The Newfoundland and Labrador government has witnessed a significant increase in the cost of road construction projects over the past six years. Department of Transportation and Works data from October reveals that the average cost per kilometer for paving projects, excluding the Trans-Canada Highway, has surged from around $330,000 in 2019 to over $610,000 in 2025 and is on an upward trend.
The department reports a substantial 93% rise in overall paving investments from the 2019-20 fiscal year to the current year, with the annual road plans budget of the province escalating from $166 million to $320 million. In the same timeframe, paving project costs have also seen an 85% increase, outpacing the 20% growth in the consumer price index (CPI) for transportation.
According to the department’s presentation, the surge in road construction expenditure, coupled with a static pool of contractors, has led to escalating contract prices. Despite the significant investment boost, there has been minimal expansion in the paving industry, with no new contractors entering the market.
Transportation and Infrastructure Minister Barry Petten, who assumed office following the provincial election, expressed concern over the soaring costs of paving projects, labeling the trend as “quite alarming.” Petten highlighted various factors contributing to the cost escalation, including rising fuel prices, labor expenses, quarry challenges, repairs, and maintenance issues.
Kris Mulcahy, Executive Director of the Heavy Civil Association, attributed the cost surge for contractors to factors like inflated equipment prices, U.S. tariffs, inflation, wage hikes, and recruitment challenges. Mulcahy questioned the efficacy of using the CPI for transportation as an indicator for heavy civil construction cost increases, advocating for a more tailored index in line with industry dynamics.
Regarding the cancellation of the Trans-Canada Highway twinning public-private partnership by the current government, Petten defended the decision, emphasizing that traditional procurement methods would expedite project completion and potentially lead to better pricing. The government’s move has triggered mixed reactions from the paving industry, with ongoing discussions on optimizing construction costs and timelines.
