With the new administration just securing the passage of the latest COVID relief/stimulus package, and with light at the end of the tunnel in terms of the virus overall, front and center on the national agenda is infrastructure for a host of reasons. Covering initiatives that will most likely include transportation, roads and bridges, water/wastewater, renewables/energy transition efforts, power transmission and distribution and thermal/fossil-related decommissioning efforts – these construction and infrastructure projects could and should last for years. Further, at roughly USD 2 billion, these plans and programs, even if ultimately slimmed down, could in fact dwarf all efforts since the WPA enacted under Roosevelt in 1935 and during the bleakest years of the Great Depression.
Changing The Energy Landscape
While the case for the infrastructure re-build across roads, bridges, water, and wastewater shouts for attention, one area that stands out is the clear need to upgrade the aging physical and digital security elements of the U.S./North American grid against natural and man-made disasters. Not only have most, if not all, commercial power providers developed plans to invest heavily in their electric power transmission and distribution networks but, as of now, the administration has jumped in too, and for good reason.
Why The Grid?
The need for infrastructure upgrading in the U.S. and North America is broad and critical across virtually every category. And, as we have seen recently with security breaches and weather-related outages, grid reliability and resilience are critical. So why is this?
- In the U.S. much of the current grid has reached the end of its useful life and is failing to keep up with population and construction trends in developing areas.
- What we just witnessed in Texas was what happens when the hardening/weatherizing of the grid is the can that gets kicked down the road. It is important to also note that this occurred in some of the warmest areas of the continental U.S.
- Making efforts to move power/transmission lines underground would clearly help reduce outages in storm-prone areas.
- As if from the pages of spy and techno-thriller novels, the hardening of both power transmission and the systems that allow for and direct distribution protection against cyber-security threats are critical. Going without power for any real period of time is certainly a clear and present danger.
- With utility scale solar and wind sites being located most often in rural areas, new and/or upgrading transmission lines and substation infrastructure/components will provide a far more efficient way for renewable energy to get to market.
- Through the use of grid reliability management tools in general, enhancing applications that allow for the identification of problems within a segment of the grid proactively, by providing real-time data – a modernized and “smartened” grid can re-route power automatically and thereby decrease outage numbers and the duration of outages overall.
- Furthermore, as this information is captured, operators can monitor, measure, assess, and predict the performance of not only the grid, but also the behavior of both energy providers and buyers.
- Behind the meter, advancing smart metering infrastructure will allow utility companies to implement more efforts to pass savings on to customers and do a better job of capturing usage data overall.
A Renewed War For Talent
As utility companies update their electric transmission and distribution capabilities they will be spending billions of dollars in total. As companies lean into their spend, and given what we still see as tight labor markets overall, those of us in Executive Search will see an intense hunt for talent at all levels across engineering, consulting, and construction firms to compete for and execute on this business. Firms across the T&D “Value Chain” will be requiring staff to plan routes, obtain easements, satisfy regulators, obtain permits, and then finally build, rebuild, harden and/or extend the T&D infrastructure.
The questions these firms all need to be asking themselves are these: Are we truly ready to step up and bid on the onslaught of projects? More importantly, do we really have the executive and project leadership in place to win and profitably manage these projects?
Unlike the renewables generation space, the traditional T&D construction and infrastructure market is mature and stable with highly tenured professionals in place and having worked with, in many instances, one employer. The experienced construction management professional who stayed on to rebuild his or her retirement plan is, in many instances, now retiring and/or looking to dial back on what was traditionally a role needing a “road warrior” mentality. And, this being the case the next question is, do we have the bench needed to succeed these leaders when they retire?
Our contention is – many do not. These firms, regardless of their place in the value chain, run the risk of not performing effectively on existing and yet to be awarded projects for several reasons. Why is this?
Generally, we must recognize that project staffing and manpower planning efforts related to project management, and execution in general, is a numbers game. The goal here is to make sure that human capital is deployed to the greatest extent possible at all times. This means the project and operations leadership talent at the high-performing senior middle management and senior leadership levels “on the bench” is, optimally, lean to begin with. Furthermore, at the same time we are seeing the number, nature, and visibility of pending projects coming on the screen, we are also seeing a “strata” of key leaders eying retirement within firms where many of their emerging leaders are still too green to assume many vital, high profile project leadership roles.
The message is - if a firm is going to be poised to take on the amount of work that will most likely be available, it will need to get in front of this human capital shortage if it is to build out both its leadership team and a bench of professionals with the experience to lead new projects successfully and profitably. We see this as occurring on two fronts.
The first – through a company’s own efforts, securing talent quickly – and most likely in advance of key wins in order to pursue, capture and execute on projects. Not only can these leaders take the lead on wins but optimally, they can serve a role in the continued development and mentoring of younger managers – a talent pipeline for the pipelines, if you will.
The second – having key partners – search firms in place, those able to access the broadest array of talent in the sector with a clear knowledge of the business, their culture, and the sector overall. Those firms who are not too big, or not too small – but those who are just right.
Irrespective of how we see the plan rolling out, and ultimately funded, because it is so long overdue, hopefully this first pass/plan is only the beginning of what will be a series of initiatives. Outside of T&D infrastructure improvements and power generation overall, new attention will no doubt be paid to the development of efforts around water, rail transportation, highway/bridge repair and replacement. The net result here is more projects and therefore, a need for more leaders, resulting in much more hiring pressure.
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