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Prevailing Wage: The Possible Fourth 'P' In P3s

Law360, New York (May 6, 2016, 12:08 PM EDT) -- As public-private partnerships proliferate, a recurring issue is whether prevailing wages, including fringe benefits, must be paid to the labor force engaged in the project. The answer to that question can have a considerable impact on the developer’s budget and potentially endanger the viability of the project; the resultant increase in total construction costs has been officially estimated at 23 percent[1], but most developers ascribe a significantly higher percentage to prevailing wages.

While developers would prefer the certainty of bright-line rules in this area, the courts have taken a case-by-case approach, focusing on the nature of the contractual relationships defining the...

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