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By JARED SHELLY, senior editor/web editor of Risk & Insurance®

The Senate's passage of a $109 billion transportation bill could lead to large infrastructure projects all over the United States. The bill will create 2.8 million jobs and fix 70,000 bridges across the country, said Senate Majority Leader Harry Reid (D-Nev.) There is also significant funding for the building and maintenance of roads and tunnels.

The key is whether the House of Representatives will pass the bill or a similar measure of its own. The House has been pushing a bill with one key difference -- opening up land for oil and gas development.

But with bipartisan support for infrastructure, we're likely to see something, even if it's just a short-term extension of the federal highway trust. It seems like a win-win -- the construction industry terribly needs the shot in the arm and the country's roads and bridges are in desperate need of repairs.

"Infrastructure is in despair," said Ken Caldwell, executive vice president of Alliant Insurance in Los Angeles.

Any government action on this front should lead to a boom for the construction industry-- meaning risk managers will have plenty on their plates, said Kevin Coen, construction infrastructure insurance director for Liberty Mutual in Boston.

While unemployment in the construction industry hovers around 17 percent, a sudden demand for labor means that companies will have to focus more intently on training, especially because many construction workers have been out of a job or doing other types of work during the recession.

"They may be kind of rusty because they haven't been on job in a while," said Coen. "You want to make sure folks are integrated back into the workforce in a highly skilled and trained way."

Meanwhile, some of the most experienced and knowledgeable workers have hit retirement age and aren't to train younger workers.

Risk managers are also tasked with making sure that young or inexperienced workers know safety protocols so they don't get hurt on the job and cause workers' comp claims. Equipment may also be an issue, as it may have been left idle or have gone out-of-date during the recession.

Since new infrastructure deals are usually large, long-term projects there's plenty of risk regarding the price of building materials. If steel is a certain price in first year of a project, how do you estimate its price in year 10?

When it comes to winning bids, the low bidder will always have the upper hand -- especially given how spending conscious the government has become in recent years. But good risk management can also help a company land a contract by showing that they have less injuries and higher quality of work.

From an insurance perspective, projects that hover around the $100 million mark, allow to have an owner-controlled insurance program -- meaning that workers' comp, general liability and excess coverage can be procured by the owner and wrapped into one policy. Such a scenario can save 2 percent to 3 percent of the construction cost, said Caldwell.

"For a $100 million project, that's 2 or 3 million," he said. "That's very significant."

March 20, 2012

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