Onsarigo, L; Duncan, K and Atalah, A (2020) The effect of prevailing wages on building costs, bid competition, and bidder behaviour: Evidence from Ohio school construction. Construction Management and Economics, 38(10), pp. 917-933. ISSN 01446193
Abstract
The Davis-Bacon Act and other state prevailing wage laws are instituted to, among other things, protect local compensation standards from possible degradations associated with public construction and create a level playing field for all competing contractors. The impact of prevailing wages on the cost of construction projects to the taxpayers is an issue that continues to be debated at the state and federal levels. In this paper, data from recent school construction projects in Ohio are used to examine the impact of federal prevailing wage standards on construction costs and bid competition. Results from the examination of all bids and winning bids indicate that prevailing wage requirements do not have a statistically significant effect on building costs or the level of bid competition. Results from endogenous treatment estimators provide additional evidence that the prevailing wage policy does not increase costs or limit competition. Additional analysis of all bids indicates that the cost-reducing effect of increased competition is stronger on projects covered by the prevailing wage policy.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | bid competition; bidding; construction cost; prevailing wage laws |
| Index terms: | public construction, estimator, educational building construction, wages, compensation, degradation, bidder, construction cost, construction project, competition, bidding, evidence |
| Subjects: | bidding, building construction, profession, business economics, dispute resolution, market analysis, material degradation and durability, financial and cost management, evaluation and assessment methods, production management |
| Topics: | Research Practice, Project Management, Cost Management, Human Resources, Procurement, Design Practice, Legal Issues, Construction Materials, Engineering Principles, Roles and Professions |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here