The U.S. Infrastructure Investment and Jobs Act: What to Expect and How to Prepare for Construction Technology Funding
August 25, 2022
The Infrastructure Investment and Jobs Act (IIJA) is more than six months old, and we are now squarely in its “implementation” period where different federal agencies with jurisdiction over the IIJA implement their pieces of it through federal programs. As we know, the IIJA touches on much more than just surface transportation but also energy and power grid reliability, clean water and drinking water, broadband connectivity, and even wildfire management. Federal agencies are doing their part to administer programs and send funding out to states and localities as quickly as they can.
Over the next five years through fiscal year 2026 (and hopefully beyond!), the Federal Government will make historic levels of funding available for the aforementioned industries. It is an exciting time to be in the construction and engineering industry. Just as exciting, however, are the strides that Congress has made to tie construction and engineering with technology and the notion of “going digital.” In numerous discretionary grant programs within the IIJA are statutory references to “innovative design,” or “innovative technology” whereby a federal agency, in looking at an application for federal funding, would like to know how an applicant would use innovative technology or design to model, plan, construct, or maintain their infrastructure.
This, for the first time, really means that Congress understands the importance of a digital transformation in the construction and engineering industries. Included in the IIJA is also a $100m discretionary grant program ($20m allocated each fiscal year) whereby the Federal Highways Administration (FHWA) will fund the purchase of “Advanced Digital Construction Management Systems” (ADCMS) that state departments of transportation are interested in buying. Included in that IIJA language is also an important reporting requirement that requires FHWA to report to Congress, on a yearly basis, the usage of ADCMS by state departments of transportation and note any trends that they are seeing industry wide. The Federal Transit Administration (FTA) has a similar charge. Bentley looks forward to the swift implementation of this program by FHWA and FTA and has been working with regulators and legislators accordingly.
Why is the IIJA Encouraging the Adoption of Construction Technology?
As we know, the construction industry is among the least digitized industries in the world. With Congress passing a “once in a generation” infrastructure bill, Bentley, along with our industry partners, sought to advocate for change and push the positive effects of what a digital transformation could mean for the industry. We were not alone; we teamed up with numerous other like-minded companies to form the Coalition for Smarter Infrastructure Investments (CSII) to advocate in front of Congress and the Executive agencies the need for change and inclusion of ADCMS language in the IIJA.
Congress heard us loud and clear and included the ADCMS grant program in the IIJA, along with numerous other references to “innovative technology” in other discretionary grant programs. They did this because using ADCMS makes our infrastructure more resilient, sustainable, and equitable, with less cost overruns and more of a return for the taxpayer. “It would be crazy to pump hundreds of billions into new infrastructure projects while still relying on design and management systems that look like they are out of the 1930s,” said David McKenney, vice president of Bentley Systems. “America ranks only 13th in the world for infrastructure — we need to invest more to compete, but we also need to invest in a smarter way. Technology and data can help us do that.” Let’s harness the power of ADCMS and innovative technologies to make this historic investment in our nation’s infrastructure go as far as possible.
There are two other reasons to modernize and digitize the construction industry: the labor force is getting older, and rising inflation. According to the Associated General Contractors of America (ACG), 89% of U.S. construction firms are currently struggling to hire workers, causing significant project delays. So, with funding potentially on its way, firms already struggling to do more with less will now have to find a way to do even more. Adding pressure to this shortage is the realization that 41% of the construction workforce is expected to retire over the next decade. This shift leaves the industry with little choice but to modernize to meet the demands of tech natives who will be entering the workforce.
From an economic perspective, the construction industry isn’t immune to inflation seen across other sectors. With the cost of raw materials rising exponentially, it is becoming harder for states to realize the gains from the IIJA because the funding increase from the law is essentially being eliminated by the inflated costs of goods.
Additionally, and beyond lacking the flexibility to address modern infrastructure construction challenges, outdated systems used by many in the construction industry fall short in their ability to provide the transparency required to secure federal funding. It is therefore paramount to spend money wisely where there is the most “bang for your buck.” As we know, creating efficiency is something that technology – and “going digital” – does very well. Bentley’s digital solutions create more efficient infrastructure, with fewer cost overruns so that project planners and sponsors can feel confident that a project will be completed on time and on budget.
What is the Advanced Digital Construction Management System (ADCMS) Program?
Congress included the ADCMS program on both the IIJA’s highway and transit titles, meaning that there will be an ADCMS program that both state departments of transportation and local transit authorities which specialize in rail and transit can apply for. As we know, this is a very important step for states and localities that want to incorporate digital technologies into the planning, modeling, constructing, and maintaining of their infrastructure. ADCMS will give these agencies the tools that they need to start their digital transformation, or if the agency is further along, continue the drive towards full usage of all the digital tools that Bentley provides.
The systems, according to the IIJA, should be used at all points of the construction process, from design to build, and should include these five different capabilities.
- Maximize Interoperability with Other Systems, Products, Tools, or Applications
- Many firms implement point solutions to solve various issues in their construction workflow. The problem is, these solutions aren’t integrated, creating even more challenges and inefficiencies in the process.
- Adopting cloud-based solutions that easily integrate with existing internal tools will enable you to maximize the full capabilities of your technology stack while removing barriers to data and project insights.
- Boost Productivity
- There are many people walking around a job site collecting progress data, documenting issues, and even taking pictures. That data is brought back to the office where it is compiled into spreadsheets for coordination meetings—meetings that too often take 4-5 hours, as the team steps through all the data – often outdated – to understand status and areas of concern. That workflow is inherently risky and prone to reduced productivity, delays, and lost revenue.
- Manage Complexity
- Construction projects are becoming increasingly more complex making it much harder to rely on manual and paper-based processes to manage your projects. Without the ability to clearly, easily, and quickly communicate and collaborate with all project stakeholders you’re faced with high project risk.
- Reduce Project Delays and Cost Overruns
- Schedule management is challenging in any infrastructure job. Various delays often lead to increased costs and even sometimes fines, legal action, and strained client relationships. Utilizing older, outdated project management methods doesn’t help the situation. Digital technologies can improve the entire project management experience, increasing project transparency and access to data to make better, more-informed data-driven decisions.
- Enhance Safety and Quality
- Construction jobsites can be dangerous places which is why safety is so important. Using inefficient, time-consuming, and manual processes increases the chances of accidents. Digital construction technology can increase job site safety and quality through improved use of data and enhanced communication and collaboration from the office to the field.
Expect the funding to flow into five “buckets” of construction technology. Some also expect the bulk of the funding to flow into technologies around 3D mapping, drone visualization, data analysis and digital twins.
- Visual-based inspection technologies that connect jobsites to engineering offices in real-time, boosting efficiency, reducing risk and accelerating project delivery.
- Construction management tools to administer contracts digitally.
- Electronic ticketing technology to remove paper from the construction material supply chain.
- 3D modeling and digital twin technology.
- Drones are applied to construction, operations, maintenance, and disaster recovery.
ADCMS is fully funded, however, it has yet to be implemented by FHWA and FTA. Bentley’s government relations team has been in touch with their staff, and they are actively writing the programs and are targeting later this summer or early fall for release. Once the programs are live, applicants will likely have 60 days to apply to USDOT. USDOT will then award funding to the applicants. Please note, however, that just because an application is submitted does not mean that funding is guaranteed.
Therefore, submitting an application that meets all the specificity and criteria that the FHWA or FTA is looking for is vital. Bentley understands that some state departments of transportation do not have the staff, or granular understanding of the discretionary grant process. As such, we have made it a priority to partner with state departments of transportation – and other potential applicants – to try and alleviate the burden of writing a grant application for ADCMS, and other discretionary grants put out by USDOT. Bentley believes that with our understanding of many of the technical aspects of our solutions, combined with the expertise and experience of the applicant of its own infrastructure, this kind of partnership will yield positive results.
Challenges that the IIJA Construction Technology Funding Addresses
- Labor shortages
- Jack Frost, VP of business development at Propeller, a drone mapping software firm shared with ConstructionDrive that “As supply chain issues and labor shortages continue to impact the industry, construction technology will allow companies to overcome these challenges by streamlining business practices and executing projects more efficiently. While these types of technology are an investment, operators are realizing their immense value in reducing material waste, increasing worker efficiency, and improving data analysis”
- According to McKinsey, digital transformation can result in cost reductions in the range of 4% to 6% and productivity gains of about 15% for construction companies. Digital investment, when coupled with a continuing embrace of new materials and advanced automation, could lead to a 50-60% increase in overall productivity.
- Designing, planning, executing, and controlling projects has historically been a disconnected process involving hundreds of roles across numerous stakeholders, all using an array of different systems. A December 2021 ENR article focused on the importance of data management to take advantage of infrastructure funding and highlighted that organizations that have transitioned to a connected, data-driven approach are already benefiting from more efficient and predictable project delivery.
ADCMS can help reduce constraints and mitigate unknowns going into a new project. By simulating the construction process in detail before putting shovels in the ground, DOTs and their partners can anticipate the impacts of their projects during construction—not just on the environment or traffic flows, but on the local economy as well. The result is greater efficiency and more competitive bidding due to fewer unknown risks.
Preparing for the IIJA Construction Technology Funding
With any discretionary grant program, it is important that potential applicants begin prioritizing capital infrastructure projects. Coordinating and partnering with public and private in-state organizations to better understand the infrastructure needs of a state is paramount.
Equally important is understanding the priorities of the Federal Government, be it USDOT or another agency such as DOE or the EPA. Although each Notice of Funding Opportunity (NOFO) that an agency release is different, there are several overarching, common themes such as “resiliency”, “equity”, “efficiency” and “sustainability” that are really at the heart of the IIJA, and therefore, ingrained in each NOFO. It is important to understand the nexus between the NOFO, and the program’s policy, with those aforementioned four buzzwords.
The ADCMS program will be released in the coming months. As stated above, most likely, the program will allow state departments of transportation to purchase advanced digital technology to deploy them on their capital infrastructure projects. We believe that the program for surface transportation will be released first, followed by the transit program.
Additionally, contractors can put themselves in prime positions by communicating with their state DOTs on how the government can best implement these programs. Contractors can share their experiences and push for the best uses of technology on different infrastructure projects. Of particular importance in the infrastructure act is the reporting requirement, where state governments that utilize the funding must make reports on the progress of the implementation of that technology on those projects at least once a year. Benefits that must be included in these reports are:
- Federal, state, and local cost savings.
- Project delivery time improvements.
- Congestion impacts
- Safety improvements for roadway users and construction workers.
Congress has made “going digital” a priority in the IIJA, with numerous programs having a scoring criterion for how the applicant plans to use digital technology in the planning, constructing, and maintaining of its infrastructure. ADCMS is one piece of that puzzle – albeit an important one – because it will allow applicants to begin, or continue, their journey of prioritizing the use of digital technology in the creation of their infrastructure.
Bentley looks forward to partnering with applicants as they pursue different discretionary grant programs. As we know, the use of this technology leads to better outcomes – outcomes that USDOT and the Biden Administration care about greatly, namely that infrastructure is built in more sustainable, resilient, efficient, and equitable ways.
Interested in learning more conversation on this topic? During a recent webinar, representatives from WSB, Lane Construction, Iowa DOT, and Bentley Systems spoke about the role of technology in the IIJA. They each brought a valuable perspective regarding the most beneficial technology. You can watch that webinar by registering HERE.