Study raises questions over project labor agreements

A study released late last week raises new questions about the cost effectiveness of project labor agreements on school construction projects.

PLAs, which have been in use since the 1930s, are comprehensive agreements negotiated between union representatives and project owners aimed at ensuring work proceeds in an efficient and timely manner. The agreements typically cover such issues as work schedules and dispute resolution procedures as well as wages and benefits and are separate from the contract the project owner would have with the construction company.

But new research from the National University System Institute for Policy Research found that California districts that enter into PLAs pay up to 15 percent more in construction costs than if they had used the traditional bidding process.

The study arrives as scrutiny of business practices at many public institutions across the state has intensified - from pensions and salaries to contracts and services - and as cash-strapped government officials search for ways to save money.

Yet, critics of the study assert that the findings are inaccurate and the study actually proves that PLAs are cost-neutral for schools. The study has also been questioned because the Associated Builders and Contractors, California Cooperation Committee is a sponsor.

The study compiled data from 551 school construction projects built between 1995 and 2009. Of those projects, 65 or about 12 percent were built under a PLA.

After the researchers controlled for factors believed to affect the cost of construction - geography, construction type, etc. - they found that PLAs added on average about $30 per square foot.

This isn't random. There is a relationship going on here," said Erik Bruvold, a lead author of the study.

According to the study, critics of PLAs argue that the requirements "discourage nonunion contractors from bidding on projects and subcontractors from participating. This reduced competition, it is claimed, results in overall higher bids. Opponents also claim that the work condition rules required in PLAs increase labor costs and that these are passed onto the project's developer."

"I'm not sure the wages and benefits paid to construction workers is one of the top hierarchies of needs for a school district," said Bruvold.

There is a significant caveat to his study, however.

Of the 65 PLA construction projects used in the data set, 47 of them came from Los Angeles Unified. When the LAUSD projects were removed, the results still showed PLA projects as having higher costs, but the data set was so small that the authors admitted that it did not yield "statistical significance."

"We can't, unfortunately with this study, answer the question, is it absolutely PLA's," said Bruvold. "It could be something uniquely dysfunctional in L.A."

Dale Belman, a labor relations professor at Michigan State who has written extensively on the subject, said the study's conclusions were inaccurate because the authors omitted several key variables related to schools and construction specifications. Perhaps the biggest was that L.A. Unified builds to higher seismic standards than most schools, he said.

"There is some good research out there; it tends to show that PLAs are cost neutral in schools," said Dale Belman, a labor relations professor at Michigan State who has written extensively on the subject.

"Really, it's a tool in construction management. It's like any other tool: you learn how to use it, you use it on appropriate projects. It can produce lots of different types of values," he said.

Those values include quality, on-time construction, better health conditions for workers, and expanding the tax base by producing jobs in a community, said Belman.

But Belman also noted that PLAs often do not benefit smaller or less intricate school construction projects. There may also be no benefit to schools located in rural areas without a union presence, he said.

A spokesman for Pittsburg Unified, one of the PLA districts used in the study, said that their union contract includes apprenticeships that have turned into job opportunities for recent graduates of the district.

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