The real cost of road work: 65,000 Canadian businesses taking a major hit over 5 years; Construction delays on Moose Jaw’s High Street West is one of the worst examples

Regina, May 2, 2018 – Lower sales, higher costs, added stress and even closure are just a few of the devastating consequences road construction wreaks on thousands of small businesses every year.

As many as 65,000 businesses over five years have been affected by road construction projects and often had to borrow, relocate or close down altogether, according to a new report released today by the Canadian Federation of Independent Business (CFIB).

CFIB is calling on municipalities to address the issue now by starting to compensate businesses negatively impacted by infrastructure projects.

“Governments have announced hundreds of billions of dollars of investment in infrastructure projects over the next few years. However, none of this funding has been earmarked to compensate the businesses that will be significantly affected by these projects,” said Simon Gaudreault, CFIB director of economic affairs. “Considering the strong negative impact on some businesses, it would be irresponsible if governments did nothing to help them mitigate the negative consequences or better manage the projects. Countless local jobs, thousands of neighbourhood businesses and the very heart of some commercial streets are at risk if these issues aren’t addressed.”

One of the worst examples in Saskatchewan: Ongoing construction delays on Moose Jaw’s High Street West

The delayed Phase Two of the Water Main replacement on Moose Jaw’s High Street West was supposed to only take three weeks, but after almost nine months it is still not complete.

“Angry business owners have told us the delays have resulted in: customers having trouble accessing their business, significant loss of sales, damage to their sewer lines and premises, and added stress and anxiety,” said Jennifer Henshaw, CFIB’s Senior Policy Analyst for the Prairie region. “To add insult to injury, one business owner said his water and sewer lines were disconnected for almost four months and yet continued to receive water bills.”

“The City’s lack of communication with the businesses located on High Street have left them completely frustrated and looking for answers,” added Henshaw. “These businesses are not looking for special treatment; they simply want to be treated fairly and be compensated for their loss of sales. That’s why we are urging the City of Moose Jaw to improve communications with the impacted businesses, and introduce a comprehensive construction mitigation policy featuring a compensation program for those impacted.”

“It’s not surprising that High Street West is currently in first place for the worst road in the province according to CAA Saskatchewan,” noted Henshaw.

Huge hidden costs

CFIB’s report, Paving a Smooth Road: Helping small businesses survive infrastructure work, is the first to evaluate the overall impact of road work on Canadian businesses. It found that since 2012, 41 per cent of them have been affected by road construction projects, with five per cent affected in a major way. In the long term, this means that one out of five businesses could suffer from the consequences of poorly planned projects.

Nearly half (46 per cent) of respondents affected by such construction said their sales had declined. Almost one in four (23 per cent) experienced a significant level of stress, and more than one in five (21 per cent) had to draw on personal or business savings. Seven per cent even considered closing or relocating their business.

“These results show that too often local businesses struggle during public infrastructure projects, shouldering unfair economic costs that are being offloaded on them,” added Gaudreault.

Compensation needed now

Most infrastructure projects are not properly mitigated, leaving businesses to deal with the consequences alone: seven out of 10 businesses are dissatisfied with how governments deal with the negative impacts of these projects.

“With peak road construction season approaching, we are calling on all municipalities to show leadership and be among the first to adopt a policy supporting small businesses threatened by extensive infrastructure projects,” said Gaudreault. “As a first step, they should put in place compensation measures for those businesses impacted by construction in a major way, inspired from the ones already existing in other jurisdictions, like Seattle, Brussels and Sydney.”

CFIB’s report also recommends that all Canadian municipalities adopt a coherent construction mitigation policy, including five key measures:

• A municipal compensation program for cases where construction has a moderate to major impact for an extended period.
• A “no surprise” rule requiring the municipality to track its infrastructure’s condition and let local businesses know of construction well in advance.
• A comprehensive planning approach based on the “dig once” principle and the phasing/timing of projects.
• An improved contracting process integrating mitigation provisions and a bonus/penalty system, especially for early or late completion of projects.
• A dedicated business liaison officer with managerial authority designated for each project and having particular responsibility as an intermediary between businesses and construction site managers.

“Construction is a serious problem for thousands of local businesses who need to see more action around this file in the next few months. The upcoming Federation of Canadian Municipalities’ annual conference would be a good opportunity to show leadership on this issue,” concluded Gaudreault.  

Survey methodology
CFIB conducted its survey between July 6 and 26, 2017 with 5,573 small business owners across Canada. The results are accurate to ± 1.3 percentage points, 19 times out of 20.

For media enquiries or interviews with Simon Gaudreault, CFIB’s director of economic affairs, please contact Kiara Morrisey, Communications and Media Relations Assistant, at 647-464-2814 or email public.affairs@cfib.ca.

To arrange an interview with Jennifer Henshaw CFIB’s Senior Policy Analyst, Prairie Region, please call (306) 757-0000, 888 234-2232 or email mssask@cfib.ca. You may follow CFIB Saskatchewan on Twitter @cfibsk.

About CFIB:
CFIB is Canada’s largest association of small and medium-sized businesses with 110,000 members (5,250 in Saskatchewan) across every sector and region.