New Year, New Challenges for IIJA
Date Posted: January 12, 2023
Posted In: News, Workforce,
From Construction Dive: As the Infrastructure Investment and Jobs Act enters its second year, the landscape for civil work looks challenging in many ways. A volatile economy, battered supply chains and high demand for labor will all make it difficult for contractors to meet demand.
Amid the uncertainty, the IIJA provides a welcome stable infusion of $1.2 trillion in funding to a variety of construction sectors over five years. The legislation will boost a wide range of infrastructure work, from bridges to broadband, as well as bolster industries focused on low-carbon and American-made materials.
However, there are a number of headwinds that could hamper the rollout of federal infrastructure work in 2023, and overcoming them requires careful planning.
“It’s a once-in-a-lifetime opportunity that all came together, but the biggest concern is: Is this going to become a perpetual raindrop that does not hit the ground? We need to make sure that things are all aligned so that it hits the ground sooner than later,” said American Society of Civil Engineers Senior Vice President K.N. “Guna” Gunalan.
Here are some of the likely challenges ahead.
Lack of subcontractor capacity
Large contractors will be able to adapt as needed to win these new federal jobs, according to Certified Public Accountant Jack Callahan, construction industry leader with New York City-based tax and advisory firm CohnReznick. The challenge will be for the primes to find enough subcontractors to staff them. The IIJA stipulates a certain number of MWBEs to meet its inclusion goals, which adds to the difficulty of finding enough of the right subs.
“You’ve got a very large diversity, equity and inclusion requirements built into these contracts. When you look at billion-dollar programs, and you look at 20% participation goals in there: Where do you find that many contractors with that much capacity to perform in what many cases are going to be highly complex, heavy civil infrastructure jobs?” said Callahan. “I think the large primes that have spent a lifetime gearing up will tackle this work, but where are they going to find the subcontractors, both from the traditional side and the diverse side?”