On The Money: School Construction Costs

The Impact of Project Labor Agreements

By Mike Luery

Project Labor Agreements (PLAs) may be costing taxpayers millions of dollars. That’s what researchers from the National University Institute for Policy Research are saying about school construction done under the premises of a PLA.

National University’s study showed California taxpayers may be shelling out up to 15% more to build new schools. It happens they say, when independent contractors are forced to hire union labor – or pay into the union’s health care fund – under the terms of a PLA.

“That’s an additional $29 to $32 per square foot higher when you build under a PLA then if you did not,” stated Vince Vasquez, a Senior Policy Analyst with National University’s Institute for Policy Research.

The higher expenditures add to up $250 million in additional costs, Vasquez told CBS 13. The National University Institute for Policy Research is a non-partisan group that examined 551 school construction projects in California – including 65 built using project labor agreements.

“There is in fact a statistically significant relationship between higher construction costs and project labor agreements,” Vasquez told CBS 13.

The Sacramento City Unified School District had two PLA construction projects in the study –
one involving the School of Engineering and Sciences and the other at the George Washington Carver School of Arts and Sciences.

Researchers say those PLAs cost taxpayers $5 million more than under traditional competitive bidding.

Some prominent non-union firms, like Rex Moore, the largest electrical contractor in the Sacramento region, have stopped bidding altogether on jobs that require project labor agreements.

“Anytime that the public doesn’t have a right to get the best construction at the best price and you limit the public’s ability to get that, I think it’s bad public policy,” said Greg Anderson, Human Resources Director for Rex Moore.

Governor Jerry Brown just signed a bill outlawing local bans on project labor agreements.
SB 922 was pushed by the building trade unions. They argue that PLAs protect the public from shoddy contractors. Labor Coalition Chair David Low told CBS 13, “When schools go with these other organizations, they don’t have the same experience and reputation and journeymen labor – they often end up paying more on the back end by having to do repair orders, change orders and it costs them more in the long run.”

Senate President Darrell Steinberg and Assembly Speaker John Perez put out a news release defending PLAs, arguing they are a way for taxpayers to save money.

Project Labor Agreements remain controversial, but in California they are here to stay. The new law signed by Governor Brown doesn’t mandate that PLAs be used – but it does mean they can’t be banned outright. In signing the bill, Brown said it “preserves the rights of all sides to debate what is obviously a hotly contested issue.”

If you examples of government waste, send us an e-mail to onthemoney@kovr.com. You can also follow On The Money stories in progress via Twitter at http://twitter.com/#!/mikeluery and via Facebook at http://www.facebook.com/CBS13OnTheMoney.

More from On The Money
  • http://www.lawconstruction.org/on-the-money-school-construction-costs/ On The Money: School Construction Costs « Construction Law

    […] Read more… Filed under: Construction Law Comments Off Comments (0) Trackbacks (0) ( subscribe to comments on this post ) […]

  • Mike Smith

    The report is based on the statistical view of a number of projects. It lacks information on what was the districts’ experiances before and after PLAs. Most of the older data uses “bid” amounts and not completed cost. The report does not note if completed construction costs includes or excludes claims. Since the report is statistical we do not know the quality level of the equipment and materials installed that greatly impact construction costs. One district coudl be using basics and another good plated – or perhaps LEED. Some districts’ use PLA due to large complicated projects – thus more costly.

    The telling sign for the questions as to PLAs is if PLA do not work – why are they still used? If the PLAs cause the project to exceed the engineers estimate, where have the districts removed the PLAs?

    The study, any study, should look at the enigneers estimate, the bid amounts, the claims and change orders – resulting in the completed “project” cost.

    The view from a former elected official and project manager/estimator.

    • Kevin D. Korenthal

      Mike, They are used because they benefit construction unions in a time when union membership is declining. The money that members unwittingly contribute to elected officials greases the wheels for PLA votes. If PLA’s made sense, the communities of Oceanside and Chula Vista would not have voted overwhelmingly to ban them. NAd if they had done that, Governor Brown would not have had to sign a law that allows the Legislature to overturn the past, present and future will of the voters without a legal decision.

  • bud

    that “study” as already been discounted as “worthless” by the author of the statistics that were distorted to produce it.

  • Kevin D. Korenthal

    I like how one can just say that the study is “worthless” when the only evidence for that is a faulty examination by the author of a competing (and the only contradictory) study and the UCLA Labor Institute. One needs only to visit http://www.thecostofplas.com to view the study, all of the media reporting and refutations of the Dr. Belman and UC Labor Institute critiques. Big Labor can adn will lie whenever and to whomever they need to cover up the inefficiency and unfairness of their practices.

    • bud

      Kevin…it seems someone is not telling the truth

  • Kevin D. Korenthal

    That’s a fact Bud. And I invite people that are interested in getting to the bottom of the issue to Google “project labor agreements” and start reading. I am confident that when folks read a good amount of the wide reporting on the subject, they will come away with the sense that PLAs are false promises and more expensive construction paid for by taxpayers.

    • bud

      Kevin, PLAs have been used for decades and produced “on time on budget” projects including the Hoover Dam. Your claim that PLAs cost taxpayers money is simply your way of telling a big lie. In fact PLAs have caught contractors cheating workers out of hard earned wages. like at the San Francisco Airport (but don’t tell anyone, it could mean they will know you are a little less than honest.).And I would invite everyone to read accurate studies on PLAs…they will then be calling your nonsense ” baloney”

      • Kevin D. Korenthal

        The fact of the matter is that PLAs do nothing to insure on time/on budget delivery of projects, do not guarantee workers are paid the proper wages (http://www.dailynews.com/ci_16536042?IADID), and do indeed raise the cost of construction as the sited study points out. You can continue to deny these facts without offering any evidence but you do so at your own peril.

      • bud

        my peril?…….oh my……. idle threats ..to quote from your own article Richard Slawson, executive secretary and treasurer of the Building Trades Council of Los Angeles and Orange Counties, which represents most LAUSD contractors, said the group reviewed the audit and believe it is “full of factual errors.”
        “The ABC-CCC is an anti-union contractors’ group that is attempting to undermine project labor agreements all over this state while ignoring the factual information that exists which shows that the agreements produce projects on time and on budget,” Slawson said.
        I belive we all know where your bread is buttered. again you come across with flawed data as “fact and truth”

  • Kevin D. Korenthal

    Nowhere in your quotations do you show where Slawson discredited the complaints against the LAUSD. In fact, if you actually contacted the LAUSD LCP Program they are required by law to share with you that the majority of the claims made about Valley Regional High School #5 have proven legitimate. Furthermore, you have failed to show in any way how the PLA study contains “flawed data” Do you always make claims that you cannot support?

  • bud

    Kevin…calling the kettle black is not “truth”..you supplied the link and I read it…what else do you want?….your idea of “factual data” is flawed at best, it would seem that even when you choose the reading material you have problems with its authenticity. And again..I believe we all know now where your bread is buttered, you work for the same people that are ripping off hard earned wages from working men and women.. Just to test, has there ever been a PLA that brought in a project on time and under budget?

  • Kevin D. Korenthal

    So you deny what the Daily News piece is reporting? Can you please present the evidence that the LAUSD would surely have made public if what was claimed in the Daily News article is not true? They have not even denied it. And I am afraid that we cannot take retired union business manager Slawson’s word for this… He has been exaggerating the benefits of PLAs for years. And yes I know this because I have been involved with the effort to reveal the truth about PLAs. They raise the cost of construction, do not guarantee a project free of work stoppages, do not guarantee that workers are paid the proper wages and they do not bring projects in under budget any more frequently than any other straight Prevailing Wage project. All of the information can be found by anyone who reads the first 3 or 4 pages of Google results on “project labor agreements”. I encourage everyone to research this topic for themselves and make their own determination as to whether or not PLAs are a net benefit or detraction.

  • Kevin D. Korenthal

    And with that, I end my participation in this conversation.

  • tj

    I believe that you should be more concern that these contractors are 100 percent american.Parts labor and sub contractors.This is more important than if they are unionized ,who cares.Make them bid projects that are for americans and for our comunity locally.

  • bud

    and with that he declared victory and left the battlefield…….lol…..silly hack, truth wins again.

  • pumpkinpie

    What a lot of PLA bull poo!

blog comments powered by Disqus
The Taz Show
LIVE: Monday through Friday from 6am – 6pm ET

Listen Live