By one estimate, the federal government and the Federal Reserve have lent, spent or committed $12.8 trillion to combat the current recession—and the end is not yet in sight. These commitments include attempted bailouts of troubled financial firms, funds for automakers, loan guarantees, economic-stimulus funding for projects, tax breaks and purchases of toxic mortgages. Taken in its totality, this golden eruption dwarfs any federal spending plan ever undertaken.
Therein lies the problem. With a potential prize roughly equal to the gross domestic product of the U.S. in 2008, every hustler on the planet will be drawn into the fray in order to get a piece of the action. Even a minuscule slice of the money could amount to a profound payday. One only has to look at the smoldering husks of financial giants (now mostly owned by U.S. taxpayers) to see that avarice exists on a grand scale.
Many economists and officials in the administration and the Fed believe speed is essential to stave off global economic collapse, which just makes the situation more tenuous. Speed generally goes hand-in-hand with waste caused by poor oversight, insufficient planning, faulty project selection and general sloppiness. Money often is the most expedient way to pave over problems.
Contractors, engineers and architects will soon start to feel the impact of the $787.2-billion American Recovery and Reinvestment Act of 2009. Congress aimed about $131 billion of that stimulus money at construction. While moving projects off the drawing boards and out into communities to create jobs is a priority, Congress also tried to set a new tone for accountability and transparency for project awards and performance. That is good for the industry and the nation, but it must be enforced vigorously.
The construction industry needs to deliver beneficial projects that will enhance the nation’s infrastructure and economy and the projects need to be done in a cost-efficient and timely manner. Any inefficiency or corruption will undermine the recovery, and that truly would be a waste of money.
Dollars and projects now are flowing. To be successful, decisionmakers should study the hard project-delivery lessons learned on megaproject programs in Iraq, New Orleans and Boston, where big money was pumped into projects and results did not meet expectations. Discipline, accountability and oversight were lacking.
The stimulus effort, inside construction and in other sectors, should be treated as a megaproject and managed as one. So far that does not seem to be the case, with rules being written and changed on the fly. The industry can deliver the projects, but the rules and expectations need to be firm.