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Rising construction costs threaten jobs, projects

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A workman pours concrete at a construction site amid worries of soaring construction prices (File photograph by Akil Simmons)

Rising costs will shutter some planned construction projects and threaten industry jobs, as officials continue to seek a way around troubling times.

Other planned projects are up for re-evaluation, construction officials have confirmed, and there is uncertainty as to the full effect on the economy.

The costs of building at residential and commercial properties are rising substantially.

The reason is that a core cost for construction in Bermuda has jumped appreciably. The prices charged by the island’s major suppliers of concrete and block are dramatically higher.

SAL Trading Limited has advised its industry clients that the price of 3,000 psi concrete, for example, has increased from $278 per cubic yard to $406, an increase of 46 per cent.

Meanwhile, the price of 8in concrete block has increased from $3.40 to $5.11 per block, up 50 per cent, and the cost of 10in block has risen from $3.78 to $5.68, also a jump of 50 per cent.

In 2014, those prices were $186, $2.54 and $2.89.

The quoted increases are among those announced by the island’s largest supplier of concrete and block that became effective January 1.

Alex DeCouto, the president of Greymane Contracting Ltd (File photograph supplied)

Alex DeCouto, the president of Greymane Contracting, said: “The impact on projects is significant. A lot of contractors have entered into contracts with owners, and the typical local contract doesn’t have escalation clauses — the price is fixed, and contractors are having to make difficult decisions.”

On a $1 million house, he said, the potential increased cost of concrete and block could add $100,000 to the final price.

Mr DeCouto added: “Architects, contractors and owners have been having a lot of discussions since the end of December about how to move forward.

“This will force the industry to call off a bunch of jobs — it will have a dampening effect on the industry as a whole.”

Meanwhile, he said, most construction projects are financed, so for jobs to go ahead, customers will be forced to shrink their projects — or find more money to pay for the increased cost of building.

The price increases are due at least in part to a depletion in the local supply of rock.

For many years, rock at Wilkinson Quarry in Hamilton Parish has been mined by Island Construction and turned into aggregate for selling on to construction industry suppliers such as SAL, which produces concrete and block.

Late last year, the depletion of Wilkinson Quarry prompted Island Construction to look south — and the company struck a deal with Jamaica’s Lydford Mining Company to import 8,000 tonnes of construction-grade limestone aggregate to the island by ship.

The cost of shipping the aggregate to Bermuda and related costs, as opposed to mining rock in Hamilton Parish for supply in the form of aggregate to Southampton-based SAL, has led to the price increases, the president and CEO of Island Construction said.

Zane DeSilva said: “We don’t have any more rock in Bermuda, so it’s got to be imported.

“Wilkinson Quarry is the only hard rock quarry left on the island, and now it’s finished.

“When you have to import, there are expenses that one incurs.”

He added: “I don’t think we will see another hard rock quarry, not like Wilkinson Quarry, in our history. That was the last one.”

The shipment of aggregate from Jamaica was unloaded at Penno’s Wharf in St George, and trucked to Wilkinson Quarry, Mr DeSilva said.

He added: “We keep it there; we retail it right out of the quarry.”

Going forward, Mr DeSilva said, he will continue to seek out sources for product.

“I am always looking at sources, so whether it’s Mexico, Bahamas, Jamaica, the US or Canada, it’s where I can get the best price and where it can meet specifications.”

Vance Campbell, the chief executive officer of SAL, did not respond to requests for comment.

Zane DeSilva, the president and CEO of Island Construction (File photograph)

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Published January 26, 2023 at 2:39 pm (Updated January 27, 2023 at 8:15 am)

Rising construction costs threaten jobs, projects

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