PLA Study on School Construction Costs Disputed
A new study that concludes California school construction projects that use project labor agreements cost from 13% to 15% more is being disputed by a number of data researchers and union trade councils.
“Measuring the Cost of Project Labor Agreements on School Construction in California,” by Vince Vasquez, Dr. Dale Glaser and W. Erik Bruvold of the National University System Institute for Policy Research (NUSIPR), San Diego, was announced via an independent News Wire story that appeared on the ENR California website last month. The study was funded by the Associated Builders and Contractors, the national trade association representing merit shop contractors and subs.
Without getting into comparisons of some heavy-duty statistics and data analysis, let’s conclude a few things. First, the study was funded by an anti-PLA group (on its website, ABC said it “strongly opposes government-mandated project labor agreements on public construction projects”). Researchers are often paid to come to conclusions they were paid to come up with, unless their findings are mandated to be objective.
Second, the study says it examined 551 schools in 180 different districts, which is four times larger than any other study. What comes to mind here is that the researchers had to adjust (or didn’t) to so many variables when coming to any conclusion. Is a five-story, structural-steel campus project with an underground parking garage situated near an earthquake zone comparable to a one-story, wood-framed elementary classroom? Plus, PLAs require prevailing wage rates, which vary categorically across the state, either adding or reducing the cost of the project.
The study’s press release singled out PLA projects for the Los Angeles Unified School District, and although there have been some distinct contractual no-no’s reported over the years, the majority of its projects were completed on time and on budget. However, the NUSIPR concluded that inflation-adjusted costs in the LAUSD were $312 per square foot while schools built outside of the district, many in equally urban settings, were $221. Again, comparing a complicated school project that uses a PLA to keep costs, delays and change orders in control with maybe a renovation of a cafeteria is just not comparable.
The Los Angeles/Orange Counties Building and Construction Trades Council obviously sees PLAs differently. In providing the Exposition Metro Line Construction Authority with some PLA background for its upcoming contracts, the council says its PLA with the LAUSD covers $27 billion of bond funding for new construction and renovations. It said the average of 38% of the hours worked have been performed by tradesmen that reside within the jurisdiction of the LAUSD, with 67% of all yearly hours worked having been performed by residents of Los Angeles County.
Besides local hire provisions, the council also touted its requirement of utilizing Small Business Enterprises (from fiscal year 2003 through 2010, $3.7 billion, or 47%, of the total contracts awarded to SBEs) and had 905 residents from the local communities accepted into a state-approved apprenticeship program sponsored by the Building Trades Unions.
The NUSIPR study also quoted the findings of Dr. Dale Belman, a professor at the School of Human Resources and Labor Relations at Michigan State University, regarding his 2005 study, “Project Labor Agreements’ Effect on School Construction Costs in Massachusetts.” The NUSIPR concludes that Dr. Belman and his research colleagues prove that PLA schools cost more. Dr. Belman, however, says that’s not the case and the NUSIPR study’s data actually confirms his conclusion of the opposite.
“This is a very bad study,” said Dr. Belman soon after he sent a lengthy rebuttal letter to the NUSIPR. “After reading it thoroughly, it actually supports the point of view that PLAs do not affect costs.”
He suggests that perhaps the only way to judge the NUSIPR findings is to release the data publically in a peer-reviewed journal, such as Industrial Relations, The Industrial and Labor Relations Review or Economic Inquiry.
We’ll see how this plays out.
“Measuring the Cost of Project Labor Agreements on School Construction in California,” by Vince Vasquez, Dr. Dale Glaser and W. Erik Bruvold of the National University System Institute for Policy Research (NUSIPR), San Diego, was announced via an independent News Wire story that appeared on the ENR California website last month. The study was funded by the Associated Builders and Contractors, the national trade association representing merit shop contractors and subs.
Without getting into comparisons of some heavy-duty statistics and data analysis, let’s conclude a few things. First, the study was funded by an anti-PLA group (on its website, ABC said it “strongly opposes government-mandated project labor agreements on public construction projects”). Researchers are often paid to come to conclusions they were paid to come up with, unless their findings are mandated to be objective.
Second, the study says it examined 551 schools in 180 different districts, which is four times larger than any other study. What comes to mind here is that the researchers had to adjust (or didn’t) to so many variables when coming to any conclusion. Is a five-story, structural-steel campus project with an underground parking garage situated near an earthquake zone comparable to a one-story, wood-framed elementary classroom? Plus, PLAs require prevailing wage rates, which vary categorically across the state, either adding or reducing the cost of the project.
The study’s press release singled out PLA projects for the Los Angeles Unified School District, and although there have been some distinct contractual no-no’s reported over the years, the majority of its projects were completed on time and on budget. However, the NUSIPR concluded that inflation-adjusted costs in the LAUSD were $312 per square foot while schools built outside of the district, many in equally urban settings, were $221. Again, comparing a complicated school project that uses a PLA to keep costs, delays and change orders in control with maybe a renovation of a cafeteria is just not comparable.
The Los Angeles/Orange Counties Building and Construction Trades Council obviously sees PLAs differently. In providing the Exposition Metro Line Construction Authority with some PLA background for its upcoming contracts, the council says its PLA with the LAUSD covers $27 billion of bond funding for new construction and renovations. It said the average of 38% of the hours worked have been performed by tradesmen that reside within the jurisdiction of the LAUSD, with 67% of all yearly hours worked having been performed by residents of Los Angeles County.
Besides local hire provisions, the council also touted its requirement of utilizing Small Business Enterprises (from fiscal year 2003 through 2010, $3.7 billion, or 47%, of the total contracts awarded to SBEs) and had 905 residents from the local communities accepted into a state-approved apprenticeship program sponsored by the Building Trades Unions.
The NUSIPR study also quoted the findings of Dr. Dale Belman, a professor at the School of Human Resources and Labor Relations at Michigan State University, regarding his 2005 study, “Project Labor Agreements’ Effect on School Construction Costs in Massachusetts.” The NUSIPR concludes that Dr. Belman and his research colleagues prove that PLA schools cost more. Dr. Belman, however, says that’s not the case and the NUSIPR study’s data actually confirms his conclusion of the opposite.
“This is a very bad study,” said Dr. Belman soon after he sent a lengthy rebuttal letter to the NUSIPR. “After reading it thoroughly, it actually supports the point of view that PLAs do not affect costs.”
He suggests that perhaps the only way to judge the NUSIPR findings is to release the data publically in a peer-reviewed journal, such as Industrial Relations, The Industrial and Labor Relations Review or Economic Inquiry.
We’ll see how this plays out.
Here's a quick way to the simple truth.. ask subcontrators that are not signatory to unions that work on projects with PLA's what the cost differences are when figuring for those proje...
August 15, 2011
Here's a quick way to the simple truth.. ask subcontrators that are not signatory to unions that work on projects with PLA's what the cost differences are when figuring for those projects. As a sb-contrator doing such I can tell you that YES! the PLA adds costs to projects. up to as much as 30% higher costs than if it were a standard prevailing wage project without the PLA and its language
I have been contracting in California, in the Education Market for 20 plus years.<br/><br/>I don't even look at LAUSD project any more because of the PLA. The idea that I would have my ...
August 15, 2011
I have been contracting in California, in the Education Market for 20 plus years.
I don't even look at LAUSD project any more because of the PLA. The idea that I would have my loyal employess on the sidelines while I am pulling people from the hall just doesn't work for me. And of course it takes new people longer to get to speed (relative to my normal employees), which costs money.
I don't even look at LAUSD project any more because of the PLA. The idea that I would have my loyal employess on the sidelines while I am pulling people from the hall just doesn't work for me. And of course it takes new people longer to get to speed (relative to my normal employees), which costs money.
Mr. Carlson<br/><br/>You might have called: <br/><br/> A) We DID track whether a school was single or multi-story. You can see that in the tables we provided in the study. B) We al...
August 15, 2011
Mr. Carlson
You might have called:
A) We DID track whether a school was single or multi-story. You can see that in the tables we provided in the study. B) We also did NOT include "renovations to cafeterias. We looked only at either construction of an entire new school or additions of entirely new structures on site. C) The LAUSD issues you raise are, bluntly, entirely beside the point as they don't speak to costs. Essentially the argument of PLA supporters is that these purported benefits are COSTLESS. D) Dr. Belman responded to an earlier draft. Upon recipeit of his letter we made the necessary corrections. E) BOTH PLA and NON-PLA projects pay prevailing wages. It is an error to imply otherwise. What _IS_ in dispute is whether we should have adjusted for differences in prevailing wage rates among CA counties. We chose not to because there is not uniform index and, actually, it would bias the results AGAINST PLas. We bent over in that case backwards against the ABC position.
Finally, we would note that Dr. Belman himself seems not a disinterested party, having recieved FAR more in compensation and grants from the trade unions than the 30% of project funding we received from ABC. For the full report your readers can go to www.thecostofplas.com
You might have called:
A) We DID track whether a school was single or multi-story. You can see that in the tables we provided in the study. B) We also did NOT include "renovations to cafeterias. We looked only at either construction of an entire new school or additions of entirely new structures on site. C) The LAUSD issues you raise are, bluntly, entirely beside the point as they don't speak to costs. Essentially the argument of PLA supporters is that these purported benefits are COSTLESS. D) Dr. Belman responded to an earlier draft. Upon recipeit of his letter we made the necessary corrections. E) BOTH PLA and NON-PLA projects pay prevailing wages. It is an error to imply otherwise. What _IS_ in dispute is whether we should have adjusted for differences in prevailing wage rates among CA counties. We chose not to because there is not uniform index and, actually, it would bias the results AGAINST PLas. We bent over in that case backwards against the ABC position.
Finally, we would note that Dr. Belman himself seems not a disinterested party, having recieved FAR more in compensation and grants from the trade unions than the 30% of project funding we received from ABC. For the full report your readers can go to www.thecostofplas.com
PLAs limit competition.<br/><br/>When you limit competition, costs rise.<br/><br/>The real question is not do PLAs cost more money, but how much more money do they cost?
August 15, 2011
PLAs limit competition.
When you limit competition, costs rise.
The real question is not do PLAs cost more money, but how much more money do they cost?
When you limit competition, costs rise.
The real question is not do PLAs cost more money, but how much more money do they cost?
The FBI is too busy putting all your corrupt Business Agents in jail. Go sell your union propoganda some place else.
August 16, 2011
The FBI is too busy putting all your corrupt Business Agents in jail. Go sell your union propoganda some place else.
Wages rarley reach 30% of the project cost. Do you have people working for free? or do you charge them to come to work?<br/><br/>"the PLA adds costs to projects. up to as much as 30% hi...
August 16, 2011
Wages rarley reach 30% of the project cost. Do you have people working for free? or do you charge them to come to work?
"the PLA adds costs to projects. up to as much as 30% higher costs than if it were a standard prevailing wage project without the PLA and its language"
"the PLA adds costs to projects. up to as much as 30% higher costs than if it were a standard prevailing wage project without the PLA and its language"
The wheels are coming off the Big Labor wagon. Having their ridiculous and unsupportable rhetoric on PLAs and other unfair work rules challenged successfully by the Merit Shop Construct...
August 16, 2011
The wheels are coming off the Big Labor wagon. Having their ridiculous and unsupportable rhetoric on PLAs and other unfair work rules challenged successfully by the Merit Shop Construction Industry is driving these guys mad. It is time to end the use of PLAs and allow Free Enterprise and Open Competition to be the rule on publicly funded construction.
PLAs do not make it a requirement for labor compliance audits, site visits, classification etc. Payment of prevailing wages are the reason for the audits. <br/><br/>Do unions now requ...
August 16, 2011
PLAs do not make it a requirement for labor compliance audits, site visits, classification etc. Payment of prevailing wages are the reason for the audits.
Do unions now require citizenship? I was not aware that unions would not allow illegal aliens to join and pay union dues. Seems very undemocratic and unjust to me. Then again does the union really stand for justice for all, or just for the more equal union brotherhood.
Do unions now require citizenship? I was not aware that unions would not allow illegal aliens to join and pay union dues. Seems very undemocratic and unjust to me. Then again does the union really stand for justice for all, or just for the more equal union brotherhood.
The proof that PLAs work and are cost-effective is the fact that they are the method of choice for many private sector projects, where cost is the overriding issue. It has worked for To...
August 17, 2011
The proof that PLAs work and are cost-effective is the fact that they are the method of choice for many private sector projects, where cost is the overriding issue. It has worked for Toyota, Honda, Disney World, the Trans-Alaska Pipeline, power plants and schools all across our great nation. Profit-driven businesses wouldn’t repeatedly use PLAs if they proved costly.
The great difficulty of studies of this ilk is the extreme weakness of the science upon which it is based. The social sciences are the least satisfactory of the sciences and statistics,...
August 18, 2011
The great difficulty of studies of this ilk is the extreme weakness of the science upon which it is based. The social sciences are the least satisfactory of the sciences and statistics, no doubt valuable as a tool,has limitations even when studying natural phenomena, such as deciding when to throw out or keep in some "data ( half quotes to illustrate the uncertainty).
Not every important problem has a clear and simple solution as engineers should know and as the expression "muddle thru" suggests.
In my opinion studies of this sort are a complete waste of resources.
Not every important problem has a clear and simple solution as engineers should know and as the expression "muddle thru" suggests.
In my opinion studies of this sort are a complete waste of resources.
Some projects bid out with PLA and non-PLA prices submitted to the contracting authority, which is the case for some GSA projects. In all cases, the non-PLA bid is lower than the PLA bi...
August 25, 2011
Some projects bid out with PLA and non-PLA prices submitted to the contracting authority, which is the case for some GSA projects. In all cases, the non-PLA bid is lower than the PLA bid by a significant margin.
Post-construction costs are skewed for many reasons but reviewing pre-project bids prove that PLA projects are more expensive without spending a ton of money on studies; it's a simple fact that many choose to ignore for reasons of greed and pride.
Post-construction costs are skewed for many reasons but reviewing pre-project bids prove that PLA projects are more expensive without spending a ton of money on studies; it's a simple fact that many choose to ignore for reasons of greed and pride.
To all of the Anonymous:<br/><br/>You all lying to gain some support for companies over workers, as usual. <br/><br/>Project Labor Agreements don't raise costs. It's a simple bit of ma...
August 25, 2011
To all of the Anonymous:
You all lying to gain some support for companies over workers, as usual.
Project Labor Agreements don't raise costs. It's a simple bit of math to determine.
First: Project Labor Agreements require that all contractors on the project covered pay the workers the same. Just as Prevaling Wages on public works projects, in some States, require that the contractors pay wages and benefits, the PLAs do the same.
Some anti-union, anti-worker contractors, however will not pay the correct wages or benefits, even when the law requires it. Many States don't do a good job of enforcing Prevailing Wages and the workers and law-abiding contractors suffer to consequences of the cheats who use law breaking as their way of low-bidding jobs.
Project Labor Agreements not only stop the cheating they protect both the Craft workers who would have been cheated out of their vital incomes and the decent contractors or follow the rules.
So, if you anonymouses want to argue that a project might cost less because a contractor can lower costs by breaking the law, go ahead. Of course you won't get any support from all those hundreds of millions of workers who you want to see cheated or the thousands of contractors who want to compete on a level playing field.
Second: Paying into labor-manangement benefit funds saves between 5% and 7% in labor costs because of the tax savings that are gained because benefits are not taxable income. The contractor saves on workers compensation costs in States where it is based on wages. The contractors doesn't pay into Social Security or Medicare on benefits payments. They also don't pay State Disability or other taxes.
This then can lower costs - of course the contractor would have to pass these savings on to the owner.
Also; contractors are required to use apprentices under PLAs. Apprentices usually start at approximately 50% of the wages and benefits paid to Journeymen Craft workers. This reduces crew costs another 5% to 7%. You might argue that a contractor could use cheaper workers, however, most States that have State approved apprenticeship systems require that contractors only use those workers as apprentices that are reqistered in the State programs.
Well, how about is we did away with apprenticeship requirements? Cost go up because of the erosion of training and trained, expereinced Crart workers. The anti-worker, anti-union contractors have been trying to come up with some alterative training for over 30 years with dismal results. Even in California, where one on the strongest apprenticeship requirements exist, those contractors that are trying to train apprentices have less than 5% of the 50,000 apprentices in the system and are qraduating less than 25% of the young people that they start.
On the other hand, the Labor-Management (Union) Apprenticeship Programs, at last count had over 49,000 of apprentices in training and were graduating over 85%.
PLAs do a lot for the construction industry, in providing level-playing fields for contractors to bid, providing workers with decent wages and benefits and bringing conditions to every project that provide a safe workplace.
With over $100 billion in projects being covered by Project Labor Agreements in California over the last decade, the facts are in. Project Labor Agreement save money for owners, provide an agressive and fair bidding system for contractors and give Craft workers a little bit of dignity for the highly technical, experience driven and dangerous, difficult work that they do every day.
Quit whining and get yourself a Union!
Ricky Right
You all lying to gain some support for companies over workers, as usual.
Project Labor Agreements don't raise costs. It's a simple bit of math to determine.
First: Project Labor Agreements require that all contractors on the project covered pay the workers the same. Just as Prevaling Wages on public works projects, in some States, require that the contractors pay wages and benefits, the PLAs do the same.
Some anti-union, anti-worker contractors, however will not pay the correct wages or benefits, even when the law requires it. Many States don't do a good job of enforcing Prevailing Wages and the workers and law-abiding contractors suffer to consequences of the cheats who use law breaking as their way of low-bidding jobs.
Project Labor Agreements not only stop the cheating they protect both the Craft workers who would have been cheated out of their vital incomes and the decent contractors or follow the rules.
So, if you anonymouses want to argue that a project might cost less because a contractor can lower costs by breaking the law, go ahead. Of course you won't get any support from all those hundreds of millions of workers who you want to see cheated or the thousands of contractors who want to compete on a level playing field.
Second: Paying into labor-manangement benefit funds saves between 5% and 7% in labor costs because of the tax savings that are gained because benefits are not taxable income. The contractor saves on workers compensation costs in States where it is based on wages. The contractors doesn't pay into Social Security or Medicare on benefits payments. They also don't pay State Disability or other taxes.
This then can lower costs - of course the contractor would have to pass these savings on to the owner.
Also; contractors are required to use apprentices under PLAs. Apprentices usually start at approximately 50% of the wages and benefits paid to Journeymen Craft workers. This reduces crew costs another 5% to 7%. You might argue that a contractor could use cheaper workers, however, most States that have State approved apprenticeship systems require that contractors only use those workers as apprentices that are reqistered in the State programs.
Well, how about is we did away with apprenticeship requirements? Cost go up because of the erosion of training and trained, expereinced Crart workers. The anti-worker, anti-union contractors have been trying to come up with some alterative training for over 30 years with dismal results. Even in California, where one on the strongest apprenticeship requirements exist, those contractors that are trying to train apprentices have less than 5% of the 50,000 apprentices in the system and are qraduating less than 25% of the young people that they start.
On the other hand, the Labor-Management (Union) Apprenticeship Programs, at last count had over 49,000 of apprentices in training and were graduating over 85%.
PLAs do a lot for the construction industry, in providing level-playing fields for contractors to bid, providing workers with decent wages and benefits and bringing conditions to every project that provide a safe workplace.
With over $100 billion in projects being covered by Project Labor Agreements in California over the last decade, the facts are in. Project Labor Agreement save money for owners, provide an agressive and fair bidding system for contractors and give Craft workers a little bit of dignity for the highly technical, experience driven and dangerous, difficult work that they do every day.
Quit whining and get yourself a Union!
Ricky Right
