The United States has historically underinvested in infrastructure facilities and systems, leaving businesses that build and supply products with unfulfilled promises.
Yet, infrastructure is essential, supporting the operation of society and the economy. Construction occupations engage in creative processes requiring building and repairing public and private physical structures. Further, the construction industry builds on opportunity. In fact, the construction industry is projected to grow 6% between 2020-2030, adding about 400,000 new jobs. Contractors are upbeat about sales and employment prospects as President Biden is investing in opportunities that will create a more robust equitable economy and higher quality of life for future generations. 2022 promises to have a positive impact on the construction industry and it is critical to keep informed.
The Biden Administration’s Build Back Better (BBBA) legislation intends to unite Americans around “things we can depend on,” by rebuilding a modern infrastructure that will have an exponential impact, empowering Americans. The BBBA is a comprehensive three-part transformative legislative framework: part one, The American Rescue Plan, was signed into law on March 2021 as a Covid-19 relief package; however, the second and third parts of the proposed legislation, called the American Jobs Plan (AJP) and the American Families Plan (AFP), were forced into extensive negotiations, resulting in the bipartisan Infrastructure Investment and Jobs Act (IIJA), signed by Congress on November 15, 2021.
According to Grist, The IIJA was a major victory, indicating both political parties agreed to the critical need to invest $550 billion in new spending over the course of five years into America’s roads, bridges, tunnels, airports, ports, railways, transit, broadband communications and other physical infrastructure badly in need of an update as well as include a major backlog of projects and repair work deferred by the pandemic. The majority of the funding in IIJA goes toward traditional infrastructure. Here are a few graphics to demonstrate: Funding Breakdown, Proposal vs Plan Comparison, Presidential Plan Comparison
Thomas Net explains, allotments were calculated per state and New York will get some of the largest funding.
The funds go directly through government agencies from the federal to the local level, giving them authority to distribute and oversee the money by giving grants; simultaneously designing the dozens of new programs outlined in the act and hiring more people and purchasing more technology to prepare. Vox clarifies, “The Department of Transportation has jurisdiction over the bulk of the funds and will oversee money for highways, public transit, and rail. The Environmental Protection Agency will oversee funding for drinking water and wastewater projects, including the replacement of lead pipes. The Department of Commerce will oversee funding for broadband deployment. The Department of Energy will oversee funding for the electric grid and clean energy investments. And the Department of Interior will oversee water management and natural disaster resilience.” While the cash flow is coming, investment choices are challenging. States, regions, and local governments want to know more details about how to equitably distribute and target the funds to construction projects in most need. Biden remarked in a speech given on January 14, 2022, “We’ve got a lot of work to do…. We are going to get it done…, and I want every penny watched.”
The construction industry needs to keep a close eye on the years ahead. Here are tips to consider:
- Prepare to be either a government contractor or a supplier to one
- Start with existing programs, like fixing roads or replacing water pipes because government contracts will be available sooner
- Then, plan for system expansions like additions to the broadband internet infrastructure
- Go for new programs last, especially competitive grant programs because they will need to be set up from scratch
- Retain and recruit skilled workers with premium pay and benefits
- Provide workplace incentives for current and future employees
- Consider acquisitions, partnerships, and joint ventures to position your company
- Tap into tax credits to lower the upfront costs
- Purchase goods primarily manufactured in the U.S. for an additional ten percent tax credit
- Invest in technology/technological innovations to streamline all aspects of the project
- Keep up with The White House’s Fact Sheet Releases. HERE is the direct link to New York.
Biden stated, “There is nothing beyond our capacity when we work together.” Construction occupations demand teamwork in the broadest sense. RBT hopes businesses can envision the future with pride as they look at what can be built together. If you’d like to know more, our dedicated team is here to help develop a personalized long-term strategy for you. Additionally, if you would like to submit topic ideas for future articles our team produces, please feel free to contact us at TLideas@rbtcpas.com.