Estimates should increase for hard cost inputs
April 24, 2019
Stegbar Aluminium Double Hung Windows
Any Canadian contractor budgeting for a multi-storey residential project should increase their estimates for hard costs by 5 to 8 per cent this year to cover higher prices for steel and aluminum products.
“We encourage [Canadian] clients to build in a robust risk contingency in their overall budget to take into account market shifts related to steel and aluminum tariffs as well as a general increase in demand for specific sub-trades,” stated Turner & Townsend—a firm consulting on global construction projects—in an April bulletin.
The reason for these higher prices in Canada stems from U.S. tariffs introduced in 2018. These tariffs add from 10 to 25 per cent on U.S. imports of aluminum and steel products including rebar, stainless steel wire, wire rod and aluminum-frame windows.
The Canadian Coalition for Construction Steel estimates that the introduction of these tariffs has increased the price of steel rebar by 58 per cent compared to a year earlier. Canadian industry insurance appraisal company Normac said the price of exterior windows has increased significantly due in part to the heavy reliance on aluminum materials, which they project will rise by up to 15 per cent compared to last year.
Canada is the world’s largest purchaser of American steel. Even if steel is available at Canada’s central mills, transportation costs often make it unaffordable, especially for those on the West Coast. It costs over four times more to ship a tonne of steel to Vancouver from Ontario than it does from Asia, according to a report from Turner & Townsend.