The speedskating oval, Richmond: The land has been zoned and construction is to begin in early 2006 for completion by April 2008. Cost: $155 million.

Organizers of the 2010 Winter Olympic Games officials may have to turn to cheaper venue designs as British Columbia enters what might be the biggest building boom in its history and double-digit inflation hits construction costs, a senior industry official says.

In Greater Vancouver alone, major non-residential construction projects worth $17 billion are queued up for the next five to seven years, said Keith Sashaw, president of the Vancouver Regional Construction Association.

Province-wide, a running tally of all types of construction projects worth $15 million or more totalled $62 billion at the end of 2004, up from $44 billion a year earlier.

But the boom has helped push construction price inflation over 10 per cent.

“When you’re faced with that kind of cost increases, it’s a negative,” said Helmut Pastrick, chief economist of Credit Union Central of B.C.

Some private-sector construction projects will likely prove to be marginal and will be forced to fold, Pastrick said. Asked whether public-sector projects may be pushed into cost overruns he said, “I wouldn’t be surprised.”

Sashaw said most Olympics-related projects haven’t got to the final design stage yet and costs can probably be shaved there.

“As you get into the design phase, you can effect savings in construction costs by . . . taking a look at alternate materials and those kinds of things.

“You can’t start talking about cost overruns when you don’t even have the design yet,” Sashaw said. “There’s no need to panic.

“The construction industry is very innovative. The design community can factor in design elements that can address these costs.”

Pastrick said the new building boom will “certainly” be B.C.’s largest in modern times, outstripping the 1985-90 boom triggered by the Expo 86 world fair. By some measures it might be bigger than the dam-and highway-building era of the 1950s and ’60s.

The provincial construction industry is expanding at a frenetic pace to keep up.

Last year alone, Sashaw said, construction employment in B.C. shot up from between 110,000 and 120,000 to 168,000 — an increase of close to 50 per cent. That included workers from other provinces migrating — or returning — to British Columbia.

“People are coming back into the province,” Sashaw said. “I suspect that a lot of the people we lost when the industry went into the slump in the 1990s are returning.

“This isn’t just the Olympics,” he added. “We’ve got a solid program of construction that’s five to seven years in length.

“People are going to be making decisions to relocate their families when they see that kind of solid performance.”

Bright as the future might be, there is a dark lining. Prices are rising, fast.

Statistics Canada’s non-residential building construction price index for Greater Vancouver, which 18 months ago was increasing by about one per cent a year, has been rising in leaps and bounds since late 2003 and last fall hit double digits, with prices averaging 10.4 per cent higher than a year earlier.

“Last year we saw some major hits on construction costs, with huge increases in steel prices and copper prices and some of the other commodity prices that go into construction,” Sashaw said.

Part of the rise is catch-up after years of below-average increases in B.C. construction, he said, and part is due to global conditions, such as rapid industrial development in China.

The pressure on steel prices should relent this year as China brings several steel mills on-stream and becomes a net exporter of steel, he said. But there will be other pressures.

“Last year, it was steel. Next year, who knows. . . . I can pretty well assure you there will be something, because construction is such a huge industry and is dependent on so many variables.”

The 2010 Winter Games official overseeing construction said the Vancouver Organizing Committee (Vanoc) expects the construction industry to help the Games stay on budget.

“There is a supply and demand situation that is going to impact us for sure,” senior vice-president Steve Matheson said.

“On the other hand, you know, the industry is very resourceful and is capable of coming up with some pretty good solutions to deal with a heated market.”

Matheson said all venue plans are on schedule, and the organizing committee is trying to kindle a kind of Olympic pride in the building industry to keep it that way, despite rising prices and risks of labour and material shortages.

“We’re going to try to appeal directly to workers to participate in the Games and take pride in that,” he said. “We think if we do a good job on that front, we’ll be able to attract companies to bid on our projects, and we will get the supply of labour that we need to build them.”

The organizing committee has been advertising in central Canada to attract interest from the building industry there, Matheson said, although most of the companies bidding on contracts are expected to be B.C.-based.

However, a labour leader said Vanoc is falling short of expectations.

Wayne Peppard, executive director of the B.C. and Yukon Territory Building Trades Council, said his group has been trying for close to a year to negotiate an agreement with Vanoc that would guarantee labour peace for Olympics construction and deal with labour costs, training, skills shortages, job safety and other issues.

“We’ve got to be able to sit down at the table and begin to work out whether or not there’s a possibility for that,” Peppard said. “At this point Mr. Matheson has said no, there is no room for an agreement, period.”

Asked if Olympics projects could be hit by labour disruptions in the absence of an agreement, he said, “That’s distinctly a possibility.”

However, Peppard said labour shares the enthusiasm about the coming boom.

“We’re looking at some pretty good times coming in the next three to 10 years.”

Source: Statistics Canada

© The Vancouver Sun 2005