Saturday, June 15, 2024

Infrastructure projects boost construction industry

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Mike Gowan, project foreman at Gowan Construction Inc., and president of Associated General Contractors-North Dakota Chapter, shared his insights about how the state’s construction industry is faring – what the hurdles are and how they’re being addressed, and what the future holds for the sector.

What does the construction industry look like right now?  

Given the challenges of supply chains, inflation and workforce shortages, the construction industry is heading in the right direction in terms of improvement of North Dakota’s infrastructure. One of the most challenging aspects is that the COVID shutdown created supply shortages of all kinds. A specific example for us was precast box culverts and structures. The shutdown created a backlog of orders to a very specialized market. This posed issues to the transportation plan sets that were slated to be built, ultimately affecting the scheduling and deadlines of some of these projects. The other was a similar challenge to all other industries out there: inflation. A major challenge centered on employee benefits, wage increases and overhead costs. This in return created short-term engineering estimate inaccuracies of 10,15 and even 20%. It doesn’t seem like a lot when we are talking in terms of $100, but on the scale of a $500 million project, you’re looking at a potential differential of $100 million.

How are companies meeting the challenges?

Everyone collectively struggles with the same problems, and unfortunately, the end user is affected the most.

Is the industry affected by workforce shortages today and if so, what are potential solutions or workarounds?

The construction industry has been struggling with workforce shortages for the last couple of decades, primarily due to an increase of students choosing to attend four-year universities, the number of construction professionals retiring, and a lack of trades programs specifically related to the construction industry. The North Dakota Department of Career and Technical Education (CTE) has recognized the shortfall and is doing a great job expanding the classroom capacities by building new CTE schools as well as increasing the number of students by offering and extending CTE education into middle school ages. Everyone agrees that introducing construction trades to these kids earlier on will increase CTE awareness and improve the overall goal of increasing North Dakota’s skilled workforce.

What impact does the construction industry have on North Dakota?

The construction industry plays a significant role in North Dakota’s economy, contributing to economic growth, employment opportunities, infrastructure development and tax revenue. The various construction projects in North Dakota – such as roads, bridges, highways, airports, schools, hospitals and utilities – enhance the state’s transportation networks, promote connectivity, support public services, and improve the quality of life for its residents.

What do you foresee for the industry in the next few years?

Over the next few years, we will see improvements to North Dakota’s network of bridges, rural road systems along with county and state highways. We have been seeing a large increase in new hospitals in cities such as Rugby, Grand Forks, Northwood and Cando, to name a few. The Red River Valley Water Supply Project will transfer Missouri River water across the state to the eastern edge to improve redundancy to the rural water supply in the event of a drought. The F-M Diversion project will provide protection for more than 235,000 people, homes and businesses throughout the F-M metro area in the event of a major flood. Reconstruction of the Jamestown Pipestem Reservoir Structure will ensure the next generation’s safety of water protection management. Along with an increase in urban private sector growth, North Dakota is a place where people want to do business.

What are you most excited about in the industry?

I’ve really enjoyed seeing our state’s leadership going to work to provide various avenues of funding for these projects rather than burdening these improvements by increasing taxes for the residents of North Dakota. It’s really unprecedented. It’s exciting to see programs like the Flexible Transportation Fund, which is designed to improve transportation infrastructure on and off the highways, including townships, cities, counties and tribal reservations. The funds can be used for projects that match federal funds and deliver projects in a timely manner. Out of 264 applicants, 66 local projects have been selected in the amount of $84 million. I’m excited to hear that North Dakota will receive approximately $340 million in Federal Aid Highway Program (FAHP) funding from the bipartisan Infrastructure Investment and Jobs Act (IIJA). It’s exciting to see programs like Operation Prairie Dog, where the payouts to non-oil-producing counties come from gross production taxes (GPT) on oil and gas production. These dollars are to be used only for essential infrastructure projects. There has been a ton of thought with these programs to ensure an equitable and prosperous future for the state of North Dakota.

Carrie McDermott joined Prairie Business magazine in March 2023. She covers business industry trends in North Dakota, South Dakota and west central Minnesota. Email address: cmcdermott@prairiebusinessmagazine.com.

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