Skanska Construction CEO Says U.S. Infrastructure 'In Crying Need Of Repair'

As millions of Americans travel to their vacation destinations this summer, lawmakers in Washington will continue debating the fate of the Highway Trust Fund.

The fund, essentially a gas tax, is one of the ways the U.S. collects money for infrastructure. Many people, including the president, have noted the nation's crumbling infrastructure and its need for upgrades.

Richard Cavallaro, CEO of the construction company Skanska USA, is one of those people. He speaks with Here & Now's Jeremy Hobson about U.S. infrastructure, as well as the state of the construction business today and its environmental impact.

On why it's so difficult to pay for America's infrastructure

“It’s interesting, because it’s like maintenance in your house. There’s not enough money to go around for a lot of stuff these days, and the easy thing is to just not do the maintenance. Some day you pay the price for that. So the easy answer is, not deal with it today, but that’s really a short-term view of what needs to get done. The long-term view is, let’s have a world-class infrastructure. Let’s move people and products in a big way, and information - all that is part of that - so we can compete in the world economy.”

On what it would cost to have world-class infrastructure

“There are estimates out there that are in the trillions. Do I think that we can take it all on? No, but we can certainly take a big chunk out of it, and we can put the money where we get the biggest bang for our buck, for sure. But the infrastructure of the United States is in really sad shape.”

On Skansa's current projects in the U.S.

"There's a big program in Los Angeles right now that is being funded by the city of Los Angeles and their subway system - it's a $30 billion subway program going on, which we have three of the projects there. We're working on the Brooklyn Bridge right here in New York, the 7 line, the Second Avenue Subway, so there are some outstanding projects. We just completed the U.N. here in New York. One of my favs I always used to talk about is MetLife Stadium, here in New York / New Jersey area."

On the hardest thing to build these days

“I would say, anything in a big urban area is always difficult because you never get the ability to shut something down, to build something new. You always have to kind of carve it up in little pieces and attack. One of the projects I love to talk about all the time - we replaced a section of the FDR Drive, and of course you can never interrupt the traffic on the FDR Drive.

“We had to build a temporary roadway out in the river, move the cars out in the river, rebuild the inner sections and then move the cars back. I mean, the temporary construction was a significant piece of the cost. A cheap way to have done it, of course, would be shut the FDR down and just rebuilt it, but that’s just not possible. Any time you work in an urban environment, you have to keep traffic flowing, you have to keep people moving, and I think those create lots and lots of challenges for contractors. “

On why America takes longer to build infrastructure than China

“Well, a lot of those are greenfield. I don’t know that everybody in China has the same amount of voice that we have here. There are a lot of stakeholders in projects - you look at Ground Zero, I mean it took a long time to get it off the ground and into construction because there were so many stakeholders and so many voices that had to be heard, dealt with and negotiated with before the project could start. So I think that’s part of it. As an American I have to say, it’s sometimes harder to get started, but I also think that’s probably right. Everyone should have their voice and create a project that everybody's happy with, instead of just, ramrodding a project through.”

On the financial status of the American construction industry

“Certainly not back to the peaks that we had in 2006 and 2007. I would say it’s a positive outlook. But the big issue for us is for there really to be a strong feeling of things are taking off, as if we had a true source of funding. And we really don’t. States have taken it on, cities have taken it on, but the feds have not really taken it on. We’d love to see a steady source of funding so we can move forward.

“But the one thing that has really filled the gap is in the ‘triple-p’ of public-private partnership. We’re seeing a real pipeline of projects. I mean states are getting serious about using it as a delivery method, and we landed an I4 project in Orlando, Florida, and we’re finishing up the mid-town tunnel job in Virginia. Those are two huge projects that are privately funded that would not have happened without the triple-p model.”

On leading the construction industry in environmental standards

“Sometimes we get focused on the today costs instead of the life cycle costs. As a company we’re focused on that. We think it’s important and something we need to lead the industry in. Sometimes not everybody's on board with us.”

On where the industry is headed, environmentally

“LEED certification now is almost standard in the building industry. Very little gets built without that. We are a big commercial development business. We build buildings and sell them to investors, and investors - that’s all they want to buy. I think that we’ll even go further than that. These net-zero buildings, or living buildings, where they produce their own energy and produce their own water, are the future for buildings. I think that's a reality. I mean, we have the technology, now we just have to be economical in how we build those.”

On things that make buildings greener that weren't done 15 years ago

“From simple things, like light switches that turn lights on and off as you walk out of a room, to using rain water to cool, to create chilled water. ... You can go as far as growing grass on a roof. So there are many, many things that can make a building more efficient. The biggest thing is to get energy efficiencies, because if you can get energy inefficiencies out of a building there’s a real dollar-savings - and that offsets the cost of doing some of these additional capital, upfront costs.”

On avoiding corruption and bribery when doing business abroad

“It’s a big challenge for a company of our size. We spend a lot of time and effort training, training, training and setting expectations on how we do business. And unfortunately we’ve had situations where it has not gone so well for us. But you have to stay on that, and I also have to react appropriately when something arises - you can’t just bury your head. You have to get out there and say, if we made a mistake, own up to it and do the best you can to fix it.

“The biggest thing is to create a workforce that understands our expectations. We spend a lot of time talking about what we build, but we’re spending a lot more time talking about how we build it, meaning: what are our values, what are our expectations, what are society’s expectations of us as a major constructor. But sometimes the culture of a country overcomes that, and that has put us in some bad positions.”

On where he sees the most demand for construction worldwide

"The U.S. is the largest construction market in the world, so we are happy to be here. As big as we are, we are less than 1 percent of the construction market in the U.S. If you look at our Swedish business, which is a very, very strong business, they own 25 percent of the construction market in Sweden. So you can see where the opportunity to grow is here."