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Project Labor Agreements

As a response to the rapidly rising costs of construction and its impact on the New York City building industry, the Building Trades Employers' Association ("BTEA"), which represents 28 contractor groups and more than 1,700 union firms, and the Building and Construction Trade Council of Greater New York ("BCTC"), which represents approximately 100,000 union workers, have come to terms on a Project Labor Agreement ("PLA"), its intent being to stimulate construction at new or previously stalled sites.

According to published reports, the PLA is estimated to reduce project costs by an average of 16%-21%. PLA savings arise out of, among other things, an agreement by the parties not to permit strikes, lockouts or other work stoppages; a reduction in profit margins and freezing of management personnel wages; and setting a standard 8-hour workday and 40-hour workweek, which includes flexible starting times and lunch breaks. Notwithstanding, Owner-Developers have also voiced complaints with the PLA, debating the actual cost savings the PLA purportedly produces and whether these savings do enough to reduce construction cost.

Owner-Developers contemplating union labor construction are wise to consider the PLA as a viable cost-saving project option. The current PLA is in a template form, and negotiations with the BCTC and BTEA are undertaken on an individual project basis. If an Owner-Developer elects to use the PLA and reaches agreement with the BCTC and BTEA, it will influence a project's construction contracts.

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