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Wicks Law helps to lower costs, improve quality

I would like to respond to the misinformation regarding the Wicks Law that appeared in a Democrat and Chronicle story on the Hamlin Public Library published March 22, followed by an editorial on March 23.
I have been in the electrical construction industry for more than 40 years, all with O’Connell Electric Co. Inc. We are presently the 49th-largest electrical contractor in the country.
I have been CEO of O’Connell for more than seven years and am currently treasurer of the Rochester Builders Exchange and president of the Rochester chapter of the National Electrical Contractors Association.
Our highly skilled and dedicated local workforce is represented by the International Brotherhood of Electrical Workers, Local 86.
The reason I give you this background information is to assure you that I do know what I am talking about.
Electri International is a research foundation set up by NECA in 1989 to perform basic research to improve the productivity, professionalism and competitiveness of electrical contractors. It has performed two studies regarding separate prime contracts and whether in fact they increase costs or save money for taxpayers.
The first study, performed by professor Brian Becker of the School of Management at SUNY Buffalo, showed that the separate prime bids for electrical, HVAC, plumbing and general construction actually saved 5 percent over the use of a single bid for the general contractor. The latest study, done by University of Washington professor Eddy Rojas, showed a similar saving of 5 percent.
Several states use separate prime bids, known in New York as the Wicks Law. The following are some of the basic reasons taxpayers realize such savings:
There is no markup by the general contractor on the specialty trade contractors performing HVAC, plumbing and electric work. In many cases, these trades represent more than 50 percent of project costs, so the savings are substantial for the project owners.
As a matter of interest, the 300,000-square-foot yogurt plant being constructed by PepsiCo in Genesee County is using separate bids for the specialty trades portion of the work even though there is no Wicks Law obligation to do so. The project is being done this way to save money.

The owner receives more competitive prices from the specialty trade contractors because they will receive payment much faster if it comes directly from the owner, as opposed to waiting an additional 15 days for payment from the general contractor. While many general contractors pay promptly, there are always some that pay well beyond what is called for by the state finance laws. This is obviously factored into our bids. There is no doubt in my mind that owners receive more favorable bids under the Wicks Law.

The Wicks Law allows for greater competition by separating contracts into four parts, since smaller general contractors are able to bid on projects that might be too large for them to tackle otherwise. Competition leads to lower pricing for the owner.

The separate bids of the Wicks Law eliminate "bid shopping" after the fact, which obviously is a benefit to the owner, especially in relation to the quality of construction.

The D&C article and editorial claim that eliminating the Wicks Law would save 20 percent to 30 percent on a project. On many projects, our entire labor cost is in the 30 percent range, and there is no way these claims of excess costs make any sense. You would have to perform the labor for nearly nothing for HVAC, plumbing and electrical work to achieve such savings. How ridiculous is that?
In summary, the Wicks Law actually benefits the taxpayers, not only by lowering project costs but by increasing quality. Misinformation given to the taxpayers does no one any good, especially in these challenging times.
Victor E. Salerno is CEO of O’Connell Electric Co. Inc.

4/13/12 (c) 2012 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.


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