On November 5, the House of Representatives voted and passed the long awaited bipartisan $1.2 trillion public works bill and 10 days later, on November 15, President Biden signed it into law. Massive infusions of spending on roads, bridges, public transit systems, power and water systems and other projects will now create record opportunities for construction companies, especially those that have expertise in navigating the complicated labyrinth of rules for public works projects as well as the workforce to handle increasing volumes of work.
In a prior article published last month I identified four areas that commonly drive increased costs and complications on public works projects but that could also be a competitive advantage for contractors that manage them strategically.
The passage of the infrastructure bill is timely for contractors as construction spending is showing year-to-date declines in most infrastructure categories. Spending has been slowed by shortages of workers and materials, as well as uncertain delivery times. Supply chain disruptions are causing inflationary problems which are particularly onerous for construction companies who perform on public works projects that were bid prior to the soaring price increases, leaving contractors to carry the burden.
The most recent Associated General Contractors of America Workforce Survey indicates that 60 percent of respondents reported one or more of their projects had been canceled, postponed or scaled back due to delays, shortages, and soaring materials cost. Combined with difficulties in filling positions, the construction industry is facing some serious challenges.
There is good news in all of this, however. It is anticipated that infrastructure related spending should start flowing freely by the second half of 2022. This will give contractors time to develop strategies to secure and retain the necessary workforce. Those with the most effective compensation programs, employee benefits strategies and apprenticeship programs will be a step ahead of the competition.
How We Can Help
Direct Advisors, LLC, established in 2001 and located in the Albany, New York area, provides bona fide benefit plan consulting and third-party administrative services to merit shop (non-union) construction companies that are subject to the Davis-Bacon Act and state prevailing wage regulations. Our clients are located throughout the United States.