June 13, 2012
High construction costs lead to innovation in Winnipeg
FWS GROUP OF COMPANIES
Construction companies in Manitoba are looking for ways to cut costs to combat rising prices in the provincial capital.
“There just isn’t enough labour to go around,” said Michael Grimes, director of business development of FWS Commercial Projects Ltd., the commercial construction division of the Winnipeg-based FWS Group of Companies.
He said finding ways to reduce construction costs is one of the industry’s biggest challenges.
Speaking at a recent Building Owners and Managers Association of Manitoba luncheon, Grimes cited two examples in which construction costs in Winnipeg were higher than in other North American jurisdictions.
In one instance, a developer discovered it will cost 22 per cent more to build a hotel in Winnipeg than to build the same project in southern Ontario.
Another company discovered it would cost nearly three times as much to construct a warehouse in Winnipeg, as in North Carolina – $90/square foot compared to $35/square foot.
Grimes said the source of the high costs is the lack of available trades people at the sub-contractor level.
“Due to all of the construction activity in Winnipeg, the demand for trades people has been exceeding supply for the last five years or so,” he said.
Large construction projects in Winnipeg, either recently completed or ongoing, include the Canadian Museum for Human Rights; the new Winnipeg Blue Bombers stadium; the James Armstrong Richardson International Airport; Manitoba Hydro Place; the Health Sciences Centre Women and Newborn Hospital; the Red River Floodway expansion; the new IKEA store; and the Disraeli bridges project.
Doug Corbett, principal with Smith Carter Architects and Engineers Inc., also spoke about construction costs at the luncheon.
He said Winnipeg, in particular, suffers from a lack of capacity in mechanical and electrical sub-trades.
“There are enough for the smaller projects, in the range of $10 million, but there are very few that can handle the big projects of $100 million-plus,” Corbett said.
To save money, Grimes said construction companies can reduce the amount of time they spend on the worksite, and they can do that by using more pre-fabricated components.
“You don’t save money by beating up on your sub-trades,” Grimes said.
“You save money by thinking outside the box.”
Grimes said that the savings, in percentage terms, from using pre-fabricated components amount to 10 percent or less.
“But five or six percent is a lot of money on a big project,” he said.
FWS Group is looking closely at ways to reduce the increasing cost of building new apartment and condominium buildings.
To that end, the company is planning to use pre-fabricated insulated walls, which come as a single wall system, in multi-storey residential applications.
Grimes said the company has been using the pre-fab walls in industrial projects, and has found it faster and less expensive to use them than traditional components.
Before the pre-fab wall panels could be used in multi-tenant residential projects, FWS Commercial needed to find out if they met fire code requirements.
Fortunately for the company, the components passed the test.
FWS Commercial is also looking into making more use of pre-cast concrete columns and beams and pre-cast hollow-core floor slabs on multi-tenant residential buildings.
As in the case of the pre-fab wall panels, the company first had to confirm that pre-cast components, which it had been using in industrial structures, met the more stringent fire-code requirements for residential buildings.
It also needs to determine if the savings in the cost of on-site labour exceed the cost of using pre-fab components, which are increasing.
Corbett said Smith Carter reduces costs by conducting workshops with contractors and sub-contractors at the design stage of a project and making them part of the team.
For example, a contractor suggested to Corbett the use of less expensive, but still solid, timber piles, at the lowrise Burntwood Personal Care Home construction project in Thompson, MB.
Both Grimes and Corbett said relief may be in sight.
Grimes said he has noticed a slight easing in costs since about the middle of May.
“Some of the workforce has been coming back onto the market as some of the big projects come to an end,” he said.
“But, I’m not sure if it’s temporary or the start of a trend.”
Corbett added that he expects to see more competitive prices in the future.
“There is a lot of urban infrastructure work that needs to be done, as well as possible dam construction in northern Manitoba,” he said.
“And, the prospect of that work has been bringing some of the larger mechanical and electrical contractors to Winnipeg.”
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