Milwaukee County could pay a price if it penalizes builders that fail to meet local hiring goals, according to a contractor who predicted project bids will rise.
Builders concerned about crews or subcontractors falling short of Milwaukee County goals simply will add money to project prices to offset potential damages, said Larry Rocole, vice president of J.P. Cullen & Sons Inc.’s Brookfield office.
“It’s just like any project that you bid,” he said. “If you feel there’s more risk for it, you are going to adjust your bid accordingly.”
Milwaukee County is moving forward with plans to reinstate a goal that half of the wages on county projects go to workers who live in the county. During the next month, county planners will consider how to give the program teeth with strategies such as penalties for builders who fail to hit the percentages in their contract, said Jerome Heer, county director of audits.
Despite Rocole’s warning, County Supervisor Johnny Thomas, who supports the hiring program and penalty provisions, said contractors who inflate bids in anticipation of penalties risk pricing themselves out of projects.
“If there’s no repercussion for their activity,” he said, “I guess, why would they comply?”
Heer said the county will set a 50 percent goal when bidding contracts starting July 1 if the Milwaukee County Board of Supervisors signs off on the plan. Builders, when signing a contract, would agree to meet a certain percentage that could be less than 50 percent on projects with unique circumstances, such as specialized types of work, he said.
Penalties would be based on how far builders fall short of the percentage they agree to in the contract, Heer said. No penalty amounts have been proposed, he said, but the goal is to avoid making penalties too high or too low.
“The trick with any liquidated damages or incentive clause is to make it substantive,” Heer said, “so it’s not just the cost of doing business.”
But Rocole said the county is unlikely to create long-term jobs for county residents as a return for what he anticipates will be increased project costs. Programs that force builders to reach a numeric benchmark are not the best way to train Milwaukee residents for long-term construction careers, he said.
He said Cullen launched lasting careers for Milwaukee residents on the Milwaukee City Hall reconstruction project only because the job went on for years.
The city of Milwaukee, Milwaukee Public Schools and the Milwaukee Metropolitan Sewerage District have local hiring goals for their projects.
“Most construction projects run anywhere from six to 12 to 16 months,” Rocole said, “and that is not enough time to build someone’s career.”
Yet Thomas said the experience residents receive on county projects will help them land construction jobs once the county work is complete. He said he supports the policy for residents, not builders.
“As legislators, our focus is on our constituents,” Thomas said, “not on individual businesses.”
Rocole said he opposes project-by-project percentage goals and penalties for missing them, but he supports getting Milwaukee residents careers in construction. He said the county should try a system that requires apprentices work on projects and contractors keep them on staff for six to nine months after the job is done.
“To me, the way the system is set up now, it’s really there to meet what I would define as short-term goals,” Rocole said. “It’s not there to build careers.”