Construction Industry Trends for Ontario in 2022

Over the past few years, the Canadian economy has experienced highs and lows that have affected many sectors. Regarding the construction industry specifically, constraints and changes have occurred as a result of the Covid-19 pandemic, a dip in available skilled labour, as well as the rise of material costs. With the pandemic still looming, what trends can the industry expect in 2022?

The industry is showing signs of recovery, placing preventative measures and exploring the possibilities of new technologies. This article will offer a general overview of some of the current construction industry trends in Ontario and what contractors should make note of in the upcoming year.

Construction industry trends for Ontario: 2022

An overview of construction industry trends

The construction industry in Canada employs around 1.4 million individuals, making this a pivotal sector in the country. It also contributes 7.5% of the country's gross domestic product. According to Statistics Canada, in Ontario, this industry was among a handful that saw growth in 2020, up 0.3%.

The number of new home constructions rose by 18 percent, with even more growth in 2021. The industry at large has seen an increase in productivity over the last 5 years, growing a total of 14 percent. Unfortunately, wages in the industry have not seen the same growth, experiencing only 1.1 percent over this 5 year period.

These wages have just barely kept up with inflation and have done worse than the overall wage growth in the country. Wage growth in the country has been around 3% whereas the industry has seen a growth of just 1.9 percent (Stats Canada.)

As of October 2021, data from Toronto Public Health shows that more than half of Covid-19 workplace outbreaks have happened in the job category of construction, warehouse and manufacturing. Wage growth and proper compensation for front-line workers would have positive spinoff effects for the wider Canadian economy.

Some argue that a rise in wages isn't possible with the concurrent rise in material costs. However, with the currently projected productivity gains, the industry could surely afford to offer their workers fair compensation.

Government investment

With the reelection of the Liberal Government, it’s still unclear if an infrastructure plan will be implemented to address pandemic-related and economic issues. The election brought light to the current housing crisis as well as infrastructure deficits.

The Investing in Canada Plan is in place and has been revised, with billions of dollars now geared toward infrastructural investment. To date, this plan has invested $96 billion dollars in over 73 000 projects.

In October 2020, the government launched a $10 million dollar growth plan for Canada Infrastructure Bank (CIB) with green-energy projects as a particular focus as well as a push towards renewable energy sources.

Legislation for prompt payment

In Ontario, there’s new legislation in place for prompt payment and adjudication. What this entails is the streamlining of payment for construction projects as well as speedier mediation of any disputes in the industry. Ontario was actually the first province to introduce this type of legislation. 

The development of construction technologies

It’s difficult to deny that the construction industry is being modernized by technology. Many companies now rely on these digital technologies for completing projects, as well as improving productivity and decision making. Some of the developments are as follows:

• Artificial Intelligence (AI): This technology can be used to improve the number of errors in a project. It can also allow project designers to make well-informed decisions based on specific variables and streamline communication between project managers, contractors and workers. Further, it can offer predictive recommendations while improving on-site safety.

• Blockchain and smart contracts: This is a decentralized data structure where each party to the transaction has a copy of the transaction that took place. Essentially, smart contracts are built on blockchain technology and allow for a streamlining of the execution of contracts. Blockchain is also helpful in tandem with prompt payment legislation. 

• Wireless monitoring: This works to survey and analyze the physical properties of a site. 

• Building Information Modeling (BMI): This technology uses 3D modelling to digitally render construction designs as well as analyze site logistics and construction phases. BMI’s help to avoid incorrect or defective builds, which represent 30% of upfront costs. 

• Building automation: This technology is often used in conjunction with AI, and helps to limit energy consumption on construction sites, thus reducing the carbon footprint of a project.

Labour and material shortages

Although there is a growing demand for home construction projects in Ontario, it’s difficult to say whether a decline in skilled labour, as well as material resources, will be able to meet the ongoing need.

There are many reasons that skilled labour has become scarce, including the median age of tradespeople retiring and a lack of on-site training possible as a result of the pandemic. This has caused a delay in many projects of varying scales.

When it comes to materials, these shortages have also impacted the possibility of many projects. Steel and other metals are in scarce supply and many materials, such as wood, are facing a backlog as a result of import-export constraints and fees.

To read more about the impact of construction industry labour shortages, read our article What's the impact of the construction industry shortage?