We have reached the point where contractors are even starting to make their own roof trusses once more. We haven’t seen that since the 1970s in Quebec,” he goes so far as to say.
We are on the lookout for the organization SOS Plan de Garantie Residential, which helps home and condo buyers better understand their rights.
“It’s dizzying these last three months our call volumes on price increases,” concludes its director, Gina Baroni.
Over the past year, the strained supply chain and workforce have caused material prices to skyrocket. Here’s why.
+54% INCREASE
It is used in curtain walls, windows, doors, wires, signage, lamp posts and poles, HVAC ducts, roofs, siding, hardware, and electrical and mechanical equipment.
+38% INCREASE
Refined bitumen is mainly used in roofing applications and as a binder for paving. It is also used for soundproofing, explosives, mold protection, as a binder in briquettes, as a backing for mirrors, for covering fence posts and for soil stabilization.
+22% INCREASE
Copper is mainly used in electrical cables and plumbing pipes, refrigerant lines in heating, ventilation and air conditioning systems, and in heat pumps.
+16% INCREASE
Steel is a major component in industry. Although it is mainly used in steel structures, it is also used for many mechanical components such as ventilation ducts, plumbing pipes, fire protection pipes, doors and frames, hardware and countless other items.
+77% INCREASE
Cobalt is used as a bonding material in many hard metals. These include cemented carbides and diamond tools which are used in cutting applications and magnets which are found in power tools and equipment.
+28% INCREASE
Lumber is used in building components such as formwork, structural members, sawmill work, doors, rough carpentry and architectural panels.
+ 24% INCREASE
Nickel is combined with other metals to produce alloys whose properties provide both ductility and high temperature strength. It is used for the manufacture of stainless steel and steel alloys.
+177% INCREASE
In construction, propane is used for temporary heating and as fuel for construction machinery.
+84% INCREASE
Tin is used in steel boxes, as an alloy with copper for wiring, and in solders.
Source: Trading Economics and Corporation of General Contractors of Quebec
The major price increases are in structural and civil products, which inevitably have an impact on the cost of construction projects, according to the Corporation of General Contractors of Quebec.