January 20, 2014

Engineers optimistic about 2014

Consulting Engineers in B.C. are optimistic about the province's outlook for construction activity in 2014 due to record high investment in major projects.

“We are very encouraged in the growth and in the number and size of the major project inventory,” said Keith Sashaw, president and CEO of the Association of Consulting Engineering Companies – British Columbia (ACEC-BC).

“We have a significant 30 per cent increase in major projects over previous years, which is now more than $300 billion.”

Sashaw made this comment to a room full of about 60 association members, who came to hear his review and analysis of the latest B.C. Major Project Inventory at the Terminal City Club in Vancouver on Jan. 15.

The most recent inventory estimates the total value of major projects at $304.9 billion for the third quarter of 2013, which is an increase of $4.7 billion or 1.6 per cent from $299.4 billion in the second quarter of 2013. Compared to the same quarter in 2012, this is a 31.1 per cent increase.

As a result, this is the first time in B.C. history that the total value of major projects has been greater than $300 billion.

“The interesting thing about the major projects inventory is that a lot of that growth number is based in the north and around resource-based sectors of the economy – resource meaning pipelines, gas and mining,” he said.

“That is where we really have seen an increase in activity in terms of major projects.”

The North Coast region remained in top spot in the province with a total capital cost at $115.5 billion in the third quarter, which is an increase of 1.0 per cent from the previous quarter and 103.8 per cent from one year earlier.

It has the highest total value of proposed projects at $99.8 billion, which includes liquefied natural gas, mining and pipeline projects.

In addition, the largest dollar contribution by an industry to the $4.7 billion increase in total value of major projects was made by pipelines, transportation and warehousing.

This industry increased by $1.9 billion to $54.1 billion in the third quarter over the previous quarter. Compared to the same quarter in 2012, this is a 49.4 per cent increase.

The two most important projects entering the inventory in the quarter were the $1.5 billion North Montney Mainline proposed by Nova Gas and the $350 million Eagle Mountain Woodfibre Gas Pipeline.

In contrast, the Lower Mainland-Southwest region took the top spot for the most projects under construction in the third quarter at $40 billion, which is an increase of about 0.2 per cent from the previous quarter. Residential and mixed-use work is the largest category of projects under construction in the region.

Across the province, residential and mixed use projects increased by $600 million to $50.9 billion in the third quarter.

The largest addition in this category during the quarter was the proposed $1 billion Monaco residential mixed-use development in Peachland.

Sashaw pointed out the fact that the Lower Mainland-South West region has the largest dollar values for work under construction, but the highest growth is taking place in the northern part of the province.

For example, construction started in the North Coast region increased by 8.9 per cent to about $8 billion in the third quarter of 2013.

Construction has started on the $650 million Fairview Container Terminal in Prince Rupert. Compared to the previous year, the value of projects under construction has increased by 17.4 per cent.

However, the total value of projects under construction was about $83 million in the third quarter of 2013, which is about the same as the second quarter.

“The major projects inventory is a soft indicator because it includes projects that are conceptual,” said Sashaw.

“That is, they may or may not go ahead. The underlying part that I find intriguing is a lot of the projects are proceeding and they do give us an indication of what’s happening in the economy.”

The flat trend in projects under construction in the province was offset by an increase in the total value of proposed projects, which also reached a record high of $200.2 billion in the third quarter of 2013, compared to $194.9 billion in the second quarter.

Utilities increased by $1 billion during the third quarter, largely due to the proposed $750 million Sooke Wind Project and the $150 million hydro-electric dam proposed by Fortis in Princeton.

The total capital cost estimate in the utilities industry is $48.8 billion for the third quarter of 2013.

Commercial projects had the largest percentage total gain of all industries (6.0 per cent or $500 million) to reach $9 billion in the third quarter. Projects completed during the third quarter jumped to $2.6 billion from $1.1 billion in the previous quarter with the completion of the Mt. Milligan mine in northern B.C.

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These projects have been selected from 371 projects with a total value of $1,936,826,394 that Reed Construction Data Building Reports reported on Thursday.


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