The Province has awarded the first construction contract to fall under BC’s new Community Benefits Agreement(CBA)/Project Labour Agreement, and it comes at a hefty cost.

The expansion of Highway 1 at Illecillewaet will now cost $85.2M, an overall project cost increase of $22.3M from the budget announced with the tender in February, which was already $27.9M higher than the original funding announcement of $35M in August 2015. In total that’s a 143% project cost increase. It’s worth noting that the Federal government’s contribution of $15.5M will not grow with the budget, leaving BC taxpayers to cover the $50.2M overage.

Since the CBA/Project Labour Agreement was announced by Premier Horgan in July 2018, BC’s construction industry has expressed significant concern about its impact on cost, competition, and labour supply. Its requirement that all workers on a CBA project become members of a preferred union is believed to be contrary to the Canadian Charter of Rights and Freedoms, and places a heavy administrative burden on a largely free-market industry where 85% of the 180,000 tradespeople are not unionized.

The uncertainty the PLA creates around the labour market is of significant concern to BC’s construction employers. When Premier Horgan announced the PLA last summer he estimated that its introduction would result in a 7% increase to project budgets. Today the government is citing “escalating costs of materials, labour, and the complexity of the work required” as the reason for the 35% budget increase on the Highway 1 project. Industry believes the cost increase to some extent reflects the risk the PLA introduces in the market.

The BCCA and industry partners are awaiting a ruling from the BC Supreme Court in regard to their legal challenge based on the unconstitutionality of the BC CBA/PLA.