Tuesday, November 23, 2004
Frank Conte, Communications
Labor Agreements increase costs to Connecticut cities and
towns, new BHI study finds
A new study by the Beacon Hill Institute shows that
Project Labor Agreements (PLAs), which effectively limit public
projects to union-only contracts, increase actual and bid
construction costs when applied to school building projects
increase actual costs by $30 (or 18%) per square foot. They
increase the winning bids by $26.07 (or 16.6%) per square
foot. Actual costs are typically slightly higher and include
any additional, unexpected expenses incurred during the life
of the project. Bid costs represent the amount that the least
expensive contractor requires to complete the project.
are collective bargaining agreements between public and private
entities and construction unions that require the hiring of
all workers, including non-union workers, through union halls,
and the adoption of union rules in the employment of workers.
In exchange for the builders willingness to enter into
a PLA, workers pledge not to strike or to pursue any other
BHI findings are based on an analysis of 102 school projects
that were undertaken in Connecticut from 1996 to the present.
Of the 102 projects, 20 were under PLAs. The study incorporates
all the available data on Connecticut school projects over
the chosen period. The results are statistically significant
at the 97% level of confidence; they show PLAs adding to costs
under a variety of different tests.
of PLAs, mostly open-shop contractors, have argued that PLAs,
which are unique to the construction trades, nullify their
key competitive advantages, particularly those governing worker
flexibility. In addition to raising costs by requiring firms
to follow union rules, the smaller pool of bidders for contracts
that require a PLA reduces competition, further raising cost
particularly when such open-shop bid on public projects.
contrast, supporters argue that PLAs provide harmonious working
conditions and avert cost overruns by ensuring on-time completion
and worker safety. They also argue that PLAs enable bidders
to accurately estimate labor costs for the entire life of
study is BHIs fourth study of PLAs, and the first to
analyze projects outside Massachusetts.
evidence is growing that PLAs are adding millions of dollars
to construction costs, not only in New England but all around
the country, said David G. Tuerck, BHI Executive Director.
Municipal leaders everywhere need to rethink the whole
of idea of entering into PLAs for school or other construction
projects, as PLAs result in spending more tax dollars than
necessary on these projects. Those are dollars that could
better serve the community elsewhere.
version of this press release
CT PLA Report 11/23/04 (PDF)
01/10/2005 12:44 PM
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