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The 2021 Infrastructure Bill: A Breakdown for the Construction Industry
In August, the U.S. Senate Passed the 2021 Infrastructure Investment and Jobs Act with bipartisan support. The $1.2 trillion bill is intended to stimulate and assist economic recovery with the creation of more jobs, more projects, and more construction spending. If the bill passes Congress and is signed into law, there could be profound impact for construction firms and contractors.
Most construction firms find themselves in a precarious situation: there are plenty of projects, but material prices are soaring, and skilled labor is in short supply. However, the consistent demand for residential homes, limited inventory, and historic low interest rates have helped provide stability for the construction sector.
What’s in the 2021 Infrastructure Investment and Jobs Bill?
The $1.2 trillion bill proposes to inject federal funding into various infrastructure projects, including transportation, building, water and sewage systems, energy utilities, and even high-speed broadband.
Moody’s expects construction spending to expand 3.2% in 2021 and 3.4% in 2022 with $550 billion in new funds. This is in addition to the regular funds allocated to infrastructure projects, such as interstate highways. New spending would include significant budgets for roads, bridges, “congestion relief”, railroads, and more. The bridge project would mark the highest investment in bridges since the construction of the interstate highway system, with $40 billion allocated specifically to bridge repair and replacement.
Should the bill pass in its current form, power and water systems would also receive a significant investment of an estimated $170 billion dollars allocated to rebuilding the electric grid, upgrading water infrastructure to meet future challenges.
What the Infrastructure Bill Means for Construction Firms
With more millennial homebuyers entering the market, housing demand has increased while inventory remains sparse. Fueled by historically low interest rates, the construction sector was already operating on strong fundamentals prior to the pandemic. However, the pandemic has also exacerbated negative trends in the industry.
Due to recent global supply-chain issues, firms have been dealing with crushing shortages in important materials, including lumber, copper, steel, insulation, tar roofing materials, and more. Research by Associated General Contractors (AGC) shows that 93% of participants have been negatively impacted by the rising cost of materials. While labor shortages are not uncommon in the industry, nearly every union and open-shop firm is currently struggling to find skilled workers. The AGC survey found that 61% of construction firms identified labor shortages as a primary contributor to construction delays.
To maintain business resilience and attract new workers, some construction firms are increasing their spend on training and professional development. Other firms have had to adjust their pay rates to outbid competitors and retain existing employees.
New investment in housing, utilities, transportation, and infrastructure is expected to result in more projects for construction firms. However, without new solutions to meet the ongoing supply chain challenges and workforce shortages, construction firms may be hard pressed to accommodate new demand.
Leveraging Cloud ERP Systems in Construction
There’s nothing worse than having to cancel projects due to outside factors. Unfortunately, many firms may have already had to postpone or turn down new projects. Between current market conditions and the proposed infrastructure bill, 60% of construction firms anticipate adopting new technologies to better meet future challenges.
Operating on razor-thin profit margins, firms need insight into crucial data to make the right decisions. Integrating multiple systems into a single platform provides a real-time overview of business financials with integrated payroll, inventory, and service capabilities. As many companies remain understaffed, teams can leverage cloud platforms to take care of budgets and scheduling.
With extensive project management capabilities, cloud ERP software solutions allow workers to be more productive in the back office as well as in the field. Having accurate project data available on site helps free up back-office resources and allows project managers to deliver critical information or conduct transactions with clients on the spot.
Cloud-based Enterprise Resource Planning (ERP) systems, such as Acumatica, can help construction firms streamline project management and business processes. Using centralized data as a single source of truth, adopters of ERP can improve their forecasting accuracy and make better-informed decisions during supply chain disruptions.
Our specialists at Blytheco work with construction firms to find and implement the best ERP software for Construction Project Management and customize it to meet their operational needs. With over 40 years in business, our construction industry experts understand the volatility that the construction industry faces.
While there is still uncertainty about the future of the Infrastructure Investment and Job Acts, construction firms will still need to adapt to the new market conditions. Implementing the right construction project management tools and ERP software is a big step toward increasing resilience to challenging market conditions.
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