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I DA U N I V E R S A L N ove m b e r - D e ce m b e r 2 0 1 8 21 TRENDS AND TIDBITS Trends continued on page 22 Federal money for civil projects could start to arrive early next year, but it's unclear when it will translate into earnings for construction companies. When the American Recovery and Reinvestment Act of 2009 passed, the public construction fi rms eagerly antic- ipated a windfall of funding and new projects. But then localities shi ed the projects to other priori- ties. e Recovery Act "really amounted to a pretty anticli- mactic impact for the large, publicly traded companies," said Sean Eastman, equity research analyst at Cleveland-based corporate and investment bank KeyBanc Capital Markets. But Eastman thinks the recently signed Infrastructure Investment and Jobs Act should be diff erent. " is package feels more capital project-oriented, and I feel like the state of state and local budgets now versus the 2009 era is quite diff erent," Eastman said. "So maybe there'll be less suscepti- bility to states allocating funds elsewhere, other than infra- structure." Adam alhimer, director of research at Richmond, Virginia-based investment advisor ompson Davis & Co., was equally as eff usive, calling the infrastructure package "a normal highway bill on steroids." " is provides states visibility and certainty to be able to tackle bigger projects," alhimer said. "A lot of the companies that I cover have been saying that the states have a big backlog of projects." While the money fl owing from the infrastructure package and the areas it will target seems locked in now that it's been passed by Congress and the White House, analysts still think other details are in fl ux. "With the exact timing of how this ultimately percolates into backlogs and earnings for E and C [engineering and construction] companies, there's still some uncertainty there," Eastman said. "But my sense is, going into 2023, there should be some momentum from this funding." alhimer thinks the money will hit sooner than some people suppose. "It does cover fi scal '22," he said. "Everybody said, 'Oh, we won't see anything from this for a year.' I'm not completely sure that is true." Competing for Talent But even a er the work arrives, there will still be challenges. If things get backed up, Matt Arnold, senior equity analyst for St. Louis-based fi nancial services fi rm Edward Jones, thinks companies could develop large backlogs in 2023, 2024 and 2025. "I think there will be limiting factors, even a couple of years out," Arnold said. "If these companies all get that busy, it's going to be tough for them to be as prepared as they want to be in terms of actual capabilities to deliver on certain projects." Part of the challenge of delivering projects is that fi nding labor to complete the work, especially for specialized jobs, could be diffi cult, leading to slower construction timelines. " ey're defi nitely going to be competing for talent to pursue these projects," Arnold said. "It's hard to put a number on how limiting a factor it will be, but it's something that has to be watched." is shortage of workers will most likely lead to much higher labor costs just as these infrastructure projects begin to break ground, industry experts told Construction Dive. Joe Natarelli, national leader of Marcum's Construction Services practice, predicts wages will go up "signifi cantly." Material shortages and price increases could also pose a problem, but Arnold thinks those will subside over time. Nevertheless, while labor and materials issues could provide at least short-term constraints, Arnold thinks the infrastructure package will ultimately prolong a post-COVID-19 upturn that is only in its infancy. " is upturn is young, and it's going to get turbocharged by this infrastruc- ture stimulus." Arnold said. ● www.constructiondive.com 11/21 When Will Contractors See a Boost of Infrastructure Dollars?