1. Understanding the $1.2 trillion Infrastructure Bill and why is it important your business?
When the President signed the $1.2 trillion Bipartisan Infrastructure Investment and Jobs Act (IIJA) on Nov. 15, 2021, it had bipartisan support from the both the house of representatives and the senate. What the construction industry needs to know is that, according to Investopedia, the bill includes $650 billion in funding typically earmarked each year for highways and various other infrastructure projects and $550 billion in new spending that could create incredible growth for the construction industry.
2. What’s in the bill and how will it impact construction spending?
The Bipartisan Infrastructure Bill offers an extensive list of projected benefits that would create new jobs, more projects, and increased construction spending.
Here are some of the construction-related areas that would receive the majority of the funding as a result of the bill:
- $110 billion for roads and bridges
- $66 billion for railroads
- $65 billion for the power grid
- $65 billion for broadband
- $55 billion for water infrastructure
- $39 billion for public transit
- $25 billion for airports
- $21 billion for the environment
- $17 billion for ports
- $8 billion for western water infrastructure
- $50+ billion for cybersecurity and climate change
- $7.5 bill for electric vehicle charging stations
According to Moody’s Investors Service, even without the bill, construction spending has been growing. In their Sector In-depth report, they state: “For 2022, we project U.S. construction spending to grow at 3.2% and 3.4%, respectively, primarily driven by stable residential and public construction activity and a recovery in nonresidential spending.”
Again, what the industry needs to know is that according to Moody’s Investors Service, that with the infrastructure bill, construction spending could see a 5% growth increase in 2022 and a 5.5% growth increase in 2023.
3. Overcoming workforce and supply chain shortages
With the new Bipartisan Infrastructure Bill, the construction industry should experience a significant windfall. However, with labor issues caused by COVID-19, global supply chain shortages and higher material prices, there are various sectors within the industry that may have to overcome some hurdles to benefit from the act.
Based on a workforce survey conducted by The Associated General Contractors of America (AGC) along with Autodesk, 88% of the surveyed construction firms were experiencing project delays. Of those, 75% surveyed blamed longer lead times and material shortages as the primary reasons.
According to the AGC, 61% of firms surveyed say “projects are being delayed because of workforce shortages. And delays due to the lack of approvals or inspectors, or an owner’s directive to halt or redesign a project, were each cited by 30 percent of contractors. An even higher percentage of firms, 93 percent, report that rising materials costs have affected their projects. These rising materials costs are undermining firms’ abilities to profit from the work they have, with 37 percent reporting they have been unsuccessful in passing those added costs onto project owners.”
Facing these and several other challenges, many construction firms are turning to company’s who have a deep understanding of their business and how to navigate the risks.
4. Preparing for the influx of IIJA spending
With the significant dollars that will be flowing because of the IIJA, construction companies are taking steps to make sure they’re ready when the $1.2 trillion infrastructure package hits the streets. They are reaching out to a variety of resources to better position themselves to secure upcoming projects, including the surety industry.
For more than a hundred years, the federal government has recognized the importance of payment and performance bonds and the protection bonds provide. SFAA President and CEO, Lee Covington, said “Investing in infrastructure will create millions of jobs across the country, growing our national and local economies in both the short and long term,” said SFAA president and CEO, Lee Covington. “The surety industry fully supports this investment and will continue to provide the essential protections necessary to support our country’s infrastructure needs through our suite of products and services.”
5. How Nielson, Hoover & Company can help
Whether you need your first bond or as an established company you’re looking to obtain greater capacity and better terms, NHC’s knowledge and customized surety solutions will deliver better results than anyone else in the industry.
At NHC, our commitment is ongoing. We will continually engage with you, learning everything we need to better understand your business. Here’s what our unparalleled experience offers you.
Over the years, Nielson, Hoover & Company has established an outstanding reputation in the industry. We’ve developed and maintained strong relationships with the nation’s top surety providers. As a result, we have better access to key decision makers, which enables us to better negotiate for our clients.
The reason more and more companies look up to us is because we continually look after them by delivering the best surety options, period. Unlike most surety bond providers, the company is not beholden to any single insurance company. Instead, it represents more leading sureties than any other agency nationwide. This adds up to more options, more negotiating leverage, and, ultimately, better terms and enhanced services for clients.