November 19, 2020

6 factors to evaluate before bidding on an infrastructure project

As of this writing, the construction industry continues to await passage of a federal infrastructure bill. Some states, however, have been pushing ahead with initiatives of their own to pay for essential road, bridge, water and similar projects. Construction companies interested in joining a publicly funded infrastructure job should evaluate the following six factors before bidding:

1. Funding sources. As with any job, confirm that the project owner has enough funding to bankroll the project. Government agencies typically set aside money for infrastructure jobs, but many state and local governments have experienced substantial revenue losses during pandemic-related shutdowns. This has notably been the case in fee-based jurisdictions, such as port authorities.

2. Supply chains. Some building-material supply chains have been either strained or interrupted during the pandemic — especially those relying on goods shipped from China. With COVID-19 still an issue, consider the potential for bottlenecked pipelines and volatile market conditions when bidding.

Some contractors are building up their inventory levels with critical materials and long-lead items to insulate themselves against future disruptions. It’s a good strategy when financially feasible, along with diversifying your supplier base and identifying alternative suppliers who can deliver materials of similar type and quality.

3. Labor market. Ensure your company can tap into a stable workforce (including subcontractors) to complete the project on schedule and at a high level of quality. Assess the possibility that some skilled workers whom you’d typically rely on may choose to “opt out” of a large project out of concerns about COVID-19. Some older workers have even chosen retirement over putting themselves at risk.

4. Regulatory compliance / safety protocols. Government-funded jobs mean government rules and regulations. Know what you’re getting into. Specifics will vary, of course, depending on the type of project and agencies involved.

Expect to see more pandemic-related requirements and responsibilities on public jobs, which could impact project timelines and costs. Anticipate the cost of measures such as keeping workers safely distanced, staggering shifts or subcontractors to lessen the number of people on-site, checking temperatures daily, and cleaning tools and equipment after each use.

5. Technology. Look into what technological requirements will be involved in participating in the project. Infrastructure jobs around the world have been increasingly using building information modeling (BIM) systems. Are you and your employees experienced with BIM software? If not, will you be able to get up to speed quickly?

In addition, the pandemic has accelerated the use of videoconferencing and mobile apps enabling remote project management, as well as wearable tech and sensors alerting workers when they’re too close together. You may also encounter paperless ticketing that helps limit contact during concrete and other materials deliveries.

6. Project delivery method. The job may not follow the traditional design-bid-build approach. Some infrastructure jobs have been moving away from low-bid packages toward collaborative strategies and delivery methods — such as public-private partnerships, design-build and integrated project delivery. Under such methods, partners work together much earlier in the process to develop the scope, schedule and budget.

Public construction often forges ahead despite economic turmoil, and in many cases because of it to help stimulate the economy and create jobs. Your CPA can assist you in evaluating these six factors, crunching the numbers and determining whether an infrastructure project is right for you.

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