EAST LANSING – “Understanding PLAs” was the title of the Oct. 12 conference held at Michigan State University, and anyone who walked out of the daylong conference without a greater understanding of project labor agreements wasn’t paying attention.

Sponsored by MSU’s School of Labor and Industrial Relations and the School of Planning, Design and Construction, the conference included local and national experts on project labor agreements, union and nonunion points of view regarding their use, as well as real-world perspectives from people who utilize PLAs on a regular basis.

“This conference,” said Dr. Dale Belman, professor in the MSU School of Industrial and Labor Relations, “is intended to help you make good decisions about how to use PLAs. “The point is to understand the strengths and the weaknesses of PLAs before making decisions about them.”

It’s unlikely anyone’s mind was changed about the use of PLAs: unions love them, nonunion contractors hate them. Among owners in both the public and private sectors, their focus is generally on deciding whether employing such an agreement makes a good business decision.

The 97-person attendee list included representatives from the entire spectrum of construction and related fields: owners, municipalities, contractors, contractor associations (both union and nonunion) lawmakers, lawyers (representing both union and nonunion), and union representatives.

Following is a smattering of facts and commentary on PLAs from the conference:

What are PLAs?

Project labor agreements are usually standardized documents, but can vary widely from job to job. They spell out what’s expected concerning employment conditions for labor unions, contractors and owners. PLAs can define hourly rates, hours worked, when overtime kicks in, safety procedures, and how grievances are handled. Nearly universally, they require no work interruptions by workers and no lockouts by employers, and they require contractors to become signatory on that job to the local appropriate collective bargaining agreement.

Belman’s introduction at the conference pointed out that the debate over the use of PLAs has dated to World War I. They were used as a contracting tool from World War II and then through the early 1990s. Since 1992, PLA have become political football: President George Bush first outlawed their use on taxpayer funded construction projects, President Clinton reinstated PLAs, President George W. Bush outlawed them once again, and this year President Obama’s Executive Order 13502 allows, but doesn’t require, PLAS on public projects.

Who uses them and why?

Steven DiBartolo, vice president of Hill International, a construction consulting firm in New Jersey that has used PLAs, told the conference that “there has to be a cost benefit” if he is to recommend their use to an owner. He said the first type of benefit, “quantifiable,” can save owners money by spelling out hours of shifts and avoiding premiums for overtime. Strategically staggering shifts and working at night in active buildings is an example. Standardizing and coordinating the number of paid holidays among the trades also falls under that money-saving category, as does increasing apprentice ratios.

In the “non-quantifiable” category, DiBartolo said PLAs can require tradespeople to keep working on a project, even if their master contract expires. “PLAs have showed to provide stable and trained workforces,” DiBartolo said. “That’s one thing that has always helped us.” PLAs can require workers to be at their stations at starting time – not in the parking lot – which improves productivity. He said owners might want other public policy elements built into their PLA, such as clauses for the hiring of a certain percentage of disadvantaged, minority or female workers.

As a consulting firm, DiBartolo said “we are not in the business of selling PLAs.” He added: “Not all PLAs are equal. It depends on what is negotiated in or our of the contract, so cost savings will vary.”

Doug Maibach, vice president of corporate affairs for Michigan’s largest general contractor, Barton Malow, said words like “cooperation, stability, economics, efficiency, protection of labor standards… are an important preamble for any PLA.”

He said the economic advantage to employing a PLA is important – “if there isn’t an economic advantage, then why have a PLA?” Maibach asked, adding: “Our industry is very complex…there are 17 basic trades and maybe a multiple of labor agreements. A uniform agreement to show how we’re going to behave together is a major advantage to us” in employing PLAs.

Maibach said the added costs of union wages, and loss of flexibility for contractors is weighed against providing workforce uniformity – PLAs usually trump collective bargaining agreements – and continuation of work through no-strike clauses, as well as some union flexibility concessions on things like overtime.

He said not every job makes sense for a PLA –they’re usually more appropriate for larger, longer-term projects. He stressed that PLAs do not have to be complicated, and that there are many template agreements with only a few pages that will work fine.

PLAs, Maibach said, offers “a good clean scope” of work, with wage and benefits defined, “good dispute resolution and the outline of jurisdiction, drug and alcohol testing and safety procedures.

“I’m in the risk management business,” Maibach said. “I believe in PLAs as a vehicle to manage risk.”

What about the open shop and PLAs?

It’s simple: the nonunion sector almost universally has no use for PLAs

“You’re either pro-union or pro-competitive, there is no middle ground,” said David Masud, managing partner at a law office that represents firms associated with the anti-union Associated Builders and Contractors in mid-Michigan. He called PLAs “bad public policy, and “a tool, a tool to be used against nonunion contractors.”

Open shop contractors in mid-Michigan, he said, “will not sign a PLA.” He said they force union membership and union dues on nonunion employees and can require employers to ignore hiring their own employees in favor of union hiring halls.

Worse, Masud said, is that nonunion employers are often forced to pay benefits twice on PLA projects. Not only are they paying premiums on their own employees’ health and retirement plans, they are also forced to pay into union benefit funds, and neither they nor their employees receive a benefit for those payments.

Still, MSU Professor Belman said there are some avenues open to nonunion contractors who want to bid on project labor agreement jobs. Among them, getting the job itself and making a profit, if the nonunion contractor can submit a winning bid. Opportunities for nonunion contractors are more open on public projects, where minority or disadvantaged participation is sought. Sometimes the owner desires nonunion participation. And in some areas, there might be a lack of union trades to man the work.

Ben Brubeck, director of labor and state affairs for the national Associated Builders and Contractors, said he has “big concerns about government encouraging the use of PLAs,” adding, “the ABC is all about free enterprise.” He said that the mid-Michigan ABC’s anti-PLA attitude is shared nationally. “There are some nonunion contractors working on PLA projects, but the vast majority of them don’t,” Brubeck said.

PLAs: where do you start?

Mike Haller, executive vice president for Walbridge, Michigan’s second-largest general contractor, said much homework needs to be done before a go or no-go decision is made on using a PLA.

“You start with fact gathering, and you find out what issues does the customer have,” Haller said.

Specifically, Haller said he looks at cost, timing, location and type of the project, the community, quality of workers, safety issues, the union vs. nonunion environment, investors, collective bargaining agreements, the potential for project stability, and the history of PLA use in the area.

“Will the owner play a role; will the owner care?” Haller said. “There are safety, substance abuse, parking issues. I have to know what I want, what is important in this PLA – then write the PLA. With PLAs, one size doesn’t fit all.”

Jack Mumma, construction contract administrator for Michigan State University, said people far down the chain of command in an organizations should leave the decision about using a PLA for the top decision-makers. “From an owners perspective, there are few agnostics on this issue,” he said.

MSU Trustees last year adopted a “responsible contractor” policy, and began the framework for a PLA policy to govern construction contracting on campus. Mumma said ultimately, “a PLA should be an example of both of us saying we got something out of this and it was good for all of us.”

Michigan Building and Construction Trades Council attorney John Canzano said while there theoretically could be a single page project labor agreement, the best documents work that “put all your cards on the table. “Both sides don’t like surprises,” he said. “Be specific about what’s included and about the scope of the work.”

The next frontier for PLAs?

Canzano said there are a number of creative ways to write PLAs. Unions can add value to projects, for example, by agreeing to add a penny per hour to a charitable fund set up by a hospital sponsoring a PLA. A similar setup could provide scholarship money during a university project. Canzano said such money check-offs can be “a great social investment tool,” and that it’s a great way to unions to become “linked with an owner.”

Peter Phillips, a University of Utah economist has extensively studied PLAs and prevailing wage laws and found that neither create added costs for taxpayers.

He told the audience he wanted to “bend your perspective” and shift the focus of PLAs away from owners, to unions. Similar to what Canzano described above, PLAs, he said, are evolving “into a new form of collective bargaining that brings a new partner” into the mix. That new partner, he said, would be an owner’s representative dealing directly with the union. “It’s a new way to discover win-win,” Phillips said.

As an example, he cited the construction of 31 power plants in California from 1998 to 2002. The work proceeded, Phillips said, because the building trades linked not with their contractors but with the owners of the plants and the Sierra Club, who were demanding clean burning power plants. Enough political force was exerted to get the plants moving when the Sierra Club’s environmental concerns were addressed by the building trades, who said they would not sign a PLA to build those plants unless the latest emissions technologies were used.

The result: sufficient political muscle by the building trades, the owners and the green lobby got the plants built.

“I’m befuddled as to why PLAs are controversial,” Phillips said. “They’re agreements that allow new forms of exploration towards win-win and they’re extraordinarily creative.”