For road and bridge contractors, federal transportation policy matters most in a practical way: when the next project starts and whether they can afford to take it on. The Infrastructure Investment and Jobs Act's (IIJA) surface transportation authorization expired on Sept. 30, and Congress has passed a short-term extension rather than a long-term bill.

In May, the House Transportation and Infrastructure Committee approved a five-year, $580 billion successor, the BUILD America 250 Act, but it has not become law. That leaves contractors planning around funding that is likely to continue but whose timing and structure remain unsettled.

That uncertainty lands hardest on contractors' cash flow. On federally funded highway work, contractors pay for labor, materials, equipment, bonding and certified payroll compliance well before they receive payment. A delay between project starts, or a slow payment once work begins, can quickly strain a company's working capital.

Scott Peper has built his career around that problem. He is the founder and CEO of Mobilization Funding, a Tampa, Fla.-based company that provides project-based financing to commercial construction subcontractors and manufacturers to cover the upfront costs of starting a job. Before founding the company, he spent 17 years in the healthcare industry in sales, contracting and executive management roles. He is the author of The Big Book of Cash Flow, hosts the podcast "The Mobilization Mindset," and has spoken at TEDx.

In this Q&A with Roads & Bridges, conducted over email, Peper explains why contractors that used the IIJA years to build backlog, equipment and reputations are best positioned for what comes next. He also discusses how working capital, equipment ownership, bonding and federal paperwork limit how much work a contractor can take on. He closes with advice for the months ahead: run lean, strengthen relationships with sureties and lenders, and avoid risky projects outside your expertise.

This interview has been edited for length and clarity.

R&B: With Congress relying on a short-term extension of the current surface transportation programs rather than a long-term reauthorization, what does that uncertainty mean for contractors trying to plan their businesses for the next 12 to 24 months?

SP: Contractors that haven't been planning for this possibility over the last five years and have assumed this level of work would continue forever are likely going to see some slowdown in their business [if funding levels drop].

Others that have used this consistent work to maintain their backlog, acquire equipment and build strong relationships with [state DOTs and] prime contractors will still win. If they've also used the last five years to build a reputation for performing great work, they'll continue to find opportunities. They may have to travel farther than they've been accustomed to for the same level of work, but for great-performing contractors, the work will still be available.

Most contractors should already have 12 to 18 months of work planned. If these programs change or work slows, they'll likely need to bid more jobs, potentially smaller jobs and projects outside their normal geography, to maintain their current revenue levels.

R&B: Contractors often have to spend significant amounts of money on labor, materials and equipment before they receive payment on a project. How can a contractor's cash flow and access to working capital affect how much federally funded work it can realistically take on?

SP: It can impact it greatly. The work itself takes time, significant upfront costs and time to mobilize on the job. Contractors are paying for labor, materials and other project costs before they receive payment, so working capital can have a major impact on how much work they can realistically take on.

The equipment required to do the job is also critical. Contractors that own their equipment outright or have a more favorable cost structure will have an advantage over contractors that need to rent some or most of the equipment required for the job.

With federally funded work specifically, government bureaucracy, bonding capacity through payment and performance bonds, administrative burdens and certified payroll reporting can add even more complexity. Whether it's the prime contractor managing those requirements or the subcontractors working for them, it's critical that they know what they're doing and manage that aspect of the job well. Any falter in those areas can create delays in payment, and payment delays on these kinds of jobs can turn catastrophic very quickly.

R&B: The industry is expecting significant infrastructure demand to continue, but contractors can't necessarily scale their businesses overnight. What should contractors be doing now to prepare for the next wave of federally funded work while also managing the uncertainty over when and how that funding will arrive?

SP: Run the business as lean as possible and build your balance sheet so you can withstand the time between project starts or while government agencies work through the funding process.

Maintain your relationship with your bonding company and maintain or build relationships with all of your key parties, including your surety, lenders, insurance providers, bankers, suppliers, trade partners, labor contractors and equipment providers. You also need to be able to access the capital required to execute the work.

Most importantly, stick to the work you know how to do. Now is not the time to jump out on a limb and take on one or two risky projects.