Inflation has Fredericton city staff pinching pennies, cancelling projects as costs soar

The effect inflation is having on the price of goods and services is creating tough decisions for Fredericton city staff.

In the past year, the cost of some contracted projects have doubled, forcing staff to cancel them, while jobs typically outsourced are being planned to be done in-house to save on money, said Dylan Gamble, director of engineering and operations with the city.

While tenders for goods and materials have gone up between 10 and 30 per cent over what was originally budgeted, tenders for services have gone up even higher, he said.

"There's a couple this year that have come up to almost 100 per cent more than what our engineers estimated, and we've had to cancel the jobs," said Gamble, addressing city councillors during a mobility committee meeting Thursday.

"So right now, we are going through and we're managing to see if there's some of the services we can do in-house and we're also looking at maybe extended timelines ... on some of these projects."

From $1.2M to $2.1M

In one example, a consultant originally advised the city that a new park on Valcour Drive would cost about $1.2 million, Gamble said.

This year when the tender was put out, the cost quoted to the city ended up hitting $2.1 million.

"Obviously the money's not available and that's where we're looking to do some of the work in-house if we can to try to save some money on the tender and try to bring it within budget."

Gamble said the city has also run into the situation where so many tendered projects have exceeded the cost estimate that later projects had to be axed, which was the case for a water and sewer project on Riverside Drive.

As for essential services like snow plowing, Gamble said the city will spend the money it needs to keep those at the right standard, however that will likely come at the expense of capital projects.

"We have a very strong infrastructure renewal program in the city but if the prices are going up by 30, 40, 50 per cent, and there isn't any more money to do these jobs, that means our infrastructure is going to get in worse shape.

"Anything service-wise, it's not going to impact anything, but construction-wise there may be less jobs, less projects."

In early summer, Canada's inflation rate rose to a 39-year high of 8.1 per cent, with experts citing gasoline costs as the single biggest contributor.

While inflation came down to seven per cent in August, food prices continued to increase, putting a strain on households and community organizations.

Inflation weighed as budget drafted

With Fredericton in the middle of putting together its budget for 2023, inflation has also become part of the conversation.

City treasurer Alicia Keating has already presented the water and sewer budget for next year, but noted that a $5-million gap remains between how much the city should be spending annually to replace aging infrastructure and how much it's actually spending.

Coun. Bruce Grandy said with inflation also in the mix, that gap, referred to as the city's "infrastructure deficit," could continue to grow.

"Even though we bring all of these things forward during budget of the projects we want to do, we have to be realistic and say there's probably a lot of them that we may or may not get done," said Grandy, speaking after Gamble's presentation.

"So that means our infrastructure deficit may go up for a few years until inflation gets under control."