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The Truth About PLAs - (7/6/2010)

LAST MONTH the University of Massachusetts Building Authority voted to put the proposed $750 million overhaul of UMass Boston’s campus under a project labor agreement that would require the use of unionized workers. The reflex reaction of hostile voices was predictable. “This is the kind of thing,’’ said Republican gubernatorial candidate Charlie Baker, “that makes people crazy about state government.’’

A flurry of newspaper columns and radio rants revived the standard anti-PLA view that these agreements exclude the majority of potential contractors and add expense to a project. The problem with these arguments is that they are fundamentally wrong. Comments like Baker’s are what make people crazy about ideological screeds based on flawed research.

PLA critics like to claim that 80 percent of the construction workforce is non-union. This is based on Census figures where occupational identities are self-described and where handymen and summer house painters are considered part of the workforce. It does not reflect the real numbers of career trades workers in commercial, institutional, industrial, and highway construction — the only parts of the industry where PLAs are ever applied.

A far better indicator is to consider the presence of union firms in non-residential construction based on a review of Dodge Reports, the most comprehensive source of information in the industry. According to the Carpenters Labor Management Program’s analysis of the 2009 Dodges, 65 percent of the dollar value of Massachusetts projects was attributable to union contractors.

Furthermore, PLAs are used only on large projects where the complexity typically demands the sophistication of a sizable company. That universe is overwhelmingly union, as confirmed by the recent Boston Business Journal list in which 23 of the largest 25 general contractors in the area have collective bargaining agreements.

It is also simply not true that non-union firms cannot participate in public PLA projects. Any company can bid and use its existing labor force, as long as it is prepared to comply with the terms of the PLA, a situation that non-union contractors resist because it raises expectations for their traditionally lower-paid workers.

The claim about added costs is based on a 2003 Beacon Hill Institute report that concluded that there was a $32- per-square-foot premium on public schools built with PLAs. After an initial rush of favorable publicity, economists from Michigan State University and the University of Rhode Island analyzed the report and determined that the estimates were “inflated and unreliable.’’ The authors of the report had based their calculations on bid prices rather than final costs, failed to compensate for urban vs. suburban sites, ignored some schools that were built with PLAs and included others that never had PLAs.

The Beacon Hill Institute was forced to issue a revised report that reduced the PLA “premium’’ by 40 percent. Even then, critics utilized the institute’s own data to demonstrate that there was no appreciable difference between construction costs on PLA and non-PLA schools.

On one level, this can be seen as an academic squabble over a poorly designed study. Unfortunately, the study results still serve as gospel in certain circles and have become uncritically accepted as a legitimate part of public policy discussions. Reviewing the entire debate at the time, Peter Cockshaw, the widely respected independent construction industry commentator wrote that there is “no solid data from any study to prove PLAs cost more or non-PLAs cost less’’.

PLAs are not designed for the expansion of Aunt Martha’s deck. They have been used on large public projects as well as private buildings for Harvard, Partners, and the Museum of Fine Arts where owners seek a level of comfort regarding scheduling, training, workforce diversity, productivity, uninterrupted work progress, and known costs. The courts have looked favorably on the agreements, particularly in cases when a project’s “size, complexity, and duration’’ are an issue.

It is frustrating to hear the same tired arguments repeated and, to a surprising degree, accepted. But there are political points to be scored and, as is so often the case in public debate, some folks don’t let the facts get in the way of a good story.

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