If the past is any guide to the future, there will be a general increase in construction costs in 2025. At least that is what industry players predict, who fear that the sector will be hit by a “perfect storm” in the over the next few months.
“Is a perfect storm looming for the construction industry in 2025? I have the impression that yes,” muses the CEO of the corporation of general contractors of Quebec, Éric Côté.
The price of projects under construction has continued to increase for several years, a trend that has continued in recent months.
You don’t have to look far to find examples. Creating a reserved lane on Highway 15 between Boisbriand and Mirabel will cost $100.4 million more than expected. For a project which was to cost $191 million, this represents an increase of 52%, and we are talking here about only around fifteen kilometers.
Likewise, we saw the cost per housing unit built as part of the government’s affordable housing program increase by more than 30%, from $344,899 to…$453,996!
The increase will continue
“Despite the recent drop in interest rates, other factors lead us to believe that the upward trend will continue,” observes the spokesperson for the Association de la construction du Québec (ACQ).
The ACQ mentions that the American threat to impose tariffs of 25% on Canadian goods could “have a major impact on material costs”.
“And with the renewal of collective agreements which expire on April 30, we can expect a general increase in the costs of construction projects,” adds Mr. Rhéaume.
Reduction in the number of projects?
The corporation of general contractors makes the same observation, but adds that the “very real” possibility that the Legault government will reduce the number of projects in an effort to save money creates uncertainty in the sector.
“Contractors should consider these three factors when forecasting the costs of their projects. If they bid too high, they risk not getting a job, and if they aim too low, they will get the contracts, but they risk losing their shirt,” explains Éric Côté.
“If entrepreneurs had to deal with just one of these three elements, it would be as is, but all three at the same time, let’s say they are not used to that,” he adds.
