I feel like I am the squeakiest wheel in town on this issue and quite frankly it would be too expensive to oil this wheel right now due to fuel escalation! Last year when I started advocating for the pandemic supply chain issues, I envisioned that we would lose some businesses due to the unforeseen escalation of prices. But I also envisioned those prices would stabilize and lead times would have returned to normal by now.

Reality is that construction businesses continue to suffer enormous losses. Unlike other industries that are in recovery from the pandemic, construction losses are not due to lack of patronage but due to actual cost increases with no relief. There have been grants for daycare, convention centers, restaurants, cultural centers, movie theaters and main street loans. I applaud the efforts to help these entities, but the construction industry is literally paying out of our pockets for projects to be built, including publicly owned projects.    

I have been in communications for over a year with entities including MAC, MetCouncil, MnDOT, City of Minneapolis, City of Saint Paul, Hennepin County, and Ramsey County. Spoken to state legislators and have the ear of the Governor’s office. Yet protections for our industry remain rare or completely ignored. We are experiencing a nearly $10 billion surplus while contractors are financing the infrastructure for the state. I have been told: “How can we afford the additional costs when they are so high? Where will the money come from?”  Good question. Now explain to me where the contractors are supposed to get the money. How is it their responsibility to build a highway, bridge, county office, etc.?

The timeline from bid date to award date to scope start can be years in some cases. However, supply quotes in this market are being held for no more than 7 days and often only 24 hours. Fuel is up 60% since December and freight surcharges are surging at over 60% in some cases. To add to the crisis, many unions are in annual labor talks and are demanding significant wage and benefit increases.

Businesses have been losing on average 20%-30% on projects. And yet project owners are holding the hard line—NO CHANGE ORDER APPROVAL FOR ESCALATIONS. The war in Europe is now exacerbating this crisis with no end in sight. The fall out stories I have heard the past month from established well run businesses of all sizes include: 

• • I am not sure I will be open if I can’t get paid.
  • I have hired an attorney just to get paid something, and now I must pay the attorney’s fees and lose even more money.
  • I refinanced my house with a cash out to pay for my business operations.
  • I am bidding less work than what I do because I can’t afford to lose any more money.
  • I cashed in half of my retirement to make payroll and pay suppliers.
  • I can’t walk away from the project or I still have monetary obligations at the same rate as my loss.

This industry has done everything that has been asked of it during the pandemic, the imposing of tariffs, the hurricanes, and other effects of climate change, and now a war overseas. Our industry was essential, and we met all the restrictions to meet our obligations during the shutdown. We meet our contract obligations – we sharpen our pencils to get projects done on budget for our clients – we put safety at the forefront in an industry that carries high risk. Where now is the support for us?

Contractors are not looking to pad a project cost to get more profit. We simply want to be paid for our costs. We have documentation of bid price to actual price paid. This is true for projects that completed over the past year and those that are just bidding now. It is NOT the responsibility of business owners to pay for unforeseen escalations. We can’t keep waiting and hoping for a correction that isn’t coming. The time for silence is over.This is not our fault, and we need fair relief, contract language protections, and payment for work completed. We need it NOW. 

— B