If contractors had to sum up the prospect of getting work from the recently passed federal infrastructure bill amid continuing labor and supply shortages, many would no doubt say: It’s a good problem to have.
Others, of a more skeptical cast of mind, might add: Be careful what you wish for.
Either way, there’s no denying that many in the industry are finally seeing the massive federal infrastructure bill they’ve long wanted. The $1.2 trillion Infrastructure Investment and Jobs Act, signed into law by President Joe Biden in November, will pump money into the construction and reconstruction of everything from roads, ports and bridges to broadband and clean-water projects.
Eric Meier, co-chair of the construction practice group at the law firm Husch Blackwell, said the spending surge will undoubtedly increase the pressure on an industry whose resources are already stretched thin. The good news, he said, is that contractors are still in a position to soften the blow.
“I think there needs to be a continued push to get people into the skilled trades, which are great jobs for people who want to do that kind of work,” Meier said. “And good thing is there will continue to be a good pipeline of work to do because of this infrastructure bill. That will further incentivize people to get into the industry.”
Meier has gained his expertise over the years by providing advice to owners, general contractors, suppliers and others on many types of construction-related matters, including contract negotiations and the various sorts of disputes that can arise both during and after projects. Meier’s initial taste of working with the industry came not long after he graduated from the University of Wisconsin’s law school and was assigned to work on a case involving cost overruns on the installation of Miller Park’s roof.
“For me, it’s been neat being around all these people who minds who work toward making something that’s so complicated, whether it’s the developer who has the vision and then has to get the documents drawn up by the architect and then translated by the engineers and implemented by the construction trades,” he said.
Meier recently sat down with the Wisconsin Law Journal to discuss the federal infrastructure bill and how it presents both great opportunities and pitfalls for an industry already contending with labor shortages and rising materials prices.
(This conversation has been edited for clarity and brevity.)
Wisconsin Law Journal: Do you think contractors will start seeing work from the infrastructure bill as early as next year?
Meier: I think it’s probably realistic to expect that from the middle of the year moving forward the money will start to come in. Then it will be up to the states to decide what’s their process to distribute the funding. And it’s going to take a while because they have limited resources to handle these things. And all this money is going to come on top of other government programs. So there will probably be an additional lag. It’s going to keep a lot of people really busy.
WLJ: How much of a role will politics play in decisions on how this money is distributed?
Meier: Even though tranches of the money are earmarked for specific purposes, the states still have lots of leeway to decide how they want to allocate it. We think there will be lots of common ground across the political spectrum on critical infrastructure – on things like roads. Those go through both red and blue counties and connect the whole state. So there will be projects that have broad support, and then maybe there will be ones that have more of a political attachment to them.
WLJ: What are you hearing from your clients these days?
Meier: Well, I do see a lot of clients in the market dealing with the strain of labor shortages and the materials-price escalation, as well as material availability. Right now, you may be able to get a certain product more or less right away, or you need may need two times or three times as much time. It may take two additional months to get there.
I know of homebuilders who signed contracts a year ago and now have to go back to clients and say, ‘I’m dealing with a five-figure price increase to get the same materials. What do I do?”
There’s no argument that there has been a price increase. But do they go ahead and acknowledge that price increase and go ahead with the project? Or do they try to wait it out and see if they can get off this wave of historically high prices?
WLJ: And now you throw this federal infrastructure bill into the mix.
Meier: Yes, you throw in this infrastructure deal. Of course, these projects won’t come online right away. But whatever year these projects do start to come online, you’re going to have bridges that are going to require a ton of cement and steel. And that demand will be competing with ongoing commercial projects that are already having a challenging time.
So, on one hand, it’s fantastic to be investing money in airports, ports and roads and all these other things. It’s a fantastic injection of funds at levels we’ve never seen before. But we still have these labor and supply shortages. And even without these new infrastructure projects, we’re struggling to meet current demand. Follow @TDR_WLJDan