- Many/most Owners do not have the knowledge, capability, or organizational buy-in to support life-cycle management of the built environment.
- Far too often focus is upon first-costs vs. life-cycle costs.
- Your budget is largely operations/repair/renovation/maintenance, not new construction. Focus upon maximizing ROI in your costliest areas.
- Process and/or Best Management Practices, especially your “construction delivery method” impacts results more that ANY other factor. Focus upon collaborative, transparent construction delivery methods such as IPD – Integrated Project Delivery, and JOC – Job Order Contracting.
- Requiring the consistent use of terms, standardized data architectures (MasterFormat, UniFormat, IFC…), and standardized cost data (example RSMeans) is REQUIRED. You can’t manage what you don’t measure….period!!!
- Develop long-term relationships with local service providers whenever possible. They will learn your facilities and needs. Treat them as Partners, and with RESPECT! Remember, you largely get what you pay for.
- Use key performance indicators, KPIs – # of change orders, # of disputes, # of project completed on-time/on-budget, facility condition index (FCI), adequacy index …
- Leverage technology, especially cloud computing. Technology MUST support your processes but not dictate or limit them. Forget monolithic, “enterprise” systems, go for “best-in-class” plugs for all your critical areas…. construction project delivery, cost estimating, space planning, capital planning, BAS, CMMS … Don’t get caught in the 3D visualization “black hole”. 3D visualization is not life-cycle management.
- Involve ALL stakeholders early and often.
- Remember… the built environment is critical to your organization. Communicate that fact, and the associated major benefits of a life-cycle approach, or you aren’t doing your job!
It’s Time for Efficient Construction Project Delivery
JOC provides higher levels of owner and contractor satisfaction versus design-bid-build, design-build, or CM-at-risk.
Job Order Contracting … 1.) Is equally responsive to the needs of the owner and contractor to get work done on-time and on-budget, 2.) Fosters trust and mutual respect, 3.) Is simpler/easier to use; 4.) Provides higher cost transparency, and 5.) Delivers more predictable outcomes.
What’s Wrong with Design Bid Build?
Traditional design-bid-build, DBB, is costly, antagonistic, and simply inefficient. DBB is exclusively responsible for the construction sectors poor productivity versus all other business sectors. Despite the fact that collaborative construction delivery methods have been proven to be superior in enabling more projects to be complete on-time and on-budget per Owner requirements, they are only recently beginning to be deployed on a larger scale.
The History of JOC
Job Order Contracting is an integrated, collaborative construction project delivery method with a 20 year+ track record. Supporting technology has been available for almost as long, as have “open”, “industry standard” cost databases such as RSMeans. The first JOC in the United States was deployed by West Point. West Point is using JOC to this day, however now, some twenty years later, leveraging advanced cloud computing technology for its current JOC.
Today, Federal Government (DOD and non-DOD), State and Local Governments, Public Schools, Universities, Transportation, Healthcare, and many other facility and infrastructure environments are benefiting from Job Order Contracting programs all across the United States.
JOC is coming to the forefront due to environmental and economic demands. Quite simply, all organizations need to “do more with less”, and provide transparency and better cost controls. Furthermore, facilities and infrastructure continue to age and require greater funds to maintain. Renovation, repair, and maintenance represent the bulk of facility management related costs, exceeding that of new construction for many/most. Environmentally, facilities leave a high carbon footprint and the need for improvement has never been greater.
What is JOC?
Job Order Contracting is a construction delivery method and a long-term IDIQ contract for construction services delivered on an on-call basis through firm, fixed price delivery orders based on pre-established unit prices (via a unit price book, UPB).
- A Job Order Contracting (JOC) system is based on a competitively bid indefinite delivery-indefinite quantity (IDIQ) contract between a facility owner and a construction contractor.
- The contract typically has a base year with two to four option years.
- The contract sets parameters such as the types of work that can be done, location of the work, design criteria and maximum amount of work to be awarded.
- The contract also has a unit-price book (UPB) that establishes a unit price to be paid for each of a multitude of construction line items. A typical UPB has over 40,000 line items, such as the RSMeans Facilities Cost Book (note: RSMeans Cost Books that include unit line item modifiers and 400,000+ line items are also available and provide greater cost visibility), and covers almost every construction task. Items that are not in the UPB can be negotiated, priced, and added to the UPB at any time.
- Shared Risk-Reward
- JOC technology – Running JOCs within a spreadsheet or generic construction cost estimating software is inefficient and provide inadequate reporting and management tools/capabilities.
Ideally, contractors compete for JOC contracts on the basis of performance as well as price. The contracts price is put in terms of a coefficient, which is a multiplier that covers the contractor’s overhead and profit as well as any adjustment between the UPB and actual local prices. Once awarded a contract, the JOC contractor normally establishes a permanent office in close proximity to the facility management staff. The contractor’s project manager becomes part of the owner’s facilities management team. The facility owner or manager decides how much work is performed by the JOC contractor based on the need and the performance of the contractor. The contractor is motivated to provide the facility owners with outstanding service and quality by the potential of additional work.
Once a JOC contract is awarded, facility project can easily be completed by following a predetermined workflow. The figure below outlines the general process.
A simple description of work to starts the process, followed by a site visit and a simple design as required. Once the design/work approach is approved, the contractor and the owner prepare cost estimates by compiling the appropriate quantities of necessary UPB line items. As noted earlier, the UPB cost data is best access with a JOC unit price estimating software system. The estimating process therefore if very fast and efficient.
After the cost estimates are completed, the contractor and user negotiate to resolve differences in line items and/or quantities in their respective estimates. In Government JOC applications, the owner MUST complete an Government Estimate (IGE) for any JOC work order over a certain value (typically $100,000-$150,000) per FAR, DFARS, or similar regulation. In other sectors, the JOC contract will stipulate any such requirements. Once a price is agreed upon, a job order is issued to the contractor and construction begins. The entire process usually takes anywhere from a day to 20 to 30 days from the time the work was first identified to job start. This represents a dramatic time and cost savings to all parties when compares to the traditional design-bid-build process. See below graphic.
The Benefits of JOC
The benefits of a properly structured and implemented JOC Program include:
- Responsive Support
- Reduced Project and/or Deferred Maintenance Backlog
- More Funds Applied To Construction vs. Procurement and/or Waste
- Dependable, Long Term Owner-Contractor Relationships
- Reduced or Eliminated Claims
- Reduced or Eliminated Change Orders
- Greater Cost Visualization and Control
- Easier Project Deployment / Management
Job Order Contracts Deliver:
- Excellent Quality: Partnering and performance incentives produce high quality construction and service. JOC contractors also can prequalify and use only the finest subcontractors. These subcontractors are held to strict quality standards and periodic evaluations.
- Fast and Responsive Construction: Takes a day to 20 to 30 days from request to start of construction. This is possible because projects do not require traditional and repetitive bidding and contract acquisition inefficiencies, detailed plans and specifications, and associated long approval process. On-site contractor location contributes to speed, responsiveness, local site conditions, and specific owner requirements. Years of research by Center for Job Order Contracting Excellence (CJE), Arizona State University, and the DOD have identified the quick turnaround and delivery time of facility systems as the greatest advantage of the JOC.
- Dependability: Long-term relationships, fixed pricing and simplified paperwork all help in meeting customer expectations for performance and price. The contractor is motivated to impress the facility owner with fast, dependable, quality service in order to receive the maximum possible amount of work from referrals and call backs.
- Simplicity: The simplified design documents and acquisition process eliminates the need for complicated and repetitive contract documentation, and associate miscommunication. Job orders are negotiated on a line-by-line basis under the guidelines and specifications of the JOC contract.
- Time and Cost Savings: Years of reasearch has shown that the rapid and quality construction are the major advantages of JOC. Reduction in administration, design, and construction management cost is substantial.
- Risk Mitigation: The JOC process has been proven to work very well at hundreds of locations nationwide and across multiple market sectors. Legal disputes are virtually eliminated and changed orders are significantly reduced. JOC contractors can be terminated due to a lack of performance as defined in the contract.
Arizona State University is currently conducting a nationwide study of job order contracting. Prior studies have noted the following:
- The primary reasons for using JOC: The need to complete the work in a timely manner, simplicity of use, familiarity with the contractor, and predictability of the process.
- JOC provides more owners and contractor satisfaction vs.more satisfaction than design-bid-build, design-build or CM at risk.
- JOC requires less time to start a project than design-bid-build, or design-build or CM at risk.
- JOC requires less design time than design-bid-build, design-build or CM at risk.
- JOC requires less time to close out a project than design-bid-build, or design-build or CM at risk.
- JOC is easier to use than design-bid-build, or design-build or CM at risk.
When is JOC not a JOC?
The following should NOT be allowed with any JOB ORDER CONTRACT:
- Programs that award to lowest bidder vs. lowest qualified bidder
- Programs without Unit Price Books, and/or objective third-party validated unit price books
- Programs with multiple awards for the same work/work area
- Programs without well thought out implementation plans, metrics, supporting software, ongoing training, and continuous improvement
JOC continues to evolve as the needs and desired results of facility owners, contractors, subcontractors, AE’s,. and oversight groups expand and change. The long-term viability of JOC appears a given as collaborative construction delivery methods become the ‘status quo’ out of economic and environmental necessity.
Overall enhanced performance associated with facility and infrastructure repair, renovation, maintenance, sustainability, and construction is our mutual responsibility.
Construction – A Track Record of Productivity Decline
Public and Private Sector Real Property Owners as well as their supporting Contractors and AEs continue to lag with respect to construction software technology and training and the adoption of efficient collaborative construction delivery methods. These facts have made the construction singularly unproductive vs. other sectors for the past several decades.
Over 80% of construction contractors still use pen and paper (50%+) and/or spreadsheets (30%+) for critical tasks such as construction cost estimating and quantity takeoffs. Only 35% use some type of task specific construction software!
More distressing, is the lack of awareness and usage of collaborative construction delivery methods such as Integrated Project Delivery – IPD (for new construction projects) and Job Order Contracting – JOC (for renovation, repair, maintenance projects ).
Time to Move Away FROM Antagonistic, Competitive Construction Delivery Methods TO Collaborative Teams
Traditional design-bid-build and low-bid are inefficient and antagonistic. Owners, Contractors, and AEs are pit against one another from concept thru warranty. The result is that between 70% and 90% of projects exceed the original planned cost and that the overrun commonly varies between 50% and 100% of budget. Construction also suffers from 57% of effort on non-value added activities compared with 26% within manufacturing. Causal factors such are largely related to ineffective coordination, basically the construction delivery method.
Performance-based construction delivery methods with shared risk-reward, as well as well-defined roles, responsibilities, deliverables, and metrics from day one is the ONLY path to success. These LEAN best management practices have been proven in the manufacturing sector, and a relative small percentage of Owners and Contractors in construction. IPD, JOC, SABER and similar LEAN construction project delivery methods have been practiced for over two decades.
Move Away from Poor Use of Data Based Paper and Spreadsheets
Independently produced documents and spreadsheets produced by cost estimators, AEs, lead to major cost increased associated with data capture and reuse, resolving multiple formats/terms/data structures, and errors, omissions, extra work, and claims inherent to the process.(2, 3)
Supporting technology and training has also been readily available. More specifically, construction cost estimating and project management software solutions for JOC, SABER, IDIQ, etc. have existed for over a decade. These solutions embed best management practices and workflow as well as robust construction cost databases. They provide contract, project, and document management, as well as productivity and control features such as visual estimating / QTO, automated estimate comparison, and so much more!
Technology can help grow contractor business, while also enabling owners to get more projects completed on-time and on-budget.
So, why do so many Owners and Contractors stick with spreadsheets?
1. Failure to perform due diligence. Simply researching the internet or talking with peers would be a step in the right direction.
2. Contractors (some) are not inclined to share information with Owners and/or work within a win-win environment of shared risk-reward.
3. Resistance to change. “My way is the best way”.
4. You can’t manage what you don’t measure. You can hide behind a spreadsheet. Using spreadsheets means there is virtually no accountability. It’s extremely difficult to review larger or multiple trade estimates within a spread sheet, if not impossible.
5. “First cost” vs. “total cost” mentality. Some see software as expensive vs. spreadsheets. In reality, one mistake on one estimate will pay for multiple software licenses. The cost of technology is insignificant vs. project costs.
In summary, whether you’re an Owner, Contractor, Subcontractor, AE, or Oversight Group, failing to invest in the right software, information, business process, and training will be detrimental to your business and/or organizational mission.
Technology continues is exponential rate of change. Cloud computing, a disruptive technology, is currently causing fundamental changes in how we work each and every day, yet many of us remain unaware. \
Collaboration, transparency, metrics, and continuous improvement will be the norm.
Are you ready?
Related Articles/Additional Sources:
1. “Discussion on U.S. Construction Labor Productivity Trends, 1970-1998”, J. Constr. Engineering and Management, ASCE.127: 427-429.)
2. “Labor-Productivity Declines in the Construction Industry: Cause and Remedies (Another Look), 2013, Teicholz, Paul, AECBytes
3. “Cost Analysis of Inadequate Interoperability in the U.S. Capital Facilities Industry”, 2004, NIST
4. “Long Term Impact of Equipment Technology on Labor Productivity in the U.S. Construction Industry at the Activity Level.” Journal of Construction Engineering and Management, 2004 130, no. 1:124-133,
Job order contracting (JOC) is a collaborative construction delivery method, and/or a form of integrated project delivery – IPD, that enables organizations to get their numerous, commonly encountered construction projects done quickly, easily, and cost-effectively through multi-year contracts – IDIQ.
JOC reduces unnecessary levels of engineering, design, and contract procurement time along with construction project procurement costs by awarding long-term contracts for a wide variety of renovation, repair and construction projects.
With an emphasis on partnering and team work between Owners and Contractors, JOC provides the methodology to execute a wide variety of indefinite delivery, indefinite quantity – IDIQ fixed-price, multiple simultaneous orders for renovation, rehabilitation and repair work for facility and infrastructure portfolios.
JOC provides multiple benefits vs. traditional design-bid-build and/or low bid, MACC, MATOC and other typically less efficient construction methods.
JOC can deliver:
1. Shorter procurement and short overall project timelines.
2. Higher cost visibility and transparency.
3. Significantly reduced number of change orders
4. Higher overall quality.
5. Ability for Owners and Contractors to complete more projects on-time and on-budget.
6. Longer term performance-based relationships among Owners and Contractors.
7. Shared risk-reward
8. Ability of Owner Engineering, Contracting, and Programming to better work together
JOC contractors are selected on qualifications and performance at a best value or low price or low bid depending on local, state or federal statutes. JOC is about performance, reliability, dependability and quality.
At the same time, JOC is about results and working within budget and time constraints. The JOC contractor provides “on call” construction services from concept thru close-out.
JOC today has more than a 25-year record of implementation within the United States Department of Defense – DOD, and wide range of non-DOD Federal, County/State/Local, Educational, and Healthcare institutions. Currently, there are hundreds of successful contracts going by the JOC name or by its counterparts of delivery order contracting (DOC), task order contracting (TOC) and simplified acquisition of base engineering requirements (SABER). Not only public sector but also private sector facility owners are expanding the use and implementation of the JOC construction delivery method.
JOC is used for a wide range of construction services:
- Facility renovation and construction services delivering turnkey improvements while reducing time and cost.
- Energy efficiency and management solutions providing high ROI and low risk.
- Mission critical improvements.
- Design – Build and Construction Management services to deliver projects on time, within budget, and without change orders.
- Abatement and demolitions services to accelerate renovation projects.
- Seamless integration with preferred architects, engineers, and client team of facility professionals.
- State wide or nationwide delivery through responsive professionals in local offices
- Delegated decision making authority.
- Turnkey projects using a fast cycle time approach to cut time and cost from the front end of the project delivery process.
- Combined value engineering and other best practices to ensure value delivered, price, and time are maximized on every project.
Technology and training are critically important to JOC, as they are to any best management practice and LEAN methodology. Technology enables consistent, low cost deployment, monitoring, use of standardized and localized cost databases (for example the RSMeans Facilities Book which is used on approximately 80% of all JOC/SABER programs), contract/project/document management and continuous monitoring. Training assures adequate owner capabilities (for example the ability to create an internal government estimate – IGE) and contractor knowledge of processes and responsibilities.
JOC is for any Owner and Contractor needs to improve productivity and efficiency with respect to facility renovation, repair, sustainability, and maintenance projects. These project represent the largest capital outlay for many/most owners and the majority of construction work performed.
Disruptive technologies change the normal course of how things are done.
Examples of disruptive technologies include PCs, Email, Cell Phones, Social Media/Networking.
What would you include in your top 10 or top 5 list?
Cloud Computing, Mobile Internet, Genomics, and AI would certainly be on mine.
As to the AEC sector? Cloud computing, collaborative construction delivery, and 3D “printing” certainly are on my list, how about yours?
|The Alliance For Construction Excellence|
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Sure, we all use spreadsheets every day. What a great tool for transferring information and performing some analysis work!
However, if you do a lot of detailed RSMeans line item estimating for JOC, SABER, IDIQ, BOS, or similar work, you know there’s a need for greater productivity, collaboration, and transparency than what spreadsheets, online cost books, or generic cost estimating software can provide.
Best management practices (Process), robust cost data, collaboration, and supporting technology are requirements for assuring maximized productivity, transparency, and continuous improvement.
PROCESS: It is the construction delivery method that sets the tone, establishes responsibilities, details deliverables, defines risk, and ultimately determines the success or failure of any renovation, repair, construction project. Traditional ‘ad-hoc’ methods, such as design-bid-build, pit owners, contractors, subs, and AEs against one another and have largely contributed to the decades long history of declining construction productivity.
COLLABORATION: Collaborative construction delivery methods such at integrated project delivery and job order contracting should be used for virtually every construction project. These performance-based methods distribute risk and reward and promote long term, productive relationships. They also foster, actually they require, information sharing. Lastly, they provide information and metrics to enable continuous improvement in concert with other LEAN practices.
COST DATABASE: A detailed unit price cost database including material, equipment, and labor, line item modifiers, and localization factors is equally important. An example of such a database is the RSMeans Facilities Cost Book, which is use for the majority of current Job Order Contracts. In fact, RSMeans Cost Data in general is considered to be the standard for North America. It’s time to put aside CLINS without cost data, and leverage third party and owner experiences with the use detailed unit prices. In short, “you can’t manage what you don’t measure”. The use of detailed unit price books to validate lump sum “hard bid” values from contractors and subs provides must become standard practice. With respect to RSMeans, is also important to have the best representation of RSMeans cost data available as well as tools and training/support.
SOFTWARE: Software’s role is simple, to enable the cost effective deployment of best management practices, information access and reuse, and ongoing monitoring at both global and local levels. Software must be “domain-specific”, in other words, just like the apps on your phone, software must be designed specifically for the task at hand.