The Economic Costs and Benefits of Project Labour Agreements in Ontario

The Economic Costs and Benefits of Project Labour Agreements in Ontario – REPORT

Project Labour Agreements (PLA) are pre-hire contracts between a construction owner and the Building Trades unions that coordinate building activities across trades and establish the terms and conditions of employment for a specific project. They were first established in Ontario in 1998 with the goal to enhance the competitiveness of large manufacturers by creating project stability through access to skilled labour, the harmonization of scheduling across trades, expediting dispute resolution, and eliminating work stoppages. Since then, PLAs have been used frequently by Canada’s largest and most respected construction companies.

Despite the inherent benefits of PLAs, they are often criticized as a restrictive tool that reduces bid competition and leads to higher costs. The enclosed discussion paper explores the economic benefits of Project Labour Agreements and focuses on dispelling many of the myths and misinformation associated with this unique tool.

This academic analysis reveals three main conclusions:
  1. PLAs do not have a statistically significant effect on construction costs
  2. PLAs do not have a statistically significant effect on the number of bidders on a project
  3. PLAs lead to timely completion of construction projects (16% to 19% faster than projects that did not use a PLA)
Setting research and statistics aside, the fact remains “some of the province’s largest and most successful manufacturers – NOVA Chemicals, ArcelorMittal Dofasco, General Motors Canada, and Toyota Canada – have regularly and repeatedly relied on PLAs to oversee billions of dollars in new construction over the past 25 years. These are large, sophisticated multinational companies with decades of experience and [they] are not in the business of wasting resources.”
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