The buzz around Biden’s massive infrastructure bill continues to grow, and all signs indicate that it’s a matter of when, not if — and whether we’re looking at hundreds of billions, or trillions, of dollars in funding.
For the construction industry, this bill has the potential for the same kind of impact that the Affordable Care Act had on businesses. The ACA was a huge, federally sponsored mandate. Companies had some runway to prepare for it, but there was a lot of what-if scenario planning right up until the last minute.
In this case, contractors know they have to do something, but it’s not clear yet exactly what that will involve. However, they do know that the infrastructure bill will shake up the companies that want to bid on the projects that spin out of it. Unlike the ACA, companies have a choice to pursue this work or not. But that only adds to the uncertainty, because it means doing plenty of due diligence and hoping they make the right decision.
Major Opportunities for HCMs
There are two major implications for contractors that should be on HCM companies’ radars.
First, because the projects will be government funded, companies will need to be in compliance with government contract regulations. That means paying the correct prevailing wage and fringe wages, and providing Certified Payroll reports to prove compliance.
Second, unions are going to be a major part of the infrastructure bill. In 2019, there were just over 1 million union members in construction. The best forecasts say these new infrastructure projects will require two to three times that number of union workers — and possibly even five times as much. In any case, it’s certain that the construction industry needs to be ready for unprecedented numbers of new unionized workers that need to be paid.
These implications could pose significant challenges for companies that take on this work. If they haven’t dealt with certified projects or unions before, they’re in for an awakening. They will need to have the necessary technology and process infrastructure within their company to meet the expectations of the infrastructure bill.
HCM companies have a great opportunity to get their foot in the door and prompt contractors to consider if they’re ready to take on these infrastructure projects. Construction companies will need to have reporting and time capture technologies fully in place before bidding on one of these government contracts.
There’s No Time to Lose
Now is the time to start engaging with construction companies, because vendors and suppliers across the industry are already hosting webinars and having discussions with contractors. Payroll providers can’t afford to wait and see how the bill shakes out.
Seizing the moment places you in the role of a credible consultative partner who’s on the forefront of industry trends — one who looks out for your customers’ best interests. Help prospects to start thinking about what these changes might mean for them. Start discussions now.
Action Steps to Win the Sale
Here are some practical action steps to take now, before the bill passes, to take advantage of this sales opportunity.
Canvas your local database and compile a list of companies that work on any aspect of infrastructure — roads and bridges, internet broadband, government buildings, etc. Reach out to them to see how they plan to capitalize on the infrastructure bill.
Challenge them to think through their current preparedness. Do they have the back office technology they need to stay in compliance with the government contracts? How prepared are they to take on any new union contracts?
Offer to share ideas and solutions that can help them achieve their compliance needs.
Plan for a signed contract and for implementation to take longer than usual. The same people who review your contracts will be tasked with preparing their companies on several fronts. They won’t be able to give you their undivided attention, because they’ll be talking with attorneys, accountants, and other advisors about the business implications of taking on an infrastructure project. That means you’ll need to be more intentional and strategic than usual to get them ready to implement.
Use a Partner with Construction Credibility
Most of all, rely on partners who understand construction. IDI has been steeped in the industry for over 30 years, and we have the expertise to help you navigate all the tricky spots—from qualification to implementation.
When you partner with IDI, you have a solution that other payroll providers can’t match. Our Contractor Central solution holistically addresses the key components that have prevented construction companies from successfully outsourcing their payroll needs.
Contractor Central was built to handle the complexities of processing construction paychecks, and getting them right every time. By bringing in Contractor Central, you can provide a solution your competitors don’t offer:
- Prevailing and union wages based on multiple variables
- Fringe rates associated with the prevailing wage rate
- ERP integration to job cost level
- Certified payroll reporting