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Project Labor Agreements: An Ownership Tool for Success

Published by: NJ Laborers on 01/09/2012

A Project Labor Agreement is a pre-hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project. On certain types of projects, PLAs have been demonstrated to be a very useful construction management tool for cost savings, for on-time, on-budget, and quality construction.

This is why many private and public entities use PLAs on their own construction projects. By superseding individual collective bargaining agreements with a PLA, project owners are able to better coordinate functions, gain access to highly skilled workers, and have more control over the project. Beyond the project management benefits, PLAs may also deliver community benefits in the form of local job creation, access to apprenticeship and training programs, and an economic multiplier effects.Numerous studies find PLAs work 2009 study by Fred B. Kotler, J.D., Associate Director of the School of Industrial and Labor Relations at Cornell University, finds that PLAs do not discriminate against employers and workers, do not limit the pool of bidders, and do not raise construction costs. He states that studies to the contrary rely on insufficient data and poor methodology.

A study by Professors Dale Belman, of Michigan State University; Matthew M. Bodah of the University of Rhode Island and Peter Philips of the University of Utah finds that there is no substantial evidence that PLAs decrease the number of bidders or change the costs of construction projects. Unlike studies offered by project labor agreement opponents like the ABC, Belman, Bodah, and Phillips account for important influences on construction costs. The study shows that project cost is directly related to the complexity of a project.Even the U.S. Government Accountability Office (GAO) issued a report in which it could not prove that PLAs are more expensive than non-PLA projects.

Citing the differences in costs, size, scope, and timing of projects, the GAO concluded that “drawing any definitive conclusions on whether or not the PLA was the cause of any performance differences would be difficult.”

Lastly, the United States Supreme Court weighed in on the matter and upheld the use of Project Labor Agreements on private and public work and leaves it up to the contractor whether they wish to bid such projects."To the extent that a private purchaser may choose a contractor based upon that contractor's willingness to enter into a prehire agreement, a public entity as purchaser should be permitted to do the same. Confronted with such a purchaser, those contractors who do not normally enter such agreements are faced with a choice. They may alter their usual mode of operation to secure the business opportunity at hand, or seek business from purchasers whose perceived needs do not include a project labor agreement."

On large-scale, multi-trade projects of a complex nature, PLAs are an excellent tool to ensure quality, cost-effective construction.  

Publication Date: 
Wednesday, January 11, 2012 - 14:30
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