MYTH BUSTER: Project Labor Agreements Actually Save Money!

“PLAs’ cost savings are both direct and indirect and can be substantial”

By: Fred B. Kotler, J.D. Associate Director Construction Industry Program School of Industrial and Labor Relations Cornell University

Image result for public domain construction workers

● PLAs are a valuable construction management tool for project planning and labor cost reduction.
● A key point made here is that there is no evidence to support claims that project labor agreements either limit the pool of bidders or drive up actual construction costs. Such claims by PLA opponents are based on inadequate data and faulty methodology. PLAs—in New York City and State and elsewhere—have instead proven very successful at saving costs while respecting fair labor standards.
● PLAs’ cost savings are both direct and indirect and can be substantial. These labor cost savings are typically achieved by the following:
➜ Direct cost savings provisions
✦ Alternative dispute resolution procedures for—and containment of—workers’ compensation costs
✦ Elimination or reduction of premium rates including increased contractor flexibility for scheduling
✦ Reduction and standardization of the number of paid holidays
✦ Increased utilization of apprentices

Indirect cost savings provisions

✦ Uninterrupted production, removal of potential friction, and heightened cooperation between labor and management made possible by
 A uniform contract expiration date for all crafts
 No strike provisions
 Expedited dispute resolution procedures and joint committee structures to address a broad range of jobsite issues including jurisdiction
 Contractors having immediate access to a pool of skilled labor during the hiring phase and throughout the life of the project

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