2020-07

Congressional Update with the Chamber’s Ed Mortimer

 
 
 
 
 
 
 
 
 
The U.S. Chamber's Vice President of Transportation and Infrastructure, Ed Mortimer joined the program to discuss the current state of play in Congress and the Chamber's advocacy efforts on behalf of the engineering industry.
 
Transcript:
 
Host:
Welcome to another edition of Engineering Influence, a podcast from the American Council of Engineering companies. Today, I am pleased to welcome Ed Mortimer to the show. Ed serves as the Vice President of transportation and infrastructure at the US Chamber of Commerce, where he oversees the development and implementation of the Chamber's, transportation and infrastructure policy, and represents the Chamber on Capitol Hill, as well as before the administration and industry organizations. In addition, Ed also leads the Americans for Transportation Mobility coalition, which is a collaborative effort by business, labor, transportation stakeholders, and concerned citizens to advocate for improved and increased federal investment in the nation's aging and overburdened transportation system. We at ACEC are members of that coalition which helps us amplify our voice to Capitol Hill. And Ed comes to the Chamber from AECOM where he served as director of government relations. So in other words, Ed knows our industry and he understands Congress and it is great to have him on the show. So welcome to Engineering Influence.
 
Ed Mortimer:
Great, Jeff, good to be with you.
 
Host:
So we were kind of talking about this beforehand, before we went live, but, you know, things are happening at least a little bit on the Hill. If you can give us a kind of an update on the legislative prospects for a surface bill, now that the House has passed their version. And of course that was dead arrival in the Senate and the Senate has been acting on their own version of not only a surface bill, but a WRDA bill. Where are things standing right now? Do you think we'll get something passed?
 
Ed Mortimer:
Well, Jeff, we're definitely in a critical moment to get something passed through the Senate. We have 63 days until the expiration of the FAST Act. And it's been over a year since the Senate Environment and Public Works Committee marked up their surface transportation reauthorization, the American Transportation Infrastructure Act, which was a 27% increase in highway funding. Unfortunately we haven't seen any action since then to bring the full bill to the floor. We need the banking committee who does a transit title, commerce committee, which does a safety title. And then the most critically the finance committee, which pays for the Senate bill. Since we haven't raised the gas tax in 27 years, they need to come up with $110 billion in new revenue to pay for that 27% increase in funding to date. They have not been able to do that.
 
Ed Mortimer:
We have been advocating for action on this. As you mentioned, the House of Representatives passed a bill, which unfortunately wasn't something we were very excited about in the sense that, the bill was introduced in the transportation committee and marked up in a partisan way. Not one Republican vote in committee, it was a 494 or 5 billion five-year reauthorization. And then all of a sudden, right before the bill came before it became a $1.5 trillion bill with a lot of things that I think your members. And again, the Chamber and the business community think are important, such as school construction, affordable housing. But in our view, we have an authorization bill that expires September 30th. We have divided government, so we have a Republican Senate, a Democrat House and a Republican White House. So the end of the day we need bipartisan solutions because until a bill signed into law, it doesn't do us any good.
 
Ed Mortimer:
And so our view was the House bill did not move that process forward of getting that bipartisan solution. So, but it passed, at least they got it through. Now we need the Senate to move out and then get into a House-Senate conference committee. So we urging the Senate knowing that they have a lot of things going on, or obviously working on the next COVID relief bill, they have appropriations that expire in September. But again, this is a, this is a priority that Congress is supposed to do their job. They're supposed to get these bills done in time and we need the Senate to act now, so we can get this bill into conference and get it to president's desk before September 30th.
 
Host:
Yeah, this is not something which is creeping up unexpectedly on either chamber. I mean, last Congress, the conversation was about the fiscal cliff that happened with the FAST Act and dealing with that, uh, knowing that there was going to have to be a reauthorization coming up because the law was expiring. The Senate was the first out of the gate, early on moving a surface bill. And it just seemed that the House's answer increasingly, it seems with the, you know, the polarization in Congress that you had a surface bill, but then it was run out of the Speaker's office and all these other policy provisions were tacked on and it became more of a political football and you're right. There were some things in the bill, that I think overall industry is interested in, you know, issues related to resiliency issues related to school construction, rural broadband, especially now in the post COVID working remotely kind of environment, but we need a surface bill
 
Host:
We've been looking at this over time. And infrastructure has always historically kind of been a broad bipartisan issue, but it does seem like those parts and elements have disrupted the dynamic, the T&I part - we mentioned that the process there was, was as partisan as we've ever seen it. And, you know, is this going to be the new norm? I mean, do you think that in your experience in working with Congress and this administration, just how things have developed do you think we can get back to that level of compromise and bipartisanship, or do you think we're going to be in a pitch partisan battle moving forward?
 
Ed Mortimer:
Well, I mean, I think it's gonna be a combination of both. And I will say, you know, a couple of weeks after this extremely partisan, uh, transportation bill came up, the committee unanimously approved a water resources development act, bill, and, you know, uh, on July 27th, the full h]House is going to take it up under suspension of the rules, which means two thirds vote to approve it. It should probably get 300 to 400 votes. So as painful as the surface markup and that situation was, they have come back and were able to get this WRDA bill done on a bipartisan basis. So, we are optimistic that we can get back to cause again, at the end of the day with divided government, you need bipartisan solutions. And we've always whether we had divided government or not. We've always been able to work on a bipartisan basis.
 
Ed Mortimer:
Now it may not be the same as it was 20 years ago. But we are optimistic that, you know, there's an old saying there is no Republican road or a Democrat bridge. And so at the end of the day, we have to hold our lawmakers accountable because they should work together to do the people's business. And in our view, infrastructure is a core responsibility of the federal government. You go back to the constitution, it actually requires the federal government to do two things. Now they may have wandered a bit from that, but the only two things that the constitutional part of the federal government to do is national defense and interstate commerce. And so investing in infrastructure is really critical to the backbone of our economy. And we have to hold our lawmakers accountable. We can't just let them say, well, I passed a bill through the House or we did a mark-upw. We have to tell them until it's gets signed into law engineers, don't benefit the American public. Doesn't see the fruits of the engineering industries labor until these bills get signed into law. And so we cannot accept half passage and press releases saying we just passed this 50% increase of funding because it doesn't mean anything until it's signed by the president, wherever that is. And then we can get the states the predictability of federal investment over the next several year period.
 
Host:
Yeah, absolutely. I mean, that's, I still remember, you know, and I don't know if it's there still, because I haven't gone into the committee room, uh, since the, uh, the Congress, the new Congress, but, you know, the last Congress could be turned around after entering a room on the left hand side is Adam Smith talking about the responsibility of the sovereign to maintain commerce and infrastructure. And on the right, is the constitution, uh, specifically outlining the federal responsibility for maintaining post roads. And of course, you know, the national infrastructure, so it is a federal responsibility and you're absolutely right. We can't take half measures. We have to get a bill done because it will, it's necessary for the certainty that the states need, especially now with, with, you know, shrinking budgets, for those states to be able to do long-term planning and, you know, the programs need to be there to, to allow our economy to recover. You did mention WRDA, and I think that's an important point that the reference, because this is always the sleeper bill, it's the one that generally gets the bipartisan support. It passes with overwhelming majorities in both chambers, but it doesn't get the press that it really deserves. From your position at the Chamber, how important is that WRDA bill, you know, it's critical for water infrastructure, you know, inland waterways, port stamps, harbors, but what's the economic impact of getting a bill like that done?
 
Ed Mortimer:
Well, what WRDA does is, and Jeff, why it's really important for the engineering industry is it's 2015. Congress has done this bill every two years. And so every two years they authorize new water projects. So without that action, uh, the Corps cannot start new projects. Why is it important? Because before 2015, it was seven years until the previous authorization was done. So this is the third time in a row that Congress is on track to meeting that responsibility. What does that mean? That means that communities can make plans and investments knowing the federal government going to do this bill every two years. Um, water infrastructure is critical to so many communities throughout the country, particularly in the agricultural, the manufacturing industry. And we all know that our infrastructure systems are old at the best and our locks and dams are some of the oldest. We've been band-aiding them for 25 to 30 years. And so these water investments are really critical, so many communities, we're also looking at, you know, you talked earlier about resiliency, we're looking at natural disasters are happening. And so doing this water bill every two years allows engineers to provide the innovation and technology that they can bring to the table and we're repairing and modernizing these water systems. We can make sure the resilient to handle the new natural disasters that perhaps our forefathers 50 years ago, hadn't planned on us dealing with.
 
Host:
Yeah. So you did mention earlier the, um, pandemic response bill, do you think that infrastructure investment like support for state DoT or local transit agency airports or other sectors might be included as a portion of that bill?
 
Ed Mortimer:
Well, it has to, okay. Our transportation systems have suffered substantially since the pandemic started. We shut down most of this country. Um, some parts of this country now we're going through a mini second shutdown. Um, the revenue sources for state DoTs is dried up significantly. AASHTO has said that they need an additional $37 billion to continue projects through the next year. Um, transit agencies have submitted proposal for $32 billion. Um, the heroes act, which passed the house includes 15 billion for state DoTs and 15 billion for transit agencies. Um, the Senate bill that McConnell has started the process of putting out there only includes $10 billion for airports. But I can tell you that we need, we will fight very hard and vigorously to ensure that any final product includes funding for those state DoTs, for those transit agencies in the airports, because they have suffered not because of anything they did, but because of a pandemic, that's a federal response has to take place to ensure that we're able to continue the business.
 
Ed Mortimer:
So many engineers have been able to continue work. They're essential workers. We be able to actually in several States move projects faster because of a lack of traffic on some of the infrastructure. So we actually have an opportunity here to take advantage of this unfortunate situation, to maybe expedite some infrastructure projects in a more timely manner. So it's a combination, all of us to ensure that the Senate, uh, the ball's in their court, the house passed a bill Baldwin Senate court. They need to come together. They need to ensure that this type of funding is available. Cause whether we get in long-term reauthorization of the fast app or an extension of this program without state match we're going to see a reduction in projects at the, at the, at the, on all levels of government. So it's critical that we urge the Senate to include this as this process moves forward.
 
Host:
Yeah, absolutely. And that's something that's been a core focus of our digital advocacy effort. Of course, we were hoping to have a spring convention and legislative fly in as normal, but COVID disrupted that. So we switched over to a virtual advocacy campaign, which was successful in the House. And of course our target is right now is the Senate. And our grassroots advocates have been very, very vocal and sending messages to their members of the Senate and also organizing meetings, virtual meetings over zoom and other formats. What has the Chamber have been doing in terms of grassroots activities to support those objectives?
 
Ed Mortimer:
So we've been very active, you know, educating our members about what's going on. Um, we've actually started a social media campaign where we have a calendar every day. It's, you know, I mentioned 63 days, to the expiration, we remind lawmakers every day, they haven't acted and that the clock is ticking. We actually have on our website, let's rebuild america dot com. We have a ticker that shows the hours, the minutes, the days that are taking now, um, for action. Um, and so like your members, we've learned to kind of change our advocacy. It's no longer um, just our folks walking the halls of Congress, but it's doing zoom. Uh, it's being involved in social media campaigns. You know, we're still talking to members of Congress and their staffs in a different way. Um, but to be honest with you, it's, it's still effective.
 
Ed Mortimer:
They still hear it. And I know engineers have a lot on their plate right now, but we need you to step up and have your voice heard these members of Congress need to hear how many jobs your company has, uh, what projects you're working on and what are the opportunities that may go away if they don't act. Um, it does make a difference and telling our story is really going to be critical in next three weeks where there's so much noise in Washington, right. We watched the news and we know the ongoing pandemic. Um, but making sure that our voice is heard, that the lawmakers truly understand the ramifications of not acting to invest in infrastructure. Uh, it's really to make the difference whether we get the right amount of funding in this next bill or not.
 
Host:
Yeah, absolutely. I mean, you turn on the television it's wall to wall COVID-19 coverage. You look at the major newspapers and they talk about, you know, the issues going on around the country. Um, and it doesn't seem like this is getting a lot of play, but honestly, the people who matter are paying attention and the best way to cut through the noise, cut through the media cycle is to get to them directly, um, either a message by email or a request for a zoom meeting. The ones that we've had have been very successful and the members have been very receptive meeting because we're able to amplify our voice. You can never get, let's say 50 people into a Senate office or 50 people into a House office. Now with zoom, you can have as many people as you want on that meeting with that member of Congress.
 
Host:
And you can essentially have a full fly in and one meeting virtually. So it's of critical importance. Um, also the ATM coalition, which is something that we've been involved with. Um, you know, you see a lot of the social media activity going on our page. Uh, we always retweet the messages and we, and we try to drive people over to the website, um, which is for the coalition it's, it's faster, better, safer, safer. So our faster, better, safer. Yes, I know exactly. I always get caught up on that. Tell us a little bit more about that coalition in some of the, some of the things that it's focused in on.
 
Ed Mortimer
Yeah. So we started this coalition, um, and it's been around for a while. And, and what we decided was, you can't just have the engineers, the construction industry, go up to the Hill and continue to ask for funding. We need to broaden the coalition. And so the goal of the coalition was let's bring organized labor in, let's bring other parts of the business, community retailers, Farm Bureau. And so we're trying to widen the coalition of stakeholders that understand the importance of infrastructure. And so ACEC and their membership in it allows us to do those activities. And then Jeff as you mentioned, we're able to kind of amplify all of our messages in this world of Twitter and so much noise, uh, being able to have colleagues to amplify the message are really important. Um, and so the coalition does that. We partner with folks, we tell the story of members all over this country.
 
Ed Mortimer:
And so ATM really is focused on from it from a grassroots campaign and on the outside in, so we hear stories around the country. We try to tell those stories to the members of Congress, um, you know, ACEC's got a great Capitol Hill office, and you guys work the inside the beltway, we partner with you guys on many of those efforts, but again, it's working inside the beltway and combining that with an outside the beltway campaign, to make sure that we're bringing the vast array of resources that we have, and we pull them together and pulling them together. We're able to be more effective than if we just do all of our, do our own campaign. So, you know, I really love what you guys do. Um, your membership has been extremely active. Um, I know it, cause I hear from members of Congress all the time hearing about what ACEC members were just in your chapters are very active at the state level.
 
Ed Mortimer:
And you've been, the chapters have been very effective at the state level raising revenue. We need to take some of the lessons learned at those state campaigns and bring it to Washington because so much of Washington tells us why they can't do something. Engineers know how we can do something. And we just have to remind these folks. And then we got to hold them accountable, whether they're Republican or Democrat, um, too many times, they tell us what we want to hear and they don't do anything after the meeting. So when you meet the zoom meeting, follow up with them and say, okay, you promised me X, Y, and Z, where are you at on those promises? Where's the bill? Has it been approved? Is the bill going to the White House? because it doesn't help you and remembers if we don't get these things done. So again, I think bringing all these resources to the table that none of the organizations that care about this can do it on their own, but together we really are bringing that large stakeholder community that can make a difference.
 
Host:
Yeah. If you were able to bring the engineering sector of the economy together with the construction sector of the economy and then the labor that actually gets it all done and have a unified voice it's practically unbeatable because you you're covering all fronts. Um, and I, and I think that's a good point. I mean, from, from the perspective of our state chapters, you know, they're working very hard on their own issues at the state legislative level, but if there's a success that, and this was kind of a call for stories, if there's a success that you've had at your state level to let us know, so we can filter it up because success at the state level translates to success in the federal level, because the members of Congress from that state delegation pay attention to what happens in the state house. And if you're able to go back and say, Hey, in Pennsylvania or Illinois, we were able to do this. So Mr. Senator or Congressman, it's not impossible, and this is how we did it. Um, it all feeds together and we all kind of self-support. So, uh, anyone out there listening who as a story or as a kind of a case study, make sure to let us know so we can get it to Ed. We can get it to people at the ATM coalition and kind of get that communicated to Congress.
 
Ed Mortimer:
Yeah. Jeff, if I could make one more point on that, the other thing is we see a lot of state officials come to Congress. So, you know, when they hear these stories, a lot of these folks that have, are now coming to Congress, we're seeing more and more of them say, Hey, I, I worked with the engineers on getting a gas tax raise or a sales tax raised. And that's going to be very helpful as we continue to grow base of support in this Congress to make the real investments that are required. So that's why in another way that, you know, these folks that end up at the state level, they find their way to DC. So cultivating those relationships and keeping them going is going to be really critical.
 
Host:
Absolutely. Well, before I let you go, I've got to ask a NEPA question because, you know, this has been n one of the administration's main focuses policy-wise from a regulatory standpoint, so I know that the Chamber supported the administration's NEPA reform, um, and of course the streamlining of project delivery, which is crucial. Why do you think it's important to the business community in general? And do you think that the changes in the NEPA regulations will make it through legislative and judicial challenges?
 
Ed Mortimer:
So good question. So, you know, look, the Chamber believes we need to modernize our infrastructure. That also means we need to modernize the way that we deliver projects to the engineers on the frontline of the challenges in the permitting process. Almost 20% of the cost of many major federal projects is due to the planning approval process. And NEPA has been used by our opponents to delay and stop projects. And that's not what NEPA was meant to do. NEPA was meant to encourage public participation and to make sure environmental regulations are being met, um, engineers that work on products today, I guarantee you any project at any ACEC members working on is going to make the infrastructure more environmentally sensitive than what it replaced, just because innovation and technology that engineers bring to the table. And you're replacing an infrastructure that was built 50 years ago or longer.
 
Ed Mortimer:
So the reality is, is that we need to show the business community because the business community is willing to pay more for infrastructure. As you know, we've been out there saying we need to adjust the fuel tax, but if we do adjust the fuel tax, we also need to show the business community that we're going to use limited dollars more effectively. And so we did support the administration's executive order on tightening up, uh, the NEPA requirements. Um, again, it doesn't change the NEPA law and there's some misconception out there. Uh, it does not change the law. It just changes the way federal agencies implement NEPA, and it provides some reasonable timelines for it. And while the Mark dental community and others have raised a lot of objections to it, um, actually in the Senate EPW bill that I mentioned that moved through the committee on a 21 to zero vote, um, that was sponsored by Senator Carper of Delaware.
 
Ed Mortimer:
It includes language that would put a two year time limit on lawsuits, on NEPA projects, um, Democrats and Republicans in the last two surface transportation bills have supported, you know, ways to kind of expedite permit approvals. So again, we believe this needs to be done without changing environmental law without cutting corners, but putting reasonable timelines. And if the answer is no, we'd rather see limited dollars go to projects that get to yes. And so again, if we're going to make the major investments necessary to modernize, we have to figure out a way to modernize these rules. So, you know, the administration just made an announcement that they finalize these rules. Um, they're going into litigation, um, as all of these things always do. Um, you know, do you believe that it's solidly, it should last that now obviously if there's an election this fall, um, there could be a change in an executive order, and that's why we wanted to get the Senate bill codified into law because a law is a lot harder to change than an Executive Order. And so that's one of the other reasons that we want to push to get that Senate bill done. Um, because getting that enacted into law this year would make sure that it's going to last where the Executive Order, if there does happen to be a new administration, it's pretty easy for them to just eliminate that Executive Order.
 
Host:
Yeah, that's, that's a really good summary because I think that a lot of people are following it, but they're not following it too closely, but it is all about keeping the pipeline open for projects. It's about easing burdensome regulations. It's not about undermining environmental quality or protections, but about getting projects from paper to completion faster. That benefits the local level all the way up to of course, the federal bottom line. So, that's very important. Ed, is there, is there anything that we didn't cover that you want to make sure that our listeners know? I mean, this is a great opportunity to hear from the Chamber.
 
Ed Mortimer:
Sure. Well, one thing I wanted to let you know, the engineers know that there's a couple of things that Chamber's really going to be advocating for in the next COVID relief bill. Um, one is liability protection, making sure that businesses that are following CDC and other health guidance, um, don't have frivolous lawsuits, as long as they're showing they're doing the right thing. Uh, making sure that we extend the PPP program, uh, and work to make sure that our businesses are able to survive through this very challenging time that did not come from anything they did. We also want to make sure, as we talked about state and local governments get resources to make up for some of the lost revenue that they had. Um, and we it's really critical that we get these done before they leave for the August recess. Um, you know, in our view, they shouldn't go on recess until this is done.
Ed Mortimer:
Some of these programs, actually the PPP program, the unemployment insurance, additional funding expires this Friday. And so we have to hold these lawmakers feet to the fire. Um, it's been a challenging start in Senate where at this point there's probably not 50 votes for the initial proposal that was put out there. It's going to be a lot of horse trading, um, but we have to keep our eye on the ball and remind our lawmakers, stop the partisanship. Uh, you have to do the right thing on behalf of the American people. Businesses need some certainty that these things are going to be locked into place. And so, you know, this is something that is really critical to all businesses. But I know in the engineering business, a lot of engineering companies took advantage of PPP, and we want to ensure that you're able to keep your employees through this very difficult time. We want to make sure there's government support there - very timely and targeted. So these aren't just longterm extensions, but timely and targeted to help businesses get through this pandemic. So urging you all to talk to your lawmakers about that and ensuring that they get this done before they leave for the August recess.
 
Host:
Absolutely. And those are issues that we will be joining you with, and helping you to advocate for, uh, throughout, um, the current session of Congress. And hopefully they do get this done before leaving for recess. And if they don't, they, they shouldn't go. Um, this is, this is critically important for the economy and for the industry. So, um, there's a lot to do. Um, if you're listening out there, you have a voice, make it, um, follow a Ed on Twitter at Chamber Moves - @ChamberMoves, and that's his Twitter feed, the ATM Coalition, faster, better, safer, that's www dot faster, better, safer.org, check them out and stay with us. And, uh, we'll keep you informed ed. I really appreciate you coming on the show. Uh, love to have you on when we get closer to the lecture and kind of maybe, uh, uh, look at, you know, the two potential outcomes and kind of where we might be going from an infrastructure standpoint. I'm a little too early to tell. We need to get Congress moving first before we can talk about that. Absolutely. Well, glad to glad to do that and good to be with you. All, everybody stays safe and let's keep busy. Yep.
 
Host:
Great. Stay safe and enjoy, uh, I guess the, the, the hot sweltering DC weather.
 
Ed Mortimer:
Right.
 
Host:
But thank you again, ed. And you've been listening to engineering influence from ACEC.
 

ACEC Update for Friday July 24, 2020

The ACEC Update for July 24, 2020:
Here are the registration links to the webinars announced on the show:
NextGen: Positioning Future Leaders Tuesday, July 28, 2020, at 1:30 pm ET
With more than 78 million baby boomers stepping away from the workforce in the next decade, it is imperative that firms prioritize their future. This includes not only identifying, but also developing the next generation of leaders. Success requires succession, but it isn’t always easy. The skills needed in the past may no longer be relevant for the future success of the firm. Join SN’s Director of Workforce Advisory as she leads participants through the best next steps to ensure their leadership of tomorrow is ready, willing, and able.
TAKEAWAYS: • How to align leadership skills with the trends that will happen in the future • Effective techniques for identifying the next generation of leaders. • Best practices for engaging legacy leaders in the development plan for future leaders. • Critical steps you can take today to start the journey of transitioning leaders.
Diversity & Inclusion: HR Panel Discussion on Program Examples and Lessons Learned Wednesday, July 29, 2020, at 1:30 pm ETComplimentary Registration
Back to the Table - The 2nd Half M&A Outlook for Engineering Firms Thursday, July 30, 2020, at 1:30 pm ET 1.0 PDH
Despite the damaging impacts of the coronavirus to our economy and industry, engineering M&A activity finally appears ready to get off the sidelines. Buyers and sellers are reengaging in talks from earlier this year while others are ready to chart new paths in their organization’s growth or exit strategy plans.
But how are the nuances of successful deal-making different from the start of the year?
Join Steve Gido as he reflects on the current M&A environment, highlights trends in first-half activity, assesses the new challenges buyers and sellers are facing, and offers anecdotes to guide expectations for the rest of 2020.
TAKEAWAYS: • Explore if the coronavirus will accelerate industry consolidation • Understand the motivations driving buyers and sellers today • Examine the implications on valuations and transaction structures • Discuss how due diligence and integration processes may evolve
For more information on the 2020 ACEC Coalitions Summer Education Series on August 6th and 7th, click here
The new ACEC legislative Action Alert urging Senate action on infrastructure can be found here
 
 

The Future of Funding and Mobility as a Service with David Zipper

 
 
ACEC welcomes David Zipper onto the show to discuss the future of infrastructure funding in a post COVID economy and the future of Mobility as a Service (MOS).
 
 
David Zipper is a Visiting Fellow at the Harvard Kennedy School's Taubman Center for State and Local Government, where he examines the interplay between urban policy and new mobility technologies. David’s perspective on urban development is rooted in his experience working within city hall as well as being a venture capitalist, policy researcher, and startup advocate. He has consulted with numerous startups and public officials about regulatory strategy.
 
David’s articles about urban innovation have been published in The Atlantic, WIRED, Slate, and Car and Driver. His 2018 article in Fast Company was the first to apply the the “walled garden” framework to urban mobility. David has spoken at events including the Consumer Electronics Show, SXSW, and the FIA Conference. He focuses on topics including Mobility-as-a-Service, the uses of transportation data, the future of micromobility, and linkages between public transit, city regulations, and private shared vehicles.From 2013 to 2017 David was the Managing Director for Smart Cities and Mobility at 1776, a global entrepreneurial hub with over 1,300 member startups. At 1776 David connected hundreds of entrepreneurs to urban leaders eager to deploy their solutions, and he closed millions of dollars in partnerships with cities and corporations worldwide. He continues to be a Partner in the 1776 Seed Fund.David previously served as the Director of Business Development and Strategy under two mayors in Washington DC, where his responsibilities included attracting businesses to the city, promoting entrepreneurship, and overseeing economic development strategy. David led support to Washington’s first startup incubators and guided the city's response to the emergence of ride hail services. Before moving to Washington David served as Executive Director of NYC Business Solutions in New York City under Mayor Bloomberg.
 
David holds an MBA with Highest Honors from Harvard Business School, an M.Phil in Land Economy (Urban Planning) from Cambridge University, and a BA with High Honors from Swarthmore College. He has been selected as a Truman Scholar, a Gates Scholar, and a Baker Scholar.
 
Transcript:
 
Host:
Welcome to another edition of Engineering Influence, a podcast by the American Council of Engineering Companies. I am pleased today to welcome David zipper onto the program. David is a visiting fellow at the Harvard Kennedy School's Taubman Center for State and Local Government where he examines the interplay between urban policy and new mobility technologies. David's perspective on urban development is rooted in his experience working within city hall, as well as being a venture capitalist, a policy researcher, and a startup advocate. He has consulted with numerous startups and public officials about regulatory strategy. David is a published article appearing in Wired, The Atlantic, Slate, and Car and Driver. He's spoken to groups such as the consumer electronics show South by Southwest, and focuses on topics such as mobility as a service and micro mobility and the linkages between public transit city regulations and private shared vehicles. David was also one of the panelists on the ACEC Research Institute's most recent round table discussion on the future of engineering focused on the future of funding in a post COVID-19 environment. And David welcome onto the show. Really great to have you.
 
David Zipper :
Thank you very much. It's a pleasure to be with you.
 
Host:
So that was an interesting panel. I listened to it a couple of times and I would imagine, I guess it's safe to say there was a universal agreement that the recovery is going to be gradual at best. After COVID-19 with your perspective from working in city hall and having that local political experience, how do you see this playing out where really the rubber meets the road? You know, you're talking about metropolitan transit agencies, you're talking about, you know, people get trying to get to and from work. How do you think COVID-19 is going to impact cities?
 
David Zipper :
That's a big question. And there's lots of different ways to answer it. And frankly, the answers are going to be different based on the, the nature of a transit agency versus a county government or a city government. But I can certainly maybe I can offer some, some overall thoughts up front and we can go into whatever detail that you like. But but yeah, in the short term you've seen transit agencies and local governments and state governments really just scrambling to keep the lights on as it were. Adjusting transit routes. Sometimes bringing up capital projects to do, to go faster because there's fewer people on the roads and there's fewer people flying at airports. So you can do airport expansions all faster. There's fewer trains running. So you might be able to more easily do capital projects.
 
David Zipper:
But that's really like a, a sort of a short term band-aid because the money's running out fast. We're already just, just today, actually, as we're recording this, there's been news about a $20 billion plus budget gap over the next couple of years in New York City's MTA, that's going to have to get closed. And the biggest transit agencies are feeling the pain first because they are really using their farebox revenue. The fairs that we all pay when we take transit they've used what they, that they collected yesterday to pay today's operating expenses. And in the big cities, that's a big chunk of their revenue, transit revenue. Transit ridership has fallen through the floor because people are uncomfortable on transit, even though it's the data suggests it's relatively safe, as long as people wear masks, but you've already seen, for example, in San Francisco, Muni, the transit service, there is consolidated routes really in a huge way, Caltrain in the Bay area, its future is up in the air there's discussion of whether to do a new tax to save it.
 
David Zipper :
And the transit agencies are going to feel the pain a little bit later because most of their revenue comes from state and federal governments that, you know, their budget is already allocated for this year, before the coronavirus hit. But there'll be a rolling impact there. And then for, for, for states and cities to, to you know, state the obvious they can't print money, they have to meet their, their - they have to make their budgets align so they can have a deficit. So what that means is that you're seeing some projects postponed, you're seeing layoffs and the Cares Act at the federal level. It gave a bit of a lifeline a few months ago when the coronavirus first hit there's discussion. Like again, as we're recording this there's discussions on Capitol Hill about a new federal investment program, it's unclear if that's going to have money for states, cities, deities, and for transit agencies, if it doesn't, I expect we're going to see pretty intense contractions and layoffs and pull back on capital projects and all of those levels.
 
Host:
It's been in my experience, you know, formerly on Capitol Hill and, and, and, and just watching this from time to time with all the surface bills that kind of come on, you always have that partisan divide when it comes down to the usual argument is that, you know, Republicans want to have the move towards devolution, but it was always that argument that, okay, we're going to Republicans would fight against Democrats who wanted to have bike trails or greenways or things of that nature, rails to trails, things like that. And then the Republicans were always going to fight against transit because they just wanted to make sure that that highway trust fund was kind of boxed in for roads.
 
Host:
Given the fact that we're in this new environment now, we're, it seems the federal government is more willing to provide aid, to deal with, to soften the blow for COVID-19. Do you think that any of those old entrenched arguments might shift, just because of the willingness to put money on the table to actually create assistance programs, do you think this might be an opportunity to break the paradigm and potentially have that money going to, you know, state and local transit agencies more freely?
 
David Zipper :
I wish I could say yes. I can't because there's a, I think unfortunately the you know, we used to say decades ago that transportation is a nonpartisan issue is simply not true anymore. The, the there's a professor at UC Santa Barbara named Clayton Nall. He wrote a book called the Road to Inequality. And in which he writes about how in the last 50 years transportation funding and particular transit funding has become remarkably partisan.
 
David Zipper :
Even to the point that if you live in a Democratic area, like say the Bay area or the New York area, even if you never take transit, you're more likely to vote in favor of referendums, referenda in favor of transit than, than any those who who'd be elsewhere, that doesn't apply in other parts of the country. So transit has become a democratic issue, which to me is unfortunate because frankly, the more people who are riding transit, the less congested roads are including those roads that are being used by some exerbs and suburbanites who are more likely to be Republican. So I would love to, to hear to, for your hypothesis to be held, to be the whole true. But from everything I've seen, like, for example, with the Cares Act you know, Schumer and the Senate and its allies had to hold out longer to be able to get a few billion dollars more for transit, it seems like it was done despite Republican opposition, as opposed to a sort of like heralding, a new breakthrough, which I wish it would on a nonpartisan bias.
 
Host:
That's something that was kind of brought up a little bit on the panel, but it wasn't really delve deep really more, more than just a couple of questions and just comments on it. But the push pull between of course, the large metropolitan areas in, on the coasts and your larger cities in the interior, but then you have those swaths of, let's say, you know, like I said, exurban or rural areas, how do you think the funding's going to be effected for projects in those smaller cities or, or areas between the two coasts?
 
David Zipper :
Well, a lot of it, right, it's going to depend on, on one, what happened to the budgets of state DOTs, and that's what, that's what those small cities and rural areas are really relying on. And this is a point that was made by Jeff Davis on the, on the panel.
 
David Zipper :
You know, even if there is stimulus money from the federal government is provided with a very generous match for highway projects for small towns. And for rural areas would say, I don't know, four to one federal match or whatever it is. There's still a one in five, 1 dollar of every five has to be put up by the local and state governments that at a time when income taxes are collapsing and tax revenue from hotels and restaurants, it's just drying up. It's not clear the extent to which States and local governments can even meet very modest matches. So if I were an official at a, in a small city or small town or a rural county, that's what I would really be worried about is to say, look, if I get a generous program with a low match, can I even meet that? I may just be grants. Yeah.
 
Host:
And that, that kind of goes into the segway to the idea of the integrated mobility or the mobility as a, and where the private sector might be able to in some way, step in. I mean, it's the few - Consumer Technology Association and CES. I've been out to a couple of their shows and seen kind of the idea of, you know, mobility as a service. The idea that you know, you might be able to have - deleverage maybe transit. And so in some way where you can actually then have vehicles, which are not so much owned, but private shared vehicles or some kind of autonomous systems, some, some cities are starting to try to get pilot programs on the road already for autonomous buses and things of that nature, which are private public partnerships. That's all nascent a little, you know, it's not fully developed. Where do you think the opportunity is for some of these technology companies that are, that are focused on mobility, and that's a big change. I mean, just the change between transportation to the concept of mobility is not so much what you own or what you have, but how do you get from point a to point B?
 
Host:
Do you think It's an opportunity for the private sector kind of enter and, and treat this as a, as a business opportunity?
 
David Zipper :
Maybe, maybe I wrote an article in Slate two months ago that noted how truly unusual this moment is, and that you know, ordinarily, there's a lot of research that shows it takes a lot to get you or me or anybody to change how they travel. We're creatures of habit when it comes to commuting, right? We have a given route we take to get to go to work or to the grocery store, to the gym or to the school. And if we're biking or if we're taking a bus, or if we're driving, we're probably going to stick to that. It takes a lot to get us to change. Just inviting you to change or me to change is probably not going to do much.
 
David Zipper :
It's really hard. What does get people to change and individual change is if you have a shock, like a like you have a new child born, and your habits have you have to move around, or let's change, maybe you change where you live, you move where you get a new job. That's an individual shock though, or a household shock. What we're undergoing now because of COVID is a society wide shock where everybody is rethinking how they travel, because they may not be going to work anymore at all. And they, if they took public transit, they may not be comfortable doing that. Now they may not be comfortable at being in ride hail the way they used to. There's lots of trips, millions of trips up for grabs in terms of how, what the new mode might be. And frankly, this is sort of a rationale for the cities to quickly put up bike lanes and, and new infrastructure that it can, can encourage people to not default to driving, which can feel like the safest route.
 
David Zipper :
It's just not sustainable at scale for cities. So the question becomes to get to your point of like, what's the role of the private sector in this? I would say that there is potentially a role for private sector actors, whether it's operators like scooter companies to step in and be able to provide, for example, a lower priced options for the short term, or maybe monthly rentals, which companies like Spin and I believe Lime have moved toward providing now as sort of a product that fits the market right now to encourage people who are not going to be, who might otherwise default to driving, to take another mode. That's more environmentally friendly, it takes up less space. And then you get into mobility as a service, which for those who aren't familiar, I would assume that everyone knows about MOS. Maybe I should define it really quick, because I don't know if all of our listeners are engaged in that. I Know some of the larger players in the engineering space are, but...
 
David Zipper :
Yeah, it's still a new field. It's a lot of people are excited about it and transportation planning and policy and technology, but it's still in its early days. The idea behind mobility as a service is to say that if we can sort of take all of these various options to get around a city for those who don't drive and knit all those options together. So you've got transit in there and scooters and ride hail and car share and bike share, and whatever else, put them all on one platform that MOS platform, it lets people choose how to get from point a to point B on all of those collective options and purchase their ticket, or a ticket that's a combination of modes on that platform. You can actually take away some of the friction, the annoyance factor of having to jump between apps and figure out which is the best service to get you from point A to point B.
 
David Zipper :
This is a need, MOS advocates claim, that really didn't exist 20 years ago when we had a very sort of fixed number for decades, really of a number of ways to get around town. You walk, bike, taxi, drive transit, but now we've got these other new modes and MOS can make a little bit simpler to navigate. So, and there's a bunch of companies that provide this now, like City Mapper and transit and so forth. And so on Google Maps, you could argue as a MOS provider in some ways. So the, the role of MOS in this particular moment that we're in is potentially a powerful one because lots of people are again, figuring out how to travel because they're breaking their old habits about how to get from point A to point B and MOS platforms can inform those decisions.
 
David Zipper :
And perhaps if the government gets involved, especially could nudge some of those decisions to be, to be resulting in a trip that's other than driving and potentially other than transit, cause people are just uneasy with it right now, for reasons that are in a lot of ways. Understandable. So is this a moment for MOS? Maybe? I would argue that these platforms are really reliant on the underlying quality and comfort of the services that they knit together. So you need to be able to provide comfortable biking and scooter lanes in a city to make people consider those options. You need to be able to provide reliable transit, to get people, to consider that which is, you know, sometimes a problem in American cities. But I do think this is a moment where MOS could be an interesting area of exploration
 
Host:
Or at least an area a time where federal policymakers can start looking at this and integrating it into, you know, long-term, you know, policy that, cause I know that, you know, Uber for example, was, was very active on the Hill talking about their fully integrated model where it's, you know, it was the combination when, you know, Uber taxi was kind of first coming out and they were talking about, we'll take an Uber to they're there, I guess, hanger or whatever they're going to consider, you know, get on an Uber taxi that will fly you to the next facility where you can go and take an Uber for your final destination. And you know, that kind of a kind of integrated, you know, closed loop system.
 
David Zipper :
Yeah, I mean, that's a little that's going to suit Uber's needs. I'm not sure cities are going to be that excited about everybody jumping into helicopters.
 
Host:
Exactly.
 
David Zipper :
I think that the high speed rail argument of saying, okay, you can take a high speed rail route to, let's say Washington DC to New York, but after you get off the train, then what?
 
David Zipper :
Correct.
 
Host:
It's how do you, how do you connect a route and how do you connect that high speed rail line termination to all the different options you can get to get to your final destination without having to get a car or, or, or reliant on one form of transportation over another.
 
David Zipper :
Yeah, I think the idea is if you're choosing between driving, flying or taking the train wouldn't it be nice if you could basically with one tap, be able to purchase your train ticket and know that there will be a, just for example, a Lyft car waiting for you because that, that car was summoned knowing that your train is running seven minutes late and it's pulling up just two minutes after the train gets into the station and you're, you've got a seamless sort of transfer from the train to ride hail onto your destination. That's the idea behind MOS, that's an inner city vision of MOS. Usually to be honest, MOS advocates are thinking more about travel within the city. So maybe the argument there would be, you know, I want to go to the place in Fairfax County, I'm in DC and to get to Fairfax County, Virginia, I need to do a combination of transit to ride hail or transit to scooter.
 
David Zipper :
And I can in one fell swoop purchase, determine my route, purchase the ticket and know that I'll have a seamless transfer when I get, when I pop out of the Metro station in Fairfax.
 
Host:
And then again, you know, a lot of this has been on the tech side because of developing the technology to allow that seamless integration of different mobility solutions. But on the engineering side, the people who are designing the infrastructure to actually enable this to happen. And that's really, you know, our core constituency from an engineer's perspective. What do you think the top, what do you think maybe a few of the, the main things that they should be looking at, or they should be paying attention to? If, they see opportunity to, you know, design the infrastructure to support systems like this.
 
David Zipper :
Yeah, I'll mention a couple of things. You know, one is the, again, the topic I wrote about a month ago I feel like there's a lot of people live in cities who suddenly have a new appreciation for their sidewalks, you know, as we're all stuck at home, trying to get exercise, to avoid going stir crazy. You realize that a lot of our urban neighborhoods have terrible sidewalks and some don't have any at all, especially in the South and the West. And I I think we've got, there's a good chance and I frankly, am hopeful that there is going to be a window of opportunity to consider sidewalk products - and sidewalk infrastructure is real infrastructure. It's less expensive than building a tunnel, but for those of your the engineers that are members of the organization that are trying to think of how can I really tap into what public leaders are thinking about now, if you can incorporate high quality wide, well lit, accessible sidewalks into your proposals for renovating a given district or into a new project.
 
David Zipper :
I think that this is a time when that's going to be thought of a little bit more directly and more constructively. I think that that also these new bike lanes and, and that are being developed, I don't see them going away. I frankly think that's also opened the door to considerations of some new technologies that will also have infrastructure needs. And I'll give one example that I'm really interested in, which is, which is parcel delivery. There's an argument that the coronavirus is a great catalyst or an accelerator of trends that are already underway. I think everybody knows that people are buying more stuff online than we used to. Now it's even more stuff than we did a few months ago. And there's been moments of sort of bullishness for sidewalk drones. I personally think that's going to take a while.
 
David Zipper :
Partly because our sidewalks think like we were talking about earlier, but the other option is is something I am actually kind of bullish on, which is e-cargo bikes, or electric cargo bikes, which for those of the audience who've been to Europe, they're widespread in Germany and other European countries. And they could be, they can utilize the existing infrastructure in cities. And most of it, at least the city of Boston is, but not an RFI today. July 21st, I think is today's date to basically invite suggestions from the private sector about what sort of infrastructure upgrades might be necessary in terms of depots to collect parcels and various neighborhoods as distribution nodes, things like that. And I, this is an area where I'm bullish in cities for the next five years. I think cities are gonna recognize that they can reduce congestion, improve neighborhood quality of life and, and utilization of existing infrastructure.
 
David Zipper :
If they shift some of these UPS, DHL, USPS trucks that they take up space and double park and can be pollutants instead utilize E cargo bikes, Europeans can do it. And I think we can too. And a lot of our cities.
 
Host:
Those are really two good points. He and I, and I, it's always kind of sad when I see a drone and Fairfax or one of the, you know, robot parcel delivery or package delivery drones get caught up on a stump or something on the, on the sidewalk and Fairfax city. It's kind of sad.
 
David Zipper :
But it happened. There was a viral video and Friendship Heights, one of the wealthiest neighborhoods in Washington over the weekend where you see the sidewalk drone got stuck because the sidewalk got too narrow. And I myself tweeted about him saying, because the guy who saw I was like, Oh, this I helped a little guy.
 
David Zipper:
It's kind of cute. I'm like this, isn't cute. If it's a person in a wheelchair, like we've really blown it with our urban sidewalks. And this should be a moment when we should be really investing in them. That's a very good point.
 
Host:
Well, David, I do appreciate you coming on the show. There's a lot to talk about here. I'd love to have you back on the show so we can talk about really these mobility issues when it comes to, you know, the interconnection of technology and mobility, how it all kind of ties together. You know, it's something that we'd like to explore a little bit more. Because I think our members are always looking for what, you know, what is the next thing what's going to be the next area that we might be able to invest in. And I think that, that these issues are going to be top of mind.
 
Host:
And yeah, and I do appreciate your time. And you mentioned that article. I mean, what else do you have coming out? Where should people be looking for the the article that you're writing now?
 
David Zipper :
Yeah, I'm actually, I've got a couple articles coming out in the next week or two. I write a lot about new forms of urban mobility and new technologies, and also about sort of the interplay between local policy, especially around transportation and automobiles and transit. So, so those who are in, if you're interested, you can always reach me on Twitter. I post all my articles there people can send me DMs. If they've got a question it's easy, it's a zipper, just my name at David Zipper. And then for my articles I actually have a website where I put them together. Cause I do write across a number of platforms and that's just as easy again www.davidzipper.com and you can find all the articles there. And I even have a little newsletter. I put out once a month with the stuff I've been writing and thinking about in these topics, because especially in the current environment, so much is changing so quickly. So I appreciate the opportunity to come join you and talk about some of these changes.
 
Host:
It was great to have you on and again, follow David and David's zipper and look out for his upcoming pieces. And we'd love to have you back on. So David have a great rest of the week stay as cool as possible when this heat wave and stay healthy.
 
David Zipper:
I'll go for a socially distance bike ride.
 
Host:
There you go. There you go.
 
David Zipper :
Thanks a lot. It's great to be here.
 
Host:
And you've been listening to Engineering Influence brought to you by ACEC.
 

Funding in the New Normal - An ACEC Research Institute Roundtable on the Future of Engineering

 
 
On July 16, 2020 the ACEC Research Institute held the last roundtable in its "Future of Engineering" series.  The event brought together some of the most respected thought leaders in the infrastructure space to discuss the financial effects of the COVID-19 pandemic on the future of funding for infrastructure projects
Panelists included:• Rosemarie Andolino, Former Chairman of MAG USA and CEO of International Development, Manchester Airport Group• Anirban Basu, Chairman and CEO, Sage Policy Group• Jeff Davis, Senior Fellow, Eno Center for Transportation• David Zipper, Visiting Fellow, Harvard Kennedy School’s Taubman Center for State and Local Government• Moderator: Joseph Bates, ACEC Research Institute
Transcript:
Daphne Bryant:
On behalf of the ACEC Research Institute's, Board of Directors, welcome to our third round table in the series, the future of engineering. A big thank you to our donors who have made this session possible. We have a great group of thought leaders here today. As you can see on your screen, they're going to share their insights and expertise with us on the future of funding in our new normal. Now without further ado, it's my pleasure to introduce two of my colleagues from the ACEC Research Institute, Joe Bates, who will serve as our moderator for today's session, and Kevin McMahon who will be monitoring the chat box and fielding your questions during the session, Joe, it's all yours.
Joe Bates:
Great. Thank you, Daphne, and thank you all for joining us today. First, I'd like to introduce you to our panelists that we have with us first there's Rosemarie Andolino, Former Chairman of MAG USA and CEO of International Development, Manchester Airport Group in the UK, where she oversaw the development of MAG's North American and global airport services business. She currently serves as an independent board member and advisor to various for-profit and not for profit organizations. And previously she served as the Commissioner of the Chicago Department of Aviation, where she oversaw the management and operations of one of the world's busiest airport systems that comprise of O'Hare and Midway International Airports. Rosemarie, welcome today. I'd also like to welcome Anirban Basu. Anirban is Chairman and CEO of Sage Policy Group an economic and policy consulting firm. Headquartered in Baltimore, Maryland with an office in Indonesia, the firm provides strategic analytical services to energy suppliers, law firms, medical systems, government agencies, and real estate developers among others.
Joe Bates:
In 2014, Maryland governor Larry Hogan appointed Anirban Chair of the Maryland Economic Development Commission. He also serves as the Chairman of the Baltimore County Economic Advisory Committee. Welcome Anirban. Next I'd like to introduce Jeff Davis. Jeff is a senior fellow with the Eno Center for Transportation and is also the editor of the Eno Transportation. Weekly. Jeff has worked on Capitol Hill working on various legislative budget process oversight and parliamentary procedure issues. He also worked extensively on the FAA, Amtrak and surface transportation reauthorization laws in the late 1990s. His current work focuses on analysis of the federal budget, federal transportation budget, and his longterm trends in transportation, funding, and policy. Finally, I'd like to welcome David Zipper. David is a visiting fellow at the Harvard Kennedy School's Taubman Center for State and Local Government, where he examines the interplay between urban policy and new mobility technologies.
Joe Bates:
David's perspectives are rooted in his experience working within city hall, as well as being a venture capitalist policy researcher and startup advocate. He has consulted with numerous startups and public officials about regulatory strategy. So thank you all for joining us today and welcome.
Joe Bates:
I'd like to go ahead and get started and jump right in to get a, sort of a feel of what's going on with the economy. As everybody knows, the US economy, as well as the engineering profession was hit quite hard by the pandemic and the last business impact survey that ACEC conducted showed that over 80% of firms said, they felt that the economy was in worse shape today than it was on March 1st before the pandemic really took hold. So clearly there's a lot of pain going on out there. There's a lot of stimulus efforts that have happened, but Anirban, I'd like to turn to you and ask you to give us an overview of what's happening with the economy right now and where you think it's going in the next five years or so.
Anirban Basu:
Yeah, well look, the recession is dated to have begun in February. According to the national Bureau of economic research is Business Cycle Dating Committee. I think by late April, it was over in late April. That was the nadir for mobility of Americans based on cell phone and other data. You know, Governor Kemp in Georgia started opening up the economy on April 20th. And there was a lot of cash that had been built up in the economy and the household sector because of those $1,200 checks for $600 in federal subsidies for unemployment insurance benefits. So the household savings rate went from 8% pre-crisis to 33% by April. The economy opens up in May guess what? We get job growth, 2.7 million jobs added in may. We followed up in June 4.8 million. That's not consistent with recession. And so it felt pretty good. Didn't it?
Anirban Basu:
Retail sales surging 17.7% in may then again, bouncing back in June felt really good. And then what happens Florida? It's always Florida. For some reason, Florida, Arizona, Texas, Georgia Governor of Oklahoma is now COVID-19 positive. So the surgeon reinfection has put the entire economic recovery in doubt. And we can see that some of these reopenings have been postponed. Some of them have been reversed. We've got the initial jobless claims today at 8:30 AM Eastern Standard Time. And they were somewhat disappointing the market's down today. So I was looking forward to a third and fourth quarter. That was very robust in terms of the economic expansion. It might still happen because people don't seem to care that there is this viral spread. They're just going about their lives. I'm in Ocean City, Maryland today. No one out there on the beach is wearing a mask. I can tell you, and they're not social distancing. They're just going about life. As, as if it's normal, you would know that there was a pandemic. So for right now, the economic outlook is very uncertain. I just think that the economic expansion will continue through the end of the year, but it won't be nearly as dramatic as I had hoped up until about a month ago.
Joe Bates:
How long do you think Anirban that the overhang will stay with us? You know, there's bound to be a vaccine in the early part of next year think pretty much everybody is banking on that right now. So let's say we get a vaccine, you know, things return back to normal in terms of how society functions sometime next year, what's the longer term outlook are we gonna, is this like 2009? Are we going to be sort of suffering for a while? Or do you think it's going to be a lot shorter than that?
Anirban Basu:
Oh no. I think it would be longer than that. And I'll tell you why, you know, after 2009, you know, the economy sort of came back to life, you know, I mean, we pumped a lot of money into the economy. We recapitalize the banks, the federal reserve increases balance sheet from $800 billion. Pre-Crisis the four and a half trillion dollars during and after the crisis. So, you know, the money disappeared as the housing market collapsed. You know, that's what caused, you know, 2008, 2009, we put money back into the system, bam LinkedIn's economic expansion, American history, and very little inflation, booming stock market. It was fabulous. And we entered with that momentum in January and February of 2020. And in February we added more than a quarter million jobs this time. What do we have? We have shattered government finances, state, and local. We have a commercial real estate sector that is in deep recession and will take years to recover, right?
Anirban Basu:
Empty storefront, shuttered restaurants, vacated office suites. And so that weakness lingers, we've got lots of debt on various balance sheets, household balance sheets, corporate balance sheets. And of course, governmental balance sheets and especially the federal government, right, which in June ran nearly a $900 billion deficit for one month, you know, $64 billion dollars. So you put all that together. I think it is possible to talk about a double the procession. And in fact, it is conceivable that we'll have that double dip this year. If, you know, if you agree with my proposition that we were in recession, we came out of recession. We could go in back into recession this year. And then at some point in the future, once this new, next round of stimulus works its way through the economy, you can get another recession thereafter. So there's, you know, a w and then another V on top of that, it's a really risky moment in economic history and the policymakers have to get this right. And those are political outcomes they have to get right. And political outcomes are rarely, right. So, I mean, that's where we are right now, very uncertain place.
Joe Bates:
Great. Okay. Anirban, thank you for that perspective. I'd next like to focus on a question for Jeff as as some of you probably know who, who have looked at the ACEC business impact study that we conducted 90%, nine zero, 90% of firms reported obtaining a PPP loan to bridge the summer and spring trough that many expected. The question here is, will clients start new projects once we get through the summer, or are we gonna continue to struggle through next year? Jeff, what do you think?
Jeff Davis:
In terms of the regular the regular federal infrastructure programs, the federal side of the spending hasn't been affected yet by any of this coronavirus? The, the, the question is always really the degree to which the level of the government that can print its own money. The federal government is going to step in temporarily and assist the levels of government that can't print their own money, state and local. And so you saw a little bit like $150 billion of aid to state and local governance was in the last traunch coronavirus relief the S the house back zone wishlist bill about a month ago, three and a half trillion dollars in one bill that was going to have like $500 billion from state governments. None of that set aside directly for state DOTs, but that's the fundamental question you gotta answer is if you're going to provide a, to state and local governments, does the federal government single out transportation as being privileged and give it a special carve out of money and leave everything else up to state local politicians to determine the priorities, or do they make transportation aid subject to state and local decisions in place that you know, weighing it against the needs for education, budgets of corrections budgets of all the other things that state governments do.
Jeff Davis:
There is zero consensus right now in Congress of whether state DOTs in particular should receive a special targeted round of assistance. That's not subject to state and local governments determining where to best allocate the resource. The Senate Majority Leader McConnell is going to introduce his own coronavirus bill next week. They've got a July 31st deadline for leaving town, at least the house for five weeks, and also unemployment insurance rent. So extended unemployment's going to be in that bill at some rate. We're not sure if the special $600 bonus will be in there or any kind of bonus at what level McConnell wants to put at least $75 billion in dangling a carrot financial aid and school systems that open on time in late August, September. And the only other thing I know about that bill is that he's determined to keep the price tag below $1 trillion.
Speaker 4:
So you're going to have you have a House bill, a three and a half trillion, the Senate trying to max out at 1 trillion, and they're going to have between middle of next week and July 31st to figure out what that goes. So, because it doesn't do any good, the federal government putting out money at 80% federal share for highways, if the state or local DOT can't afford its own 20%, or is uncertain, whether they're going to have the dedicated revenues over the next X number of months to cover their 20%. So that's the basic issue is the uncertainty of government tax receipts at the state and local level is going to start tampering all this.
Joe Bates:
So, so if I can press you on this just a little bit, Jeff, and I'd also like to get David's thoughts on this. You're saying the federal money is there. So are projects going to be effected. And if so, in what way?
Jeff Davis:
Cash going out the door for federal infrastructure programs has not really been affected at all yet by coronavirus, but for the big highway and transit programs, those are reimbursable dollars. The government signs a contract upfront only after the state government pays the contractor do they come to the US Department of Transportation and get reimbursed. So the dollars leaving the door and the treasury is a lagging indicator. Unfortunately, it's the most up to date indicator we have as far as monthly basis. We'll find out next week, hopefully on the obligation to the grant agreements actually signed between the federal government and state local government for infrastructure we'll hopefully have enough later quarterly total on that. And they're about to move to monthly reporting on that. So we can finally get something other than anecdotal evidence, you know, from States, state DOT here, or city transit agency there on how much they're curtailing their future spending plans in light of the coronavirus revenue uncertainty, but at the federal level, we don't quite have the data yet on just the degree to which the federal governments, local and state government infrastructure partners are rolling back activity, looking to the future yet.
David Zipper:
Yeah. And can I follow on, on that? Is that.
Joe Bates:
Yeah, go ahead, David.
David Zipper:
Yeah. And, and just cause I do a lot of work in particular with urban transportation, like the transit agency is I can sort of speak from that perspective and everything that Jeff is saying is, is I think true and the lack of certainty, the lack of clarity at the federal level sort of filters down to transit agencies, being very concerned or cities being very concerned about future cash support, which leads them to make decisions now about future planning. And I can give a few examples of that. You can see that that very simply some of the groups that are hit the hardest by this right now, it would be the transit agencies that live off of their farebox revenue. They're using the farebox revenue from last week to pay their bills from this week.
David Zipper:
So just this week, there's been a big controversy in the Bay area where CalTrans may or may not get the funding. It would need through a special sales tax to be able to continue. And there's it's kind of incredible for his affluent areas, the Bay Area, serious conversation about CalTrans ceasing service. And if that happens that actually, and I want to make this clear since given the audience here, it's not like you can just turn off a transit agency and then turn it back on. You're losing mechanics, you're losing specialized knowledge about the technology and the vehicles that it's very difficult to emulate. And you look over New York with the MTA saying that they're going to have money to get through August. And they're the, the, the director was saying yesterday that she's being forced to go through the whole org chart, to lay people off and then sort of compounding these problems.
David Zipper :
You've got, especially in New York, for those who may be there, you've got the Trump administration are sitting on decongestion pricing, which would have otherwise provided a $15 billion cash infusion into MTA at a time that really needs it. So, there's plenty more examples I could cite, but I would simply say, you know, this is a time when in the urban transportation side, which I would imagine is of interest to many in the audience. You're seeing a lot of leaders being forced to assume the worst, because there's just no clarity from the federal government about whether there'd be a secondary infusion like there was with the cares act, which is forcing them to hunker down and, and make some really difficult decisions.
Jeff Davis:
And at the state level, most States operate under constitutions or laws prohibiting them from running a deficit. So the deficits are cash in cash out. So they've got to arrange their, their future spending commitments based on anticipate the latest anticipated future tax revenues. And that's why they have to particularly curtail slow spending capital programs early and upfront to try to make sure that they don't run a deficit six or eight, six or 12 months down the line when the bills are coming due and being paid.
Joe Bates:
Rosemarie, I want to get you in the conversation here is what else how do you see since we're talking about the public sector here in public funding, how is the public funding going to affect the airlines? The airports, obviously the airlines got a little bit of assistance in the last month or so maybe not as much as they wanted, but what's your take on the public funding and how that's gonna affect the airline sector?
Rosemarie Andolino:
Well, I think you've seen two things, right? Not only did the airlines get some money, but airports did as well. Right now I think everybody is in a cost constraining mode, right? No spending, looking at ways to actually conserve money and continue the projects that have been funded or continue moving along. The things that have you know, make sense, but, longterm projects, new terminal developments, where if they haven't already again, been funded are going to be placed in a whole holding pattern right now, due to the fact that we need to see where the world's going. We need to see what type of demand there will be. I think this aligns, however, with large capital projects needing time to plan things out in order to before construction. But what will the future look like? That's going to be the challenge that we face.
Rosemarie Andolino:
And I think that's where we need to focus. Our time and energy right now is looking at what are going to be the needed things that our ports are going to need to put in place. If you think about 9/11 and what occurred after 9/11 TSA, we have all these check-in facilities. Now, you know, you have the meter greeter halls that now have all these security measures in place in places like Chicago's airports, older facilities, most U S airports weren't built to handle that type of impact in our terminal facilities. However, now what you see is going to be another layer of potential demands or needs of policy changes, which we won't even know for a while yet what's going to happen. So I think at the moment, airport directors, airlines are still trying to understand what is going to need to happen for, you know, the issue we're dealing with today, the pandemic we're dealing with today, but what then does the future bring, what do we have to plan for for the next phase of the next? What is?
Rosemarie Andolino:
The one thing I will say about our industry is, you know, the aviation sector has always been an indicator in the economy, right? It kind of leads because of the fact that you have to book your travel in advance. You start seeing where the spending is going. You start seeing what the airlines are putting in place, whether the demand is for the next three months, what's going to be happening in the fall. So this is going to be a time now where we're going to see the booking. So what's going to be booked by carriers and what the demand's going to be. You know, as cities are kind of hunkering down again, putting in more restrictions of travel, what's that next phase going to be, and what are those impacts going to be? And that's just phase one. We're not even into our fall phase two yet of what could happen.
Rosemarie Andolino:
But on the positive note is the aviation industry has always recovered stronger than where it was before. So ideally, you know, we could see these trends, you know, and recovery happened quickly. However, we're still out three to five years in that recovery. And what we'll come back first will be that domestic travel, right? The leisure travel, domestic travel, what's still on hold right now, which is kind of the bread and butter of the industry is business travel. And that is a key importance to the success of the entire, not only aviation industry, but hospitality industry as well. We talked about, you know, the entire economy at the opening of restaurants, et cetera, that all feeds from travel aviation and business.
Joe Bates:
So I want to ask a couple of followups here, Rosemarie, you talked about the short term and then the long term. So let's break that down in terms of funding, how are the airports and the airlines going to do the things they need to do in the short term? Where are they going to get the money from for that?
Rosemarie Andolino:
Well, again, I think there's been, there's been some money that has been passed around recently. I think everybody's looking at what's going to be the next phase. Is there going to be another CARES Act two? Or is it going to be the HR 2 and there will be, will there be provisions in that for and again, we'll the neck, there'll be another round of care act funding, right? So those two things are going to be extremely important. I think right now, in terms of where they get the money is again, what they've already issued. So airports are reliant on garbs right? General airport revenue, back bonds that have already perhaps been issued for key projects or AIP money that has come from the federal government and airports have, are they, they are longterm, they plan three, five years out. So projects I've already been planned designed, perhaps they're going through the bidding stage now for construction, you know, depending on what part of the world you're in. So that's work is going to continue. What the question will be is major, you know, terminal redevelopments, right? Major projects. When you have additional capacity right now in the, in, in the market, the question really is, are you going to retrofit your facilities, use that money to retrofit your facilities, to perhaps close down some concourses to consolidate the operations. You know, it's impacted everybody from the cleaning people that are, you know, the cleaning crews and cleaning these large facilities to the operations of concessions. You talked about the airlines, you know, the airports, there's so many jobs and activities that are part of aviation. So many behind the scenes that you don't realize that are, again, especially with key facilities like that are huge. Cargo has continued, you know, the demand for cargo high value cargo.
Rosemarie Andolino:
So a lot of retrofitting for those aircraft have been carrying cargo. Passenger carriers have been carrying cargo now more, even in, not only in the belly of the plane, but they've converted, you know, the passenger seating to carry cargo as well. So, you know, that has been growing and has been stable. But in terms of getting revenue, collecting money from what the normal revenue creations would be like, you know, the Passenger Facility Charge the concessionaires, all of that has basically come to a halt. It's just trickling it. And so that's where the focus will be on O&M, right? In terms of the maintenance of your facilities, I think to take advantage. Well, when I was at O'Hare, we were in a decline. It was the recession when we were building the $8 billion expansion program. And Kevin will remember this many airports were actually closing down their programs because of what was ahead.
Rosemarie Andolino:
We were actually moving forward because of the down in traffic, gave us the ability to actually build those runways, the infrastructure that normally has to be, you know, that's normally impacted with high volumes of operations, give you a little bit more flexibility in that construction of those major impacting projects. So for airports like Utah, who have said, we're going to continue to go forward, you know, they're continuing to build their facilities to get it done, save money on delivering it faster, right. And build, you know, it's, it's in that stage of what it needs to be complete. But for most airports, it's really going to be functional improvements that they're going to be needing to make with the money they have. And you, you know, reprioritizing, perhaps fundings of projects already out to actually move that money to do functional improvements for current environment.
Joe Bates:
Okay. So it sounds like, you know, things there for the moment in our airport space, the projects are continuing, but the question is a bit more longterm than this....
Rosemarie Andolino:
Major projects, yeah. Major change projects, I think are just pulling, are going slower. It hasn't completely, unless it's like a hotel development or certain things of that nature, and depending on where the stages and they are on their development. But if they're in the preconstruction, I think they're starting to go a little slower before they put the shovel in the ground in order to manage the future. Right. Because this is a three to five year recovery. It takes usually three to five years to build some major projects.
Joe Bates:
Sure. Anirban what are your thoughts about the airline industry and in particular, as you look at the sort of the macro economic movements here?
Anirban Basu:
Oh, I think there'll be a rapid bounce back. You know, you said it earlier, we're going to get a vaccine at some point, right? Come on Pfizer, come on, Maderna, come on, Berry, jeez. You know, Regeneron, Gilliad, somebody, you know, start up your computer, get some test tubes out and do this because that's, what's going to solve this problem. That's the only thing that can do it. It's not going to be a cause of our good behavior and our mask wearing. We don't seem capable of that. And so you can see the pent up demand out there. You can see that people want to travel right when Disney opens up. But I think the best example of this was when the Las Vegas casinos opened up and the long lines to try to get into those places. People want to live like that. They want to go to professional sports games.
Anirban Basu:
They want to do all of those things and allow that requires travel. And so once we get a vaccine and you know, obviously people are talking about how long they'll take to get people actually vaccinated. It's not just discovering the vaccine, but actually operationalizing it. But once that happens, I think you'll see tremendous traffic increases at some point in 2021 itself. I really believe that business travel is going to come back. I love these Zoom meetings. I really like this. This is fun, but there's nothing like that coffee break after a long speech, getting ready for the next speech and shaking the hands with sponsors and others. And so I think that comes back pretty, pretty, pretty quickly. I think, I think it comes back more quickly than most economists would
Rosemarie Andolino:
On antibiotic. I think right now, if I could add, you touched on the fact of the what's happening, right? This is the leisure market, right? These airlines are offering right now, very discounted prices, just kind of fairs for travel. A lot of packages out there. You've got your choice, right? Because, but the reality is you can't social distance on a plane, right? You can wear your mask. But there are some challenges associated with that and where the risk is not being taken as in the business community, right. Business companies don't want to take that risk. And again, that's a key driver for the changes in the airline economy is that business traveler.
David Zipper:
I think we all agree. We need a vaccine. I might just connect actually the airport question with issues of a broader ones about transportation projects. I may a glimmer of hope for the airlines. Other not for transit is that for the foreseeable future, people are not comfortable taking transit. Ridership is down around 50% and ride hail trips are way down too. So what that suggests to a lot of people, myself included, is that one source of revenue for airports, meaning parking facilities, make it a bit of a boost, which is something that has not been the way it's going for a while. You disagree with that?
Rosemarie Andolino:
Yeah. Parking facilities have been consolidated again. There's really, there's no demand for parking right now. There's excess, you know, there's plenty of supply in terms of parking close proximity to your terminal if you're departing at the moment. So parking at airports is challenging. I mean, look at the rental car industry as well. You've seen Hertz in bankruptcy. You're going to see consolidation there. Yeah.
David Zipper:
Yeah there's no question of that, I guess for the next year though, I think I would expect, I find to make a bet. I would put more money on people on parking revenue for airports to come back faster than transit ridership.
Jeff Davis:
And over the next month or the next year or so, the data we have indicates that the best infrastructure performing there's going to be are hot lanes because what's going to be slow is to come back to, we get a vaccine is carpooling particularly with this DC, the DC area, and a couple other places had a thing called slug line where complete strangers would line up in certain places in the suburbs could be picked up by other complete strangers and share their air and their car for 15 minutes. So to go downtown, to be able to use the, the, the express lanes, that's going to be the last thing that comes back in all transportation and so hot lanes where you can pay extra money to use the carpool lane.
Jeff Davis:
If you think to getting there is important, or if, if, if the lanes are being congestion managed at all times, like the new I-66 is here what we've seen Transurban reported the lanes they run in China, and there are a bunch of them now actually have more ridership as a month ago than they did before Coronavirus. So at least in the time being, not, not longterm and until we get a vaccine, single occupancy ridership, and the toll lanes that that make revenue directly from people who are willing to pay our may even do better in the interim than were doing before.
Joe Bates:
So now Jeff, that's assuming that we have traffic like we had previously, right? If, if people aren't going into the office, then maybe we're not going to have the same level of congestion. I don't know. What, what do you think about that?
Jeff Davis:
That's true. Okay. We're going to, I anticipate sort of slow quasi reopenings and I forget, how, how, why did this spread out? Some of the places that went to a, to a terminal congestion can kind of congestion pricing anyway, like Interstate 66, Northern Virginia is now told all morning that those, the congestion based set by computer where that you know, the toll varies minute by minute to try to keep traffic at 45 miles an hour, wherever I think it is. So things like that once I unfortunately if we're, if we're like, if a vaccine takes two years there, there, there has to be significantly more reopening than we have in urban cores to get through the two years. You can't have two years of shut down. So to the extent that there's going to be some kind of reopening vaccine or not single occupancy cars or cars occupied by immediate family members only are going to be where it's at in that short term. And then it's a question of once we do get a vaccine of digging out of those habits and trying to get back to the changes in, in using different modes that we were trying to get to before the coronavirus.
Joe Bates:
Okay. So I want to go back and talk just a little bit more about the public sector. And before we turn to the private sector, in terms of projects and Anirban, I want to direct this one to you, how are the States and localities going to make up for the revenue shortfalls they're seeing, you know, the, the tax revenues are way down, people aren't spending as much. How are they, how are they gonna survive and continue to fund their portion of these public projects?
Anirban Basu:
I mean, there's only one way isn't that, right? They have to have a system called the federal government. I mean, that's, it mean it had been pointed out by Jeff. I believe state local governments have to balance a budget every year, but the federal government doesn't and the federal government right now is looking at a 10 year Treasury yield of 0.615%. There's actually a really good time for the federal government to borrow. I know the national debt is 26 and a half trillion dollars. I get that at some point, we have to start paying some of that back. I understand that, but we're in the midst of a pandemic crisis and state local governments have already laid off 1.5 million workers in recent months. If that continues, then that will really stifle the economic recovery we all want for this country. And so that's, that's it.
Anirban Basu:
I mean, how else are you going to make a billions of billions of dollars of lost revenue? If you try to increase taxes, if you're in New York or Connecticut or New Jersey, guess what happens? People move to Florida, you know, so there's a limit to what you can do in terms of revenue enhancement. Now you can, you know, told more roads and so on and so forth. There's some of that, there's no, there's less elasticity there. So customers have to use those roads to get to wherever they're going. And so maybe that makes sense, but otherwise it's really the federal government. And that I think you're going to see this month is some kind of stimulus package with monies for state and local governments. That's going to help a lot on the capital side and on the operating side.
Joe Bates:
Okay. David, anything else to add on that subject?
David Zipper:
Yeah, I mean, in the absence of federal funding, I, the only other options I see are, would be new tax revenue at the local level. And Audubon's right, that there's a cap to what you can do there. And as we saw in San Francisco earlier this week, even there, in a particularly affluent city, they didn't want to do a very small sales tax raise to fund Caltrain. So what you end up with are, I'm just not just talking about transit. You know, recently he was looking to push out the purchase of a bunch of electric buses for a couple of years, and there was a $15 billion program up in Boston to convert commuter rail, to be a regional rail with 15 minute headways and being all electric. That's now a little bit on ice so that they won't say that explicitly.
David Zipper:
I mean, this stuff is just going to get postponed unless there's an infusion of federal dollars. Cause I tend to agree with Anirban that there, there might be bits and pieces of additional revenue. You could get it at the state and local level through tax raises, but it's not, it's not anything close to enough.
Joe Bates:
Okay. I want to take a second to remind the audience that we do have the Q and A chat for, for questions and also the chat box. At the moment we don't have any questions or, Oh, Kevin. Okay, go ahead, Kevin.
Kevin McMahon:
We just got one. The question is the panel is painted a very good picture of demands in aviation and transit, particularly being in down short term major infrastructure clients, or feeling the uncertainty of commitment from the federal government on funding. What would you advise most of our listeners who are running engineering firms in terms of, of their employee base, should they be looking to you know, really be frugal in terms of hiring plans over the next year? Or do you see any type of demands that would encourage folks to go out and hire additional people.
Joe Bates:
Who wants to take that one?
Anirban Basu:
No, I was going to say, you know, like I've been saying it to, you know, whether you're an engineering firm, CEO or whatever company that happens to be, what are we in right now? We're in cash preservation mode, that's it? You know, we're trying to hold on to liquidity. I mean, that's it, we're trying to make payroll now. You know, the other part of this is there will be an economic recovery. There was after 2008, 2009, there will be this time around. And so who do you want to be with you as that recovery begins? You want the best and the brightest engineers and your stars, your stars, your star engineers, whoever you really need to be part of the team. And so the, you know, you go down, you know, person, you know, person by person on your team and ask the question, do I need this person? And it's an unfortunate situation. We don't want to throw people out of work. That's not what this is about, but at the end of the day, if your enterprise doesn't survive, you're no good to anybody including yourself. And so I think that's the mode we're in right now. There's just too much uncertainty to be in any other mode,
Jeff Davis:
The goal of the federal aid right now is, and should be trying to hold things level to try to keep the amount of total amount of federal state, and local money going for infrastructure type projects to be the same as it was going to be had coronavirus not happen. And then you've got a separate question of the great, the great infrastructure backlog, but I think that's going to have to go on the, on the back burner shortly in terms of just trying to maintain temporary directed aid, whether it's to revenue replacement to state governments or whatever, trying to tread water until coronavirus is over it. And then next year try to do some kind of broader infrastructure boost above the current spending levels that we're, that state local governments are now struggling to maintain. So it was a bad, it turned that it was a bad time to bring up infrastructure bills this year because of the focus is much more on preserving the funding that we've already got going at the state local level versus trying to build significant new dollar amounts of new capacity above that, which I think is going to have to wait till next year.
Joe Bates:
Rosemary were you wanting to add something to that?
Rosemarie Andolino:
I was going to add onto what Anirban said was the fact that, you know, do you have the right people is really the question, because I think again, as airports look to look to the future, airlines are looking to what is going to be necessary to make their customers feel safe and to continue to facilitate travel. What are the things that that, that are going to be needed at airports? And I think we need to look to engineers and others to help us understand what types of technologies, right, whether it's cleaning and sanitation, if it's technology for contactless opportunities to service customers better, and it contactless sweat, what are the types of things that need to be brought into place again, to create functional enhancements of the facility today for better service that customers can rely on and feel, you know, again, give them the comfort and safety for their travel journey.
Rosemarie Andolino:
So I think, and for the future. So I think that is a key important component. I think also part of what's been discussed in Congress as well. And Jeff, you could probably add more to this, but the Congress is looking at, if we are going to make investments, we want those investments then to put our infrastructure in a better place, right. To make it better than it was. Many airports are older facilities and are retrofitted. How do you take those facilities that you have today and whatever investments you make make it so that they're better for the future sustainable green, you know, less energy in terms of technology. Those, I think are some of the things that can be worked on now. And again, you know, do you have to UV light, you know, baggage as it's going through baggage systems, you know, what is going to be the future? And I think getting the bright, you know, engineering groups that are out there, the people, the right talent to help think these things through and come up with solutions and ideas are going to be extremely important again, how do you minimize costs and investment, but come up with great solution,
Joe Bates:
Kevin, it looks like we've got some more questions in there.
Kevin McMahon:
Thank you, Joe. There's, there's a couple of questions. One I'll ask the panel right now is, conventionally, infrastructure has been seen as a, as a great type of stimulus funding mechanism to get people back to work. It seems like nowadays more of the stimulus is funding. Those aren't just giving laid off employees cash versus creating jobs. Ins't this the perfect environment to create an infrastructure bill that would think big and get people back to work. Why is that not as robust in the discussion as some of our panelists, some of our listeners think it should be?
Joe Bates:
Jeff, do you want to start us off on that one?
Jeff Davis:
Yeah. well, first of all, your aid needs to be targeted and what your problem is. And immediately, you know, as of June 30th, the number of people employed in heavy and civil engineering construction seasonally adjusted was down 8% from February.
Speaker 4:
...Seasonally adjusted is pivotally important in outdoor activities like construction, but that 8% is 85,000 jobs. I'm not sure that that should be the prime focus of federal recovery when you've got 5 million people out of work just in the hospitality and restaurant sectors alone, but not to mention, you know, the million or so state, federal, state, local government employees you know, 400,000 people in transportation. You know, the infrastructure everyday of automation of complication means that infrastructure spending as a way of just providing jobs as stimulus is a little less effective than it was back in the good old days. So even though, you know, we definitely, as a country need to be spending more money on infrastructure, focusing on infrastructure as a job creator is probably not the right answer when all of the jobs, the majority of job losses are not from people who were probably going to want to retrain to go work in construction.
Rosemarie Andolino:
You know what though, Jeff, I think on top of that though, is the benefit of with low traffic, right? With low utilization of our infrastructure today because people are staying at home still to get minimized impacts, right? Greenhouse gas impacts, minimize congestion impacts all of the things that also come when you actually do more with a, you know, kind of a respite here where there aren't as many constraints on your current infrastructure, can you, it's easier to close down lanes and to, you know, to build more. The challenges we have, let's say the Myrtle Beach corridor. I know the Congressmen there had been struggling many, many years because it's a definite destination for the drive market. And, but the roads there are built for the local traffic not to handle the ingress and egress of the swells of people that come and drive into the marketplace.
Rosemarie Andolino:
So it causes major conduct congestion for those living there and for the, you know, the community at large, to make those investments today, while traffic is low, it will be a win win for again, when that traffic, when that curve starts, you know, that that color starts rocketing up again, to be able to accommodate them efficiently and to grow the market. Because with the delays that the experiencing last year, you know, they're going to start to lose, they would have lost start losing traffic. So if we could fix a tent to the problem today, so that it will, we're prepared for that future growth again would be ideal. And if it creates jobs and feeds families that's right.
David Zipper:
Yeah. Yeah. There's a variety of transit agencies are doing exact same thing of trying to do the capital investments on an expedited timeline now to take advantage of the fact that few people are riding, same thing goes, a few people are using a bridge, easier time to do repairs. It's less disruptive and that will provide some efficiency gains. The problem though, is that you know, capital budgets are different from operating budgets, certainly for transit agencies and for everybody else. And and it's the farebox revenue that's gone down 50% plus in many places it's coming back very slowly and there simply isn't enough money to keep the operating operator, to have the lights on effectively. That's where I worry. Although I think all the points Jeff made about recognizing that transportation is part of a much larger economy, which is where other parts have been hit even harder is a worthwhile thing to keep in mind so that we can maintain perspective.
Joe Bates:
Kevin, do you want to ask any other questions before we move on to the private sector?
Kevin McMahon:
Yeah. I'll just ask one question, Joe. And it relates to really, there's a few questions I'll try to collapse into one. Is there any chance that Congress will do anything before the election and you know, like suspend NEPA from, for the next six months or anything like that, or are we sort of in a really holding the Fenn vote until this whole election plays out?
Jeff Davis:
I don't think legally they can suspend NEPA the, with anything they did calling them the emergency would be, would be instantly drawn out in court. But the Trump Administration just yesterday released the final regulation on reforming all of the NEPA on amending all the NEPA regulations comprehensively. The first time since they were issued in 1978 and putting hard two year time limits on a lot of these process. So, like I said, the regulation was released yesterday. It should be officially printed in the Federal Register in the next couple of days and take effect 60 days after that, I'm sure the environmentalist are gonna Sue, but that was the combination of, of the entire Trump Administration NEPA regulatory agenda for last four years as it came about yesterday. So I'm not sure how much they're going to be able to do in in addition to that, between now and the end of the year.
Joe Bates:
All right, let's go ahead and move on to the topic of the private funding private projects, you know, this is sort of a whole other animal here what's going to happen with you know, apartment building, home, building a high rise construction. Are we going to see a credit crunch? And, you know, I saw a piece of information this morning. It said home builder sentiment is back to pre coronavirus levels, which really surprised me. So, David, what do you think is going to happen here in the private sector?
David Zipper:
I, well, people still need places to live. I'm not sure how much they're going to need places to, to work in the same way as we did before. So you know, I think I would look for resurgence coming from the residential side faster than I would expect to see it on the, the office development side, particularly in the dense cities like we're where I'm based in Washington, DC, where I've already heard murmurings about possible conversions from corporate into into residential. I think that's going to take some time to play out, but I would have every expectation that residential would come back before commercial. And then there is the next question of where is it going to be in a central city? Is it going to be in the suburban, is it going to be, is this the big moment for some of the like second tier cities like Denver and Boise and salt Lake city to suddenly suck some of the talent away from the big, expensive coastal megalopolises? I tend to be a little skeptical of that for a variety of reasons. But I will note just to say that there is something happening that the rents in San Francisco year over year are down over 12%, which is higher than any other market.
David Zipper :
So that does suggest at least that by the way, San Francisco has the highest rent in the whole country. So it does suggest there is some movement now, at least temporarily of people who can move and go live with family, or just relocate for a while that they are I think, and this is, I think it's a bit of a shaky time for, for a market like the Bay area. But you know, I always, my attitude is always, it's, it's easy to overestimate the duration and extent of a change when you're in the middle of it. So I wouldn't quite if I had the chance, I wouldn't sell off all my my buildings in Manhattan just yet, let's put it that way.
New Speaker:
And Anirban, what are we looking at in terms of a credit crunch? Are we, do we have anything to worry about there is the Fed providing sufficient liquidity in the markets and are the private projects going to have problems getting funded?
Anirban Basu:
Oh, I think the credit crunch has already begun. Third reserve can create as much money supplies at once. It can't force banks to lend, and there's nothing bankers like less than defaults and delinquencies, they hate it and ends careers and it destroys the quarterly financials. So yeah, it's already begun. And, you know, with respect to, you know, some of the comments David was making very good comments. I think this is the decade of the suburbs. The previous decade was the decade of the cities. Millennials turn into their twenties and large numbers, often renting very expensive apartments, driving density, but, and, and this was going to be the decade of the suburbs, even without COVID-19, but COVID-19 makes it even more so, so owner occupied part of the residential market is flying high - homes are flying off the shelves. Condos are selling freely in all markets, even in Connecticut.
Anirban Basu:
But I'd say that multifamily market will be much more challenging going forward. You're going to see a real surge in vacancy rates in multifamily America going forward. And of course, that's going to further perpetuate that credit crunch and then commercial real estate forget about it. It's already in crisis and will be in crisis for many years to come. Because again, of all those empty office suites, abandoned storefronts, shuttered restaurants on and so forth. So the suburbs will fare better than the cities, but commercial real estate generally will be in quite bad shape.
Joe Bates:
Rosemarie. Do you have any thoughts on this topic?
Rosemarie Andolino:
Well, again, living in an urban environment in Chicago, I would agree that you're starting to see, you know somebody joked about people moving to Florida, right? There's the, there's been a huge influx of people relocating. And I think you're seeing that from a lot of major cities. I mean, people whether it was the, you know, the COVID that hit New York and Chicago and other locations and people then relocating to what they thought were communities that were less exposed or had things under control, which has now basically inverted, right? So now those communities are challenged, but you've got distance, you've got, you know, more against, you're not as crunched in together, right? As in an urban environment, you have some more freedom. So to actually, you know, be outside and have space away from people. So I think there there's definitely that exodus happening and you know, with the change of offices and you know, some of the leading technology companies, right, that are out there are saying, don't come back. You know, we don't need you to come back to the office for a, you know, let's revisit it in a year or two years. So if that's where most of the key employment was, and if they can all work from home, you know, will they be buying them a nicer, more expensive home and spending their money there. If they're not moving around the country as much, either in travel.
David Zipper:
If I could, it was an interesting thing that just happened. I think it was today, if not today, yesterday, Airbnb, which I think is a really interesting company in the midst of all this, just announced that they're going to go, they're back to doing an IPO. And what's interesting is they got hammered hard. They had to raise a down round of capital because when the coronavirus hit people did the whole, like one night or two night business just disappeared. But now they've created this whole new market and the CEO, Brian, Brian Chesky talks about this of month to two month rentals, where people are going into a cabin here, there would have you. And it's true that some of the largest employers in the country, some of the tech companies in particular said, we're not going to require people to be back throughout 2020. It opens the door. And then Airbnb has really fast recovery with this creation of a new longterm rental market, which by the way, is driven not by urban locations. Does lead to me to the question. I think anyone who goes beyond asking the question is saying, they know more than they really do of whether some of these, some people are going to decide, you know, what, for the foreseeable future, I really don't need to live in a central city with my family anymore. How that plays out. I don't know, but it's interesting to watch
Rosemarie Andolino:
Well, and if I can add to that, I think what the additional factors is going to be in the next few weeks, it's really going to show its head is if people, if school districts are not going to require kids to actually go to school, then parents can relocate anywhere and spend the next three months, six months, as you said, in different cities or different communities. You know, cause they can learn from anywhere they can work from anywhere and the children can learn from anywhere. So that's, I think is going to be a key factor coming up that hasn't actually shown itself yet.
Speaker 5:
Kevin, do we have any questions on the private sector side of things?
Kevin McMahon:
Yeah, there's there's one, one one quick comment that one of our Connecticut participants, Anirban, really liked your comment about wow, when people are moving to Connecticut, it's shocking. So you got some air airtime on that, but Joe, the question is about some private, some public ports in inland waterways. Is that really just dependent on the economy and freight movement? Or what does the panel think about that space?
Joe Bates:
Who'd like to take that one.
Rosemarie Andolino:
I think the cruise ship cruise industry in terms of passenger cruises is challenged right now. So I think in terms of ports, for the purpose of the hospitality industry, the travel industry, that's a longer term recovery than even aviation. You know, so you're looking more from, you know, four to seven years. It's just, how are they going to deal with those issues?
Jeff Davis:
The the, the big trillion dollar infrastructure bill, the House passed last on July 2nd, didn't really deal with ports and inland waterways and harbors that much because the bill that passed the house was a Democratic only messaging exercise. And they were very close to a bipartisan two year reauthorization bill for those programs that passed committee in the House yesterday, it's past committee in the Senate the month ago. And it's one of the few things that actually make an inaccurate law on its own before the end of the year. And in addition to authorizing a few new, large projects. They're also trying desperately. They found that they finally found a budget gimmick in the House. That'll work to unlock that nine and a half billion dollars. That's been collected over 30 years in the Harbor Maintenance Trust Fund and not spent. So that may get an act of the law this year, finally separate from any other infrastructure package which would really open the flood Gates on a lot of much needed harbor dredging capacity improvements, et cetera.
Joe Bates:
We only have a few minutes left here. So I'd like to ask each of you to peer into your crystal ball. This is my final question, which I like asking on these, these round tables. And the question is, I'm going to start with you on a bond. One is a two part question one, and you've, you've gotten into this a little already, but how long will this recovery take for us to reach levels that were pre COVID and not only how long will it take, but what's, what are the, what's the critical thing that has to happen for the recovery to proceed?
Anirban Basu:
Oh, it'll take years to fully recover from this. I mean, I think the initial period of recovery has been sharp will be sharp going forward, even with some of these reopenings being postponed and some of them even being re reversed, but but it's going to take years. I mean, if I asked you the question, you know, back to you, how long did it take us to get to a 50 year low in unemployment? It took us 50 years. I mean, the economy was really shockingly good coming into this pre-crisis period. And we entered, as I say, 2020 with so much momentum. It's going to take a long time to put that back together again. And we in America, what's it going to take to really get back bipartisanship, right? The radical center re-emerging so we can work together so that something like a tip O'Neill and Ron Reagan on a Friday afternoon, going to a Georgetown pub to talk policy that could happen again in this country. And that's, what's going to take, cause we have unskilled immigration policy. We have unsettled infrastructure policy. We have global trade fragmenting and uncertain trade policy. And by the way, that relates to the port's outlook, as well as it turns out you put all that together. That's what we're going to need bipartisanship.
Joe Bates:
Okay. Rosemarie, what about you? How long will this recovery take? And what's the critical piece to proceeding?
Rosemarie Andolino:
I believe right now, I think it seemed when this whole hit, I should say we were at like the 19 North, the 1954 levels of, you know, in terms of aviation and travel. You know, after 9/11 we saw a 30% decline in travel, but it was one region right? Here, this is global. And in April we saw an 80% decline. And what really was moving was those that had to move, you know, whether it was medical professionals, meaning to move locations. You're seeing that come back with some leisure travel, but I think again, the business community is going to be key because that is the higher spend that the airlines and others need. And that is really the bigger indicator. I think you're looking at, I mean, 2022 really before you'll see kind of the comeback here, because I think we're at least a year out from a vaccine, because again, we talked about that that's going to be key for people to feel comfortable and safe. The one thing we have in the United States is short haul traffic and domestic traffic, right?
Rosemarie Andolino:
So you can travel essentially within the 50 States with less restrictions. So I think people, whether they travel by car, but by air they'll feel comfortable getting on the flight for an hour with their masks and, you know, better cleanliness the activities that have occurred on aircraft now. So you're going to continue to see that consolidation, I think will happen fairs for probably then, you know, start going up in that regard. But international traffic, we're still looking at probably 2024 before that really comes back. So, you know, it's gonna, it's gonna be a while. Ideally, you know, the industry itself there are things that need to be done right, to make travel better for everyone, whether it be the passenger, the airlines, or the airports, whether it's funding. We talked about NEPA and, you know, constructability of programs, et cetera, and implementation.
Rosemarie Andolino:
So I would hope that during this time Congress can take them and the leadership can come together from the different organizations to actually solve those solutions so that when traffic does come back, when we are earnestly building, you know, new programs, bigger projects, you know, building the terminals of the future for our airports that have not had those investments in many, many years, that we're able to do those with great technology with simplified processes and proper funding so that they can continue to be the economic engines that they have been for communities across the country.
Joe Bates:
Great. David, you next and we'll close it out with Jeff.
David Zipper:
Sure. I find this question. It would be a lot easier for me to answer if we were talking about Canada or about Holland, because there, you're talking about basically like the, the V I think, which is like, you basically have the virus come, you, you provide some, put some cash in people's pockets to make the economy be, be put it in a coma basically. And then you come back out and if we're talking about those countries, you can see that already at this point was made earlier that auto traffic is back up and it's already higher than the peak rush hour to auto traffic is higher than it was before t he virus in places like Longxeuver in China and, and Shengen. But we, we frankly blew our chance to do that in this country.
David Zipper:
And you know, and I actually worry about how bad I think things could actually get much worse in the next few months, as people start losing their homes, being foreclosed on as unemployment benefits run out. I don't think we realized that we are on the precipice of things, getting a lot worse with a lot of people in the middle class or lower middle class being unable to just survive and who knows what that's going to do. It, that that actually leads to political questions that go far beyond you know, the demand for certain types of engineering services. But I will say that it's going to take a long time before we're going to be, we need a vaccine. And even with the vaccine, I think it's going to take a long time in the United States to see a rebound in, in, in critical parts of the economy, especially for engineers, such as office construction. We're a long way away from that. I think we're a long way away from it with regards to to urban transportation. And to be honest, like, like the most important things to do now in my view is to be honest, to call your elected representatives and tell them we absolutely need more stimulus money in people's pockets. Now that's my personal view.
Joe Bates:
Great. Thanks, David. And Jeff, what about you? And then after your comments, Jeff, we're going to go to Daphne to close us out here.
Jeff Davis:
In terms of additional federal dollars for new infrastructure you know, new projects, new structures, new routes. I don't expect any action on that this year because Democrats, particularly in the House and Republicans are a light they're light years apart on the relative priorities, they believe should be given to highways versus transit and mass transit and Amtrak, the whole rural, urban divide. And every day, that gets closer to the election with the polls, where they are Democrats saying, why would I bother negotiating issues that fundamental with Republican Senate and Republican president when there's a 50, 50-ish or plus chance that starting in January, they could hope that Democrats get the trifecta and write a bill. They really want, instead of locking a compromise priorities in for five or six years next year is what it's all gonna be about. You know, the extensive infrastructure to be one of many priorities. In addition to coronavirus, it's all going to get wrapped up in the fact that starting August 1st of next year, the debt sexual debt limit will reset. And they'll start taking emergency measures.
Jeff Davis:
We've already added four point 6 trillion, I think since the last reset August 1st, just a year ago. So this will be by far the largest debt limit increase in the history of the country. And so September, October, next year, treasury, won't be able to move money around and traditionally many of your major turning points in federal fiscal policy in the last 30 years, Graham Rudman the 1999, three budget deals, budget control act HARP, Fannie Freddie bailout, last year budget deals. They all revolve around debt debt, ceiling crisis of trying to find ways to get the votes, to raise the debt limit and all the fiscal policy for that year wound up getting wrapped up in it. So I expect that to be the centerpiece of next year, around September, October, 2021, that will set the stage for fiscal policy for the next five to 10 years.
Joe Bates:
Got it. Yeah. Well, let's, let's all keep our fingers crossed that we have a vaccine by then. So at least we can take that out of the equation. Thank you all to the panelists for joining us and Daphne, why don't you go ahead and close this out.
Daphne Bryant:
Great. Thank you. Thank you all for joining us today. Thank you to our panelists and our donors for making this session possible. We have a short evaluation that we'll send you this afternoon. So please share your experience with us. Thank you all. Have a great afternoon and please stay safe. Thank you.

Managing Risk When Returning to the Jobsite with Lockton's Karen Erger

 
Engineering Influence sat down with Karen Erger, the Director of Practice Risk Management at Lockton Companies, the world's largest privately held insurance brokerage firm to discuss managing risk when returning to the jobsite during COVID-19.
 
Host:
Welcome to ACEC's Engineering Influence podcast brought to you by the ACEC Life Health Trust - www.aceclifehealthtrust.com. I'm pleased today to be joined by Karen Erger. She is the Director of Practice Risk Management at Lockton Companies, the world's largest privately held insurance brokerage firm. And today we're going to be talking about all things risk management, especially in the age of COVID-19 and what engineering firm leaders need to think about when returning to the office, not just the office, but the job site and dealing with clients, with paused work, and contracts and all these things that six months ago, we didn't have to think about. And now we are living in a time of complete and utter economic shutdown that starting to restart, and that's posing a lot of, a lot of questions. So Karen, thank you for coming on the show, number one, and number two, tell us a little bit about what you do at Lockton and how you would approach this massive issue.
Karen Erger:
Thanks, Jeff. It's a pleasure to be with you today. Appreciate being on the program. So my job at Lockton is providing education risk management, education, resources, to Lockton's clients, and specifically our group of clients are architects and engineers. I have the privilege of working with about 40 professionals at Lockton whose sole focus is architects and engineers all sit on the eighth floor of a building in Kansas city. And so my job is to prepare risk management, education, resources, and programs and advice for our clients, but also for my internal clients, for the people who serve our architecture and engineering clients. My background is being an attorney representing architects and engineers in malpractice suits. So I'm a good, witch not, not a bad witch. And so I did that and for all the rest of my career, I've been a broker pretty much exclusively working with architects, engineers, and contractors.
Host:
So you know, the industry, you know the ins and outs and the challenges that firms have to deal with on a regular basis. But of course the COVID-19 is anything but regular. Have you ever really approached something... I mean, have you ever dealt with something of this magnitude because it's just been so widespread and also just from your position both as a broker and as an attorney, how do you get your arms around this whole issue? And, and, and the fact that there has been such a disruption and that firms are not only dealing with questions about keeping their businesses afloat at any given time, but then also dealing with reopening the offices, how you doing with employees, but then also with their clients. And then a lot of what we're going to be talking about today is on the client side, which is getting back to that worksite, getting back to that paused work in a changed environment and world after this pandemic or, you know, as it still happens, like, how do you get your arms around this whole subject?
Karen Erger:
Well, Jeff tough and unprecedented times, for sure. And you're right, that firms have really, they have to fight this battle if you want to call it that on so many fronts dealing with what's going to happen internally with employees and how they will work and externally with clients on projects and how we handle those, how we get those started, how we manage them at cetera. My specific focus is on practice risk management. So the thing that I'm usually looking at is how can engineers and architects run their practice so that they no other way to say it, get in less trouble and are able to have better relationships with clients, which is kind of the foundation of having fewer problems and also do better projects. So one of the things I've noticed is though this is a very unprecedented time as you point out, I'm always amazed in the 30 years I've been doing this, how we're usually going back to the toolbox of risk management and deploying some of the same tools, despite the fact that this is a very difficult and unique situation.
Karen Erger:
So communication and documentation. I mean, I I can just, I can feel your audience groaning. Like here comes the lawyer talking about communication and documentation again, but it's really one of the things that I think is going to be critical in restarting projects and dealing with clients and probably on the home front too, although that's not my specific focus in what I do. So I think whenever there's a situation like this, whenever there's some big moving event, we're, we're, we're all pulling together to try and make things better. I think it's very tempting to skip and skimp on communication and documentation because we just want to get the project moving. We're all in this together. And we all, we're all people who are of good intent and we all understand each other, which can be absolutely true. Even people of good intent though, can misunderstand each others actions after the fact.
Karen Erger:
And that's why it's so important to communicate with clients about, okay, so COVID-19 presents certain problems to us, whether that be in actually accomplishing the project or doing site visits. Now that now that our ability to do that can be compromised by the need to follow safety procedures by the fact that people are at home by the fact that people can take mass travel communication with clients about those issues is key. It's always tempting to assume that we know what's in the other, other fellow or gal's head, but we need to have those conversations and we need to document those conversations. We need to give our clients the information that they need to make good decisions. So the pros and cons of for example, here's how we're going to do site visits. And here's, here are the ways we can do it. And here are the pros and cons of those agree on that. And then commemorate that in writing, whether it's, you know, just, just a piece of paper, but ideally an amendment to the contract, if that is what is needed here. So that later we all understand what's going on, but also forget about the covering your butt aspect of this for a minute also, so that we're sure that we're on the same page. There's something about writing things down that can be very helpful and no, no, no, that's not what I meant or I didn't hear you when you said that. That's not what I wanted here.
Host:
Yeah. So that's a really good point. I mean, for firms that a lot of this is kind of hindsight because it's hard to really, you can't go back in time and start that communication process now because we're so late into the process, but looking ahead, God willing for the next shoe to drop the next big challenge. It's a good point that starting that communication early are there any recommended processes or, or best practices in that communication that firms should really adopt in, let's say future contracts with clients. Is there any addendum, is there any language or instruments that affirm a general counsel should say, okay, we're going to add this now into our, you know, our contracts moving forward because the situation that we find ourselves in?
Karen Erger:
Yeah. Well, that's, that's a great question. And I love that you've struck on contracts. That's a good way to get a lawyer wound up and talking. So thank you for that, Jeff. Yeah, let's, let's talk about contracts going forward. And actually this is also a contracts looking backwards because one of the things that I recommend to our clients is that this is the time to pull out the contracts for your existing project and see where you stand with respect to your rights and duties to the client. So some of the things that I would expect people to be more thoughtful about now that we've, we've had this very momentous experience of COVID-19 are things like understanding what your rights are when the project is suspended by the client, which of course, lots of them are. Do you have the right to additional compensation and additional time?
Karen Erger:
Does the contract spell that out? So we know that the AIA and the EJDC documents do that. They're very clear about this, but we also know that not all documents are AIA and EJCDC, and lots of times our engineer and architect clients are not in a position where they can dictate what the contract form will be. So what I would expect, or what I would hope for is that firms will start to think about what are our non-negotiables here, what is very important and what have we learned from COVID-19 that needs to be incorporated in our contracts going forward. You mentioned kind of what, what can we do now that we've, we've had this experience. Another thing that there's going to be a lot of focus on, I think is what are what are, what is the damages delay situation? If there's, if there's a delay that is beyond our reasonable control, do we have responsibility for that?
Karen Erger:
Or does the contract expressly say that we do not? So I've heard a lot of talk about, perhaps we need a, force majeure or clause, which is just law, French for superior force, and contractors typically have them in their contracts, but often design professionals do not. I've seen some insurance carriers proposed different, different different provisions that actually talk about a pandemic virus that might be wise. There's also language in the AIA and EJDC, excusing delays, if they are, I think AIA is due to reasonable cause and EJDC is delays through through no fault of the engineer. So we'll want to look at things like that. And finally, one last thing. So that's two, the third would be additional services. So what does the contract say about your ability to claim additional services? Because as I'm sure we're going to discuss today, some of what's happening here is going to, I think really mandate looking back at the project and perhaps making some changes in it.
Karen Erger:
Can we be compensated for those changes? And that's something that additional services will be valuable for. And I guess this is a sub point. I said, there were only going to be three. So this is a sub point to that one. Being very aware of what the notice requirements of your contract are. If the contract says you've got to get five days, notice to the client or confer with the client before providing additional services, know that and do it contracts, aren't just something to be sitting in a dusty drawer someplace. They can really help you, but only if you know what they say and you're aware of where you stand contractually.
Host:
And that's a really good point. And the thing that popped in my mind was I guess, two questions. The first is that that nature of force majeure not really being part of design contracts, is that, why is that, is that more of a, the perspective from the design side of things saying that, well, you know, our work is kind of controlled. We don't we don't need that force majeure in there because when are we going to actually have to exercise it? Has it been just a kind of a generational thing where, you know as contracts with developed over time and as the legal cannon developed over time that it's just been left out because it's not like, wow, you know, it's design work. We're not, we're not on the site. We don't have to worry about that. And, and, and is that a perception that needs to change now that everybody's kind of been tossed into the whole situation together? No matter what you're doing, if you're at home working on, on a computer or, you know, in an office, you know, doing the work?
Karen Erger:
Oh, that's a, that's a good question on a really timely one. I just want to make it clear just because something isn't labeled force meajeure doesn't that it doesn't accomplish that intent, that language that I mentioned in AIA and EJDC which is that delay beyond your reasonable control is something that you won't be penalized for that really is force majeure it. So just kind of practice pointer pro tip. When you're looking at your contract, don't just look for force majeure, look at something like time for performance, because that's where I would expect to see those, those provisions you asked about how did we get here? Why is that the contractors typically have force majeure clauses, and we don't have such expansive and explicit provisions in our contract as design professionals. I think part of the reason that something that you touched on, which is we don't go to the site, we're not affected by kind of the physical forces of it's raining, and we can't make concrete in the rain. We work at our desks. And so
Karen Erger:
Maybe there's less emphasis on what will we do if it's raining or what will we do if there's wildfires nearby and we can't go to the site. And to a certain extent, it's still true that we can work from our desks, that we are a little less impacted by it than we think we are. But, you know, this is a bigger question than this podcast probably admits of, but I think one of the things that's going to be terribly interesting is it seems like people are able to be productive from afar. It seems like remote work and work from home is, is working. That people are being productive and, and whatever like that. So two things, one, can we do this forever? Is there going to be a point where we're kind of grant kind of grind our gears? Cause we can't all sit around a table looking at things and shoving stuff around and, and I guess too, are we really being productive at home? I think so. I hope so. But kind of the proof of the pudding, isn't going to be evident for a little while.
Host:
A little while. Yeah. and the only followup to that is kind of the position between prime and sub. So if you are, you know, if you're a prime, if you're a prime on the contract you know, I can imagine that you're, you're maybe more inclined to have that language in there or, or to consider what do we, what maneuverability do we have should something happened like this disruption, if you're, if you're a subcontractor you're, I would imagine your hands are a little bit more tied or, or is it something where if you're a subcontractor coming into, to a project and you're going to be, you know signing on the line to start that work, is it, should that perspective change, should you be more aggressive in creating room to maneuver in that contract?
Karen Erger:
Right. So the sub-consultant is usually stuck with whatever the prime negotiates be that for good or ill, or at least I guess from a risk manager standpoint, I kind of hope so we're, we're always preaching to the prime to flow down what you've taken on and not, not give better than, than you got. So if you've taken on some higher than normal standard of care that isn't perhaps entirely insurable, unfortunately you've kind of got to share that with the sub consultant and that is kind of the sub consultants burden, but I think it's important that sub-consultants be aware of what is being flowed down to them so that they're aware of their contractual obligations, I guess, ideally I do know of primes and subs who work together time and again, and who have a course of dealing with each other, joining forces and negotiating or talking in advance about what we're going to negotiate would be a wise move here. And, and let me let me just speak from the about the sub-consultant issue for a second, because one of the things that, and this is not just pandemic related, one of the things that always concerns us about our clients big and small is sub-consultant risk. So when a prime takes on when a prime seed's part of the scope to a sub,
Karen Erger:
The prime is still stuck with the liability for that. And they know that I know they know that, but the sub really holds some of their liability wellbeing in their hands. So two things that are always important that are never going to go away and maybe are more important now are choosing subs who are well qualified and that's not just the firm is well qualified, but the team is well qualified and also making sure that the subs have good and sufficient insurance. I'm not saying that insurance is the solution to everything, and that should not be the risk management plan, but making sure that the subs are adequately insured is, is terribly important because as the prime, you don't want to be holding the bag for the, for the whole thing, if there is a problem.
Host:
Yeah. That's probably more important now than ever to really look at who you're doing business with.
Karen Erger:
Absolutely. And if I can just expand on that, I've seen it happen where, you know, let's say our firm is in Kansas city and there's a sub locally that they really like, and they work together all the time. Well, now they have a job in Portland and fortunately the sub has an office in Portland, but a]is the office in Portland, the A team, like the Kansas city sub, or is it the Z team that we don't really want to be working with and qualifying your team is important too.
Host:
Let's, let's talk about that additive design work that we kind of talked about a little bit earlier, because one of the things that is a hallmark of, of our industry is that, you know, engineers should be trusted advisors to their clients, which means they should be able to provide solutions. They should not just do the work, but identify challenges, potential solutions to improve the project, to be that expert, to get the best result from the design through the construction, really from start to finish. And in this world that we're living in now know, we, you know, we had a recent round table with our Research Institute, which is kind of an adjunct to ACEC. And one of the things that was brought up during a panel discussion on the buildings that we live in work in, and what they're going to look like after COVID are really the challenges of designing buildings that have now different humidification systems, different air flow systems, air exchanges, what's the code now?
Host:
Well, should we do more than code? You know, all these challenges, you know, that are now there, if you have a project that you're working on either, you know, and as a design stage right now, and you're looking at it and saying, you know what, this isn't going to work the way that the offices have are set up in this design, the way that the mechanical, the, all that stuff is, is, is, is placed right now that, that, that works six months ago. But now not, you know, not now so much, you know, how, how should engineering firms approach these issues and, and, you know, how could, how should they broach that with the clients to say that, you know, the project was great when we started, but we have to look at what we now need to do to make this a workable solution.
Karen Erger:
Yeah, Jeff, this is this is in a way this isn't a new problem. This kind of goes back to what I was saying before, because even pre COVID-19 that we had periods where the economy was slow and clients mothballed a project, maybe mid design, and then when they want to get going on it again, the design firm really needs to take a hard look at everything that's been designed in light of what the circumstances are now. And those are things like scope, schedule, and budget, but also have laws and code change. What about the owner's objectives? And the design criteria are those different? Do we still have the people necessary to, to do this project? What about our sub-consultants, et cetera, et cetera, going to a client and saying, we need to spend time doing that may not be met with, you know, clapping of hands.
Karen Erger:
They feel like they've paid for this design and they should be, they should be done. We should just be able to re animate this thing, but that's not, that's not the way that design works. And I guess my hope is that in the face of covert, it's going to be really plain that no, we cannot just pick up. And especially with the, with the built environment, sort of things that you're talking about, things like, like an office structure, I'm thinking that to a sophisticated owner, it's going to be pretty clear that no, we need, we need to rethink a lot of things here. And maybe fortunately there is, there's no way somebody could have anticipated that this would happen. Right. I think that's the one thing that we all I hope agree on is that there's no design professional out there who, who last July could have been, like there could be a pandemic.
Karen Erger:
So we're going to have to put the workstation six feet apart. And in fact, no owner would wear that, right? Because they, they want to have those people closer together. Cause real estate is expensive. So when projects restart a lot of these factors that I was talking about before are going to have special relevance. And you touched on this one, the initiatives to try and control viral, spread through HVAC design in a, in a way it's a pretty exciting time to be mechanical engineer, because that does seem like it's going to be an important part of the solution set to a lot of these problems. I was just re a design firm, just released a very interesting paper about indoor relative humidity. And it turns out that having indoor relative humidity of 40% does a lot to control viral spread. It can substantially suppressed, all means of COVID-19 spread.
Karen Erger:
But most most buildings in cold climates or mixed climates have a relative humidity that's 20% or lower, but you can't just stuff humidifiers in there. I mean, I'm a lawyer. That's what I would do like, Oh, Hey, let's get a humidifier and stuff it right in the room. And then that will fix everything up, except that's going to impair other systems, walls, ceilings, floors those will buckle. Those will have problems and it will create other health problems too, like mold. So that's where that's where design professionals and their special knowledge come in. This is a problem that they can solve. I mean, nobody would wish this problem on anyone, but it's, it's a great time to be a mechanical engineer. This really is an opportunity to do something significantly important.
Host:
Yeah. That's where it comes to like the challenge and opportunity. It's it's, you know, the one thing that was the takeaway from a lot of the the engineers and experts on the panel was it's actually a great time because we have the ability to improve on designs, offer new solutions, create new areas of focus and business that we didn't have before. And now, you know, we can start talking about these other issues and, and expand our, you know, it's an opportunity for expansion and, and, and really not just expansion of existing businesses, but, you know, new disciplines to come out. So it, it, you know, it's, it's the double edged sword it's having to go back and saying, okay, well, you know, and you're right. The client on the client side should have that interest of saying, well, at the end of the day, does your end consumer I E the person who's going to be signing the lease for an office building, or for, for, for a couple of floors, do they want to sign a lease for an office that isn't going to be the best for their employees?
Host:
And, you know, so hopefully it is that give and take and understanding that the end result has to be beneficial for everyone. But it's going to be interesting to see how this does impact, especially the private vertical market because, you know, a road is a road you're not really going to be changing anything related to, to do the pandemic when it comes to, you know, surface infrastructure or a bridge or a rail line, but yeah. And the development of a train car and the development of of the office building that will change. Well, let's talk about the job site itself and getting employees back onto that job site. Cause you can do as much as you can to make sure that the office environment is a security bubble and that you're doing everything you should to minimize the spread of COVID within the office environment. But the minute an employee leaves the office and goes to a job site they're out of that security bubble. And how does affirm do the most it can to protect their employees? Because then they're interacting with contractors, with the builders, with a number of other people in other companies that probably all have different levels of response, right? Risk nightmare.
Karen Erger:
Yeah. Well, you know, when, whenever, whenever we're interacting with other people who are partially responsible for the outcome, that can be tricky not to fall back on my good friends communication and documentation, but I think that's where this begins is thinking about, okay, so now that we are facing this pandemic, what, what are our challenges going to be as far as doing what we need to do on site and having that discussion with the owner, having that discussion with the contractor, again, going through here, here's our plan, given what we know from the CDC and other credible sources about how we might be able to do this, talk about the pros and cons and document what that go forward plan is including contract amendments. If that's, if, if our, our scope is changing, which it may be, and then, you know, you, you touched on the contractor's control and that's, this is tricky because the contractor does, should have plenary control over job site safety and the design professional doesn't want to be in a situation where they're starting to call the shots on job site safety. On the other hand, we need to keep our employees safe when they go to the job site and you, ACEC, have put together a lovely new resource guide to returning to the office and the job site that is incredibly detailed and even includes a checklist, which when I site checklist, I see my clients smile. Cause they like those. I think that will be very useful.
Host:
Yeah. That's new ACEC, New York Jay Simson. I'll give him a shout out for putting that together, but it's nice. But yeah, that, that, and Charles, our GC was very, very engaged in getting this thing together. And as you know him, you know, his work, he's very detail oriented I tuned in. But yeah, that's, that's a really good point because one of the things that we always talk about is duty of care and, and that, you know, engineering, shouldn't broach that line into, you know, extending beyond it's core responsibility for the design, because at the end of the day, the, the construction firm should have that responsibility of, of actually producing the design to specification.
Karen Erger:
So, so you I won't read the entire guide to cause cause people listening to this podcast can go find it, but just touch on a couple high level things just to think about obviously things I would think about are don't don't force employees to go to the job site, obviously sick people shouldn't go, but no one should be forced to go. If they're, if they're not comfortable doing this, do the education that you need to do so that they understand social distancing and other COVID-19 safety guidelines, give them the PPE that they need to be safe on the job site. And I think this is terribly important to empower them to suspend site visits. If when they get there, the situation is not per the COVID-19 plan, or if other concerns exist, they should stay that they're leaving the site state. The reason document that in the email to the project manager and perhaps the client.
Karen Erger:
Yeah. Nobody should feel forced to do that. And I think it's important to impress that on staff who go to the site because some of them tend to be less experienced staff. They might feel like they have to do it no matter what, it's their job, take one for the team. No, this is about their safety what's best for the firm is that all of their employees, their most precious resources stay safe. And that really needs to be impressed upon them because they want to do their job. They want to do the right thing, but it's important that they know that that's an important part of it. If it's not safe, it's okay to leave.
Host:
Yeah. And of course, I think I should be imparted at the top down. Right. So the project manager, even, even, you know, leadership at the firm, you know, has to be, yeah, that has to be a kind of a charge given from the top so that the people at the bottom know that they have air cover to make that decision when they have it. And they're empowered to make that choice.
Karen Erger:
Yeah. You mentioned something earlier. If I can, if I can tell them to this kind of, you didn't, you didn't say stay in your lane, but, but that was kind of what you were saying about, about the contractor is don't, don't mess around in job site safety, do what your, what you're skilled at doing, stay within your skillset. And just going back to what we were talking about about design. I think it's important that design professionals do that too, because there may be aspects of this that are not within a particular design professionals, competence, maybe they will need to retain or recommend that the owner rate retain, for example, an industrial hygienist or whatever like that. It's important to know where your competence stops and were additional help is needed. And I say that mostly because after working with A/E's for 30 years, they want to help the client. And it's important not to let that, that really wonderful desire lead you into taking responsibility for things that you don't have within your professional competence.
Host:
That's a really good point because you don't want to overextend yourself and again, expose yourself to risk.
Karen Erger:
Exactly.
Host:
And the positive on that, it provides the opportunity for firms to enter into strategic partnerships with other disciplines that they otherwise wouldn't do work with. So instead of coming up with an answer on the fly, find somebody who's good at what that, you know, industrial hygiene or something else and, and bring them into the fold.
Karen Erger:
I definitely see evidence of that happening and would also remind folks that insurance is still important. If a contract is going to flow through us, it's that's time to talk to your broker about, will we be covered for this? If we are sued on a primary basis, is something better to be assigned to the owner and also what insurance does their sub-consultant have. In fact, it might even be important to ask what insurance could our sub-consultant ask. Since we're not talking about the kinds of disciplines that we're used to engaging with this, isn't a matter of a structural engineer, engaging someone else to do a report that they would normally do. This is something a little different and a great time to call on your broker for help.
Host:
Yeah. I really appreciate you bringing up the the guide. That's you can find that up on the ACEC website -the Coronavirus Resource Page right there in the home, on the home site, you'll see a link to it and a guide version one, because things are changing. So we're going to be updating that a lot. And you brought up a good point, I think is a good way to round everything out is, is really kind of figuring out what you may or may not need. And talking to an expert experts such as yourself, where can people find you? If you are in the A/E industry and you're have these questions and you need some, some counsel on some risk management you know, we're, what's the best way of getting in touch with you or, or your colleagues at Lockton?
Karen Erger:
Yup. I will answer, anybody's email that at Kerger@lockton.com. That is definitely the best way to get in touch with me these days now that we all duck unfamiliar calls on our phone because they're afraid someone's trying to sell us a used car warranty, but I'd be happy to hear from anyone. One of the best ways that I learn is through our clients and other architects and engineers questions.
Host:
Well, Karen, I really appreciate you coming on the show. This is where there's a lot to talk about here. And I don't think this is going to be the only conversation we'll have. And you know, as things develop and, and as new information comes out or, or, you know, if there's something that peaks your interest, let us know and we'll have you back on. But for now, we've, we've kind of covered the top line of, of, of kind of risk management in the age of COVID-19. Hopefully it's food for thought for a lot of our member firms and check out the guide that we have, the ACEC Guide to Returning to the Office and the Jobsite. And Karen, you have a great rest of the week happy belated, 4th of July.
Karen Erger:
And it's been a pleasure. I hope I can come back and talk to you again.
Host:
Wonderful. We'll have loved to have you back on. And again, this has been ACEC's Engineering Influence podcast brought to you by the ACEC Life Health Trust. We'll see you next time.

A Conversation with Chris Luebkeman about the Future of Engineering

 
 
Joining the Engineering Influence podcast is Chris Luebkeman, who has been one of the foremost visionary thinkers in the engineering industry over the past couple of decades. He is currently the leader of the strategic foresight hub in the office of the president at ETH Zurich, which is the Swiss Federal Institute of Technology. Prior to ETH, Luebkeman worked at Arup for more than 20 years leading the research and development group. And a couple of weeks ago, he participated in an expert panel hosted by the ACEC Research Institute, looking at the impact of technology on the future of engineering. Chris, thanks so much for joining us.
Luebkeman:
It's great to be here, Gerry. Thank you so much.
ACEC:
At the end of the round table, you closed with the thought that before we look ahead 20 years to where we are going, we should look back 20 years to where we were. And when I look back from today to 2000, it just reinforces my sense of how difficult it is to peer into the future. You've been doing this your entire career. How do you do it and how have you done?
Luebkeman:
I wish I had a perfect crystal ball, which I don't. I wish I had tea leaves, which would give me the future, but I do it nor do I have special smoke, which I could wave around and read the patterns. But what I try to do and I have done with my team is understand what's driving change and where those drivers can lead us.
Luebkeman:
Let me explain what I mean by that. We all feel the changes in our climate, the changes in our demographics, the political changes which we feel. These we consider are the megatrends and these megatrends we could identify for the entire world in some way. The entire world is not getting older, per se. Certain countries are getting younger like Nigeria and Saudi Arabia because of their birth rate. And other countries are getting older like Italy or Japan or Switzerland. And so the demographic change as a megatrend is something we all can recognize. But then we have to kind of start digging into the contextual manifestation of those trends. Climate change, we see this now is a megatrend, how it manifests again is quite different. And so we now see today 38 degrees Celsius in the upper tundra of Sweden, which has never, ever, ever been recorded before and starting to be able to release methane out of the frozen earth. You can start to see some sort of potential for tipping points that could then lead to cascading change.
Luebkeman:
But your question was, how do you look back to look forward? And I like looking back because I think as humans, we have reacted to our context in very different ways. If we go back 20 years to the year 2000, do you think how all of us were freaking out that our computers are going to explode and everything was going to grind to a halt? And it's interesting because this was one vector that could have taken place. And we now looking back, we kind of chuckle and say, yeah that Y2K bug, yeah, that was a funny one. But because of the anticipation, lots of systems were cleaned up. Many firms really took a good look at how their computation was working so that we could prevent this extra digit from being the problem, which we were worried about. And so we were able to take care of that.
Luebkeman:
At any point in time, we have to stand where we are and look forward. To me, this is a possibility that we have as humans. We don't know what whales dream of. We don't know what whales think of in the future. We know they have families. We know they have feelings, that their mothers love their calves just as we love our children. We know that they talk. We still hunt them and kill them, but we know that they have all of the same typologies of emotions, but we don't know how they think about the future. And this is something which we're gifted with.
Luebkeman:
We do this in a very organized way. If we have these megatrends, we can use five different lenses, the lens of society/societal change, the lens of technology/technological change, economic, environmental, and political, the so-called STEEP lenses. And what we try to do when we're thinking about them, we try to consciously say, let's imagine what some of the social changes could be, given what we see as megatrends. Given, let's say a city, a state, a nation getting younger. What does this mean as a society? If you're getting younger, you need more schools. If you're getting older, you need more doctors or more cemeteries. So you can look at that societal trend and say, this is where we could imagine. The same with technology. If we can start to imagine, as we electrify our fleet, that means we reduce engine heat. So the heat Island effect in cities will decrease, which could be a wonderful thing. The noise decreases, the pollution will decrease in the city. So that's electrification as that goes forward, but we need more electricity and so it's interesting to be able to spin out as you start to think of these different directions.
Luebkeman:
And there's always two sides to this. There's the world we want, that we hope for, and the world we might end up having or we might be afraid of. And so I think it's also important when we're thinking about the future to try to imagine both of those in, and I would say, in a non-pejorative way, I can say that I doubt if many of us want to see all of our insects dying, right? This is something that I think we could probably all agree we don't want. Now the root causes of those deaths, be it the changing temperature, be it chemicals that are getting into their ecosystem into their bodies. Those can be discussed, but we could always say so if therefore if we don't want the insects to die, what do we need to be doing. Do we need to be making sure that when we build buildings or as we evolve our cities, that we're creating more habitat for insects because we know of their critical place in our ecosystems? Or we know that just people being in nature for three minutes changes the way their neurology functions, that the brainwaves literally change when a person is in nature for three minutes. So it calms and has a positive effect. So maybe that these habitats could do multiple things.
Luebkeman:
And I know I got way off topic there, but for me, as you look back, it's also important not to look back always with rose-colored glasses and say everything was wonderful. Or everything was terrible. It's to try to be as honest as we can because history is always written by the victors. But trying to look at that time and what was really what was happening then that led to those decisions, that led to that context. So that we can try to have a better idea of the context into which we're walking, so that we can have a better idea of the way we'll be needing to make decisions or the things we'll need to be needing to make decisions about say in 5, 10, 20, 30 years, knowing that the future is fiction. It is a story which we will write, and there are things which we'll get right and things we'll get wrong. But that does not preclude the opportunity, and I would even say the obligation we have as professionals to think about it. We have a duty of care. And that duty of care for me includes thinking about what's coming and acting in that duty of care so that the next generations are inheriting a place that we would be proud of.
ACEC:
Looking at technology in the future. You gave us three words, expansion, acceleration, and consolidation. What did you mean by those?
Luebkeman:
For me, technology is not the end. It's the means. For some people, technology is the end. There are wonderful engineers, geeks, designers, product designers, people for whom tech is all about tech. For me, in our professions, technology, be it a pencil, which is a beautiful piece of technology, or artificial reality goggles, a great piece of technology, these are all means to ends. So what are those ends that we see? One, I think we're going to see an expansion of what we will be able to even model, to calculate, to investigate, to interrogate, to see the expansion of our human capability to judge to see, to explore. And this is where I get super excited, this idea that we cannot just measure heat flow, but we can perhaps begin to visualize the heat flow through a wall or through a window because we've got the way to understand all of the interaction of the material pieces and the parts; or the city and the way humans are moving through a place in space. So it's an expansion of our capabilities.
Luebkeman:
The acceleration is when we look at many of the algorithms, which are being evolved within our world and our professional world, they enable us to query a certain data set in ways that we could only dream of 20 years ago. The speed at which that we can query, query, query, query, test, test, test, test, so we can try 10 different options within a millisecond where when I was learning to be an engineer, a structural engineer 30-something years ago, plus, plus, it would have taken maybe 10 days to check all those options. And now we can do it so much faster. And I think the key here is we've got to make sure that with the acceleration, we're also still thinking critically. And I would even say that critical thinking is an even more important skillset when we can examine and do things so fast. And so we've got to really be careful again, as professionals, that we're helping the next generations understand that just because an analysis looks pretty doesn't mean it actually makes sense. It could be really done fast, but maybe it's just a bunch of junk--garbage in, garbage out.
Luebkeman:
And the last is consolidation. I think the technology, especially the toolsets, which we have--since they're expanding and accelerating our capabilities--will result in a consolidation of core knowledge groups. And if we go back to where many of the professions that are members of ACEC today. When those professions were founded in the 19th century, the 18th century, and even further back, they were founded based on the husbandry--and it was a small h--the curation of a knowledge set that required a long time to practice and to learn almost like a craft. And the rules that it took and experience it took for that one craft sort of built on the medieval guild systems.
Luebkeman:
And if I look today at a lot of these tools and a lot of the knowledge is, I would say, it's smearable in between professions. So when you're doing a finite element analysis, or you're looking at a flow of some kind of something. It could be water. It could be temperature. It could be people. Many of these skills are now able to be applied to different domains. And that, to me, this is a consolidation of sort of knowledge sets and skillsets into I believe new types of consulting groups who are able to fluidly move between domains because they're able to speak each other's language. And this is where, you go back in time, again, there's this protectionism based on language. The engineer talked about a beam and the architect talked about a beam, but they really meant two very different things. Where today, through BIM, the beam is already described with all of its different characteristics and behavior characteristics and relational characteristics. All within one package. It was consolidated into one package as we're able to interrogate in a different way. So those are, that's how I look at those three words.
ACEC:
In reference to what you're just saying, in the roundtable, you promoted the idea of cross-training of new engineering graduates, but you suggested rather than being trained in other sciences, that they perhaps be trained in philosophy or some other softer science. Is this part of what you're talking about?
Luebkeman:
Yes, absolutely. I think one of the things that we're observing more and more is the need for an individual to be not just a super, super T person with their arms super short and long legs, but have a little bit longer arms so they can reach out and understand, have a broader understanding of how to communicate across different domains. And so when you're minoring in say music, or may double major in philosophy or language, you really have to learn a different way of thinking and be open to different ways of thinking, different ways of problem-solving. So you're problem-solving how to write a poem when you're trying to be open for that or art. That's very different than trying to problem solve how you design a rebar cage or a structural system. And I think that will help us with this border crossing, which we really need to solve the complex problems that we're going to need to be solving as a society.
ACEC:
One one of the recurring themes about technology in the roundtable was accessibility. And you, for example, participated in the round table from Zurich, six or seven timezones away. You talked about not having to be at the center to have access to first-class knowledge, and to a degree, we already seem to be there, but where do you see accessibility expanding from here?
Luebkeman:
So I think this is a multifaceted question. One is the individual and what the individual can access, and it's going beyond Google. So we understand how to search and not just search with what Google slams at you, but we will be able to access the best professional knowledge. It could be through ACC. It could be through one of the other organizations, but accessing world-class first-class knowledge that you can then as a professional interpret into your local jurisdiction. One could argue you can do a lot of that today, but I think it's going to get even better with artificial intelligence. It's going to help advise you what you should be looking for. It's like, "Oh, Chris, now we see you're doing something here. You probably should look at this as well." To help me be a better professional.
Luebkeman:
And then it's up to my judgment to say, actually, I don't think that's really going to work here because of this, that, and the other thing. But that's just accessibility that is going to be pushed to me. And then there's the accessibility of a firm to knowledge and to skill sets. I believe we're going to see a rise of much smaller networks, networked professionals, so that if you needed my skillset, you'll be able to access me on an as-needed basis rather than having me full-time employed. So I do believe we're going to see more and more of the gig professional in a way that is able to transcend. And the last one, I'm not so sure about anymore, which is international accessibility. We're seeing sort of a movement globally to the re-nationalization of work. And so the international accessibility, that is a chapter, which we'll have to see what happens. But that's what I mean.
ACEC:
What does the gig professional mean for a firm? How does it change? What will a traditional engineering firm look like?
Luebkeman:
I think it truly will have a pretty profound effect. Because some of the name firms over the past 25 years were able to earn their name--and rightfully so--because they could develop their own software, they had their own R&D groups, they were able to create an internal market for access. Today's professional can access all of those on an as-needed basis. So you no longer need an R&D group behind you to have the same level of expertise. That's different than access to experience. And this is what I think of with some of these firms who want to get a bunch of young whippersnappers who are very facile and very clever with the new tools, but they don't necessarily have the wisdom to understand what's buildable, what's doable in say Georgia, or what's doable in Alaska. That the software might say it's doable, but the wise man or woman will know you can't do it in Alaska, in the six-week building period that you've got. So you have to do it another way. This is what I mean by this kind of this new type of gig access, where you no longer have to carry the overhead, but you're going to have to find the right people to help you out and be the best you can be.
ACEC:
You suggested during the roundtable that every firm should make an effort to learn about new tech, such as digital twins, and I assume other cutting edge technological advances. Why do you think acquiring that knowledge is so critical?
Luebkeman:
I'm a firm believer that in order to be a strong professional group, you need to keep up with what's happening in the profession. You don't have to, but it's just like saying you don't mind being left behind. It's like, "Yeah, I'm not going to bother." Okay, well then I think you'll have a dwindling market share. You'll become irrelevant. And to me, it's about how do you maintain relevance as a consultant? You're only viable if you're relevant and digital twins will be part of a contractual obligation more and more and more often. And more often the utilization of virtual and artificial reality or augmented reality will become more and more part of the daily expectation. In Silicon Valley, one of the largest builders is no longer a developer, but a tech firm and they require every one of their consultants and sub-consultants to be augmented reality ready? Because as the architects, they say, if you could, why would you not want to walk through your new office if you can, and be able to look at the details and talk about how you're going to build something or talk about the light and see the light change. If you could do that, why would you not? It's like saying, "Well, no, actually I do want to use my slide rule because that's what I know best." Slide rules are awesome. I used one too. You kind of had to know the answer before you even use it, but you were limited. You were limited in what you could solve. And so this is to me where this technology is. I'm not saying you have to buy in and you dive deep into it and everything that comes with it, but to least understand the opportunity that each of these new technologies is potentially bringing to you. Have somebody in your team or your group who's responsible for that and who shares at lunch-and=learns, saying, "Hey, this is what, this is what Joe blogs or Susan, or whoever is doing with digital twins in our world." Or have someone come in and give an augmented reality demo. Not to be afraid of it, but to say, okay, it's kind of cool. It might not be what I want to do with my personal practice, but in my team, someone should do it.
ACEC:
For many of us, when we look towards the future and technology, we see artificial intelligence, machine learning, accelerating, accelerating, and accelerating--the Terminator factor. Within that, where is the human engineer, the member of ACEC?
Luebkeman:
I still truly believe in the human at the center. I will continue to believe in that. Maybe I'm stubborn, but I believe that we as humans have in our brain and in our heart, something which is the intuition, which is a passion, which is a mission, which a silicon tool cannot yet imitate or emulate. That at the end of the day, it's my responsibility to make the decisions that I make for my project. And as a professional, we carry that. And I still believe we can understand the small, subtle signs and the small, subtle signals from a client and their needs that an algorithm cannot yet do. And I don't believe that in my lifetime that it'll be able to.
Luebkeman:
I love the fact that we can now do things with these tools, which we could never imagine before. Now that we can examine glare from a facade. Before it was impossible to do, but now an algorithm can help us understand if this is going to be a glary facade before it's built. I think that's great. Or test variations on how a mass transit is going to move through a city, so you have the least clash detection. Or an artificial intelligence goes through and examines a BIM model and flags the 1500 mistakes that the humans made. That's wonderful. So that we can go back and say, "Oh yeah, that's right.". So we're still at the center and I do believe that we will stay there as long as we maintain our creative edge and our passion.
ACEC:
That's a good way to end. So we've been talking with Chris Luebkeman of ETH Zurich. Thanks so much for sharing your thoughts with us,
Luebkeman:
Thank you so much for asking and thanks to ACEC for sponsoring this series.