Associated Builders and Contractors - ABC - Empire State Chapter - New York - PLA Issues

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Roswell Study Summary

Roswell Study Shows 26% Cost Increase Due to Project Labor Agreement!

A study conducted by Empire State ABC concluded that the use of a project labor agreement on the Roswell Park Cancer Institute construction project increased costs 26%. The study analyzed the bid results from 56 packages, including 39 packages bid without a project labor agreement (PLA), and 17 packages bid with a PLA, totaling $66, 864,566 of the $170 million, five year project.

The Roswell packages that required labor agreements were 10% over budget. Those that did not require PLA's were 13% under budget. Over the full project, the cost of the PLA translated into a waste of 39 million taxpayer dollars. On the six largest Roswell projects, three done with labor agreements and three without, the effects were even more drastic. Project labor agreements increased costs over 48%.

Bid packages that did not require PLA's had 36% more planholders and 21% more bids than packages that did require PLA's. The study also showed a direct correlation between the number of bidders and whether or not a bid package comes in under budget. Packages that were over budget, regardless of project labor agreements, averaged 5.6 planholders and 3.3 bids. Packages that were under budget, regardless of project labor agreements, averaged 8.3 planholders (48% more), and 4.8 bids (45% more).

The conclusion that the use of project labor agreements raises construction costs 26% over the price of free and open competition was determined as follows: The study analyzed bid packages budgeted at $66,864,566 bid for the Roswell Park project, consisting of bid packages budgeted at $32,630,458 without PLA's, and bid packages budgeted at $34,234,108 requiring PLA's. If the entire project during the study period had been bid with PLA's required, and if the 10% rate of over budget bidding remained the same, the project would cost $73,551,022. If the project had been bid without PLA's required, and if the (-13%) rate of under-budget bidding remained the same, the project would cost only $58,172,173.

On December 22, 1994, the Appellate Division Third Department in Albany overturned a lower court decision that had declared project labor agreements on the Roswell Park project and the Tappan Zee Bridge project illegal. The Coalition to Preserve Competitive Bidding on Public Works, of which ABC is a member along with other merit shop, union, minority and women contractor associations, brought the suit, and sought leave to appeal the December reversal. On March 28, 1996, the NYS Court of Appeals ruled the Roswell Park PLA invalid.

Subsequent research revealed the following:

Engineers for the Roswell project admitted that they increased project estimates +5% when PLAs were adopted after the 12/94 appellate court decision.
Several other studies of public and private projects demonstrated total project cost increases due to PLAs ranging from +9% to +40%.
Union statements that the project came in "on budget" ignored the fact that non-PLA bid packages averaged 13% under budget.

The Roswell study has been distributed to the media and to key government officials statewide. Copies are available through the ABC office.