Thinking Ahead: The Infrastructure Bill, Vaccine Requirements and Severe Weather Impacts
Working in the built environment often means juggling various bits of information and trying to make the most informed choices. Weighing how broader economic and political trends will affect your business can be a challenge and can feel daunting.
In this new series, we’ll break down some of the economic indicators, regulations, trends and other considerations our economists, consultants and other subject matter experts are thinking about and offer some insights into how that might need to be factored into your planning.
New Infrastructure Bill
The $1 trillion infrastructure bill passed by the Senate in July 2021 will reach large metropolitan centers and rural communities alike, with earmarks for roads and bridges ($110 billion), passenger and freight rail ($66 billion), broadband ($65 billion), electric and power infrastructure ($73 billion) and environmental remediation ($21 billion). While there will be a lot of competition bidding on these projects, contractors who understand the dynamics of their regional markets will be poised to capture work 1. Additionally, the use of federal funds to match state and local spending often means the impact in terms of projects generated can be much higher than the stated federal appropriation.
Vaccine Requirements
Along with that increase in federal investment will come federal contracts. The Biden administration recently announced that all employers with 100 of more employees will have to require COVID vaccines or provide negative tests weekly. This is in addition to requiring federal employees and federal contractors to show proof of vaccination or test negative 2.
That means those who work in the government space or who plan to bid on federal infrastructure projects will need to determine how to comply with the rules being generated by the Department of Labor. Whether this will include state and local government projects in receipt of federal matching funds is yet to be determined. Smart contractors will start developing plans now for how to collect proof of vaccination or implement testing and how they’ll work with subcontractors to do the same. Not only will employers need to maintain vaccination records, but they’ll also need to determine appropriate testing frequency and how to convey that information to the necessary monitors. A potential vaccine or testing requirement could raise operational and logistics questions that contractors will need to solve working with their subcontractors and suppliers.
Planning ahead or forming contingency plans could help you act quickly and win business while others are behind.
Severe Weather
Another constraint on the industry cropping up is the need to rebuild after extreme weather events such as wildfires and hurricanes. Hurricane Ida caused billions of dollars in damage to critical oil and gas infrastructure, transportation, roads, bridges and the electrical grid from Louisiana to New York.
Given the current supply chain issues for materials, rebuilding from disasters will likely increase in cost and take longer. The Producer Price Index (PPI) report for August released September 10 suggested construction prices are on the rise and growing at approximately 5% year-over-year. This growth is in line with historical index levels between 2017 and 2019, while industry spending continues to be challenged on various fronts.
Another constraint on construction remains finding skilled labor to meet demand from new builds and repair projects. The industry will need to plan resource allocation to meet capacity demands as natural disasters continue to cause damage. This balance will only become more difficult as federal infrastructure dollars flow into projects.
Conclusion
During an economic recovery, the complex dynamics of a lingering pandemic and accelerating climate change, the natural temptation is to postpone the critical work of strategic thinking. Often it seems counterintuitive for most engineering and construction executives to slow down, pause and think deeply about their businesses in the face of rapid growth and opportunity. Ironically, this is the perfect time to take these steps.
As business leaders start looking to 2022, it will be important to continue tracking and assessing current industry trends and macro events that are shaping the built environment. This kind of analysis can be powerful in determining the underlying forces and trends that are driving behaviors for customers and competitors, as well as E&C firms. In addition, analysis of the data and information can allow business leaders to prepare for shifts in the market before they happen and increase their chances for success. With an understanding of the business climate, customers, competitors and the company itself, this research can equip management with the power to make better business decisions, increase revenue and maximize profit.
1“The Senate Approves $1 Trillion Bipartisan Infrastructure Bill in a Historic Vote.” NPR. Aug. 10, 2021
