THE INFRASTRUCTURE BILL & LABOR SHORTAGE
The bipartisan Infrastructure Investment and Jobs Act (IIJA) will bring $550 billion of new federal investments in America’s infrastructure over the next five years. How will that affect the labor and staffing needs in the construction industry? And what does it mean for project owners? The impending construction boom and how firms in the industry respond to their staffing needs are critical issues in the current marketplace.
The construction industry’s need to recruit the next generation of workers is a well-known challenge. With a widening skills gap in the infrastructure capital project market, companies offering design, at-risk construction, and consulting alike, are hard-pressed to find talented and skilled workers. Based on the attrition rate of students currently pursuing STEM degrees, we will likely see an additional shortage in the supply of skilled labor.
What is more, “The Great Resignation” has compounded the issue. The Great Resignation refers to the thirty-three million Americans who have quit their jobs since the spring of 2021. This is spread over all the different market labor segments, including the infrastructure capital project market. Companies hire far more employees than resign each year in a typical booming construction economy. However, that has not been the case over the past couple of years. The hiring levels remain the same, but the resignations are increasing rapidly.
The general pool of qualified, available, and willing construction talent is shrinking while the number of construction programs is increasing. This current labor market dynamic will create several significant challenges for owners of construction projects. However, these challenges present opportunities for certain owners to stand out and become the “owner of choice” for their consultants.
HOW TO BE AN ATTRACTIVE OWNER
Owners that understand the labor turnover challenges that consultants have and help consultants address these challenges, will ultimately be helping themselves. Owners should consider what they, as owners, can do to make the project more attractive for consultants and contractors to work on. The paradigm has shifted, consultants and contractors will continue to be more selective on whom they work with – much the way owners have had the luxury of being selective of which consultants and contractors they have worked within the past.
Here are a few suggestions on things owners can do to help consultants address these current retention challenges:
- Streamline procurement processes. Provide the bidder’s informative internal organization structure, systems, processes, program planning, and goals that the bidders will operate within. Only ask for the information that is absolutely essential from bidders.
- Offer labor turnover solutions to the consultant. Provide information in the procurement document about how the Owner will support and work with consultants and contractors to address labor needs and how the program has considered ways to keep employees interested.
- Provide labor escalation clauses. On multi-year projects, there should be escalation clauses that allow annual rate increases that are tied to annual salary increases.
- Develop opportunities to promote consultant employees through the program. The contract should allow promotion of consultant staff within the project over time on multi-year projects.
- Consider defining and emphasizing project/program culture during procurement to stand out. Invest in the culture of the project/program.
- Do not poach your consultant’s staff. Establish policies that prohibit the owner from hiring your consultant’s staff from the project they are working on. The policy should also include a prohibition on allowing consultants to poach staff from one another on the same program (this only increase costs to the Owner after all)
- Pay on time. It is up to the consultant to provide accurate and compliant invoices in a timely manner. However, upon submission of a compliant invoice, the Owner should have systems and processes that keep the invoice moving ahead and make sure it is not held up with anyone reviewer for any prolonged period. Anser Advisory has worked with large programs to help facilitate these processes while completing real-time funding sources and uses audits.
This is an exciting time in our industry with so much opportunity and funding available for Owners to engage in challenging projects that will serve our communities well. With Owners and Consultants working together to mitigate the retention challenges of this “Great Resignation” period, we can help these public agencies to further their mission by delivering infrastructure that shapes our country for decades to come.
This completes our 8-part series of Meeting the Infrastructure Moment. Stay tuned this summer and fall for our next series focusing on innovation and Anser Advisory’s proprietary branded solutions. Patrick Hanssens is Director, of Program Controls based in the Anser Advisory Boston office and David Baldini is CEO of IntegrateIT based in Ashburn, VA.
This is an 8-part series called Meeting The Infrastructure Moment: How Owners of Projects/Programs Will or Won’t Succeed. In this series, Anser’s own subject matter experts share their perspectives on what owners can do to succeed, including best practices for receiving and spending these funds.
Contributing authors: Kristen Braden, P.E., Managing Director, SVP based in the Anser Advisory Ohio office, and Craig Halvorson is Regional Managing Director, EVP based in the Santa Ana, CA (Headquarters) office.