Infrastructure Investment: Tools Subcontractors Need to Secure, Perform on Projects

Large public infrastructure projects are creating thousands of jobs, but they also are increasing the demand for limited materials. As a result, over the course of two years, material costs skyrocketed and lead times increased, forcing contractors to pay significantly more out of pocket to procure materials. According to one recent study, since the pandemic began, lumber costs increased 122 percent, steel mill products 123 percent, copper and wire cable 101 percent, and diesel fuel 201 percent, while demand continues to rise. Pandemic-related project delays also have increased, with two-thirds (66 percent) of contractors expecting delays on some projects. This difficulty in finding workers contributes directly to the strain on contractors’ bottom lines. As more major infrastructure projects get under way, subcontractors must compete with the giant firms and the biggest contractors for the same limited materials and scarce skilled workers, a battle in which they are severely overmatched. That’s because subcontractors have little control and few options when it comes to managing their cash flow and gaining access to credit.

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