The $1.2 trillion infrastructure bill signed into law in November will provide significant funding to benefit those in construction-related industries.

Nearly the entire bill is dedicated to projects that will require engineering and construction. It is likely that of tens of thousands of contractors will receive business from these investments and many domestic manufacturers and transportation and logistics companies will also benefit from the billions of dollars in materials that will need to be procured in order to complete these projects.

Benjamin Johnston, chief operating officer at Kapitus, a small-business financing firm, provided some thoughts about how to make the most of potential opportunities.

How might small- to medium-size commercial contractors capitalize on some of the proposed investments?

Johnston: Small businesses can find real opportunity in many of the modernization and growth initiatives proposed, but money will not be allocated equally. Small businesses should consider how best to position themselves for a world in which green technologies are increasingly available, and in many cases, required. Contractors should also consider how to position themselves to compete for government contracts.

How can they effectively position themselves to take on more government contracts?

Johnston: To compete directly for government contracts, small businesses must become certified government contractors. Contractors can register through the federal government’s System for Award Management (SAM) at USFCR.com and should have a DUNS number and NAICS code available when applying.

Once registration has been approved, the contractor can bid on and secure government jobs. Many smaller contractors serve as subcontractors on government projects. Subcontractors that do not wish to bid on government projects directly do not need to be registered through SAM as they are working on behalf of the “prime” contractor.

Subcontractors interested working on government projects without bidding on the project itself should partner with prime contractors that have strong track records of success working with the government. These prime contractors are likely to provide a stream of future business as government spending on construction increases in the coming years.

What are the biggest obstacles to smaller contractors gaining more business, and how can they best overcome those obstacles?

Johnston: The biggest obstacles for small business are likely to be their size and ability to scale in the face of increasing government demand. Government contracts are awarded after taking into consideration both the cost of the bid as well as the ability of the bidder to deliver on the full scope of the project.

Smaller, less experienced contractors might struggle to add the skilled labor and equipment required to handle certain jobs. Smaller contractors may initially decide to act as a subcontractor, while continuing to grow. Once a certain scale has been reached and the contractor has experience working on larger contracts, that contractor may then decide to become a prime contractor and bid on government jobs directly.

How do you see the outlook for construction businesses in the near and long term?

Johnston: Generally speaking, more government spending means more money in the economy, and more opportunities for small businesses to benefit. A stated goal of both the infrastructure bill as well as the budget is to make investments in the nation’s core infrastructure while promoting the transition away from fossil fuels and toward green energy solutions. As a result, contractors with expertise in managing major infrastructure projects as well as implementing green technology solutions will see the largest impact.

At Kapitus we are very bullish on the small-business economy in 2022 and are especially bullish on the construction sector. Construction is our largest and fastest growing industry sector. Over the past 15 years, Kapitus has provided nearly $500 million in financing to approximately 8,000 contractors. Given the activity we are seeing in the space today, we expect construction to be our largest sector again in 2022.

What are some pitfalls business owners should try to avoid?

Johnston: There will be a tremendous number of large construction projects available for bid in the coming years. Contractors will want to avoid the temptation of being overambitious as they pursue these projects. Understand the labor market and what it is going to take to procure the people and materials required to complete these projects. Also consider the capital that will be required to staff up, purchase equipment and source materials. Before bidding, talk to your bank or small-business lender to understand the capital available to you and how best to finance your growth.

About the Author

AEM is the North American-based international trade group representing off-road equipment manufacturers and suppliers, with more than 950 companies and 200-plus product lines in the agriculture and construction-related sectors worldwide. AEM has an ownership stake in and manages several world-class exhibitions, including CONEXPO-CON/AGG.