Costs and Benefits of MBE Rules in Construction

The findings of a study designed to investigate the costs and benefits of Minority Business Enterprise (MBE) regulations in the construction industry are presented. The data indicate that large contractors have less difficulty than smaller organizations in meeting MBE requirements. In addition, it is shown that the regulations both benefit and enlarge the number of minority contractors. According to the study, however, MBE procedures have not increased the number of qualified minority contractors. The data also indicate that MBE regulations have increased the cost of construction projects. The amount allocated, although significant when compared to percentage profit, is not substantial. For example, the unweighted values, in terms of construction dollar volume, range from 3.41% for the Engineering News‐Record (ENR) 400 organizations to 3.33% for the Associated General Contractors of Indiana, AGC (Indiana). The weighted values range from 2.04% for the ENR 400 contractors, to 3.74% for the AGC (Indiana). The great majority of firms surveyed indicate that MBE rules and regulations should be modified. Better agency procurement efforts and comprehensive programs to train minority contractors are mentioned as a necessity.