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$1 million more needed for new library

Rising construction costs will be felt by projects throughout Whistler

Skyrocketing construction costs are forcing the budget for the Whistler Public Library up by $1.2 million.

Council must now decide to approve the new $7.98 million budget or go back to the drawing board and look at other options.

"I don’t know if it (the increased budget) could kill the project," said Municipal Park Planner Martin Pardoe. "I guess that’s one option. I think that before that option was chosen they (council) would probably look to either reduce… the size of the building or they would look to change some of the materials of the building to look for cost savings that way."

The project is already almost two months behind schedule and every month of delay tacks on an extra $60,000 to the overall cost.

This is not an anomaly. The increased costs to build the Whistler Library are just a symptom of a larger problem.

It's a relatively new phenomenon that is shaking up the industry and could have quite serious repercussions for the resort municipality, which is on the brink of a major construction boom, fuelled in part by the 2010 Olympic Games.

"We got hammered as well," admitted Squamish Nation Chief Gibby Jacob. "I don’t think anybody has escaped."

The Squamish First Nation and Lil’wat First Nation are working together on a First Nations Cultural Centre in Whistler. Jacob said the centre will cost them a lot more than they anticipated. The budget has jumped from original estimates of $15 million in 2003 to $19.6 million this year, due in part to rising construction costs.

"It's just a horror show for everybody," said Jacob.

There are a number of factors at play, exacerbating the situation in the province and in the rest of Canada, from the rising cost of materials to a shortage of labour and a glut of work.

Toby Mallinder, a partner with BTY Group, which does construction cost consulting among other things, explained the factors behind the ever-escalating costs.

One of the driving forces is the 2010 Olympic Games and the push to complete projects before the world descends on B.C. Between now and 2010 there is at least $12 billion worth of major infrastructure to be built, mostly between the Lower Mainland and Whistler, including Olympic venues, the Sea to Sky Highway and the Vancouver Convention Centre, to name just a few.

All that demand means the sub trades are very, very busy. Take the concrete formwork subtrade as an example. BTY Group estimates prices for this trade have gone up 50 per cent within the last two years.

"That was the first trade to jump from what had been the norm," said Mallinder.

It spiked because of the sheer volume of work and the fact that there isn't a lot of competition within the trade itself.

"Well, first of all there aren't many to start with so there's a shortage of those skilled trades or forming trades and their order books… they could be (full with orders) two years down the road," said Mallinder.

That's not just a problem with the concrete formwork trade. There is a shortage of skilled labour across the construction industry, with the average age of workers around 50 years old. These factors all add to increasing costs.

So with an aging workforce and an overabundance of work, particularly in the Lower Mainland, that could spell problems for construction projects in Whistler.

Mallinder said it would be harder to entice workers to the resort when there's so much work in the city and elsewhere.

"The problem with Whistler is you don't have a work force up there," Mallinder explained. "So for big projects, more often than not, you've got to bring them to Whistler… If there was no other work, if it was a relatively flat market, then trades wouldn't have a problem travelling to somewhere like Whistler… But the order books are so full, there's so much to choose from for these guys, why would they go up to Whistler when they could work close to home for the same price?"

The cost of materials has also been a large contributing factor, particular the cost of reinforcing steel, which has gone up in some cases about 40 per cent in the last year.

Steel is a world commodity, something which is in high demand throughout the world. And so when a country like China, which has one of the leading world economies, starts importing large amounts of steel, the repercussions are felt around the world.

"The orders coming from China put a massive demand on the world steel supply, which was one of the reasons why steel went up," said Mallinder.

For companies that are budgeting for projects right now, like the Squamish First Nation, it can be a tricky business. Material costs seem to be increasing each week.

"We’re trying to do things to offset those rises," said Jacob.

One way for the Squamish Nation to combat the rising cost of materials is to go into a joint venture in a building supply company based in North Vancouver.

"If we’ve got to spend money we may as well be paying (it) to ourselves, recouping some of the costs out the back end of that particular joint venture," said Jacob.

For the team working on the library, the rising costs have forced them to find ways to reduce capital costs in the building without compromising the quality of the building or the design.

However, if council does not approve the $1.2 million increase at the May 2 meeting, they may be forced to go back to the drawing board, which would again delay the project.

Pardoe explained that they could look for cost savings elsewhere although that may compromise the LEED (Leadership in Energy and Environmental Design) standards.

For example, the library windows are slated to have wood framing, which fits in with the village design guidelines and with LEED. But choosing vinyl as an alternative may be cheaper.

"From a sustainability perspective and a LEED initiative perspective, it's probably not a good thing, it's not a wise decision to use that product, although it is considerably cheaper," said Pardoe.

As thoughts focus on big capital expenditures in government projects, local developer David Ehrhardt, a principal in the Nita Lake Lodge development, is thinking about the residential market. He said ultimately it's the consumer who will pay for the increased costs in that market.

That again becomes a significant issue in Whistler, where employee housing is to be built at a capped price, specifically at $175 per square foot. If costs continue to climb, few developers will be enticed to build price-controlled housing Ehrhardt said. And for the hundreds of residents on the ever-growing employee housing waitlist, that is not welcome news.

"If the costs go up and (go) above the costs of supplying the product, then no one's going to move ahead and do it. I mean, that's a reality. That's something that the community has to face," said Ehrhardt.

In the meantime, Mallinder said it's only going to get worse.

BTY's projections in December showed the industry would peak at 10 per cent inflation in 2005 and decrease to 8 per cent by 2008.

Now his sense is that there could be at least a five per cent increase on those December projections.

He said: "Things are probably going to get even worse over the next two or three years."

Council will consider the library budget at its May 2 meeting. If approved, when all is said and done, this library will cost $8.1 million which includes, construction, design and all soft costs.