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Why Are Canadian Construction Costs So High? (2018) (pedestrianobservations.com)
97 points by luu on Nov 25, 2019 | hide | past | favorite | 140 comments

As I can see from living in Canada and travelling the world there can be several reasons:

- corruption, especially in QC

- over-the-top safety requirements, regardless of project size. E.g. in Toronto every road work sight has a police officer present who’s just standing there bored out of their mind. In Montreal it’d be two persons on each side holding a flag - a job in Europe replaced by a temporary semaphore.

- lack of experience and expertise. Canada is a relatively young country with very few major infra projects under its belt.

- lack of funding due to low density. You just can’t build ambitious infra projects for such sprawling city design. Every city, except Montreal to some degree, suffers from urban sprawl and low density.

- lack of care by citizens. Most Canadians aren’t well travelled outside of Americas. They don’t know what good cities look and feel like. Even when they go on vacations it’s generally cheaper destinations in southern parts like Cuba, Mexico and Dominicans.

> - corruption, especially in QC

Québec had an inquiry¹ and found large-scale systematic corruption. Other provinces… haven't looked.

¹ https://en.wikipedia.org/wiki/Charbonneau_Commission

A very interesting article I read (can be found with a google search) was an in-depth look at the corruption with snowplow contracts. People were getting beat up and were greasing politicians palms to get these lucrative contracts in Quebec.

How very Canadian!

- corruption, especially in QC

If you think corruption is bad in Quebec, look at BC. One of the first things our current government did was to pass a law requiring that all government-funded construction must be performed by workers belonging to unions which donated to the governing party's last election campaign. A short time later, they changed the procurement rules from "lowest cost bid" to "best bid", with the rules for determining "best" explicitly including how many jobs would be created for members of the aforementioned donor unions.

Taking lowest cost bid isn't always optimal. In Germany it is required to take the lowest cost bid which leads to all kinds of failed projects as the winning bid can't hold its bid. As well, life-time of things built this way have become awfully short.

Imagine if you were forced to buy all your stuff from the dollar store. Pretty obviously the results would be hit and miss, mostly miss.

Imagine a twist on this: you have to buy from the dollar store, but they dollar store has agreed on a level of quality. They may have a separate back room with only the things you are allowed to buy because that is where items that meet your quality standard are. (They may or may not allow others into that room)

The reality is for big projects quality should always be part of the contract. Use substandard quality materials and the whole contract is void.

> the dollar store has agreed on a level of quality

The problem is that "agree on a level" and "lowest cost" are fundamentally opposite goals which require constant outside monitoring.

Not if you set the correct requirements.

It's not "lowest cost bid" but "lowest cost bid that meets all the requirements". The point is that requirements have to be well specified.

It can be very adversarial very quickly. Whichever way you turn, the public servants need to be very competent, either to direct the project themselves or to specify it very well. There's no free lunch.

The problem is that Germany lacks knowledgeable people in public service.

The underlying assumption is that Waterfall works, which is probably more problematic.

The thing to keep in mind is that it is not a bid if it is determined to be unrealistic. It is imperative that the contracting office understand whether a submission is realistic or not. If they do not perform that basic step, then the project will either fail, or be subject to expensive change orders that will likely inflate the costs and schedule massively.

>One of the first things our current government did was to pass a law requiring that all government-funded construction must be performed by workers belonging to unions which donated to the governing party's last election campaign

It's true that (a) workers must join a union when working on gov't projects and (b) The governing NDP is the "pro-union" party and thus, has received millions of donations from said unions.

The last part of what you wrote is worded poorly IMHO. Read literally, it seems to imply that donating to the party's campaign is part of the law itself. Which it isn't.

I agree, the effect is pretty much the same (due to (a) and (b) above) but I think it's important to clarify that point.

Do you have any sources for reading up on this? I find it interesting but can't find much after googling. Is it related to CETA?

I'm not convinced this is a bad thing, given only the information in your comment.

You're not convinced that it's bad for the government to deliberately overpay for projects in order to funnel money into the pockets of its political donors?

I’m not sure that’s a fair characterization. Is it clear they’re overpaying?

I’m not pro-union but unions aren’t the devil.

Assuming that comment isn't misrepresenting the issue (I know nothing about Canada and can't say), I think the main focus isn't the unions, but that only organizations that contribute to fattening politicians wallets can build anything. Those organizations just happen to be unions.

A union that is getting contracts because they contribute to the right people is the corrupt devil. A union that provides for their workers salary, safety, retirement, or whatever other good is fine, but many unions cross the line to not allowing non-union workers fair ground to compete with them and that is evil.

I'm not convinced it's because the unions are lining the coffers of the politicians. It's not like corporations are strangers to lobbying and influencing either. There have been many problems with non-union subcontractors skimping on workers protections, causing death and injury to workers. I don't know about the situation in Canada, but a few soundbites without data is not going to convince me "union bad", "big construction company good".

Is the situation clearer when you realize that it's only a subset of unions which are allowed to be involved with public construction contracts? The unions which didn't make "donations" have been shut out.

I'd be interested to learn more about this. Do you have a source? Thanks.

That is abhorrent.

> lack of experience and expertise. Canada is a relatively young country with very few major infra projects under its belt.

Gawd. As if Canadians are too dumb to go to international conferences like everybody else. Maybe they wouldn't let us in because we are wearing toques and speak in funny accents.

Toronto is a larger city than Chicago, and has more construction. We hold international conferences.

It seems like most of the construction in Toronto is condos and road repairs. The subway system is an embarrassment.

Additionally, who in their right mind wants to go to Chicago for literally any reason?

Source: I am an American who has visited Chicago 3 times and hated it more and more each time due to prices, crime, horrible weather, and extreme lack of anything to do

Strongly disagree with this. Chicago is one of the greatest cities (to visit or otherwise) not just in the US, but anywhere. I’ve been there over 30+ times since I was a kid and I’m going far out of my way to visit again tomorrow, it is that good.

It’s the original skyscraper city with an absolutely wonderful skyline and architecture. Being in the city during a blizzard is magical, and the weather on a nice summer day. Tons of parks and pristine coastline. One of the best food and shopping scenes anywhere. World class museums. Also, it’s certainly cheaper than SF/LA/NYC. There is a lifetime of things to experience in Chicago.

Funny. I grew up in the city and lived there for most of my adult life and never had any issues with any of those things.

Source: someone's who's spent more time in Chicago than someone's who's visited a handful of times.

>Funny. I grew up in the city and lived there for most of my adult life and never had any issues with any of those things. >Source: someone's who's spent more time in Chicago than someone's who's visited a handful of times.

Of course you'd like it, you're used to the place. The city is called "the windy city" for a reason, and is certainly not known to have weather resembling southern California. If you like it, that's fine, but not everyone likes cold, windy midwestern weather.

For prices, your experiences are simply invalid. The OP was likely talking about prices he'd see as a visitor, the large part of which would include hotel rooms. Do you spend a lot of time in hotels near your home? Of course not. And if the OP is comparing various international cities, then I can see why he'd complain about Chicago: it's a large American city and would likely have extremely high hotel prices, because hotels in America are generally very expensive unless you want to stay in a roach motel. It's much cheaper, as a single traveler, to stay in most of western Europe (except probably Switzerland).

Just don't visit between November and March.

The "Windy City" thing has little to do with our weather; winds are empirically worse in New York and San Francisco. If you have almost no experience with the city, it's easy to project and extrapolate from its nickname.

Or visit then if you like some snow :) I'm currently in Seattle and I cannot wait to move back. Fortunately, my girlfriend gradates in 7 months and we are literally counting down the months until then so we can move back.

It's a great city. But there's lots not to like about living in a big city. I find NYC almost incredibly oppressive and confining and crazymaking, but I don't wonder why people love it; I also get why people move out to farms in Minnesota, even though I'd never do that myself.

But you're not allowed to say that "the wind" is why you don't like Chicago.

(Fair warning, I have our city's flag inked on my arm, so I may be a booster).

Yeah I'm not referencing the wind in Chicago but rather the oppressive cold which is worse than most parts of the world with a population larger than x :)

It's about the same as Boston, marginally colder than NYC, and substantially warmer than Montreal. :)

> (Fair warning, I have our city's flag inked on my arm, so I may be a booster).

It is a kickass flag, to be fair.

Of course, Chicago's flag is actually a windsock.

>winds are empirically worse in New York and San Francisco.

Well New York isn't exactly famous for great weather either...

The "Windy City" moniker comes from a reference to local politics, not the weather. In my personal experience Chicago is no more windy than any other place I've visited. Otherwise, as I heard from Norwegians, there is no bad weather, just bad clothes.

It’s one thing to go to a conf and learn theory another thing to have first hand experience.

It’s like saying you can become a good programmer and have a good company culture by going to conferences.

It ain’t going to happen.

Once you have N years, and see and solve X problems you won’t be experienced.

A big thing about getting first hand experience is learning what questions you even need to ask!

When you first start, you don't even know what you don't know. All the conferences in the world aren't going to help you if you don't know which problems you need help solving.

I can't not comment on this as well. Canada a realitively young country? I know they say don't be snarky, but what an arrogant, ignorant, very American thing to say. People have been building "infrastructure" everywhere in Canada for hundreds of years, just as they have in big brother USA.

> - corruption, especially in QC

Quebec removed a blindfold with the Charbonneau Commission.

A sincere question: have other provinces done the same recently? What did they discover?

> - over-the-top safety requirements, regardless of project size. E.g. in Toronto every road work sight has a police officer present who’s just standing there bored out of their mind.

How much does that add to a project that costs 9-10 digits?

> - lack of experience and expertise. Canada is a relatively young country with very few major infra projects under its belt.

What's your definition of "major infra projects?"

Canada is geographically enormous, with extreme climate and terrain, and clustered populations. Yet somehow they've built infrastructure for a modern, vibrant economy.


70 years of remote hydro-electric plants and a transmission network for half a dozen provinces and states.[1]

50 years of nuclear power plants in half a dozen countries.[2]

A counter example for corruption (Canada is currently removing another blindfold), but about a century of bridges, tunnels, highways around the world.[3]

> - lack of care by citizens. Most Canadians aren’t well travelled outside of Americas.


> They don’t know what good cities look and feel like.


[1] https://en.wikipedia.org/wiki/Hydro-Québec

[2] https://en.wikipedia.org/wiki/Atomic_Energy_of_Canada_Limite...

[3] https://en.wikipedia.org/wiki/SNC-Lavalin

Edit: typo & clarity

>Quebec removed a blindfold with the Charbonneau Commission.

Sorry to digaree but he Charbonneau Commission did very little, corruption is still a huge problem in QC, it's part of the culture ..like Italy.

They said it removed a blindfold, they didn't say it solved the problem.

> How much does that add to a project that costs 9-10 digits?

Pretty sure "every road work site" cost a few digits less.

The US State of Massachusetts, for what it's worth, also uses police officers to control and supervise traffic around all worksites involving streets or roads.

These police details are paid by the organization doing the work. Condo developers, public utilities, and municipal public works departments all pay the same rates.

This stuff is expensive. It cost hundreds of millions of dollars US during the Big Dig. Our local radio humorists Tom and Ray Maggliozi might have said, lots of police "put their boats through college" in those days.

You'll regularly see a those cops hanging out in front of a construction site (doing nothing) or sitting in their cars (doing nothing). They could just as effectively be replaced with an orange cone.

They certainly are needed. I was snared in late night construction traffic near Baltimore waiting for a crane to lift a beam. I was in the middle lane preparing to merge over and was at an angle along with another two guys in a car to our right from the right lane. Suddenly there's this beeping coming from a car that's trying to get between us. We then hear a young woman asking to let her pass. "Excuse me, can you please move?" My friend leans out the window and asks, "You can't pass, the road is blocked by construction" she again asks the same thing but a little distressed. My friend responds "Is everything okay? do you need help?" she just kept begging "please move we have to get through." The guys next to us again ask them "Do you need help?" The girl again begged for one of us to move this time nearly crying. The other driver responds "You can't pass. There's nowhere to go" The woman responds by leaning on the horn while inching up until she nearly hits the other car forcing him to pull off the road. She then speeds off into the very active construction zone. Within seconds, out of the darkness comes lights and sirens and gives chase.

About 30 minutes later when the lane opens we get about half a mile down the zone and saw that the cop was only able to stop this nut job after her path was blocked by machinery and materials. She was cuffed, sitting on the hood of her car completely zoned out. Her friend was still in the passenger seat. They couldn't have been older than 20. My money was on club/party drugs they couldn't handle and freaked out while waiting in traffic.

Daily I walk past a street that is a dead end, and there is construction being done at the far end of this dead end. Every day there are 2-3 police officers standing at the top of the street. It's a gross misuse of time and funds.

> Big Dig

just for some context:

> The Central Artery/Tunnel Project (CA/T), commonly known as the Big Dig, was a megaproject in Boston that rerouted the Central Artery of Interstate 93 (I-93), the chief highway through the heart of the city, into the 1.5-mile (2.4 km) Thomas P. O'Neill Jr. Tunnel. The project also included the construction of the Ted Williams Tunnel (extending I-90 to Logan International Airport), the Leonard P. Zakim Bunker Hill Memorial Bridge over the Charles River, and the Rose Kennedy Greenway in the space vacated by the previous I-93 elevated roadway. Initially, the plan was also to include a rail connection between Boston's two major train terminals. Planning began in 1982; the construction work was carried out between 1991 and 2006; and the project concluded on December 31, 2007 when the partnership between the program manager and the Massachusetts Turnpike Authority ended.

> The Big Dig was the most expensive highway project in the US, and was plagued by cost overruns, delays, leaks, design flaws, charges of poor execution and use of substandard materials, criminal arrests,[2][3] and the death of one motorist.[4] The project was originally scheduled to be completed in 1998[5] at an estimated cost of $2.8 billion (in 1982 dollars, US$6.0 billion adjusted for inflation as of 2006).[6] However, the project was completed in December 2007 at a cost of over $8.08 billion (in 1982 dollars, $14.6 billion adjusted for inflation, meaning a cost overrun of about 190%)[6] as of 2006.[7] The Boston Globe estimated that the project will ultimately cost $22 billion, including interest, and that it would not be paid off until 2038.[8] As a result of a death, leaks, and other design flaws, Bechtel and Parsons Brinckerhoff—the consortium that oversaw the project—agreed to pay $407 million in restitution and several smaller companies agreed to pay a combined sum of approximately $51 million.[9]


Over-the-top safety requirements are spot on I think. Here in BC Worksafe BC just constantly adds on new rules and regulations every year, and they don't care about your company's budget or productivity.

I know Worksafe programs are similar from province to province, so I would be curious to see a comparison of Canadian Worksafe safety standards to safety standards from around the world to see just how much more (or less?) onerous they are.

How does Canada compare to the U.S.? United States citizens have a legal right to a safe work environment which is what drives many of the safety requirements. The others are generally best practices stemming from past lessons learned. Do Canadian workers have similar rights?

If so, your comment of " just constantly adds on new rules and regulations every year, and they don't care about your company's budget or productivity." could be read to acknowledge that it's not the government's job to preserve a company's budget or productivity, but rather preserve their citizens' right to a safe work environment.

In a perfect world, profit and safety could align but when they don't I'm not sure it's fair to chastise an organization for upholding their competing interest. The above can be all disregarded if Canadians don't have similar rights, it was just a thought.

Well if we can't afford to build things without killing people, we shouldn't be building things. Construction safety rules act as a check on liberal capitalism's growth obsession.

We can afford to manage risk, but not eliminate it. If we allow safety to rule us completely, we invite regulatory capture and https://en.wikipedia.org/wiki/Red_flag_traffic_laws

You’re assuming new rules and regulations actually prevent injury and death. That isn’t necessarily so.

Top four safest countries for construction are usually UK, Australia, NZ, Canada. They also have the most regulations on safety and a generally strong safety culture. Correlation may equal causation.

I guess we better just live without anything then. You can’t build anything without there being a risk of injury or death. Just like how you can’t walk down the street without risk of injury or death.

Agreed with the corruption and over-legislation, which in my experience coincide. Bidding on governement projects in QC is very painful to do and corruption is sky high so competition cant set in

EDIT to add: example of QC bidding: most companies underbid the construction work to later postpone the deadline and request more money than originally bargained, and there doesnt seem to be any (enforced) legislation to consider that

Extremely strict regulations can function as an asshole filter[1] where only people who intend to bypass the rules somehow get involved in bidding.


Sounds like Germany...

Sounds like any government procurement in France… especially construction works that is budgeted for 5 years and strangely ends up lasting 10,15 years…

Unrelated: as a non-native English speaker with CS background it's the first time I learned the original meaning of "semaphore". Took me some time to find https://www.uvm.edu/landscape/dating/road_signs_and_traffic_... to explain what is a semaphore (the search results were heavily biased to the word's use in computer science).

For what is worth, in Italy traffic lights are still called 'Semaforo'.

Same in Brazilian portuguese (depending on where you live, we have at least 5 words for the same thing: Sinal, Farol, Semáforo, Sinaleira, Sinaleiro)

FYI Canada has 3 engineering firms in the world top 10, SNC-Lavalin with 50k employees, WSP with 44k employees, and Stantec with 22k.

Lack of experience and expertise is not the issue.

>>over-the-top safety requirements

This is due to the safety at all costs fallacy that dominates popular politics.


One other factor is capture by unions, although that could fall under corruption. It's a high level form of corruption involving swaying public opinion to accept union narratives about the good done by their control of labor forces.

I would call that broad special interests as opposed to corruption per se - corruption implies that they are abusing or perverting something for personal gain when it shouldn't be.

Taking your own salary obviously isn't corruption nor even outright banditry - the intended function is personal enrichment. Nor is voting in your interest even if short sighted and likely to cause future problems.

Similarly demanding construction helmets diverts resources but keeping workers safe is a legitimate goal. Even if the demands were extreme and inefficient like demanding the development and manufacturing of power armor to paint a shed in case a piano falls on them or a moose attacks while irrational, terribly inefficient, and stupid wouldn't be corruption per se.

Now the armor demand because of kickbacks? Doing shoddy work for repeat customers or harming others directly for their own gain? Definite corruption.

>>Similarly demanding construction helmets ... wouldn't be corruption per se.

No I wasn't categorizing demands for safety standards as corruption. The safety point was separate from my point about unions.

I was categorizing the misleading of the public to get a political party elected that enables one's own union to fetch above-market wages for oneself as something like high-level corruption, though maybe 'corruption' in the public policy context has a more specific definition that doesn't include this.

> lack of experience and expertise. Canada is a relatively young country with very few major infra projects under its belt.

Nonsense. Canada is a major engineering power, building large projects the world over. One of the world's top 5 engineering firms, SNC-Lavalin, is located there.

- lack of experience and expertise. Canada is a relatively young country with very few major infra projects under its belt.

Wait? We need to have 14th century church building experience to be considered experienced at building infrastructure?

Yeah, this doesn't make sense to me either. 60 years ago South Korea was one of the poorest countries on Earth. Today it manages to build world-class infrastructure at very low cost.

In contrast America was the first country in the world to build subways on a mass scale. Yet today it has by far the highest subway construction cost in the world. At least an order of magnitude higher than South Korea.

I'm skeptical that aggregate experience on a national-level at decade-scale makes any major difference.

In Canada general construction costs like home renovation/building are not that high.

As soon as the government gets involved in a public construction/renovation project costs sky rocket. I can only attribute it to bureaucracy, corruption, and indifference since the tax payers pockets are endless. Contractors all have to be Unionized (good/bad?), it seems there is no urgency to do anything quickly or in a cost effective manner.

When you look at the renovations on the subway taking place at Royal York Station, it's comical. The project shouldn't take more than 3-6 months but it seems they want to drag out the job so they can retire after it's complete in 20-30 years. Runnymede Station took about 5 years and I'm not sure they're finished. Something like pulling up 200 sq/ft of tile can take a 1-2 months of 2-3 guys working 8 hours a day.

This is what happens when there is corruption with no oversight and the source of payment is the tax payers pocket.

Alternate take:

Large civil projects are more complex than home renovation projects and are thus less likely to be accurately assessed by our simple planning heuristics. (see "the planning fallacy"). Each gap in the actual vs. planned outcome requires change-orders that slow down schedules and cost more money.


It's what happens when there are many contractors involved, each intertwined in a complex relationship, each needing to schedule around each other and each with half a dozen sub contractors under them with the same complex requirements.

So 200 square ft of tile takes three months because the tilers are hired by the tiling company who is hired by the contractor hired to finish the walls who was hired by the main contractor who was hired by the construction company. Along this long chain someone schedules tiling on the same day the electricians are wiring up the lights. They reschedule and crew arrives only to find the materials are missing, no one knows who ordered them or who to talk to. Once they sort that out and get the materials delivered the project is put on hold because someone stubbed their toe on a box of tiles and a stop work order is issued. A safety inspector arrives with the cast of CSI miami to figure out who to blame. Meanwhile, while everyone is busy blaming each other, the tiling contractor steals the materials for another job and everything goes right back to square one. Now multiply this story by the number of individual items to be coordinated... All this while, the crew has to be paid for their time even though they couldn't work. Absolute madness.

Seems like laws need to be drawn up to make this unprofitable. It should be easy enough to get out of paying people standing around not behaving in a "competent and workmanlike manner." Or even the entire company. If it doesn't happen, why pay?

As you've described, what is going on is corruption due to lack of oversight.

Similar to the coordination problems among different trades, I think there's a lot of interplay between competing interests that make something that seems simple on the surface much more complex.

Take crane operations for instance. An organization may require union crane operators as a means of oversight to help guarantee trained and certified operators for a hazardous operation. However, this often has unintended consequences as union crane operations may also require positions like a crane oiler, which are largely obsolete in modern equipment.

I don't think that constitutes corruption because it's completely transparent and above board, even if unwise.

Corruption is a moral issue that exists besides the law. If the payment occurring produces no net benefit then I see no reason to consider it just.

These problems seem complex and may truly be, but if they lead to payment for nonperformance then that needs to be addressed. I expect the market can figure it out from there.

I don't think I agree on your definition of corruption. Corruption in the legal sense is, by definition, illegal fraudulent activities, generally defined as using a public office for private gain. The fact that an operation is unproductive doesn't necessarily make it corrupt.

Even while I have libertarian leanings, I would be hesitant to "expect the market can figure it out" largely because of asymmetries of information and the tendencies of present bias in making decisions, especially those with a profit incentive.

This is talked about in the link above. Specifically, they call it "coordination neglect":

>The failure to think about how hard it is to put stuff together when other people are involved. And so that can make the planning fallacy bigger and badder when there are teams of people trying to finish work on time.

Disappointingly, the answer from the article is "I don't know."

This article could be condensed to a table.

Unlike most articles with a question. This person is actually asking a question.

Still raising the issue is important. I don't know, but that I know I don't know makes me a better, more informed voter than before when I didn't even know that it costs more to build here than other countries.

In any market, there’ll be a limited number of contractors capable of doing a really big job like building a railway line (or constructing an aircraft carrier, or a fighter jet, or whatever).

These contractors have a game theoretic choice to make: either they work hard to compete on price, or they inflate their budgets and count on their competitors to do so too, safe in the knowledge that there’s enoigh projects going around that everyone can have a nice fat slice of pie.

Theoretically a new competitor could enter the market and eat everyone’s lunch, but... all the institutional knowledge on how to build a train line or aircraft carrier belongs to the big players and it’s too hard to enter.

The difference in construction costs between various different markets seems to just be different game theoretic equilibria at work.

Careful design of regulation can lower the barriers to entry, and thus make colluding harder.

You are right about the scale of the big players making it hard for upstarts to compete. One of the most straightforward ways to still get competition, is to make it possible (or even easy!) for foreign companies to bid.

there are lots of companies that know how to build rail, and most use subs that can be hired by anyone rather than owning all that labour and risk themselves.

Comparing rail lines to aircraft carriers is ridiculous and discredits your entire post.

If everyone inflates their price the one who inflates it the least wins. That's not how the industry actually works. its far more common to bid low and try to make up the profit in claims.

You know nothing about this industry and its obvious from your writing.

In addition to the others reasons meantioned by others: NIMBYism, political projects, and suboptimal planning. Toronto has a whole subway line going through low density neighborhoods and it’s not like any densification plans are happening there soon. On the other hand Liberty Village was given to hi-rise developers because it was a wedge of industrial land squished between railway and a highway. Now it is a bustling neighborhood but pretty problematic to get in it out with the overloaded streetcar line bearing the brunt.

It is not only about upfront costs, ongoing maintenance is important as well, and one needs certain level of density for the infrastructure to be a bit closer to self-sustainable

If you want some fun, read the investigation reports about the corruption surrounding construction business and politicians in Montreal, QC. Not sure which year it was, could be 2015.

Montreal has a never ending construction. A colleague of mine says the mafia controls the construction business in Montreal. Seems like corruption is a tad high in Québec than Rest of Canada

Yeah the construction is pretty much in the families. The report explicitly shows how they deter others from bidding for contracts. First an engineer from the government who oversees the project will make a phone call to tell you that the contract has been already given to someone else so please withdraw your body which of course has a lower price. If you don't then some guys will throw garbage at your door. I'm not sure what's the next step.

This may be indeed true. Some say the construction is the fault of the city being old but I’ve seen the same street being worked on throughout the summer for two consecutive years. There is construction everywhere as well compared to other cities I’ve visited.

Montrealer here. Constant construction of everything is the norm.

The roadways are a nightmare of poor construction and tons of detours.

The thing that bugs me the most is that they can’t seem to get the hang of painting lines properly on the roads. Lines painted last 2 months at most, then are gone. I was driving this weekend on 3-4 land highways, that curve around corners and have no lines painted.

Luckily our public transit is decent so I don’t normally have to drive.

> Lines painted last 2 months at most, then are gone.

This is due to federal environmental standards; the old oil paints that actually worked are banned.

I actually wasn’t aware of this. I was wondering why there wasn’t a better alternative, but it seems there are environmentally friendly paints more durable than what is in use in Montreal.

It’s just more expensive.

I don’t really understand how that can be the blocker in a city with strong economic activity, high income taxes, high fuel taxes, and high property taxes (>4% in our downtown core on non-residential properties).

Of course not. The company uses the substandard paint to ensure that there's a future need thus future income. The fac t that the shorter lasting paint is cheaper just gives the company a leverage point in the bidding.

Google 'mafia', 'phoebus cartel', and many other examples of skimming, profiteering, and collusion to fix prices.

I wonder why they don't shift to using non-paint markers like a plaster or something at that point. The advantage of paint seems throughly lost overall.

In New York City we have four seasons: almost winter, winter, still winter, and construction. Supposedly we're in autumn but the reality is it's the tail end of construction. We'll have a few months of crummy weather and then back to beautiful sunny construction.

Autoroute 20 has been under construction/repair since the 90s. Specifically the section between lachine towards decarie.

This is the same case in US. The cost of construction has far outpaced inflation by order of a couple of magnitudes while technology keeps getting cheaper and labor prices are still stagnant for decades. Amazingly, it's exactly reverse case in China where construction prices have fell through the roof.

"fell through the roof"; I'm not sure whether that's high and went low or low and went high. From the context I'm assuming that means its gotten very cheap?

It means that construction prices used to be through the roof (very high). Now they've fallen back down through the roof to somewhere on the main floor, but not in the basement.

> [...] and labor prices are still stagnant for decades.

Labour's share of GDP has roughly stayed constant. GDP per capita has increased, both real and nominal.

It’s fallen significantly: https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-...

However, in the late 20th century—after many decades of relative stability—the labor share began to decline in the United States and many other economically advanced nations, and in the early 21st century it fell to unprecedented lows.

PS: In terms of overall GDP a numbers (edit: not real data) 21% vs 17% may seem more or less stable but that’s a 20% drop or roughly all inflation adjusted per capita GDP growth over the last 20 years.

Where does the 21% vs 17% come from? The graphs in that article seem to hover around 56% to 66% for the labour share since 1947. What am I missing?

But looking at the graphs, there seems to have indeed been a big drop in the labour share since the dot com boom.

If I remember right, the capital share has been stable. But the share going to real estate has exploded.

And that's likely for the same underlying reasons construction costs have skyrocketed. See https://www.brookings.edu/bpea-articles/deciphering-the-fall... and https://ftalphaville.ft.com/2014/02/03/1759582/piketty-and-t...

Sorry, the context was missing. The 21% vs 17% was not meant to be representative of overall numbers. I just recall someone minimizing the impact by referring to some income bracket then comparing it to GDP. My point was simply people overestimate how much per capita GDP is growing, so numbers that look similar can represent large shifts.

Anyway, it’s 1AM so I am a little out of it.

When you really think about it deeply, better production should depress prices because of econ 101.

However, the FED induced inflation in assets has made everything out of control.

Still lower than the U.S. I went to a couple of cities in Canada in the past year and there's construction everywhere, from skyscrapers to roads. My corner of the Bay Area has a couple of 5-story apartment complexes going up.

That's probably more due to zoning regulations that construction costs, no? I was under the impression that zoning in the Bay Area makes new construction very difficult.

> Still lower than the U.S. I went to a couple of cities in Canada in the past year and there's construction everywhere, from skyscrapers to roads

NYC has had skyscrapers going up left and right the past decade: Central Park, 111 West 57, One Vanderbilt, 432 Park, 30 Hudson, 3 World Trade, 53W53, 35 Hudson, One57, 1 Manhattan, 220 Central Park South, 15 Hudson, 125 Greewich, 425 Park, etc.

All of those are taller or nearly as tall as the tallest buildings in all of Canada. In one US city. What does that prove?



For more objective data, https://www.livabl.com/2019/03/torontos-condo-more-cranes-th... . Toronto does far outpace NYC in the current amount of high rise construction.

You name dropping one of the largest and most urbanized cities in the world proves what?

NYC doesn’t even make it in the top 10 biggest cities in the world. In fact NYC comes just behind Chengdu in 38th place. And in terms of density, NYC isn’t even in the top 50.

>And in terms of density, NYC isn’t even in the top 50.

I don't believe that. If you look at Manhattan alone, you'll see something very different. Unlike many other cities (particularly in the US, but also other places), NYC is basically a collection of cities. Manhattan is dense, but Staten Island is definitely not, so that drags down the average density. It's not fair to compare that with many other places.

So do you not believe that or is it not fair?

Any "top 50" list of cities by density is inherently biased: How do you demarcate where the city's borders lie? Do you count surrounding municipalities? The whole thing is going to be comparing apples and oranges, because different cities are organized differently. It just isn't something you can easily distill down into a list like that.

The comment he was responding to is anecdotal. They were responding anecdotally in kind.

This is why (for U.S. at least) https://www.facebook.com/watch/?v=784223122033567

I'm currently in the process of building a laneway suite building on my existing Toronto lot, which is typical of the city - 25 feet wide by 160 feet long. There's a driveway and a laneway at the back.

I spent two years and $25,000 to just get to the point of having building permits. The most egregious part was that I had to pay the city around $3,000 to cut down a tree on my own property, because due to a city bylaw, I did not own the tree, the city did, and I had to pay them for their "loss".

The bureaucratic nonsense and nickel and a dimeing people to death with multiple fees and taxes, added with the premium cost of materials, makes building far more expensive than it needs to be.

Here is a theory.

Builders chargé maximum what they can.

Home prizes has increased rapidly in Canada, some say possibly to a bubble level.

Banks create new debt out of nothing through fractional reserve banking. Central banks support negative interest rates.

A conseque of low interest rates is that many can afford to borrow to high real estate prices.

The high real estate prices drive up building costs, since builders can charge higher prices. Ie want a piece of the cake.

Well, that could drive up the cost of land, sure. But how can it drive up construction costs too much? Competition must fill that gap quickly.

Yep! It's astonishing how many articles about price never mention supply and demand.

Neither the article or HN comments (so far) mention supply and demand.

Builders are actually in an extremely competitive marketplace, with a race to the bottom culture on costs. They also bear a huge amount of risk, usually committing to fixed fee contracts. The profits go to those who hold the money / land - the developer.

Except when the developer is also the builder, which is becoming more and more commonplace.

And fixed fee contracts? What planet? I don't know of anyone who has built anything in the last decade or two that hasn't gone over budget. If you're buying materials through the developer they're taking a margin.

Developers are taking their margin on materials, but houses are easy to bid to an exact price. Many developers are building houses before there is a buyer. As soon as the hole is in the ground it goes to the real estate market, at any time you can buy it, and they will make changes per request - they assume you will choose paint color (any color is the same price), if you want to add a fireplace that will cost you. Often these houses are finished without before they are bought and go on the market at market price.

Of course the point is no builder would take the above risk unless he could estimate his costs with enough accuracy to ensure that he makes a profit on the deal.

Edit: Note that builders build enough houses to have processes and procedures to estimate them. If you build anything to a standard such that it is like everything else that is vastly cheaper than if you build something unique. There is a lot of ways to make a house custom within the standard, but if you want a round tower that will cost because builders don't know how to make round (but settle for octagon and suddenly you are back to standard)

Design, land, environmental permitting and remediation, noise and dust remediation, aboriginal/metis consultation, utility components on LRT/subway projects can span years and costs millions of dollars per utility and a given kilometer may have 100. and then you have to actually build whatever it is.

Just doesn't seem like an analysis with enough detail.

Yeah, surprised no one mentioned environmental permits and aboriginal consults -- those were the two items that were/are holding up the big pipeline projects in Canada.

I do t think the person who wrote the article or the average hm user know much about environmental permitting or indigenous consultation. Or building much either.

Firstly, the cost of construction EVERYWHERE is going up. In America, every major construction is TWICE the cost per mile than it is in Europe. Australia is 50% higher again.

eg Sydney purchased surplus trams from Spain. To create a tramline from Randwick to the city (25min bus trip) has already cost USD 2,100 Million (AUD 3,100 Million) and is years late. Spain did the whole line for USD 115 million.

Wait till you cross the ditch to New Zealand, our materials costs are through the roof...

I'm going to guess that Canadian construction is inefficient because they just take their time. It feels like there isn't the drive to get things done quickly and consequently cheaper. The work is good but just takes longer.

I think the main issue is why American costs are so low. It still amazes me how you can buy a big beautiful house in the sun belt for a few hundred thousand. If Canada is more expensive its probably sensible.

I realize I'm being downvoted but you have to realize that most of the developed world has a great standard of living but a new build 4 bedroom house on a 1/4 acre of land is completely unaffordable for most people.

This article is about public transit construction costs, so your comment is fairly off topic. In the realm of public transit, American costs are absurdly expensive

Yeah I hate people that never read the Posted Article. I didn't this time.

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