Report: PLAs Increase CA School Construction Costs 13%-15%

Vince Vasquez Undesignated, Vince Vasquez 8 Comments

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New Groundbreaking Study Reveals “Project Labor Agreements” (PLAs) Increase School Construction Costs by 13 to 15 Percent in California

School projects built under these contracts cost $28.90 to $32.49 more per square foot

JULY 26, 2011 SAN DIEGO – California school construction projects built under contracts that contain provisions known as Project Labor Agreements (PLAs) cost 13 to 15 percent more than non-PLA projects. That is the major finding of a new study published today by the National University System Institute for Policy Research (NUSIPR). This research is, to date, the most expansive review of the use of these agreements on school construction.  It is particularly relevant considering that California voters have approved $64 billion in school construction bonds during the last decade.  Clearly, the facts suggest that enactment of a PLA may have significant financial consequences.

Project Labor Agreements are agreements between those constructing projects and construction trade unions.  They address issues such as hiring preferences, wages, benefits and how labor disputes are to be resolved.  At present at least 24 K-12 school districts in California have adopted PLA provisions, including Los Angeles Unified, Santa Ana Unified, San Diego Unified, San Francisco Unified and West Contra Costa Unified school districts.    Between 1996 and 2008 these districts built 65 schools using PLAs with a cumulative cost of $ 1.7 billion.  Given the higher costs of PLAs, this means these agreements cost taxpayers and students more than $200 million.

Prior statistical research identified PLAs as contributing to higher final costs of school construction in other states, but no study has examined California school projects.   NUISPR research shows that Project Labor Agreements in California are associated with higher construction costs for public schools. Costs are higher when school districts construct a school under a Project Labor Agreement. In inflation-adjusted dollars, the presence of a PLA is associated with costs that are $28.90 to $32.49 per square foot higher.

The relationship between the presence of a PLA and higher school construction costs was found even when controlling for other factors that previous studies found impact cost: such as the number of stories, whether the school was built in an urban setting or whether the project included swimming pools and gymnasiums.  The NUSIPR study sets a new national standard for PLA research.  The authors examined 551 schools in 180 diferent districts and used two different methods to get the most accurate information possible.  The study is four times larger than other studies.

NUSIPR Senior Policy Analyst and the report’s co-author Vince Vasquez noted “This study, the largest and most comprehensive to date, provides new insight into the fiscal impact of PLAs. Our statistical models indicate that that schools built under PLAs are likely to cost more.” He went on to note, “These findings are important for California. Over the last decade, state voters have passed more than $64 billion of school construction bonds to build thousands of new classrooms and modernize hundreds of existing facilities.  California’s rapid pace of school construction activity is now matched by only a handful of other states. It is our hope that our findings inform public debate when PLAs are advanced as a costless policy tool.  Our research suggests they are not. Should districts choose to adopt them, school construction costs are likely to rise significantly.”

Note: The study’s authors conducted three sensitivity tests, including and excluding projects known to have extraordinary costs. These projects include Robert F. Kennedy Community Schools, Central Los Angeles High School #9, and the Edward R. Roybal Learning Center. NUSIPR employed statistical tests that neutralize the impact of outliers on results. In each case, they found that school construction costs were higher when Project Labor Agreements were used.

Additionally, the Keston Institute for Public Finance and Infrastructure Policy at the University of Southern California performed an independent review focusing specifically on the statistical analysis and associated findings.

The research was partially underwritten by a grant from the Associated Builders and Contractors, California Cooperation Committee.  NUSIPR estimates that this support comprised no more than 20 percent of the total project cost.

The full version of the PLA study can be found at the NUSIPR website, www.nusinstitute.com

About the National University System Institute for Policy Research

Based in San Diego, the National University System Institute for Policy Research, (NUSIPR) is a non-partisan organization that formulates and promotes high quality economic, policy, and public-opinion research so as to improve the quality of life enjoyed by the region’s citizens.

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Comments 8

  1. Workplace safety rules also increase costs. Employer-provided health care. Pay equity. The minimum wage. Child labor laws. The safety and inspection requirements of the design and construction of the buildings.

    One can argue against those additional costs too I suppose, but it’s funny how those didn’t fit the political agenda.

  2. Lucas, I’d be interested in hearing the labor-friendly left rationale for imposing PLA’s on public projects? Especially in light of the various existing protections against abusive policies which you listed in your post.

  3. PLA’s are simply extortion by the powerful — in this case, the labor unions that will hold projects hostage with bogus legal actions until the politicians give them PLA’s to enrich both the union members and the labor bosses.

    Obviously all at taxpayer expense.

    For CA to survive, we need to gut the unions. Support the state prop to end their mandatory paycheck deduction for union dues used for political purposes.

  4. This may well be an excellent and unbiased study, but it has been my experience that whoever pays for a study gets the result they want. Since this study was “partially underwritten by a grant from the Associated Builders and Contractors…,” I am somewhat cynical.

  5. Alger – unfortunately it is nigh impossible to collect data on 500+ schools, conduct over 120 seperate statistical tests, review over 50 different studies and articles, and write 10,000 words for Free. I guess SOMEONE might be independently wealthy enough to do that but in the real world research requires support.

    You can download the report at http://www.thecostofplas.com and let us know where you think we let the biases of the funder creep into the methodological choices we made.

  6. Alger’s actually has a point (something y’all thought I’d never concede) about possible bias — follow the money. Bradley and I raise this caution often about such reports. Naturally, such funding does not PROVE a study is either biased or incorrect, but one should always be circumspect when looking at the conclusions.

    Funny how the left (as personified by Alger) blithely overlooks such potential bias in studies funded by government agencies, labor unions, liberal academics getting grants and other special interest groups that generate most of the “evidence” for the statists’ welfare, regulatory, nanny state. And unlike right wing-spsosored studies (which are usually — and correctly — so labeled by the press), too many liberal-biased studies pass scrutiny — presented as objective reports from “nonpartisan, nonprofit” think tanks.

    But then, our PERSONAL biases affect us all — that’s human nature. Advocates for both sides (including yours truly) have such a weakness. But the press should try to meet a higher standard.

  7. Richard,

    Thanks for the concession, but again you make assumptions about me that are just not true. My comment was “..whoever pays for a study gets the result they want. ” The key word there is “whoever.” When it comes to PLAs, I would be just as skeptical of a study funded by the Building Trades.

  8. Erik,

    Just the fact that this study was, at least in part, a “review (of) over 50 different studies and articles” makes it suspect.

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