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Project Labor Agreements Frequently Asked Questions

A Project Labor Agreement is generally a project-specific, collectively-bargained, written “umbrella” document addressing issues of concern and assigning responsibility.  A PLA is established as a means of creating uniform and acceptable standards of conduct and work practices for all employers and employees at a project.  This approach enables the project to be managed in a fair and cost-efficient manner, without work stoppages.  The intent of a PLA is to provide for professional and safe construction methods; and continued productivity while offering fair and reasonable working conditions.

A PLA is negotiated between an owner(s) or a public agency acting as the owner of a construction project and the appropriate representatives of the various building trade unions having jurisdiction over work performed in the project area.  In PLA bargaining, unions bargain as a group with someone who controls the work of what is usually an upcoming large and complex project, which involves multiple crafts and covers many months of activity.  The larger and more complex the project, the more important it is to have a PLA.

PLAs are labor agreements, designed to provide a uniform labor policy for all construction workers involved in the building of a specific project. A PLA could be used to address a series of projects if desirable to all parties involved. As part of the stabilization of wages, benefits, and working conditions, the workers agree to use the PLA’s specific dispute resolution process and forego strikes and other work actions so the project can be completed on schedule in a cost-efficient manner.

PLAs address matters that are critical to a project meeting tight construction schedules and budget requirements.  They protect an owner’s rights which need to be addressed by contractors and sub-contractors whether union or non-union.  Since the majority of projects involving public agencies are already covered by Nevada Revised Statute 338 (Prevailing Wages), wages are normally not a major issue for negotiation in PLAs on public works projects. In general, public and private PLAs contain language addressing the: Scope and Length of Agreement, Labor/Management Committee, Management Rights, Non-Discrimination Clause, No Strike – No Lockout Clause,  Jurisdictional Dispute Resolution Procedure, and Working Conditions. PLAs can contain language addressing Project Safety, Training, Drug Testing, Minority Participation and Pre-qualification of Bidders.  Based on need, PLAs can also address specific issues such as Staggered Starting Times, Breaks, Uniform Holidays, Access to Elevators, Parking, Use of Staging Areas, On-Site-Transportation, Restrooms and Equipment Security. Normally a governmental agency or owner would not want to be drawn into disputes concerning these types of operational matters.  But these are exactly the types of issues that create work stoppages and result in significant cost overruns.  A PLA requires disputes to be resolved quickly without impacting work progress.
 
PLAs typically provide for job referrals through union hiring halls and contain a union security provision. These provisions do not restrict employment opportunities to union members or require employees of non-union contractors to become union members. All contractors and sub-contractors are required to abide by the terms of the PLA.  This is often done through a “Letter of Assent.” 

Often PLAs contain “core personnel” or “tag along” provisions that will allow non-union contractors to staff a percentage of work with pre-existing employees who need not go through the hiring hall.  Non-union contractors can perform as prime or sub-contractors but must sign and abide by the specific project’s PLA provisions.

The purpose of a PLA is clearly addressed in the following language from the current PLA in place at McCarran International Airport:

“In recognition of the special needs of this Project and to maintain a spirit of harmony, labor-management peace and stability during the term of this Project Labor Agreement, the parties agree to establish effective and binding methods for the settlement of all misunderstandings disputes or grievances which may arise; and in recognition of such methods and procedures, the Unions agree not to engage in any strikes, slow downs or interruption of work and the Contractor agrees not to engage in any lockout.”

It continues with:

“The parties are committed to providing open access to bidding opportunities for all contractors and to assuring an adequate supply of craft workers processing the requisite skills and training in order provide the ratepayers a Project of the highest quality.  Further, the parties agree to cooperate throughout the term of this agreement to develop methods to reduce Airport construction and Project administrative costs.”

In other words, the primary purpose of a PLA is to save the owner of a project significant amount of money by dramatically reducing the risk of delay and cost overruns due to labor disputes and by assuring that an adequate number of skilled craftsmen are available to complete the project on time.

The booming construction market, with project costs now reaching billions becoming almost commonplace, has resulted in stiff competition for the services of competent bidders.  The best strategy is to plan for it. Be proactive with your business.   A PLA gives you the confidence to commit to tight construction schedules.  The slowdown of residential construction has cause an upsurge in small contractors bidding jobs well outside of their experience levels.  Having “heard of a contractor” or checking to see how long a contractor has “held a license” is not enough any more. Check the size and frequency of their involvement in projects similar to the one you are considering. The larger and more complex a project is, the greater the need for a PLA.

The project’s interests are protected by specific PLA language that ensures best value for the project and strict adherence to budget constraints and construction schedules.   The project is delivered as designed, when needed and without any surprises.  In Southern Nevada’s highly competitive market for skilled labor, guaranteed access to skilled craftsmen is critical to the success of any project. The project is protected from costly delays due to labor unrest and is assured access to skilled craft workers.  The community’s interests can be furthered and protected by PLA requirements for using local labor and contractors, thereby keeping tax dollars in the community and re-circulating many times. The owner can show support for local businesses by encouraging and using PLAs.  The true benefit of a PLA is that it provides the ability for the owner to address specific needs and concerns of the project and various stake holders.

With skyrocketing land prices, shorter buildings may become obsolete.  Everything is going vertical which requires more skilled contractors, more complex construction methods and increased technical skills from the workers.

Green building technologies require more than “handy-man” skills.  Building green requires extensive training to develop qualified skilled craftsmen and ongoing programs to upgrade the skills necessary to meet the new requirements associated with green building technology.

Government and “one of a kind” private projects are typically more complex and 
have a useful life expectancy of over 50 years. These considerations emphasize the need for the quality installation and confidence available through a PLA.

 

The use of PLAs has caused research on the effects of PLAs on a variety of issues, including the number of bidders on projects, labor costs and final bid price.  Unfortunately, much of the research is of low quality and originated from organizations or individuals with a clear position on PLAs.  The data presented has often been prepared using a heavy reliance on biased anecdotes and comparisons. The most common negative information about PLAs stem from  early experiences gained by the initial efforts with a new construction method on large, complex projects.  Problems generally resulted from unclear language and unreasonable requirements including PLA clauses which restricted the project to use of specific union contractors and predetermined suppliers.  Modern PLAs prohibit union only provisions on public and quasi-public projects.

 

The goal of any construction project is to produce a quality product while making the most efficient use of project money.  Maximum efficiency is precisely what a PLA is designed to achieve:  Getting projects done on time and on budget!

The twin PLA goals of “on time” and “on budget” are met in project after project for three main reasons.  First, due to the no strike - no lockout provisions, there are no labor interruptions on the site and consequently no work stoppages to resolve differences between labor and management.  Disputes are usually resolved using some type of expedited arbitration process which is defined in the PLA agreement. 
When disputes do arise, they are quickly resolved and the work goes on.

Second, standardized work rules and working conditions make for a smooth flow at the jobsite.  The workers know they will be working in a positive environment and can concentrate solely on getting the work done.  Both management and labor understand exactly what is expected of each other.

Finally, the high quality apprenticeship programs and hiring halls associated with the PLAs assure that the workforce on the job is trained and ready for the tasks before them.  Consequently, there is no need to go back and fix mistakes caused by shoddy work earlier in the project; rather, the work is done right the first time.  Essentially, a Project Labor Agreement ensures a skilled workforce on the project at all times.  The failure to adequately staff a project with properly trained craft personnel can undermine and even cripple any construction job in terms of schedule, quality and cost.

Construction is the #2 industry in Nevada and involves engineers, architects, material and equipment suppliers, contractors, sub-contractors and workers. Construction is a major player in the economic health and stability of our community. The concept of “Development” involves more than just initial construction costs. It involves understanding that development is a key element to the long term economic health of our community.  How a project is built is as important as where the development occurs.   A PLA can determine how a project is built and thereby determine its economic value to a community.  If a local contractor is put to work and local businesses provide rental construction equipment or a local supplier provides construction materials, it is important. The economic health of a community benefits if local workers perform the work; and if those workers earn a livable wage, have health insurance and retirement benefits, the community prospers. Sellers of construction materials become customers;
construction workers become buyers; and without customers and buyers, there is no need to build.  Using local contractors and suppliers keeps the construction money in the community, re-circulating many times.

If transient workers show up, bringing their uninsured families to the community and dump health insurance costs on the local social service agencies, it has a considerable negative impact on the community.  Hiring a local signatory contractor works as a disincentive to growth in the number of new residents, and sometimes illegal aliens coming to the area and bring with them the associated increased financial impact to Social Services, Health Care and Education on government resources and thereby increasing the taxes of workers and businesses.

Does the construction money stay local, or does it leave the area never to be seen again?  Successful developers realize that their success and reputation is dependent on the success of the project.  Successful bidders are not “here today and gone tomorrow”.  They are here for the long haul; building more than buildings, they build lasting relationships. 

When constructing public works projects or similar projects involving use of public resources, additional considerations come into play.   It may involve dealing with the project’s true value to the community with specific PLA language in order to justify local government participation with land, fee waivers, offsite development, Tax Increment Financing and other incentives.  Governmental agencies often consider: “Will the project serve as an inducement for future non-subsidized projects to follow?”  It involves consideration of the long term impact of the project on the entire community.

Southern Nevada’s large, stable workforce is experienced working in our adverse
weather conditions (heat, cold, wind) and social environment (24 hour bars and gaming).  This enables locals to meet tight construction schedules. Our signatory contractors have experience with local awarding bodies’ bid documents which reduces chance for errors and the need for expensive change orders or construction delays due to disputes over intent of bid and contract document language. Our local contractors are familiar with state and local governmental licensing, bonding, administrative processes and inspection requirements.
 
A capital improvement process involves a great deal of pre-planning and coordination.  Facility owners, construction managers and other entities responsible for capital improvements often require PLAs, as a matter of prudent project planning, to address critical project staffing requirements for craft labor.  A developer with a PLA agreement strengthens the projects viability in the eyes of the financial community due to PLA assurances that a project will be completed on time and on budget without delays.  PLAs give investors and lenders confidence.

Projects involving Tax Increment Financing (TIF) should serve as a real catalyst to
economic development in an area.  An example is the World Market Center which will receive approximately $10 million in tax rebates from the City of Las Vegas over the next 20 years.  The project has been the catalyst for additional downtown development such as $100 million in renovations to the Golden Nugget, the Jewelry Market and the REI Neon project. 

John Restrepo of the Las Vegas based Restrepo Consulting Group, when discussing the economic impact of $870 million dollar improvements to the Las Vegas Convention and Visitors Center, says “Any type of large-scale construction project is going to produce dramatic impacts on a community during the construction phase. Economic impact is felt directly, indirectly and through induced benefits of a project.  The direct benefits are the ones that come as a direct result of the project, such as paying for construction materials and the jobs directly associated with construction.  Indirect benefits are those purchases that involve goods and services that come from companies that have a direct role in the construction. Induced benefits, which include revenue generated by construction workers who buy goods and services in the local economy.”