Cost of paving projects in N.L. nearly doubles in just 6 years

The cost of road construction projects paid for by the Newfoundland and Labrador government has nearly doubled in just six years.

“The average cost per kilometre for paving projects (excluding the TCH) has risen from approximately $330,000 in 2019 to over $610,000 in 2025 and continues to climb,” reads a Department of Transportation and Works presentation from October.

According to the department, overall paving investments rose 93 per cent between 2019-20 and the current fiscal year, with the province’s annual road plans budget growing from $166 million to $320 million.

The presentation, obtained through access-to-information legislation, shows that over the same period, the cost of paving projects rose by nearly the same measure — 85 per cent. But the document also shows that during the six-year stretch, the consumer price index (CPI) for transportation rose by just 20 per cent.

“The increased spending on road construction, combined with a static supply of contractors, has led to rising contract prices,” explains the document dated Oct. 20, less than a week after the last provincial election.

“Despite the significant investment increase, there has been minimal growth in the paving industry,” it says. “While some contractors have added new equipment, allowing for limited capacity expansion, no new paving contractors have entered the market.”

Transportation and Infrastructure Minister Barry Petten, who took the reins at the department after the Progressive Conservatives won last October’s provincial election, called the skyrocketing cost of paving projects “quite alarming.”

“Why they’re gone up? I have no idea. But, I mean, my issue, my concern is, from where I sit, we have to watch the public purse,” Petten said on Wednesday, adding he would be meeting the Heavy Civil Association of Newfoundland and Labrador next week. 

“There’s fuel, they say, there’s total labour, there's quarry issues, there's repairs, there's maintenance, it’s just a gamut of things that we were given, but we don't have a real breakdown,” he said. “That's what the industry will tell us. And again, I'm not one to judge their answers. You know, I take it at face value.”

Kris Mulcahy, executive director of the Heavy Civil Association, said exploding equipment prices, U.S. tariffs, inflation, wage increases and recruiting issues have all seen costs soar for contractors.

“Our association is just as driven to want to ensure that costs stay down,” he said Thursday.

He called into question the department’s use of CPI for the transportation sector, a measure calculated by Statistics Canada, as an effective “proxy” to measure cost increases for heavy civil construction companies, given the specific pressures facing paving contractors.

“I’m aware of other provinces, like P.E.I., their [industry] association is working with the province to come up with a better index,” Mulcahy said.

He added that the department has a role to play in bringing down construction costs, arguing that putting roadwork out to tender in January or February, rather than partway through the spring, would allow companies to plan better and bring down costs.