Infrastructure Spending To Fight US COVID-19 Recession

cnstrctr Insight

The Coronavirus has ravaged the North American and Global economy, and with stock markets beginning a slow climb out of their lows the subject of getting people back to work is top of mind. Similar to past recessions the government is considering infrastructure spending to stimulate the economy.

The article which was original posted in World Economic Forum outlines a common example of how governments around the world are dealing with economic fall out. Infrastructure spending is considered an effective way of creating jobs as the impact of every dollar spent is realized in multiple industries.

Let’s use a hospitals as an example, if the government invests $500 million into building a new hospital, the money trickles out to many industries including:

• The construction companies including contractor and subcontractors directly involved in the project
• Equipment suppliers providing construction equipment for the project
• Suppliers of the raw materials to the jobsite (ie lumber, adhesives, roofing materials etc)
• Suppliers of the permanent equipment in the building (computers, televisions, medical equipment etc)
• Suppliers of the raw materials for those equipments
• Consultants, advertising agencies, marketing teams

There are multiple sectors engaged for each project, as a result hundreds and sometimes thousands of jobs are generated.

What the article points out however is that infrastructure projects in the US (and many other areas of the world) are poorly managed and not efficient ways of spending money. Projects are often corrupt and the money, that is intended for good uses gets wasted due to abuse.

What can be done to increase efficiency on construction projects?

The article than goes on to explain three ways construction efficiency can be improved in the United States:

1. Centralize government decision making
2. Use data to make decisions on infrastructure spending
3. Harness innovation in construction technology

Each of these forms of waste is found in every modern society but what can be done about each?

Centralize Government Decision Making on Construction Projects

Place government bodies in charge of projects or groups of projects. As an example Ontario has put Metrolinx in charge of developing it’s transit priorities which helps to avoid layers of government that cause harmful delays on projects due to delayed decision making.

Use Data To Make Decisions on Infrastructure Spending

Having a governor decide that a baseball stadium is the best investment because they want their name on it is poor decision making. All infastructure should be assessed and graded and the money spent to perform repairs, and make new investments accordingly. Money needs to be put to a smart, good use.

Harness Construction Innovation

I’ve written about this alot – and while it may not be possible – there are methods that can be adopted easily. Standardizing construction requirements for the state to allow contractors to use modular based construction more easily would be one simple solution. Requiring all contractors who bid to use BIM modelling and project management software.

There are many ways that infrastructure spending can help to improve the economy. Dumping billions of dollars into the industry without a clear plan is not the right move forward. It must come with reforms and new approaches.