The Expert:
Eric Asquith, Senior Counsel, Freeman Mathis & Gary LLP
QUESTION: With the Fern Hollow bridge collapse in mind, what are some key considerations as Infrastructure Act bridge projects begin?
A: It made national news when the Fern Hollow bridge collapsed in Pittsburgh on Jan. 28, 2022. Coincidentally, President Joe Biden was en route to Pittsburgh at the time to promote the $1.2 trillion Infrastructure Investment and Jobs Act (IIJA) and stopped to see the bridge collapse himself.
The IIJA was signed into law last November. It includes $550 billion in new investments over five years, including $110 billion for roads, bridges, and other infrastructure projects, with $40 billion earmarked specifically for bridge repair and updates.
Construction companies and associated professionals will benefit from the investments by the government, as it will lead to increased opportunities and jobs in the field. With these opportunities, however, come various risks and practical considerations. Below are several key issues for consideration.
Potential Exposure
Design and construction professionals, including structural and geotechnical engineers, inspectors, and subcontractors who build and provide service to a bridge over its lifespan, all could be exposed to liability for their work if infrastructure fails, as happened in Pittsburgh.
As with any project, design and construction professionals should take care to limit their exposure by, among other things, having a clearly defined scope of work, including indemnification provisions in any contract, and ensuring documentation is well kept before and during the life span of the project.
Adequate Insurance Coverage
As work on these new projects is commenced, the companies doing the work need to keep in mind that they have adequate general liability insurance (CGL insurance), which can cover construction defects and bodily injury, and property damage claims. Design professionals should carry architects and engineers professional liability insurance, which can cover flaws and damages resulting from alleged errors in their services.
Use of Public-Private Partnerships
The IIJA is supportive of the public-private partnership (P3) project delivery method, as P3 is mentioned throughout the IIJA.
P3 is a model that offers public authorities a means to address infrastructure needs without relying strictly on public resources. P3s are partnerships between governments and the private sector to build public infrastructure like roads, hospitals, schools, or to deliver services.
Competing for a P3 project requires a significant upfront investment in at-risk design services, and developers and design-builders seeking to bid on a P3 project should work together to plan for and allocate these costs. If the project is awarded, the parties must also fairly allocate the costs and risks associated with completing the project and performing any ongoing operation and maintenance.
Labor and Supply Chain Issues
During the pandemic, materials costs have increased markedly. The increase in public infrastructure funding through the IIJA may further drive materials costs upward as demand for the materials increases based on the new projects the IIJA presents. Any bids for public infrastructure projects need to account for this probability of a continuing increase in cost of materials, as well as take into account the potential for worsening delays in sourcing and obtaining the needed materials for the projects.
Further, as baby boomers retire out of the construction industry, there is a shortage of talented workers in many construction specialties. There may be an increased reliance on younger, and potentially under-qualified, workers on many projects, which can threaten work quality and safety.
While the IIJA is certainly an opportunity for the construction industry to participate in and support public infrastructure projects, these opportunities are not without risk, and consideration needs to be given to bidding, planning, staffing, and execution.