MBEX Has the Scoop

Four Questions About the Infrastructure Act Answered (Part 1)

The Infrastructure Investment and Jobs Act (IIJA), also known as the bipartisan infrastructure bill, will increase federal spending on infrastructure by about $550 billion over the next decade, nearly all through grants to state and local governments, which own much of the nation’s infrastructure. There are still many questions surrounding this bill and what it means for the construction industry. In this four-part series, we share answers to a few of the biggest questions courtesy of industry experts.

The Question: Some IIJA funds are allocated across states by formula. Others require state and local governments to apply for funding. How well is that process going?

The Answer: There is a wealth of federal discretionary programs now. Some of them are new; others are variants of one that have been around for several years.

What federal programs and their staffs are trying to do is figure out how to write a finite number of good applications. They [federal workers] have a hard set of challenges on their plate delivering all of these new programs. DOT [U.S. Department of Transportation] is trying to combine sources where they can. They put a single funding notice in one instance for three different programs, so that instead of applying three times, businesses and organizations only have to do it once. The more they do that, the easier it is for people to actually avail themselves to these programs. On the back end, how they project manage could be challenging if it's not very organized because the dollars will flow through different operating administrations with different rules. Making sure they're adherent to consolidation on the back end as they've been on the front end...would be important.

It's best to view the funding process as a five- to -seven year endeavor, and in many instances the money will be spent 10-12 years out, given the way that things work. A team is being built at the White House to focus on project delivery and on setting up the right structures. Each state has an appointed state infrastructure coordinator at the White House's direction, with one or two exceptions. They're also working hard to make sure low-capacity communities have the resources needed to both plan for and apply for funding. The bill has 375 grant programs, 125 of them brand new.

One odd but very interesting this about this bill is that it includes a competitive program for culverts.There's now a new federal competitive grant program for culverts, which means with IIJA, there's going to be lots of programs, lots of money, and most likely, lots of chaos.

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Answers and responses to this question were provided by (1) Ryan Berni, senior advisor to Mitch Landrieu, the infrastructure implementation coordinator in the White House, (2) D.J. Gribbin, former special assistant to President Trump for infrastructure, and (3) Shoshana Lew, executive director of the Colorado Department of Transportation. 

How a Recession Could Change Employment Outlook for Construction

This article orignally appeared online with the Minneapolis / St. Paul Business Journal on August 10, 2022 and was written by Ashley Fahey.

Has the construction labor issue gotten better, worse or remained about the same since the pandemic started? What happens in the event of a recession? Below, we've highlighted a few key areas experts have studied to predict if the economy is headed for a recession, how to anticipate workforce shortages, and when IIJA funding will begin to flow.

ARE WE HEADED FOR A RECESSION?
The July jobs report from the Bureau of Labor Statistics found the industry added 32,000 jobs last month, with industry employment increasing by 311,000 jobs, or 4.2%, on an annual basis. But those numbers obscure the fact commercial construction in particular is facing coutervailing forces, based on property type, said Anirban Basi, chairman and CEO of Baltimore-based economic and policy consultant Sage Policy Group and chief economist for the Associated Builders and Contractors.

The sector's unemployment rate was 3.5% in July, on par with national unemployment across all industries and indicative of how tight the market remains.

The ABC's July Construction Confidence Index readings for sales, profit margins and staffing levels, which came out August 9, declined, suggesting a growing pessimism across the construction industry. Indices for sales and staffing remain above a threshold of 50, which indicates members surveyed still expect those metrics to grow in the next six months, but readings for profit-margins are less than 50 for the second consecutive month, according to ABC.

The cost of construction is also continuing to rise. The U.S. national average increase in construction costs in the second quarter was about 2.4% on a quarterly basis, and 7.5% year-over-year, according to Rider Levett Bucknall Ltd., a law firm that specializes in property and construction advisory services.

Basu said he thinks job growth overall will slow, and, specifically in construction, demand will increasingly shift away from private-sector projects to public ones. He'd predicting an economic recession will occur next year, which could start to materially affect the broader construction industry about a year later, given the long lead times on construction projects.

CONSTRUCTION WORKFORCE CONCERNS
A key worry for those who observe, or work within, the construction industry: If the pipeline of projects does start to slow because of a recession, existing workers that suddenly find themselves out of a job may leave the industry and not come back when the cycle picks back up.

That's what's happened in past recessions, perhaps most memorably in the global financial crisis of the late 2000s. It's an issue exacerberated by a retiring skilled workforce in construction, where the average age is now 42.3, according to the Bureau of Labor Statistics, and there are fewer younger workers to replace them.

Retaining and hiring labor has been one of the hotttest topics of the pandemic as workers have altered work and life priorities. More workers than ever before are remote, or have decided to pursue jobs in other industries that'll give them flexibility to wokr at home. Still others, in industries like hospitality, were laid off at the onset of the pandemic and have yet to return. The U.S. labor-force participation rate across all industries was 62.1% in July 2022, below pre-pandemic levels.

Julian Anderson, president of Rider Levett Bucknall, said, anecdtoally, he's also heard fewer people working in the construction are willing to move to follow work. In decades past, it wasn't unusual for construction workers to relocate after a major bridge or road project wrapped up. But with construction so busy across the nation in recent years, and overall attitudes toward work changing, people are more reluctant now to relocate to follow projects, he said.

Fewer immigrants coming to the United States, particularily since the pandemic onset, has also hit the construction workforce more acutely than other sectors.

"There were, I think, quite a few people who worked informally in the construction industry for many years, doing those...labor jobs norbody else wanted to do," Anderson said, citing jobs in the wet trades like painting, drywall and plaster. That's likely to be a persistent headwind for the construction industry. 

DON'T FORGET ABOUT IIJA PROJECTS
Although some government officials are only in the planning stages of potential IIJA-funded infrasturcture projects, Basu said elected officials love to cut ribbons on restored bridges and newly built interstates. With prices in some commodities like fuel and steel already having come down from recent spikes, it's likely more infrasturcutre projects with IIJA funding will begin later this year or in 2023. That'll boost demand and job in publicly funded construction projects, Basu said, at a time when privately funded development may be slowing.

"I'm expecting there will be a recessions --- I don't know how deep or how long, but this money [from IIJA projects and related spending] should help to prop up the construction industry for a good period of time," Anderson continued. 

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Read the full article in the Minneapolis/St. Paul Business Journal here.

Newest MBEX Members (June + July)

Who joined the Minnesota Builders Exchange throughout the months of June and July? Keep reading to find out, and then join us in extending a warm welcome to the newest members our construction community!

These companies joined the Exchange in the months of June and July 2022:

Olson & Son's Electric Inc - An electrical contractor located in Monticello, Minn. since 1959, OSE offers services that include electrical contracting, commercial, industrial, residential, electrical apparatus service center/motor repair, retail store, and preventative maintenance.

Skogen Mechanical - Located in Mankato, Minn., Skogen Mechanical was established in 2011. They offer services in a wide variety of industries including educational, medical, industrial, manufacturing, retail, residential and commercial facilities.

Gardner Builders - A general contractor that started up in 2010 and is located in Minneapolis, Minn., Gardner Builders is a hospitality company in the commercial construction business focused on delivering projects – both simple and complex – in a way that gives customers complete confidence.

Hilti - Founded in 1941 as a small family start-up, Hilti has an office located in Roseville, Minn is a part of the company's North American team that includes about 4,000 highly-trained team members. They carry expertise in product and software development, sales, engineering, finance, marketing, logistics and other support roles.

BC Electric Service LLC - Located in Mankato, Minn., BC Electric Services offers electrical work for both the commercial and residential construction realms that includes electrical troubleshooting, parking lot lighting, pole lighting, LED retrofitting, voice/data network cabling and systems, and more. They also offer services in the agricultural sector as well as home audio and theater servicing to take your home entertainment experience to the next level.

910 Specialties - Established in 2013, 910 Specialties offers services in wood ceilings, acoustical walls, impact protection, flooring materials, windows, FRP, and other specialty materials. They are located in Sioux Falls, South Dakota.

Country Joe Homes dba Youngfield Homes - A general contractor focused on new construction located in Lakeville, Minn., Country Joe Homes endeavor to build creatively and beautifully designed homes that are more comfortable, more functional and full of light. They're also expanding into commercial work.

Affintech - A leading national technology systems integrator, Affinitech builds world-class technology solutions that excite and engage, while making people safer and more productive, and businesses more successful. They are located in Chanhassen, Minn., offering professional services in digital signage, audtio/visual solutions and commercial security systems.

Central Mechanical Insulation - Located in Avon, Minn., Central Mechanical Insulation offers mechanical insulating contracting services. They are a newer company as they have established themselves this year (2022). 

Renascent - A demolition contractor in Indianapolis, IN, Renascent specializes in the demolition and repurposing of old structures. With roots thirty years deep, Renascent plays their part in the renewal of urban, campus, health care, industrial, and public works projects, repurposing land and buildings to meet the technological, cultural, and social demands of the 21st century.

Parker Contracting LLC - Another newer construction company started in 2022, Parker Contracting specializes in earthwork and site utilities and they are located in Minneapolis, Minn.

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Interested in the Minnesota Builders Exchange and what our Online Plan Room can offer? We have two levels of membership: Basic and Premium. 

- Basic Access includes: access to bidders lists and bid results, tracking ability of projects via email, ability to follow prebid projects, receiving of nightly email updates, filtering of projects using CSI/Division, and the ability to order blueprints for pickup or delivery.
- Premium Access includes all the features of Basic Access, plus the ability to view, print, and save project plans, specs, and addenda.

Choose the level of access that fits your companies needs best. While we do not offer a free trial before becoming a member, you can preview our Online Plan Room on our YouTube channel. Watch the available videos to get an idea of our plan room's capabilites and functions. Give us a call if you have questions: (612) 381-2620.

If This is Your Current Password, It’s Time to Update

We have a serious question for you: is your current password “123456” (give or take a number or two)?

If you answered yes, you’re going to want to change it…and fast. It doesn’t matter if it’s the CEO of a company or a contractor; the most popular password remains to be “123456”.

MOST POPULAR PASSWORDS

According to a recent study conducted by NordPass, a business password management company, of all the industries out there, construction is the worst at keeping hard-to-crack passwords.

Inside this study, NordPass included a list of passwords complied in partnership with independent researchers specializing in research of cybersecurity and was conducted to study password habits of high-level executives. The study also looked at how vulnerable most businesses are despite years of warnings to create more sophisticated passwords.

Regardless of the potential fallout of a data breach, most workers insist on setting passwords that are simple word and number sequences. The following are the most popular business passwords:

- 123456
- Password
- 12345
- 123456789
- qwerty

Interestingly, this study also found that top-level executives are more likely to use names or mythical creates as an inspiration when creating passwords. A few of the most popular are “dragon,” “monkey,” and the name “Tiffany”.

DATA BREACHES COST $$$

When using a common password such as “12345” and “password,” it significantly increases the risk of cyberattacks at both the person and company level.

An IBM report reveals in 2021, the average global cost of a data breach reached $4.24 million, which is 10% more compared to 2020. The attacks that happen due to compromised credentials cost even more, at $4.37 million and account for 20% of breaches.

The industries with the most data breaches, in order according to the study, were construction, technology, finance, healthcare, hospitality, media, and marketing.

HOW CAN YOU KEEP PASSWORDS SAFE?

Avoid data breaches by following these simple steps to improve password security:

1.) Use a password manager. Password managers allow users to store all the passwords in end-to-end encrypted digital storage locked with a single keyword for the most convenience. Most password managers have additional features to check passwords’ strength and automatically generate unique ones. For organization, they can come in handy when sharing passwords with employees or managing their access.

2.) Introduce cybersecurity training. Since simple human mistakes remain the leading cause of data breaches, it’s worth investing in cybersecurity training sessions for employees. Starting from the basics might be a good idea given your team will most likely have different technology backgrounds and levels of experience.

3.) Enable multi-factor authentication. Known as MFA, it serves as an extra layer of security. It’s an authentication method that uses two or more mechanism to validate the user’s identity --- there can be separate apps, security keys, devices, or biometric data (such as facial recognition or fingerprints).

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Want to read NordPass’s full study? Find it here.

So, What Is BIM?

When it comes to BIM, even the acronym causes misunderstandings. It is certainly not a new term, yet the confusion surrounding it could be one of the major barriers to its implementation.

The volume of misconceptions surrounding BIM sadly doesn’t end at its name. As BIM is increasingly becoming part of daily lives for those in the built environment, it’s time to bust the most common myths and allow organizations to confidently move forward with their digitalization journeys.

What does BIM mean?
Is it building information modeling? Is it better information management? Well, BIM is indeed an acronym for building information modeling.

This term has been used for many years and was originally and primarily focused on 3D models and the associated data. Having said that, over the years, it has matured to describe the wider information management process across the lifecycle of a built asset.

Depending on what part of the industry professionals are from, BIM can mean different things, so you can see why there’s some confusion. Regardless of the ‘why,’ there is clearly a greater need to simplify the terminology and to give BIM the commonly understood description - one that will not only reflect the broader industry transformation and today’s digital landscape, but one that can spark instant understanding and confidence among all professionals in the built environment.

So with that, BIM could be considered as better information management, and associated with managing information in a smarter way.

Digital Assets for Project Management 
For years, many organizations in the built environment have imagined BIM as a 3D model that helps create a more visual representation of the project at hand. Certainly, the old acronym of building information modeling did not help to shift the common thinking that BIM is just a model. 3D manifestations are only part of a much wider process that at its heart fosters more collaborative working, seamless information sharing and easier access to data, to ultimately produce a wide variety of digital datasets and meet tight project deadlines.

Is BIM just software? 
BIM software does not exist. However, there are different tools on the market that can enable professionals to generate and share information more effectively. It is often the case that organizations need a range of software solutions to help them deliver different parts of the project.

The specific software will therefore depend on the specific needs and project goals, and it is up to the individual organizations to choose solutions that will help them improve efficiencies, reduce risk and improve collaboration. While the software is an important element of achieving better information management practices, BIM in itself is much bigger than just an online tool.

What are the Benefits of BIM? 
It is another common misconception that implementing information management practices is too costly and simply not worth the money.

While there is undoubtedly some upfront cost associated with changing traditional and legacy working processes, these should – and will – be countered by the long-term efficiencies and benefits that an organization gains.

These upfront costs can include software and extra training, but both do not have to be expensive. There are many tools out there that are free or at low cost to start the digitalization journey, as well as various readily available resources and guidance online that can help with smoother, cross-team implementation.

When starting, re-starting or moving onto the next step of BIM implementation, organizations should always keep the efficiency gains at the forefront, as there is a clear and direct correlation between efficiencies and the bottom line. Easier project information sharing equals met deadlines, no time-wasting, better communication, less risk, and subsequently greater trust among clients to deliver future projects.

Improving the Future of the Built Environment 
With the most common myths now debunked and greater clarity provided over what BIM means, both private and public sector built environment businesses can more confidently embark on their digitalization journey and succeed in their BIM implementation. While it’s only natural to hesitate to make a change, better information management has the power to greatly improve processes and productivity for all stakeholders involved in a project.

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This article originally appeared within CONEXPO CON/AG 365 Newsletter on May 27, 2022 and was written by Nigel Davies.

Full MBEX Calendar Ahead

We’re halfway through summer; how did that happen so quickly?!

As hot summer days continue, we're looking ahead to a slew of MBEX events that offer networking opportunities with fellow members and professional across the industry, entertaining ways to spend a day, and connection with the organization.

After a successful Twin Cities Golf Tournament in June (check out the recap here), we’re keeping the momentum going with a packed events calendar over the next couple of months. Here’s what’s coming up, and we sure hope you can make it:

DULUTH HARBOR SUNDEW CRUISE
July 20, 2022
Set sail on Lake Superior aboard the retired Coast Guard Cutter, Sundew. Enjoy an evening cruise around the Duluth-Superior harbor, dinner, and drinks while aboard connecting with members and experiencing the lake shore in a brand-new way. Registration is now open at www.mbex.org/sundew.

EXECUTIVE DIRECTOR, TOM GETZKE’S, LAST DAY
July 22, 2022
Join us in wishing Tom, our Executive Director, a fond farewell as he closes out his time with the Minnesota Builders Exchange and heads into full-time retirement. Send a note and well wishes by emailing tg@mbex.org. Our next Executive Director, David Siegel, officially started on July 5, 2022. Read the full press release here.

SPORTING CLAYS SCHOLARSHIP FUNDRAISER
August 18, 2022
Aim, pull, and shoot in support of raising funds for the MBEX Scholarship Fund at Game Unlimited. Enjoy an afternoon of clay shooting with members and other construction pros, and afterward, sit down to a steak dinner with all the fixings. Awards will be handed out for team achievements as well as door prizes and raffle winners will be drawn. Register at www.mbex.org/clays.

GOLF TOURNAMENT NORTH
August 24, 2022
We FORE-see a great event on the greens of the Ridgeview Country Club! Gather your foursome, tee up more than a few golf balls, and enjoy a beautiful day out on the course with fellow members, MBEX board and staff, and make connections throughout the industry. Register now at www.mbex.org/golf-north.

We look forward to seeing many members are these noted events! Have questions? Please email Tom at tg@mbex.org or Don (for either the Sundew or Golf Tournament North) at don@mbex.org.

Don't miss an event; download our 2022 Events Calendar.