Construction in Quebec: how SMEs can remain strong

Construction companies are facing major challenges: rising material costs, U.S. tariff issues, labor shortages... For SMEs, the pressure is on. But with a better understanding of the situation, it's possible to act more strategically.

In short

Against a backdrop of high costs, labor shortages and changing market conditions, your SME in the construction sector can remain profitable by taking well-targeted action.

  1. Monitor your margins closely to spot cost overruns early.
  2. Diversify your projects to reduce the risks associated with a single type of job.
  3. Strengthen your business relationships with key suppliers and partners.
  4. Optimize your processes to reduce waste and improve productivity.
  5. Invest in your employees to reduce turnover.
  6. Protect your cash flow by building in safety margins.
  7. Seek support immediately if financial pressure becomes too great.

An key sector under growing uncertainty

Construction remains a pillar of the Quebec economy. In 2025, the industry reached a peak of 216 million hours worked, an increase of 2% despite a volatile economic environment 1. But behind these encouraging figures, a number of significant uncertainties remain.

U.S. trade policies have a direct impact on Quebec. These tariff tensions continue to weigh on supply chains and influence worksite planning.

In this context, almost one in two SMEs in Quebec feels unprepared to face a further rise in costs.

SMEs more vulnerable than large companies

Large construction companies have wider margins, better purchasing capabilities and larger teams to absorb cost increases and delays. SMEs, on the other hand, are much more exposed. They bear the brunt of tariffs, inflation and labor shortages. Many are forced to postpone projects, downsize or renegotiate contracts. In a context of skyrocketing costs and increased risks, the financial health of small businesses is becoming fragile, despite strong demand for housing and major public projects.

Inflation and operating costs

Although inflation may be making fewer headlines than in the past, construction contractors know that it is still very much with us. Several expense categories continue to weigh heavily:

  • Materials: steel, concrete, wood and other essential inputs have seen significant price increases in recent years2.
  • Transport and logistics: the costs of transporting materials and managing supplies have also risen as a result of global disruption.
  • Insurance : these remain costly, increasing operating expenses for SMEs.
  • Interest rates: despite recent adjustments, project financing remains more expensive than before, affecting profitability.

These combined pressures are squeezing SMEs’ already tight margins, and forcing them to review their financing models and operating strategies.

A severe labor shortage

The shortage of skilled workers remains one of the biggest challenges facing the construction industry as a whole.

SMEs are particularly hard hit. They have to deal with :

  • High staff turnover, often linked to demanding working conditions and a perceived lack of stability on certain projects.
  • Competition from larger companies, who are more likely to attract talent thanks to more competitive salaries and benefits.
  • Higher salaries. Some collective bargaining agreements have recently led to significant wage increases.
  • Strict rules on hiring temporary foreign workers, which complicate workforce planning.

These constraints lengthen delivery times and limit SMEs’ ability to accept new contracts. For many entrepreneurs, labor has become the main brake on growth.

7 ways to help you bounce back

Are you an SME in the construction sector? Here are a few tips to help you stay on course!

  1. Get a clear picture of your financial situation

    Analyze your projects, margins and risks. A good understanding of the figures helps you make better decisions.

  2. Diversify your contracts

    Don’t depend solely on one area or one customer.

  3. Optimize your working methods

    Better planning, rigorous cost control and tight management can reduce waste and improve profitability.

  4. Invest in your team

    Offer your employees benefits and group insurance, regular training, and a safe environment to reduce turnover.

  5. Strengthen your business relationships

    With your key suppliers and partners.

  6. Anticipate cost fluctuations

    Update your quotations more often and include contingency clauses.

  7. Ask for help quickly

    If you’re worried about delays, debts or overruns, our insolvency advisors can help you reorganize your finances. Don’t hesitate to contact us!

As a small business owner in the construction industry, you face many challenges, but there are solutions to help you get through this period. Taking the time to analyze your situation and adjust your strategies can help you protect your business. If debts or cost overruns are becoming a concern, contact one of our financial recovery consultants. They’ll help you get your finances back on track.

Sources :
1 Perspectives, Dec. 2025
2 BC Construction Association

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