Some new capital projects for Coquitlam may be delayed or scaled back because of the soaring costs for construction.
That’s the word from Michelle Hunt, the city’s general manager of finance, lands and police, who gave council a heads-up last month as staff begin to crunch the numbers for the 2023 capital budget.
In her presentation before the finance standing committee, Hunt was clear with her message: In the post–pandemic world, inflation rates are on the rise, as is the price for labour and building materials.
As well, the supply chain is moving slowly, putting further pressures and expenses on major construction projects.
As a result, Hunt said, she's working with city department managers to find savings and, perhaps, hold off on projects.
"We are working very hard to live within our means," Coquitlam city manager Peter Steblin said, asking council to prioritize projects.
The city recently hired an expert to help with budgeting and forecasting "so that we can stay on top of these challenges," Hunt said, noting new capital projects and renewing existing assets are in the plan.
Among the city’s current big-item items are (in numerical order):
- Austin Works Yard (Phase 1): $50 million
- YMCA, Burquitlam community police station and park and ride: $57 million
- Place Maillardville Community Centre: $25.2 million
- Spani Pool: $18 million
- Cedar Drive pump station and sewers: $8.5 million
- Quarry Road (Gilleys Trail to Widgeon Park): $8.5 million
- Northeast Community Centre: $8 million
- Partington Creek Channel/Cedar Drive: $6.3 million
In particular, the Austin Works Yard Renewal, the Spani Pool Renewal, the Northeast Cedar Drive pump station and sewers, and the Innovation Centre renovation are much higher than projected.
And Hunt said construction of Northeast Community Centre on Burke Mountain will be impacted by inflation and cost upticks.
Roofing materials, steel pipes
The Consumer Price Index for the Vancouver area in May was 8.2 per cent — up from 6.6 per cent in April "and continues to sit at record highs," Hunt said.
And, according to Statistics Canada, construction prices rose 12.8 per cent from the first quarter of 2021 to 2022 for non-residential building.
"This is compounded by longer lead times for some materials and finished products, with some high-demand items temporarily unavailable," Hunt wrote in her July 12 report.
"Vehicles, petroleum-base products (roofing materials, insulation products, foam used in the automotive industry, PVC pipe), asphalt, steel pipe, glass, fuel and consumer electronics (phones, computers and tables due to microchip shortages) are among the projects that are creating procurement challenges for the city."
Hunt also pointed out the price volatility, as well as geotechnical and archaeological finds and permits, along with the city’s environmental sustainability pledges on climate adaption and greenhouse gas emissions.
Still, Coun. Brent Asmundson warned that if council postpones as project, it could cost the city more in the long run to build it.
The five-year capital plan is set to go before council in November, with a vote expected in December — a month ahead of schedule for the new council, so the city can secure contractors, schedules and pricing in early in 2023.