A growing body of evidence demonstrates cost hikes associated with government-mandated project labor agreements (PLAs) and school construction.
Government-Mandated Project Labor Agreements: The Public Record of Poor Performance (2011 Edition): The 2011 edition of ABC General Counsel Maury Baskin’s report on government-mandated PLAs documents a record of PLA construction projects with unfortunate patterns of cost overruns, reduced competition, delays in construction, construction defects, safety problems and diversity issues. (Learn more)
Project Labor Agreements on California School Construction Raise Costs up to 15 Percent: According to a 2011 study released by the National University System Institute for Policy Research, California school construction projects built using PLAs experienced increased costs of 13 percent to 15 percent, or $28.90 to $32.49 per square foot, compared to projects that did not use a PLA. (Learn more)
Project Labor Agreements Raise Costs on New Jersey School Projects by up to 30 Percent: In October 2010, the New Jersey Department of Labor and Workforce Development issued a report that found PLAs on school construction projects in the state were 30.5 percent higher than for all non-PLA projects. The same report found PLA projects tended to have a longer duration than non-PLA projects.” For FY 2008, the average duration of PLA projects was 100 weeks compared with 78 weeks for non-PLA projects.
There are also a number of real-world examples provided by leading academic research from the Beacon Hill Institute (BHI):
- 2017: PLAs increase the costs of school construction by 13.12 percent. On average, schools with a PLA mandate cost taxpayers an extra $2 million per project. Project costs increased similarly for mid-size projects, small projects and entire schools when the projects were subject to PLAs. (Learn more)
- 2006: A real-world case study supports BHI’s previous research on the effect of PLAs on school construction costs. In 2006, the City of Fall River, Mass., bid three school construction projects under a PLA. After attracting only a few bidders, all of which came in well above the projected budget, the city canceled the PLA and reopened the bidding process. The report found the City of Fall River saved $5.8 million on total construction bids by removing the PLA and bidding the project using free and open competition. (Learn more)
- 2006: PLAs add an estimated $27 per square foot to the bid cost of construction (in 2004 prices), representing an almost 20 percent increase in costs over the average non-PLA project. (Learn more)
- 2004: The use of PLAs on school construction projects in Connecticut increased the cost of the projects by nearly 18 percent, meaning the presence of a PLA increased the projects’ final base construction costs by $30 per square foot relative to non-PLA projects. (Learn more)
- 2003: A study finds that “PLA projects add an estimated $18.83 per square foot to the bid cost of construction (in 2001 prices), representing an almost 14 percent increase in costs over the average non-PLA project. (Learn more)