PLA's are a helpful construction management tool - Inside Construction - Project labor agreement

Real Estate Weekly, March 24, 2004 by Kristen Thur Plemon

Almost every organization has a written business plan to ensure goals are achieved in a timely manner.

Project labor agreements (PLAs), or pre-hire collective bargaining agreements, are similar to a business plan; they contain written provisions guiding how a construction project should be executed.

"PLAs have proven to be an effective way to manage and maintain time schedules and budgets, particularly for large, complex construction projects that involve a multitude of contractors and workers with specialized skills," explains Steve Lamb, marketing spokesperson for the Mechanical Contractors Association (MCA) affiliates nationwide and executive vice president of MCA Chicago.

Since the 1930s, public and private entities have utilized PLAs to execute their capital construction projects. In almost every state across the U.S., PLAs have been used to build schools, airports, water treatment plants, manufacturing facilities, highways, housing, utilities-virtually every type of project. Some of the most well-known projects are the Boston Harbor Clean-Up, Cape Canaveral, Alaska pipeline, and the Seattle Seahawks Stadium.

Toyota has built all of its U.S. manufacturing facilities under PLAs and, currently, has an $800 million plant in Texas underway. Moreover, the courts and Congress have determined PLAs to be a valuable tool for owners and construction managers. Under amendments to the Taft-Hartley Act 40 years ago project labor agreements were made legal. In the majority of cases, courts have upheld the use of PLAs for publicly-funded projects, citing the substantial benefits these agreements provide in terms of project planning and project delivery.

In light of the U.S. shortage of skilled construction workers over the last decade, PLAs ensure major projects will not be delayed by a shortage of qualified workers, not to mention labor disputes. Unions provide a majority of skilled labor in the construction industry through formalized training, which concentrates on safety, specialized skills, and on-the-job experience.

According to the U.S. Department of Labor, over 70 percent of all apprentices are trained by joint labor-management programs. In addition, the building trades' referral systems, open to union and non-union applicants, is the largest organized structure for recruiting, screening, and deploying construction workers as needed. Owners can rely on a dependable supply of trained personnel and more easily predict labor costs.

Multi-year, sophisticated projects often involve several local collective bargaining agreements. A consultant hired by the New York Thruway Authority determined the four-year refurbishment of the Tappan Zee Bridge in New York to require 19 separate agreements and would cost over $6 million more if the project was negotiated without a PLA. Also, the local agreements would require renegotiation during the life of the project and posed potential labor strife. Because of the convenience of one agreement through a PLA, it is a time and money saver for the owner or construction manager.

Cost savings can also be achieved through labor-management safety programs incorporated into a PLA. For the Eastside Reservoir construction project in California the state agency utilized a PLA that allowed them to consolidate the over 250 safety programs conducted by over 250 subcontractors and 20 general contractors on the project. This resulted in $30 million in insurance costs savings on a $2 billion project, according to a representative of the project owner, Metropolitan Water District of Southern California. Additionally, carve-outs or alternative dispute resolutions, which lower workers' compensation costs, are possible in PLAs.

In recent years, PLAs have shown to be increasingly flexible in its terms, apparent by amendments that addressed concerns of disgruntled parties. "Social justice" building provisions is one type of provision that can be added to PLAs to provide a beneficial tool to communities seeking to increase local jobs and support local causes. The Port of Oakland PLA created the Small Business Utilization Program and a Local Hiring Program that trained and gave jobs to historically disadvantaged workers.

Bechtel Corporation, one of the largest contractors in the world, has used PLAs on over 100 construction projects, mostly complex projects, nationwide in the last twenty-five years. A chairwoman for the Metropolitan King County Council in Washington reported that Bechtel determined PLAs use on three Sound Transit projects resulted in a net savings of $15.7 million. She also wrote in her editorial to The Seattle Times on May 1, 2002, "On project labor agreements, we think it is important we utilize what has been a very effective tool for being able to complete very important public projects on time, on budget, as promised."

Despite the contentions of anti-PLA factions, project labor agreements are not "union-only" projects. It is illegal to discriminate on any construction project based on union or nonunion status. Nonunion or open-shop contractors can bid, and have won bids, on projects constructed with PLAs. On the Rhode Island Airport Corporation terminal project, 15 of the 38 contractors were nonunion. The Supreme Court determined in the case of the Boston Harbor project that no contractor is excluded from the bidding process in a PLA unless it excludes itself.