Landmark Ottawa library project faces the same conundrum as the rest of the building industry
Joanne Laucius, Ottawa Citizen
Publishing date: Oct 15, 2021 • 21 minutes ago • 4 minute read
How can the cost of building a new super-library in Ottawa soar by $141 million?
Among the factors: a devastating winter storm in Texas, construction stimulus programs in Asia and massive new distribution centres sprouting up all over North America.
The perfect storm that has gripped mundane renovations and building projects has also hit a landmark joint project between the Ottawa Public Library and Library and Archives Canada. Originally pegged at $192.9 million in 2018, the new library is now expected to cost $334.16 million.
The city received two bids to build the project, one from EllisDon and the other from PCL Construction. PCL’s bid was the lowest, but still an increase of $64 million.
Given the volatility of the costs for material and labour, PCL has taken on considerable risk by giving the city a firm price, said John DeVries, president of the Ottawa Construction Association.
The 2016 cost estimate included a 10 per cent escalation contingency — but actual construction inflation in Ottawa is currently more than 65 per cent, said a report to the library board.
“The bid price is a fixed price, so it will not go up. There is no market intelligence suggesting that prices are going down. In fact, they continue to go up,” said Orléans Coun. Matthw Luloff, the library board chair.
“Waiting for the prices to drop and re-tendering would result in a more expensive project, and potentially no project at all if the general contractors don’t come back to the table to bid on this project a second time.”
The city of Ottawa and Library and Archives Canada, which are to share the building at 555 Albert Street, have embarked on an iconic project at a time when world markets are in turmoil, said DeVries.
There are risks involved in large projects spread out over several years, especially one-of-a-kind projects like the new central library where elements are custom-made, he said.
The design for the new library incorporates exterior glass with a frit pattern. This will help reduce glare, cut cooling costs, and reduce the risk of bird collisions, giving the exterior a distinctive textured look. But the number of global manufacturers able to produce glass for a project of this size are very limited, said DeVries.
Shortages and a short supply of materials have been reported in all parts of the construction industry.
The price of steel, for example, has increased from $600 to $800 U.S. a metric tonne before the pandemic to $1,800 to $2,000 now, said JC LeBlanc, a business development manager for Montreal-based Canam, the largest steel fabricator in North America.
Last June, the Ottawa Construction Association held a industry roundtable to discuss turbulence and price escalation in the materials market. The construction of major distribution centres, such as those being built by Amazon, Costco and Walmart, are driving up steel prices as consumers turn to online shopping, the roundtable heard.
The issues affecting the Canadian construction industry are global. There is a world-wide shortage of shipping containers and congestion in ports, which has delayed unloading and delivery. Government stimulus projects in Asia are driving demand for construction materials.
A winter storm in early 2021 affected petrochemical manufacturing in Texas. Plants had to be shut down, pipes burst and equipment and plants had to be rebuilt. This has affected the supply of plastics, fire-stopping materials and paint. The price of resin pipes increased by 100 to 200 per cent, the roundtable heard.
Late this spring, the North American drywall market was sold out and there were a few cases in eastern Canada where the distribution network had no inventory of 5/8-inch drywall to sell to suppliers. This spring, plywood costs had doubled to $100 a sheet and oriented strand board (OBS) a type of engineered wood similar to particleboard, was more expensive than plywood.
Meanwhile, the construction industry is also contending with labour shortages. DeVries anticipates this will get worse as clients begin to request vaccination policies for workers.
“Projects of this size have a number of subcontractors, and subcontractors of subcontractors, each of which needs a crew dedicated to this project at the time when their service needs to be delivered,” said Luloff.
“First of all, it is increasingly hard to hire in the trades these days, which is causing an increase in the cost of labour and the challenges of sourcing it. Second, the Ottawa construction market is very hot right now. All these crews are busy on other projects, which creates a supply and demand dynamic that drives up prices.”
“Value engineering” seeks savings on projects components, such as identifying alternative materials. A report to the library board said $100 million in savings have been identified by reconsidering materials in parts of the building.
The city will be sharing the building with Library and Archives Canada, which will be paying $136 million compared to the original estimate of $70.6 million.
The government of Canada is committed to its share of the project and is confident it will move forward, said Library and Archives in a statement.
“Library and Archives Canada took the necessary measures to secure additional government of Canada funding to respond to the increased pressures elated to COVID-19 and the super-heated construction market in the national capital region.”
This project is not a box or a condo tower, said DeVries.
“Architects do some beautiful, creative things. Then it’s up to the building industry community to figure out if they can build it,” he said. “The constructability is part of the sticker shock.”
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