On July 14, Bryan Arnold, Chair of the OGCA Executive Committee, Giovanni Cautillo, OGCA President and Erich Schmidt, Manager – Public Affairs and Innovation, met with Hon. Kinga Surma, Ontario Minister of Infrastructure. The purpose of the conversation was to inform the Minister about the impact of inflation on the construction market and general contractors in general.
Recent increases in non-residential building construction costs are beginning to stabilize in most construction market areas (CMAs), but inflation continues to increase at well over 2%. The past year has seen persistent bottlenecks in the supply chain, a labour shortage and an increase of more than 50% in the price of primary construction commodities ( steel, aluminum, copper) have given rise to even stronger inflation in the construction sector. Rising non-residential construction costs remain driven by continued price growth in structural metal products and have been impacted further by supply chain constraints.
The OGCA is supporting contractors collaborating with public buyers to address these increases directly since price escalations are not the contractor’s responsibility. Contractors are not risk-averse but are calculated in how they assume risk. Higher risk factors can increase bid prices for public contracts, which only fuels further inflation. This can imperil ambitious provincial and municipal infrastructure projects designed to keep our economy moving and support crucial GDP growth.
The OGCA will continue collaborating with the Government of Ontario and industry on solutions for current and future projects through productive meetings, like recently with Minister Surma. Our goal is to improve risk-sharing in public contracts related to inflation and help maximize the value of public assets during this challenging time.
If you have any questions about escalation clauses or the recent inflation in construction costs, please contact Giovanni Cautillo, OGCA President, at giovanni@ogca.ca.