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 Flameswas put on hold Wednesday while budget problems are resolved.

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

• Calgary Flames arena deal paused over budget concerns

The groundbreaking is supposed to happen by Aug.1under the terms of the contract both parties signed. ButNenshi 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 saidhe isworried 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 saidsteps 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 probablyhave 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."