Why it won't work
Much is made of the infra-structure aspects of the Obama plan. However, this really shows that neither he nor his advisors know how construction projects work.
1. The money is available for projects that can be let within 90 days. To begin with, unless a project has been bid or is in the midst of bidding, few large projects can go from design completion through contract letting within 90 days. There are just too may steps and each step takes time. For instance, when bids are received it takes at least a week to pin down just which bid to accept. Then, there frequently is a cycle of "value engineering" which can take sometimes 30-45 days. Then the bonds must be procured, the contract prepared, etc. If the state legislature needs to approve the contract, you need to add 30 days at least to the pipeline. You can frequently get one or two contracts through in less than 90 days. I sincerely doubt that your can get several billion dollars worth through the pipeline.
2. Suppose that a contract is let within the 90 day limit. This merely obligates the money. The money is set aside and is no longer available but it is not spent. It stays in the bank account of the state. The money won't enter the economy until it is expensed or paid to the contractor. The work is paid for as it is completed and in the early days, not much is completed. Further, a certain percentage of the work is not paid for immediately but is retained until the end of the project. In short, the bigger the project, the more time it will take and thus the longer it will take before all the money is released to the contractor. For instance, we recently did a rehab on 18 bathrooms in a hospital. Total cost was about 1.8 million. From bidding until the final check was written...3 years.
3. The economy was reasonably balanced in terms of the demand for plumbers and pavement specialists for the number of projects. When the number of projects was increased beyond the workforce, projects got stacked up. That same thing is going to happen in spades. Then, the projects won't be expensed but rather the funds will remain in the state coffers for the foreseeable future.
Like many folks, the politicians think that just by saying "let's do a project", it's done. Not true by any stretch of the imagination.
What I'm saying is that the infra-structure portion of the bill won't have any immediate effect. That's besides the fact that jobs for road builders in Alabama won't be filled by white collar employees from CT who've lost their jobs.
Eric
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Originally Posted by Mr Booty
