Record Quarter Highlights Diversity In BC’s Economic Outlook

By January 16, 2014Business, Business News

Submitted. Total capital cost of major projects in B.C. hit a new record high in the third quarter of 2013 with a diverse range of projects contributing to the growth profile, according to the Association of Consulting Engineering Companies – British Columbia (ACEC-BC)’s BC MPI Review, released today. The BC MPI Review is a quarterly report that provides analysis on the Province of British Columbia’s Major Projects Inventory.

Total capital cost of major projects in B.C. reached $304.9 billion in the third quarter of 2013, up 1.6 per cent over the previous quarter and 31.1 per cent higher than one year earlier. Total capital cost represents the combined value of projects identified as proposed, construction started, completed and on hold.

“We are particularly interested in the diversity of projects in our province that are highlighted in the Major Projects Inventory this quarter,” said Keith Sashaw, President and CEO, ACEC-BC. “While LNG, mining and pipeline projects continue to grab the headlines, it is important to note the significant contribution of projects outside of this realm.”

As examples of this diversity, Sashaw points to substantial projects in the residential and commercial (Monaco Mixed-Use Development project in Peachland valued at $1 billion), forestry (Babine Sawmill Replacement project valued at $100 million), recreation (Jumbo Glacier Resort project valued at $900 million), shipping/transport (Fairview Container Terminal Expansion project valued at $650 million), and green energy industries (Sooke Wind Project valued at $750 million).

“This capital spending mix across all economic sectors clearly demonstrates investor confidence is not based on one industry, but on comfort with the province as a whole,” said Sashaw.

The North Coast region remained in top spot with a total capital cost at $115.5 billion in the third quarter, up one per cent from the previous quarter and 103.8 per cent from one year earlier. The North Coast region has the highest proposed total at $99.8 billion, with LNG, mining, and pipeline projects representing the majority of these proposals. In contrast, the Lower Mainland-Southwest region retained the top spot for most projects under construction in the third quarter at $40 billion, with residential and mixed-use projects the largest type of project under construction in the region.

All industrial categories saw increases quarter-over-quarter. The pipelines, transportation and warehousing industry posted a $1.9 billion increase quarter-over-quarter and accounted for the largest dollar contribution to the $4.7 billion increase in total capital costs. Commercial projects had the largest percentage gain at six per cent or $0.5 billion to reach $9 billion in the third quarter. Commercial project total capital cost is 13.6 per cent higher than in the same quarter last year.

The outlook for major project activity and investment in B.C. remains optimistic with improving global economic growth expected in 2014 and beyond. Stronger commodity markets will result in more resource development projects proceeding in the next three to five years. In addition, the domestic economy will be lifted by increased export and investment activity and will require additional residential, commercial, and public investment projects.

Q3 2013 Major Project Inventory Highlights:

Project total capital costs by project status, Q3 2013 vs. Q2 2013:

– Proposed: 2.9 per cent increase to $200.2 billion

– Construction Started: held steady at $83.6 billion

– Completed: 131 per cent increase to $2.6 billion

– On Hold: 11 per cent drop to $17.7 billion

Project total capital costs by industrial category, Q3 2013 vs. Q2 2013:

– Residential & Mixed Use sector: 1.2 per cent increase to $50.9 billion

– Commercial sector: 6.0 per cent increase to $9 billion

– Pipelines & Transportation & Warehousing sector: 3.6 per cent increase to $54.1 billion

– Mining & Oil & Gas Extraction sector: 0.7 per cent increase to $81.5 billion

– Utilities sector: 2 per cent increase to $48.8 billion

– Manufacturing sector: 0.9 per cent increase to $28.8 billion

– Public Services sector: 0.3 per cent increase to $7.6 billion

– Other Services sector: 0.3 per cent increase to $23.4 billion

The BC MPI Review is a quarterly report prepared by ACEC-BC that provides insight and analysis on the Major Projects Inventory, published by the British Columbia Ministry of Jobs, Tourism and Skills Training and Responsible for Labour. The Major Projects Inventory, which is published quarterly, lists all major projects that are proposed, planned or underway in British Columbia. These are projects with a capital cost of at least $20 million each within the Lower Mainland and projects valued at $15 million or more apiece in the rest of B.C.

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