The Newfoundland and Labrador government has seen a significant increase in the cost of road construction projects over the past six years. According to a presentation by the Department of Transportation and Works in October, the average cost per kilometer for paving projects (excluding the TCH) has surged from around $330,000 in 2019 to over $610,000 in 2025, with a continuous upward trend.
The department reported a 93% rise in overall paving investments from 2019-20 to the current fiscal year, with the annual road plans budget of the province escalating from $166 million to $320 million. During the same period, the cost of paving projects increased by 85%, while the consumer price index (CPI) for transportation only rose by 20%.
The document highlighted that the increased spending on road construction, coupled with a stagnant supply of contractors, has resulted in escalating contract prices. Despite the substantial investment surge, minimal growth has been observed in the paving industry, with no new paving contractors entering the market.
Transportation and Infrastructure Minister Barry Petten, who assumed office after the Progressive Conservatives’ victory in the recent provincial election, expressed concern over the soaring costs of paving projects. He emphasized the need to monitor public expenditure closely and planned to engage with the Heavy Civil Association of Newfoundland and Labrador to address the issue.
Kris Mulcahy, the executive director of the Heavy Civil Association, identified various factors contributing to the rising costs for contractors, including soaring equipment prices, U.S. tariffs, inflation, wage hikes, and recruitment challenges. Mulcahy also questioned the department’s use of CPI as a measure for cost increases in heavy civil construction companies, suggesting the need for a more tailored index.
Petten recently announced the cancellation of the public-private partnership intended to twin a section of the Trans-Canada Highway, opting for the traditional public procurement process. He believes this approach will expedite the project completion and potentially secure better pricing. The government aims to maintain a positive working relationship with paving companies while addressing the challenges in the road construction sector.
In a statement, the former Liberal transportation and infrastructure critic, Jamie Korab, highlighted the utilization of the P3 model by the previous government to tackle rising construction costs. The Liberals’ multi-year roads plan, announced in March 2023, marked a significant investment in highway and road infrastructure during their tenure from 2015 to 2025.