BC Construction Industry

British Columbia Mining Industry
April 10, 2018

BC Construction Industry

BC Construction Industry Outlook

The government is taking initiatives to boost small businesses by introducing a new contract award system. This system will enable small BC based construction businesses to have a fair shot at bidding for government contracts. According to British Columbia Construction Association (BCCA) President Chris Atchison, there are more than 225,000 workers and 23,000 businesses currently employed in the construction sector. However, in a highly competitive market coupled with skilled worker shortages and lack of innovation, businesses run the risk of being stuck with unfinished projects.

Crownsmen Partners provides an overview of the British Columbia Construction Industry and insights for local and international businesses to help them make strategic decisions. According to the Ministry of Advanced Education, Skills and Training, the industry is broadly segmented into 5 categories throughout BC: residential, commercial, industrial, institutional & government, and infrastructure and the construction projects are divided into current value of construction projects underway and the total value of proposed construction projects.

 

Industry Overview

Source: BCCA

The chart above, shows the growth for the values of current construction projects underway and of proposed construction projects in the industry. The value of proposed construction projects has been growing at a rate of 14.7% per annum whereas, the value of current projects underway has declined at a rate of -2.6% per annum over the last 5 years. Lack of innovation and shortage of labor can be attributed for the fall in the value of current construction projects underway however, increased government initiatives have resulted in a rise in the value of proposed construction over the years.

According to Build Force Canada, an association set up to provide timely labor market information for the industry, it will be difficult to keep up with the demand of projects, estimating an expansion of 16,800 employees in the BC Construction Industry by 2021 and a retirement rate of 40,000 employees by 2026.

 

Industry Segmentation

Source: BC Major Projects Inventory

The industry is segmented into residential, commercial, industrial, institutional & government, and infrastructure. The data shows the total proposed and current construction project value for 2017 Q3 was approximately $412.7 million, with industrial construction valued at over half at around $267.8 million. This is a result of increase in LNG construction projects and port construction projects.

Infrastructure and residential construction are the second and third biggest segments at $53.6 million and $47.8 million respectively.

 

Industry Dynamics

There are many factors that affect the growth of the BC Construction Industry. The construction industry in BC is fragmented and is dominated by small businesses and hence the most recent Throne Speech states that government is moving towards a new contract award system which will “give small, BC-based businesses a fair shot at government contracts”. The BC province has also proclaimed April to be Construction and Skilled Trades Month. It invites builders of BC including suppliers, manufacturers, professionals, retailers and other organizations to come together and celebrate the important contribution of the construction industry to local communities and to the province as a whole.

Build Force Canada determined in 2016, that there was strong residential activity, but it is expected to decline due to the slowing population growth rate. They expect in the years 2019-2021, there will be a demand for non-residential construction based on proposed LNG, mining, electricity generation, transmission, and pipeline projects. Over the next decade, it is estimated that the unemployment rate of members in the construction industry will be over 40,000 members versus the new entrants to be only 33,400 members. The demand for major projects, unemployment rate, and a decrease in the current population growth are factors that could affect the current and future growth of the construction industry.

Current trends serve as indicators to established or prospective businesses to determine how the construction industry may face challenges or expand. In 2016, residential construction experienced high activity but declined by around 4.5% in 2017 and is assumed to continue to decline due to the slowing population growth. On the other hand, non-residential construction in industrial, commercial, and institutional building (ICI) is rising due to increased investments. The non-residential growth trend is expected to peak in 2021, potentially expanding the non-residential sectors by 16,800 jobs. According to industry experts there will be a challenge to keep up with the demand of projects amidst decreasing number of workers between 2019-2020.

Businesses will have to be mindful of the challenges hovering across the industry and will have to develop mitigating strategies to be able to tap into the growing BC construction market.

 

References

British Columbia Construction Association (2017). BC construction industry statistics 2017. British Columbia Major Projects Inventory, Ministry of JTST. Retrieved from https://www.bccassn.com/media/bc-industry-stats-2017.pdf

 

Build Force Canada (2017). British Columbia construction & maintenance looking forward. Retrieved from http://www.rcabc.org/wp-content/uploads/2017/02/BuildForce-Canada-BC-Market-Outlook.pdf

 

British Columbia: Ministry of Advanced Education, Skills and Training (2017). British Columbia major projects inventory: Third quarter 2017 Retrieved from https://www2.gov.bc.ca/assets/gov/employment-business-and-economic-development/economic-development/develop-economic-sectors/mpi/mpi-2017/mpi_report_q3_2017_final.pdf 

 

Build Force Canada (2016). British Columbia proposed major projects drive construction activity. Retrieved from http://www.rcabc.org/wp-content/uploads/2017/02/BuildForce-Canada-BC-Market-Outlook.pdf

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