Calgary mayor says increasing material costs could impact city construction projects

Calgary Mayor Naheed Nenshi says he is worried about the impact higher prices for construction materials will have on major projects in the city.

Construction is about to get underway on the $500-million expansion of the BMO Centre in Stampede Park, as preparation work for a $550-million new arena nearby for the Calgary Flames was put on hold Wednesday while budget problems are resolved.

There is a gap between the money the city and the Flames owners have assembled for the arena project and what it may actually cost to build it.

The groundbreaking is supposed to happen by Aug. 1 under the terms of the contract both parties signed. But Nenshi says that may not happen now.

"I don't know if we can do the groundbreaking by August 1. That's probably pretty aggressive, but maybe," he said.

The mayor said he is worried about the rising cost of construction materials across North America.

But he says it also stands to reason that delaying construction could make things worse for projects like the arena, the BMO Centre expansion and the Green Line LRT.

"It also means, go quick. Because, for example, the BMO Centre has just closed on a series of contracts which were fine," he said. "But with the two trillion dollars of infrastructure investment announced in the United States, we anticipate prices of basic materials will rise, and so we have a certain desire to sign contracts now."

Nenshi said steps will have to be taken to ensure all of the city's major projects can control cost escalation.

"The price of lumber is at record highs. We anticipate that the price of steel and concrete will increase over time. We are evaluating financial strategies to hedge ourselves against those increases, but we will probably have to set aside some inflationary money," he said.

"Every major project that we've done since I've been mayor has come in on time and on budget, and I don't intend to change that."