Run Government Like a Business...With Project Labor Agreements

June 2011- We all know people who, when they are unhappy about what their city or county is doing, clamor for government to be run “more like a business.”

Sometimes they are right. For example, when private sector businesses, motivated by profit and efficiency, embark on a major construction project, many begin by negotiating a Project Labor Agreement, or PLA.

Some of the biggest contractors in the country normally build projects with PLAs including Bechtel, Kiewit and Fluor. PLAs have been an accepted method of doing business since they were used to build Hoover and Grand Coulee dams in the 1930s.

PLAs have worked so well that businesses are still using them to build power plants, solar fields, hospitals, hotels, sports stadiums and all types of projects, including Disney World, the San Francisco Giants ballpark, the Trans-Alaska pipeline, and all of Toyota’s American manufacturing plants, to name just a few.

Hundreds of private sector projects worth billions of dollars are built with PLAs each year. Why do profit-driven private businesses repeatedly use PLAs?  Obviously, because they are cost-effective.

A PLA is a risk-management tool, which is negotiated before work on a project begins. Its purpose is to accomplish the goals of the owner, municipality, and/or general contractor for a specific project. Most PLAs include a process to resolve disputes on the project, and have no-strike clauses. They establish the hours of work, wages, benefits and working conditions for the work force. Many municipal PLAs also have local hire provisions, and other benefits desired by the community.

Private, for-profit businesses clearly love these guarantees provided by PLAs, because they continually seek them out. Many municipalities also use PLAs for their efficiency and community benefits.

So why would we want to hamstring our local governments from even being able to consider achieving these benefits? If PLAs make good business sense, what is the real agenda behind the effort to ban them? It’s really an extension of what’s going on in places like Wisconsin, where there is a malicious campaign to bash unions by spreading hateful misinformation.

The union bashers say that the decent wages workers get from PLAs drive up the cost of projects, exclude non-union contractors, and force workers to join unions.

That’s simply not accurate. Every contractor, union and non-union, is guaranteed by law the right to bid on public works jobs. Federal law protects workers from being forced to join unions against their will.

PLAs don’t exclude anybody. They simply hold union and non-union bidders alike to the same negotiated and agreed-upon wages, benefits, quality standards and local hiring provisions.

on-union contractors routinely bid on and win contracts. In fact, not only did non-union contractors bid on the Metropolitan Water District’s $2 billion Eastside Reservoir project, over 70 non-union contractors actually worked on that project. Most PLAs have similar results.

PLAs actually do improve the quality of workers’ lives, and they also improve the bottom line for contractors, managers, consumers and taxpayers.

Studies explain why profit-driven businesses, and governments, benefit from PLAs: higher productivity and quality workmanship more than offset the cost of good wages. A Cornell University study from 2009 found: “PLAs are a valuable construction management tool for project planning and labor cost reduction,” and further, “There is no evidence to support claims that project labor agreements either limit the pool of bidders or drive up actual construction costs.”

Another 2009 study from Michigan State University, that researched PLA use dating back to the massive public works projects of the 1930s, found the record clearly shows that PLAs “improve construction projects and provide benefits to owners, contractors, construction labor, communities, and the public.” 

These studies show that the repeated misrepresentations about PLAs, that they increase costs and exclude non-union bidders, are flatly false.
But the market-driven behavior of private sector businesses, which turn to PLAs again and again, drives the point home most compellingly: PLAs work.

People clamor for government to be more efficient and businesslike.

Don’t be misled, because a ban on PLAs would do precisely the opposite.

Bob Balgenorth is President of the State Building and Construction Trades Council of California, which represents 350,000 construction industry workers.



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