Summary Statement
This study examines a large number of project labor agreements (PLAs) using a variety of techniques, including archival research, interviews, case studies and the statistical analysis of original data. PLAs are pre-hire collective bargaining agreements that establish the terms and conditions of employment on one or more construction projects. Interview evidence suggests that safety inputs are greater on PLA projects including language establishing labor/management safety committees.
2007
Principal Findings
- Project Labor Agreements (PLAs) have been used for many years, perhaps as early as World War I. However, the use of PLAs has changed over the years. Once reserved for very large, isolated or specialized projects, today PLAs are used on a wide range of projects.
- PLAs are prehire collective bargaining agreements that cover the terms and conditions of employment on a specified construction project or set of projects. PLAs require that all contractors on a project, whether typically union or not, abide by collectively-bargained terms and conditions of employment, including paying union scale, using union referral systems, etc.
- An essential difference between PLAs and area agreements is that the principal parties in most negotiations are the building trades’ unions and representatives of construction users, rather than unions and contractors.
- The use of PLAs on public sector projects has become increasingly controversial over the past 15 years. All levels and branches of government have been brought into the PLA dispute. Court cases during the period have generally been over the issue of whether a PLA violates state or local bidding laws or regulations.
- The controversy over PLAs has spawned a number of studies on the effects of PLAs on the bidding behavior of contractors, construction costs, construction wages and several other issues. However, much of this research is flawed because of inherent difficulties in conducting such research, poor methodology or predetermined conclusions.
- Our research on bidding behavior and costs finds that PLA neither decrease the number of bidders on a project nor increase or decrease a project’s cost when other important variables are taken into account. However, previous studies that have found a strong positive effect of PLAs on project cost failed to account for other important variables and, as a result, inflated the presumed impact of a PLA.
- Assuming cost neutrality, other aspects of PLAs should be considered. Interview and case study evidence finds high satisfaction with PLAs by stakeholders and suggests that PLAs can be used to improve scheduling, safety, training and minority employment.
- A problem with PLAs in many areas is a lack of contractor participation in negotiations, which can lead to the needs of a specific industry being ignored. One solution, which is used in a number of jurisdictions, is the development of a model PLA through a standing labor/management committee.
