Earlier this spring, the Dane County Board of Supervisors ran into a problem with the jail’s consolidation project.
As the price of labor and materials skyrocketed with inflation, the price jumped to $16 million more than expected when the project was originally approved in 2019.
The final plan would build a new jail to close the aging City-County Building jail and leave open the possibility of closing the outdated Ferris Huber Center down the road.
Yesterday, Dane County Executive Joe Parisi announced that the plan approved in March will now cost about $10 million more than thatbringing the total cost of the project to $176 million. This means that the council will have to approve additional funding for the project for the second time this year.
Patrick Miles is the new Chairman of the Dane County Board of Directors. He says the new price increase is not a complete surprise.
“I think that’s the case with most construction projects these days. The cost that drives the increase is labor, due to the increased demand and the fact that places are struggling to hire for so many construction projects right now, and then material costs have also increased dramatically,” says Miles.
Miles says that while Dane County Jail certainly saw the biggest price increase, it’s not uncommon these days for projects to go up in price. Usually when the county creates a budget for a project, such as the jail, it includes a buffer to account for any unexpected price increases.
“We don’t have anything quite on the same scale as what we’re talking about with the prison, but I know we’ve seen a number of change orders, like some things going on at the landfill and the biogas plant. There have been delays in getting materials, some of these things have been delayed due to supply chain issues,” says Miles.
The budget amendment to continue the prison consolidation project must pass a three-quarters vote at the board and must be approved by August 18 to keep the project on track.
The reason the prison continues to see larger price increases than other projects is simple: building a new prison is complex.
Chuck Hicklin is Dane County’s Chief Financial Officer. Hicklin says in his 20 years working for Dane County, he has never seen such an unpredictable market. He says small projects, like repaving roads with asphalt, have fewer moving parts involved than a project like a prison. Therefore, it is much easier for them to find more accurate costs for the materials needed for the project.
But bigger projects like the prison have a lot more interrelated materials. If one of these materials is not available, the whole project stops. You cannot install a door locking mechanism without a door.
Hicklin says when this happens, it not only affects the cost of materials, but also the cost of labor to wait for those materials.
For example, Hicklin points to the new sheriff’s office in Stoughton, which was due to open last year.
“This project, they were supposed to move last November, and the contractors were done, they were moving pretty well, but there were some things, like light fixtures, they couldn’t get. So we had to wait three months and move in three months late. The project was 99% complete, but for those few things needed for occupancy, so we had to delay our move-in,” says Hicklin.
It also means that contractors are less likely to bid on projects from a government agency. And the fewer contractors bidding on a project, the higher the cost will be.
“One thing that’s unique with a public project is that you design the project and then you bid the project. And when that offer arrives, the entrepreneur signs the contract for that amount. Period. Unless there’s a change in scope, or they run into something they didn’t expect, or we decide to change to something cheaper, they’re forced to go to that fixed price,” says Hicklin.
Inflation isn’t just hitting the county either. Almost every level of government faces similar issues, Hicklin says. Earlier this week, the Capital Times reported that the price tag associated with building the Madison Metro School District would cost an additional $28 million, largely due to inflation.
When presented to voters in 2020, this project was already expected to cost $317 million and will help renovate all high schools in the district. The construction of this project is already underway.
Photo courtesy: WORT Flickr