Construction Costs Expected to Rise in 2015
Recently I attended a Vancouver Island Construction Association Meeting in Courtenay and participated in a round table discussion with businesses from the construction industry and with representatives from municipalities, colleges and other types of related agencies. One of the topics of discussion at our table was the cost of tendering a project during 2014 and the question that came up, was: what is the cost of projects going to look like in 2015?
From my perspective, I can see that the bidding process for almost all projects, including commercial, residential, municipal and federal projects seems extremely competitive at this time. The construction companies have shared information with me, that they are willing to make skinny margins to keep their crews employed. Herein lays the next challenge for the industry in the upcoming two to three years.
These same construction companies, including residential builders have told me that they are increasing the hourly rate that they pay their employees by 15% to 30% to retain them. Employers are also looking at other perks to retain employees, so that they do not leave their community to work elsewhere.
The increase in labour rates is expected to increase the overall cost of construction projects by 8-10% during 2015. This increase will likely be seen across residential, commercial and government projects during the upcoming year. The bottom line is that construction costs are going to be more expensive.
Talk to your employees to see what incentives they might be interested in. It could be something as simple as changing their work schedule. A little raise is always going to help, and combined with a few other changes, you could have a loyal, solid team moving forward. You would be surprised at their answers, if you ask them. I know that I was when I asked the question!
Clarice Coty, Editor, Building Links
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