5 Minute Read
January 27, 2022
There may be fewer days in February, but that doesn’t mean fewer breaking construction news stories. From new federal guidance on upcoming infrastructure projects, to new environmental and collective bargaining impacts to more than half million new workers needed, here are the key headlines we were following this past month.
The White House has unveiled a guidebook for contractors and construction firms that will help them understand all of the laws and regulations around the federally-funded infrastructure projects as part of the $1 trillion-plus Infrastructure Investment and Jobs Act that recently passed in Congress.
The guidebook and associated web page provides a wealth of information and resources. Among them, a breakdown of the proposed projects, roadmaps to how they will be funded, and resources to help jurisdictions prepare to receive the money, such as links to partner programs and fact sheets.
As Reuters noted in a February article, many contractors—as well as state and local governments—are not well informed or prepared to start taking advantage of the flow of new infrastructure projects. Roughly half of the funds are expected to be awarded to state governments, with the rest to be made available on a competitive basis. “To win the money, Reuters noted, “local governments will have to apply for it—and after decades of belt tightening, many lack the bureaucratic muscle to do so.”
The Takeaway: Though many questions about processes still remain, the White House’s guidance is an important—and much needed—step toward moving the needle. One thing is clear, these projects and the funds propelling them will be highly scrutinized, and contractors may have to be agile enough to adapt to new rules and regulations (more on this below).
Industry analysts have long noted that those contractors with the most modern technologies and workflows are the most likely to win the bulk of this new work. It’s yet another reason contractors should be upgrading software and processes in order to meet these demands.
The White House in February announced the creation of a “Buy Clean” task force that aims to focus on the production and purchase of low-carbon construction materials for federally-funded projects. The goal is to “increase emission transparency through supplier reporting and incentives and launch pilot programs to boost federal procurement of clean construction materials.”
The Biden Administration says the initiative will add jobs and help boost competitiveness in the global market. The task force creation comes after a December 2021 White House executive order to make the federal government more sustainable. It was met with mixed reactions, with environmental groups lauding the task force and construction industry associations taking a more cautious approach.
However, one of the largest global contractors, Skanska, is already moving toward low-carbon materials. It is trialing a low carbon reinforced concrete solution on National Highways’ M42 junction 6 improvement scheme in England, and applications could soon be extended to other countries, including the United States.
Separately, another White house executive order would put emphasis on unionization and collective bargaining for large, federal construction projects. That order would require large projects funded by the new infrastructure law to use project labor agreements—pre-contract commitments by employers to enter into a collective bargaining agreement with at least one union. This would apply to projects costing $35 million or more.
Again, this order was met with mixed reactions, as unions and workers rights groups celebrated and industry associations warned that such a mandate could create unfair disadvantages for non-union contractors, as well as raise construction costs between 12% and 20%.
The Takeaway: The key word here is “change.” We’ve already seen a lot of change happening in the construction industry, and it’s become very clear we’re going to see more. Whether it’s new rules and mandates, stiffer competition for projects, or tougher project demands, contractors are going to have to be agile in order to adapt and win work..
A February report by the Associated Builders and Contractors (ABC) noted that the construction industry will have to attract more than 650,000 new professionals—on top of regular hiring—in order to keep pace with projects and projected growth in 2022. Citing data from the U.S. Bureau of Labor Statistics, the ABC noted that every $1 billion in new construction spending created demand for 3,900 new workers.
“The Infrastructure Investment and Jobs Act passed in November and stimulus from COVID-19 relief will pump billions in new spending into our nation’s most critical infrastructure, and qualified craft professionals are essential to efficiently modernize roads, bridges, energy production and other projects across the country,” said ABC President and CEO Michael Bellaman.
Meanwhile, career-change-based attrition will keep current workforce figures relatively stagnant. Census Bureau data points to an estimated 1.2 million construction workers leaving their jobs to work in other industries in 2022. It is expected that this will be offset by an anticipated 1.3 million workers who will leave other industries to work in construction.
ABC Chief Economist Anirban Basu noted that as construction spending expands following the infrastructure bill’s passage and other growth opportunities, so too will the gap between supply and demand for labor. ““The scarcity of qualified skilled workers is an even more pressing issue,” said Basu. “Since 2011, the number of entry-level construction laborers has increased 72.8%, while the number of total construction workers is up just 24.7%...The roughly 650,000 workers needed must quickly acquire specialized skills.”
The Takeaway: As the ABC and other industry organizations note, the labor shortage remains the number one issue in the construction industry. Younger generations have largely spurned traditional construction careers in favor of more opportunities in the tech space. Yet, as leading contractors have found, embracing innovation and fostering construction technology careers within their organizations has helped change that narrative. More construction education programs, trade schools and apprenticeship programs that are rooted in emerging construction technologies are also needed to help build tomorrow’s construction workforces.
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