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Can’t say PLAs increase or decrease costs, study says

Date Posted: August 20 2010

The anti-union Associated Builders and Contractors “strongly oppose” project labor agreements in the construction industry, because they “prevent taxpayers from getting the best possible product at the best possible price,” according to their national website.

Moreover, any time the ABC sees fit to bring up their anti-PLA rhetoric in Michigan when a city council, school board or county-level government considers adopting a PLA on a local construction project – and they can be prolific when it comes to writing op-eds and letters to the editor – the ABC claims that studies show such agreements inflate costs to the government of between 10-20 percent.

But a new government study released last month by the Congressional Research Service – the nonpartisan research arm of the Congress – begs to differ with any cost claims related to project labor agreements.

“Much of the research on the effect of PLAs on construction costs is inconclusive,” the report said. “In part, it can be difficult to find and compare similar projects where some use a PLA and others do not. If similar projects can be found, it can be difficult to control for factors that affect the costs and quality of construction. Studies of the effects of PLAs may not include variables that account for the quality of work performed or whether the projects were finished on time.”

Project labor agreements can vary from job to job. The agreements generally standardize work hours, wage scales and overtime rules, as well as jobsite safety standards. They also generally guarantee no-strikes or lockouts and provide alternative dispute resolution.

Last fall, at a PLA conference sponsored by Michigan State University, contractors who utilize PLAs said they were an effective business tool that standardized various major factors for their businesses, and allowed them to more effectively bid and administer projects.

The ABC cites several academic studies that claim PLAs add unnecessary costs to taxpayers on publicly funded projects. Building trades unions cite their own studies that downplay cost savings. Union-cited studies tend to show PLAs as mostly cost-neutral. Unions have been more focused on promoting project labor agreements as instruments available to contractors and owners that offers multiple benefits. A Cornell University study called PLAs a “very useful construction management tool.”

Neutralizing the arguments of cost advantage/disadvantage to taxpayers puts the focus of PLAs back where unions have said it belongs all along: as a simple business decision, not a political or union vs. nonunion decision.