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Originally Posted by Sylvanfan
I work for one of the larger Steel Fabricators in Alberta. Steel is way up in price well over 20% from market norms, lead times are extending by the day, and supply is short.
Usually we can get typical structural steel for about 50 cents a pound from mills. On some specialty steel with weathering and cold temperature requirements on a recent job up to nearly $1.00 a pound and 3 months for the Material to land at our plant. But plate is heavily dependent on scrap material being recycled, and there is a major shortage of that right now. Part of it due to Covid shut downs and closures from last year.
We landed at 1600 ton project and I think we have procured material for about 65% of the project and have pretty much cleaned out the in stock plate supply in the region from supplier warehouses and the like.
We did bid the BMO Center which closed last week and it was 8800 tons. As far as I know we have not even seen the bid package for the arena and I know it was on our radar as one of the major projects we would go after. If it's similar to Edmonton's arena that was more like 16000 tons.
In a typical large project Steel is pretty minor, usually no more than 10-15% of the overall project cost. All the pretty stuff that covers up a lot of the steel, that's also up in price right now. But it's the second thing after the Concrete that's needed. If the steel is delayed...well, hard to frame all those pretty interior walls and suites without a supporting super structure.
At the beginning of the year there was a lot of activity, but we have seen a lot of Construction owners put projects on pause. Even on awarded contracts...we have been told to hold off on buying Material and complete the drafting/Engineering work and they'll put it online. One of the Major Energy producers in the Province has a project where they are currently evaluating digging up a bunch of old power poles, and rework them to suit what they require for a new line because the price of new steel scared them that much.
So I wouldn't be shocked if the steel bids on BMO are 25% higher than they expected, and that will end up being the same for the arena.
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Thanks for the information.
I work in architecture, and I know that our CMs have been telling us the same thing, but never with the same amount of detail...
It's gotten to the point where we get a cost estimate, have to value engineer the design down, and then find in that time period, the costs have escalated again and we have to value engineer again.
Larger projects will have economies of scale that would help them to secure volume of material, more than smaller projects would be able to...so who knows what is going to happen with the arena...
keynesian economics don't help here as the challenge is in raw material and not simply labor costs...
Any idea if aluminum is also a supply issue? Asking for a project I am working on...
