Construction decline expected across Canada

Overall construction across Canada is expected to be two per cent lower this year than if the oil price had not fallen, though Ontario remains in an optimistic position, according to a new survey.

More than two-thirds (68 per cent) of respondents to the latest RICS Canadian Construction Market Survey reported that the price decline has been responsible for the cancellation of projects in areas predominantly focused on the oil, gas and energy sector.

Nearly 90 per cent of respondents believe that workloads will be further reduced over the coming year.

“The survey highlights the significant impact the major shift in oil price has had on the respondents’ sentiment and outlook for 2015,” said Marlon Bray, director, cost consulting and project management at Altus Group.

“Alberta is bearing the largest brunt of the downturn with reduced expenditures and a likely decline in tender price expectations.

“While construction output is predicted to be lower across Canada, Ontario remains in an optimistic position with continuing investment in the residential, commercial and infrastructure sectors.”

Indeed, the regional trend from the previous quarter continues, with Ontario expected to see the strongest investment in construction in coming years and the Prairies’ expected construction fortunes continuing to fall with the price of oil.

An Alberta government official expanded on the effect of the oil price drop on the province. “Any activities connected to the oil sands are taking a real hit,” he said.

“There’s a lot of news regarding larger oil companies, including multinationals like Total, which previously expressed interest in investing in oil sands but are now putting projects on hold, and this is showing across Alberta.

“There are still a fair amount of commercial and residential projects in progress but the industrial sector is definitely taking a hit. And government infrastructure projects are still proceeding, but cautiously.” 

As for factors limiting future growth, respondents noted that financial pressures and competition from rivals remain the most important, with nearly 60 per cent citing both as concerns.

Planning and regulatory constraints and weather were also cited, while a third of respondents said they are affected by labour shortages, especially in securing surveying and other construction professionals.

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