RC123 MarApr 2026 - Magazine - Page 10
2026 OUTLOOK
LEADERSHIP
Taking a comprehensive view on construction cost escalation can
help the sector strategize. These are representative of Canada as a
whole—and the national 昀椀gures do not depict provincial vagaries or
project-by-project speci昀椀cs. The forecast is based on our prediction of
national bid price escalation, compiled from proprietary data, market
research and practitioner expertise.
Rather than focusing just on input costs—these 昀椀gures account for
market conditions, commercial pressures and other indirect factors. At
the time of writing, Turner & Townsend estimates bid price escalation
between 1.5 and 2.5 per cent for 2026, as subdued GDP and reduced
project activity constrain industry price pressure. This is higher than
the one to two per cent seen in 2025.
Lagged 昀椀scal stimulus and federal investment should see
escalation proformas pick up to between 4.0 and 5.0 per cent
in 2027, alongside a release of private sector pent-up demand. National infrastructure projects and programs could
also accelerate skill shortages and worsen supply chain
bottlenecks, applying a premium on strained resources.
Collaboration is key
With workloads set to 昀椀rm up towards the latter half
of 2026, and into 2027, escalation pressures are likely to
grow. Alongside persistent volatility, the infrastructure
segment of construction will be exposed to continually
shifting market forces and recalibrating supply chains.
A proactive and multi-pronged approach to planning,
procuring and delivering of infrastructure projects is
needed to manage these risks and capitalize on bene昀椀ts
for the long-term successful implementation of these
schemes across the country.
With data indicating future pressures on resource
availability, the time is now for companies and
organizations to invest in talent development locally
To meet the economic headwinds facing our country, “made in Canada” projects like the Port of
to meet the growing need to deliver the expanding list
Montreal’s Contrecoeur Terminal are being supported by the federal government’s Major Projects Office.
of multi-billion-dollar, multi-year projects that will be
delivered in the coming years.
The volatility in some areas of the construction market
is making it more complex and challenging for clients and contractors
Labour conditions continue to shape deliverability as well. The
to deliver high quality, on-time and on-budget outcomes. While a
unemployment rate in construction has steadily increased from 4.3
clear preference has been shown in recent years to move toward more
per cent in Q3 2022 to 6.4 per cent in Q3 2025 as contractor orderbooks
collaborative contracts, speci昀椀cally Progressive Design-Build (PDB),
weakened. Apprehension has also 昀椀ltered through into hiring
Alliance or Target Cost, this change needs to be done based on projectdecisions, with vacancies dropping to 3.0 percent in Q3 2025—their
speci昀椀c parameters and market sounding, and not as a one size 昀椀ts all
lowest value since Q3 2017.
solution. In addition, implementing these contracts is the 昀椀rst step, but
All of which have contributed to the reduced availability of
truly internalizing the collaboration required and delivering the works
construction workers. As a result, labour costs have continued their
in the true spirit of the contract is the key for long-term success.
steady upward trajectory, with average weekly earnings rising by
A speci昀椀c bene昀椀t of these collaborative contracts which must be
5.9 per cent on the year in Q3 2025. This growth is now underpinned
successfully leveraged during these uncertain times is risk allocation
by newly rati昀椀ed union wage agreements across multiple provinces,
and management which should be balanced between parties and
which will lock in annual increases for several years.
re昀氀ect a best for project strategy. While the initial evaluation of risk
Construction productivity also remains muted, having fallen by
and an honest division of which entity is best placed to manage it
8.1 per cent since the pandemic. Retirements outpacing recruitment,
is critical, meaningful management of existing and emerging risks
skill gaps and slower adoption of technology continue to constrain
throughout the project life cycle is equally as important.
e昀케ciency, compressing margins and adding complexity to schedules.
Finally, during these changing times, organizations need to
The impact of Bill C-5, C-15 and the MPO on the labour force
leverage the available data, from project sources, organization and the
should not be discounted, though. The federal government, led by
wider market, to identify cost and capacity issues early for the best
Prime Minister Mark Carney, plans to expand skilled trades training
opportunity to e昀昀ectively manage the impact.
programs to help industry supply meet demand. However, if several
While 2025 forced us to face unexpected volatility, it also
new projects are greenlit concurrently and development quickens
strengthened our national resilience to meet the challenge and deliver
simultaneously, signi昀椀cant strain would be placed on the labour
“made in Canada” solutions that develop our resources and deliver
market, as the construction industry is unlikely to scale up quickly to
exciting and complex projects for the bene昀椀t of the nation.
match rapidly increasing workloads.
10—RENEW CANADA – MARCH/APRIL 2026
RENEWCANADA.NET
GOVERNMENT OF CANADA
Concrete paving, masonry units and ready-mixed concrete
climbed by 8.0, 7.8 and 7.6 per cent, respectively, owing to growing
infrastructure workloads, raw material cost increases and notable
transportation expenses.
Structural steel only increased by 1.2 per cent and steel pipe and
tubes fell by 15.3 per cent, with tari昀昀-linked cost pressures more
prominent in the U.S. than Canada. However, tightening Canadian
steel import duties will see reduced quotas and an additional surtax
that will likely increase costs. Knock-on e昀昀ects will also be notable,
with lead-in times lengthening, heightened compliance risks and more
onerous administrative requirements.
