August 24, 2010

In the Midst of the Worst Construction Downturn in Generations, Use of Project Labor Agreements Continues to Increase

At a time when construction owners are aggressively seeking the best possible value for their construction investments, they are increasingly turning to the use of project labor agreements (PLAs) to ensure “on time…on budget” results. This year alone, almost 100 private AND public PLAs – with a dollar value in excess of $80 billion – have been registered and approved by the Building and Construction Trades Department. These include the first two American nuclear power plant construction projects in over 40 years – Plant Vogtle (GA) and South Texas (TX).

Additionally, scores of other PLAs – such as those that fall under the National Maintenance Agreement, the Powerhouse Maintenance Agreement, the General President’s Project Maintenance Agreement, and the Stack and Chimney Agreement continue to be signed and put into place in every region of the nation on behalf of such private, profit-oriented corporations as ConocoPhillips, BP, Southern Company, Exelon, and Pacific Gas and Electric, to name just a few.

This continues the trend we saw in 2009, when hundreds of additional PLAs were negotiated and implemented. All told, in the last few years, PLAs have been signed and implemented to cover in excess of $200 billion of construction work across the United States. This is a strong testament to the fact that construction owners everywhere (especially those that are profit-oriented and seeking increased value during this current economic downturn) are recognizing more and more the utility of a PLA as a jobsite efficiency tool. These owners understand that PLAs work to promote productivity by allowing construction managers to more effectively coordinate the numerous contractors on the site, standardize working conditions, and give contractors ready access to a local pool of well-trained and highly skilled workers who have undergone thorough drug-testing and background checks negotiated as part of the agreement.

Further, PLAs are also being utilized as a community development vehicle to provide career training opportunities for local and disadvantaged residents.

Putting aside all the rhetoric that surrounds the debate over PLAs today (especially when it comes to their use in the public sector), these statistics offer the best argument in their defense. Facts are facts…and reality is reality. And the fact is that PLAs – as they have for decades – continue to be utilized in both the private and public sector by large, sophisticated, experienced, and cost-conscious owners, developers, construction managers and contractors, all of whom want the best results in the most cost-effective and time-sensitive manner possible.

For over 75 years, PLAs have been utilized across the nation – from the Hoover Dam, to NASA’s Space Program, to the Interstate Highway System, to the Trans Alaska Pipeline. Today, corporations and agencies that range from Disney World, to the Tennessee Valley Authority, along with dozens of professional sports stadiums, and all eight of Toyota’s American manufacturing facilities, are but a small example of major private and public projects that have successfully utilized PLAs. Even Wal-Mart, the world’s largest corporation whose entire corporate culture is focused upon cost-consciousness, is increasingly turning to PLAs when constructing its retail outlets.

From a single Wal-Mart store, to a local school renovation, to highway and bridge projects, to large industrial projects, PLAs are increasingly being viewed as a valuable tool to ensure project efficiencies and “on time…on budget” results.

If Project Labor Agreements continue to be utilized in increasing numbers by both the profit-oriented private sector and the cost-conscious public sector, there must be a reason. Clearly, that reason is this: THEY WORK!