Cost of Project Labor Agreements

Cost of Project Labor Agreements: What You Need to Know

Project Labor Agreements (PLAs) have become increasingly popular in the construction industry. A PLA is a pre-hire collective bargaining agreement that establishes the terms and conditions of employment for a specific construction project. PLAs typically cover wages, benefits, and working conditions, as well as dispute resolution procedures.

However, PLAs come at a cost. In this article, we will discuss the cost of PLAs and what you need to know before deciding whether to use them.

First, it is important to understand that PLAs can significantly increase the cost of a construction project. This is because PLAs require contractors to adhere to certain labor standards, which can increase the cost of labor. In addition, PLAs often dictate that contractors must hire workers from specific unions, which can limit the pool of available workers and increase labor costs even further.

Furthermore, PLAs can also increase administrative costs. Contractors must negotiate the PLA with the union before the project begins, which can be a time-consuming process. In addition, contractors must track compliance with the PLA throughout the project, which can require additional administrative resources.

Some critics of PLAs argue that they are a form of favoritism, as they often require contractors to hire workers from specific unions. As a result, non-union contractors may be excluded from bidding on projects that require a PLA, which can limit competition and increase costs.

On the other hand, advocates of PLAs argue that they can be beneficial for both contractors and workers. For contractors, PLAs can provide a stable and predictable labor environment, as well as access to a skilled workforce. For workers, PLAs can provide higher wages, benefits, and better working conditions.

In conclusion, it is important to carefully consider the cost of PLAs before deciding whether to use them on a construction project. While PLAs can provide benefits for contractors and workers, they can significantly increase the cost of a project, limit competition, and place administrative burdens on contractors. By weighing the potential benefits and costs of PLAs, contractors can make informed decisions about whether to use them on their projects.