Construction cost trends

Canada building permits trend

Municipalities issued building permits worth just over $6.8 billion in July, down 2.3% from June. This followed a month of relative stability between May and June. The main factor in the decline was lower construction intentions for both residential and nonresidential buildings, particularly in Ontario.

Chart 1 - Total value of building permits

In the residential sector, the value of permits decreased 2.4% to $4.3 billion, following two consecutive monthly advances. The decline was attributable mainly to lower construction intentions in four provinces, led by Ontario, with Saskatchewan a distant second.

In the non-residential sector, the value of permits fell 2.1% to $2.5 billion after a 9.0% decrease in June. Non-residential permits declined in six provinces with Ontario and Saskatchewan accounting for most of the drop.

Residential sector: Construction intentions down for both multi-family and single-family dwellings

The value of permits for multi-family dwellings decreased 4.3% to $1.9 billion, following two consecutive monthly increases. Construction intentions were down in seven provinces, with Ontario posting the largest decline, followed by Saskatchewan and Alberta. The value of multi-family permits increased in British Columbia, Nova Scotia and Prince Edward Island.

Municipalities issued $2.5 billion worth of building permits for single-family dwellings in July, a 0.9% decline following two monthly advances. Most of the declines occurred in British Columbia, Ontario and Saskatchewan. The value of permits for single-family houses rose in five provinces, including Alberta, Manitoba and Quebec.

Nationally, municipalities authorized construction of 19,139 new dwellings, down 4.9% from June. The decrease was attributable to both multi-family dwellings, which fell 6.8% to 11,846 units, and single-family dwellings, which declined 1.6% to 7,293 units.

Non-residential sector: Declines in the institutional and industrial components

In July, the value of permits for non-residential construction decreased for the second consecutive month; declines in the institutional and industrial components more than offset gains in the commercial component.

In the institutional component, the value of permits fell 25.2% to $404 million, the second consecutive monthly decline and the lowest level since February 2012. The decrease was mainly the result of lower construction intentions for educational institutions in Ontario and British Columbia and government buildings in Saskatchewan and Alberta.

The value of permits for industrial buildings decreased 3.7% to $462 million, following a 0.5% advance in June. The decline was mostly the result of lower construction intentions for manufacturing plants in Ontario, the value of which had increased the previous month.

In contrast, Alberta and Quebec recorded the largest increases. Alberta’s gain came from manufacturing plants, utilities and transportation-related buildings. Quebec’s advance was attributable to utilities and transportation-related buildings.

In the commercial component, the value of permits rose 6.4% to $1.7 billion, the fifth monthly increase since the beginning of the year. The advance was largely a result of higher construction intentions for a variety of commercial buildings. These included retail outlets and theatre and performing art centres in British Columbia, and recreational facilities in Newfoundland and Labrador, Saskatchewan and New Brunswick.

Chart 2 - Commercial value of building permits

Provinces: Construction intentions down significantly in Ontario

In July, the total value of permits declined in six provinces, led by Ontario, followed by Saskatchewan and Alberta.

After two consecutive monthly gains, Ontario recorded the largest decrease, mainly as a result of lower construction intentions for multi-family dwellings, institutional and industrial buildings.

The decline in Saskatchewan, which was the second in a row, originated from residential, institutional and industrial buildings. Even so, the total value of permits in Saskatchewan was 10.3% higher than the monthly average in 2011. Alberta’s drop was attributable to institutional and commercial buildings, as well as multi-family dwellings.

British Columbia posted the largest gain, a result of growth in the value of permits for commercial buildings and multi-family dwellings. The gain in Newfoundland and Labrador was mainly

attributable to higher construction intentions for commercial buildings and single-family dwellings.

In Quebec, the value of permits for industrial and institutional buildings was behind the increase, while in New Brunswick, gains were reported in institutional and commercial buildings, and single-family dwellings.

Permits value down in most census metropolitan areas

The total value of permits fell in 24 of the 34 census metropolitan areas.

Toronto and Regina registered the largest decreases. In Toronto, the decline was primarily attributable to lower construction intentions for residential and institutional buildings. Regina’s decrease originated from multi-family dwellings and institutional buildings.

The largest advance occurred in Vancouver and Montréal. In Vancouver, the gain was the result of growth in the value of permits for commercial buildings and multi-family dwellings. In Montréal, the advance was attributable to a large extent to multi-family dwellings and industrial buildings.

Note to readers - (Data Source: Modified from Statistics Canada catalogue no. 11-001-x) The Building Permits Survey covers 2,400 municipalities representing 95% of the population. It provides an early indication of building activity. The communities representing the other 5% of the population are very small, and their levels of building activity have little impact on the total. The value of planned construction activities shown in this release excludes engineering projects (for example, waterworks, sewers or culverts) and land. For the purpose of this release, the census metropolitan area of Ottawa–Gatineau (Ontario/Quebec) is divided into two areas: Gatineau part and Ottawa part.

Canada Non-residential Building Construction Price Index, second quarter 2012

The composite price index for non-residential building construction rose 0.6% in the second quarter compared with the previous quarter. The quarterly increase was mainly a result of higher labour costs as a result of strong the energy industry, mining, private infrastructure investments and rail projects.

All of the seven census metropolitan areas (CMAs) surveyed reported quarterly increases, ranging from 0.3% in Montréal to 0.8% in both Edmonton and Calgary.

For the year, the composite price index for non-residential building construction rose 3.1%. Of the CMAs surveyed, Edmonton (+4.2%) and Calgary (+4.0%) posted the largest year-over-year increases, while Halifax (+1.9%) recorded the smallest gain.

International markets

Construction costs continue to trend down in most parts of the world as the impact of global economy is not yet fully recovered. European markets show the most decline compared to the Americas. Brazil, Uruguay, India and China continue to take the lead as strong emerging markets. The emerging markets continue to constrain the overall resources such as scarce crude oil, building materials, equipment and specialist professionals.

Material prices will continue to drive construction costs upward. With Australian natural disasters and South African mining operation instabilities, growth in China, India and Brazil is exaggerating demand for most types of building commodities such as copper, steel and oil.

European economic issues are slowing down raw material operations that produce concrete, data cabling and furniture.

The chart below shows the construction cost in India escalating at 8.2% in 2012, up by 10% from 2011. Costs in India lead China and Uruguay with both Brazil and Malaysia tailing closely behind. Demand for construction in India is driven by its 14.7% strong economic growth rate fueling infrastructure construction such as roads, marine ports, airport, electrical power stations and railways. In 2011, the total investment was close to 8.5% of India’s GDP. China is embarking more in high voltage power transmission lines, electrical power stations, industrial and retail infrastructure.

Global Construction Trends Construction Cost Escalation 2012

Q4 2011 Q1 2012 Q2 2012 Q3 2012 USA 2.8 3.7 3.7 3.8 Canada 2.5 2.2 2.2 3.1 China 4.9 5.2 5.2 5.1 India 7.5 8.2 8.2 8.2 Ireland 2.8 2.0 2.0 2.0 Malaysia 4.1 4.0 4.0 4.0 Brazil 4.2 4.5 4.5 4.8 Uruguay 4.2 4.5 4.5 5.2 UAE 3.2 3.2 2.8 2.3 UK 3.1 2.8 2.5 2.5

Winnipeggers debate second phase of the city’s rapid transit system

On Thursday, September 20, residents of the City of Winnipeg attended an open house hosted by the city to weigh in on the proposed ‘Hydro Corridor’ rapid transit system. The impacted industrial area currently has no residential housing, but the city is anticipating a future neighbourhood in this industrial area.

The City invited local residents to provide their input on the second phase infrastructure. The proposed route rapid expansion will impact also the CN Letellier route that currently runs along the west side of Pembina highway. The Hydro Corridor is proposed to cut through the Fort Garry Industrial area between the Maybank and Beaumont neighbourhoods.

Early comments from Winnipeggers seem to embrace this new proposal. Some residents said that this proposed route makes more sense as it runs through highly populated neighbourhoods that are currently experiencing bus overcrowding. Some are anxious to see the construction phase shortened for an early opening.

Nova Scotia to begin work on dike

The Nova Scotia government says work on a crumbling dike that was breached by flood waters in the Truro area will begin as soon as conditions are safe.

The province announced it will take measures to repair a Truro-area berm that was breached, just one day after the agriculture minister said it was not his department’s responsibility (photo by Jean Laroche/CBC)

The province is helping protect residents and businesses in the Truro area from flood damage by repairing and reinforcing a barrier in the North River area.

Truro-Bible Hill MLA Lenore Zann says the safety of the residents of Truro is the province’s top priority right now and that the province will work with partners to ensure all possible measures are taken to protect the community from further flood damage.

There are hundreds of kilometres of dikes in Nova Scotia

Provincial engineers and staff from Emergency Management, Transportation and Infrastructure Renewal and Agriculture are working with municipal officials in Truro assessing the raised barrier, called a berm. The province is also making TIR staff and equipment available.

Provincial and municipal experts are gathering information next week in preparation for a meeting with Premier Darrell Dexter, municipal leaders and other officials. Premier Dexter called for that meeting, in the wake of the last storm, to develop an action plan that protects families and businesses from flooding in central Nova Scotia. Media Contact: Nicole Watkins-Campbell, e-mail: watkinni@gov.ns.ca.

Ottawa Mayor wants a new casino

Ottawa mayor Jim Watson said he’ll ask city council to signal interest in a new gaming facility, a move that would allow the Ontario Lottery and Gaming Corporation to seek proposals from potential operators.

Watson, who made the announcement through Twitter, said OLG has not proposed or short-listed a location and said council holds final approval on zoning, which would come after the request-for-proposals process.

A staff report will be discussed at the next finance and economic development committee meeting, which will include public delegations and be held in the evening to allow residents to attend.

If council approves the report on Oct. 10, Watson said he will write a letter to OLG to signal the city would be supportive of a gaming facility in principle. While not committing the city, it would allow the OLG to issue a request for proposals from potential operators.

After a preferred proponent has been selected, there will be additional public delegations at a future FEDCO meeting some time in 2013.

The city would still hold the final approval on zoning for a gaming facility.

PST re-implementation timeline

The government’s action plan remains on track to return to the PST with all permanent exemptions on April 1, 2013.

The return to a PST and federal goods and services tax (GST) system in British Columbia is complex and requires careful planning, coordination and implementation throughout the various stages to help ensure an orderly, responsible transition.

Businesses will need to adapt their systems for the implementation of the PST on April 1, 2013. Initial outreach will focus on the general tax application of the PST Act, with more detailed information being released as the regulations and legislative amendments are announced.

A new e-service called eTaxBC is being developed that will benefit businesses by allowing online PST registration, tax return filing and payment and self-service options.

The Ministry of Finance is also acquiring new telephone technology that will support multi-location call centres in both Victoria and Vancouver. The ministry’s information and services on the main government webpage at www.gov.bc.ca are being redesigned and updated to improve access to information, based on consultations with businesses, individuals and tax professionals. Implementation is expected this fall.

Hiring is underway for tax administration positions required for the return of the PST. Government is finalizing its arrangements with the Canada Revenue Agency on returning staff to administer the PST.

Connect with our advertisers

Company Page Phone # Website/E-mail

Altus Group 2 905-953-9948 www.altusgroup.com BTY Group 7 416-596-9339 www.bty.com George Brown College 10 800-265-2002 coned.georgebrown.ca Insite SiteWork 18 877-746-7483 www.insitesoftware.com LCO Construction & Management Consultants Inc. 25 514-846-8914 www.lcogroup.com LEC Quantity Surveying Inc. 15 604-568-3711 www.lec.bc.ca Ontario General Contractors Association 6 905-671-3969 www.ogca.ca Pelican Woodcliff Inc. 23 905-889-9996 www.pelicanwoodcliff.com PlanSwift Takeoff & Estimating Software 6 888-752-6794 www.planswift.com SMARTBIDNET 32 866-888-8538 www.smartbidnet.com TD Insurance Meloche Monnex 15 866-296-0888 CIQS.Tdinsurance.com TTcm2r Inc. 31 416-925-1424 www.ttcm2r.com Vertigraph, Inc./Interworld 28 800-663-6001 http://www.interworldna.com/vertigraph/siteworx_os.php Walcon 9 866-392-5547 www.walcon.ca

We make the difference every day. Could you?

We are Turner & Townsend, a leading independent global consultancy with clients in the property, infrastructure and natural resources sectors.

Our services are extensive, from preparing business cases and operational blueprints, through programme and project delivery, to asset optimisation.

As a result of our continued success winning major programmes and projects around the world, for many of the largest international clients, we are growing and looking for talented and energetic people. We want you to grow with us.

Locations

Opportunities exist in all of our regions across property, infrastructure and natural resources:

■ Americas ■ UK ■ Europe ■ Africa ■ Middle East ■ Asia ■ Australia

People

We are interested in people at all levels in the following areas:

■ Management consultants ■ Programme managers ■ Project controllers and planners ■ Project managers ■ Cost managers ■ Cost estimators ■ Contract and claims specialists

You could be a sector specialist or a generalist, but you will have an impressive track record of delivery.

For further details of current opportunities, please contact Josie Wylie, 416-925-1424 or email torontohr@ttcm2r.com or visit the recruitment area on our website www.turnerandtownsend.com

Please indicate which regions are of interest to you.