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Booming construction sector faces ongoing challenges

Companies grapple with skills shortages, prompt payment and project procurement
Women now make up almost six per cent of the skilled construction workforce | Photo: July Alcantara, E+, Getty Images

Findings from the recently released BC Construction Association (BCC A) industry survey show a thriving construction industry that is a major contributor to the province’s prosperity. 

For example, the value of current projects has surpassed pre-pandemic figures and grown to $134 billion. 

The construction industry’s contribution to the province’s gross domestic product has increased to $23 billion today from $18.8 billion in 2017. 

Construction is the biggest employer in B.C.’s goods-producing sector, with more than 200,000 British Columbians relying on the industry for a paycheque. Average annual construction wages have risen to more than $66,000. 

The industry is also maturing. 

The number of companies that have adopted diversity policies, such as the Builders Code, has risen to more than eight out of 10. 

Women now make up almost six per cent of the skilled construction workforce, and they are five-and-one-half times more likely than men to recommend the trades as a career path. 

“Women in construction are following a passion,” said BCC A president Chris Atchison. “They’re determined and persistent and will work to overcome any barriers that get in their way.” 

Construction is also facing some serious challenges, such as a skilled labour shortage. 

Although the number of construction companies in B.C. has grown to more than 26,000, the number of people employed in the industry has fallen. 

Approximately nine out of 10 construction companies employ fewer than 20 workers, and the average company now employs just over 6.5 people. 

“The decrease in size is a reflection of market forces,” said Atchison. “The skills shortage makes it hard to find and retain talent, so employers are forced to do more with less.” 

In addition, profit margins have shrunk, so there’s less cash flow to invest in technology and training. 

“Many contractors have started to turn down larger projects they believe come with too much risk,” said Atchison. “So we’re seeing big companies getting bigger, and small companies getting smaller.” 

In addition to labour shortages, B.C. construction faces prompt payment and project procurement challenges. 

“It’s normal in construction for contracts to include 90- to 120-day payment terms,” said Atchison. “That’s three or four months. There is no other industry where payment terms are this long. The standard in Canada is 30 days. And construction owners keep pushing for longer and longer terms, and they often pay late on top of that.” 

Meanwhile, the contractors, most of whom are small “mom and pop” businesses, still have bills to pay. 

“They do that by taking out more debt,” said Atch i son . “That’s risky, and many construction companies have gone out of business as a result.” 

He added that other provinces, such as Ontario, Alberta and Saskatchewan, have instituted prompt payment legislation. 

“They’ve seen that it acts as a deterrent to late payments and, at the same time, is a catalyst for better communication,” Atchison said. “B.C. has everything it needs to follow suit. Everyone would win: owners, contractors, sub-contractors, suppliers and taxpayers.” 

In addition to slow payment, the industry is bedevilled with suboptimal project procurement practices. 

“They lead to escalating costs, expanded timelines and compromised outcomes,” said Atchison. “Taxpayers can’t afford it, and neither can contractors.” 

There are excellent guides and standard documents to help owners, he said, but their use is becoming increasingly rare. 

“Experienced procurement specialists are retiring, and their replacements have less expertise and less understanding of construction,” said Atchison. 

Atchison added that contractors are becoming concerned about the stability of their industry. 

“Contractors are staying away from projects they would have bid on in the past,” he said. “Part of it is the skills shortage, but a lot of it is also slow payment, increased costs due to supply chain disruptions and shortages and poor owner procurement practices. 

“It’s not worth the risk to them,” Atchison said. “Investing in infrastructure is important, but you also need to invest in the industry that is called upon to build it.”•