Ask The Experts

Drop us an e-mail with your questions at lsancio@competitivecontracting.org

Q: I’ve been told that Project Labor Agreements (PLA’s) drive up the cost of school construction projects, is this true?

A: It is not true. In New Jersey where Prevailing Wage Standards set minimum pay rates, there is no difference in compensation values between a union worker and a non-union worker. In fact, while people assume that union labor is more expensive, the opposite may be true. According to a recent NJ LECET study, employers and project owners often pay more for non-union labor than they would for union labor. This is largely due to many non-union employees receiving cash in lieu of benefits. Because this makes the non-union worker’s gross pay higher, they (and their employer) pay more in taxes. The difference has been calculated to cost employers and project owners an additional $3.74 per hour per worker.

Q: While developing a strategy to evaluate bids, our School Board is unclear when and for what reasons it can reject a bid from a bidder.

A: Bids may be rejected for the following reasons:
A) The lowest bid substantially exceeds the cost estimates for the goods and services;
B) The lowest bid substantially exceeds the board of education’s appropriation for the goods or services;
C) The board of education decides to abandon the project;
D) The board of education wants to substantially revise the specifications;
E) The purposes or provisions or both of the Public School Contracts Law are being violated; and
F) The board of education decides to use the State authorized contract pursuant to N.J.S.A. 18A: 18A-10.

Q: What is the difference between bidding a job single prime or multiple prime? Is it better to use a general contractor or doesn’t it matter?

A: In our opinion, there is a big difference between single prime and multiple prime projects. By using single prime bidding, the owners/school board delegates the construction responsibilities to a general contractor who has experience handling large construction projects that require a full complement of subcontractors. With single prime contracting, the general contractor is awarded the entire contract and must supervise and be responsible for all of the subcontractors.
In a multiple prime environment the building owner assumes that immense responsibility. This can mean overseeing and coordinating the work of numerous contractors. Some prefer this option, but be warned that multiple prime projects require the owner to have a strong background in construction management.
Sometimes, it is better to hear this information from an impartial source. According to a 1994 study of New York City school construction by Princeton University professors Orley Ashenfelter and David Ashmore, single prime contracting reduced final construction costs by 10%. They cite hidden management costs and time delays as the primary factors for multiple prime overruns.