Study Finds Project Labor Agreements Increase School Building Costs

Associated Builders and Contractors of Ohio (ABC) teamed up with the Boston-based Beacon Hill Institute on Thursday to release a study finding that project labor agreements add significantly to the cost of school construction projects.

ABC’s Bryan Williams, a former state legislator, said the report bolsters his organization’s position that neutrality should be codified for all state and local public works construction so project labor agreements can neither be required nor forbidden for bidding on government contracts.

David Tuerck, president of the Boston-based think tank, said the study analyzed 88 Ohio school construction projects from 2003 onward, 15 of which had project labor agreements.

Tuerck said in developing the study Beacon Hill accounted for a variety of variables that can affect total project cost, such as the inclusion of a gym or theater or whether a building is to house an elementary or high school. The study concluded a project labor agreement increases final construction costs by $23.12 per square foot, measured in 2016 prices, a 13.12 percent increase over average construction costs of $176.23 per square foot.
That cost difference amounts to more than $2 million for a 100,000-square-foot building, Tuerck said.

“These results are statistically significant,” he said.

Tuerck and Williams said the results are logical given the effect project labor agreements can have on preventing or dissuading companies from bidding on projects, thus hindering competition.

“There are millions of dollars that went into needless cost increases … that could have gone into the cost of a structure or enhancing the quality of the structure for the community that’s using those,” Williams said.

Tuerck said the study is consistent with separate analyses of the use of project labor agreements in other states.

The Ohio Supreme Court struck down a 1999 law restricting the use of project labor agreements. Under the Strickland administration, the Ohio School Facilities Commission issued a policy allowing local boards of education to require project labor agreements on their construction projects. The Kasich administration withdrew that policy.

The Beacon Hill report is available here.