Of the two dedicated Job Order Contracting Solutions available in the United States, one provides and recommends an open, transparent, and mutually collaborative approach, including an independent, nationally recognized and vetted cost database, developed and customized as required to client requirements, from RSMeans Company LLC.
A recent Audit Report by the New York City Comptroller on a non-RSMeans based system, highlights some critical aspects of any JOC – Job Order Contracting – program.
Audit Report on Job Order Contracting by the Department of Design and Construction (note: This is one of many audits over the past several years, with few problems resolved).
JUNE 28, 2012
AUDIT REPORT IN BRIEF
Download the Complete Report (pdf 214 KB)
The Department of Design and Construction (Department) manages the design and construction of more than $6 billion new and renovated City facilities such as firehouses, libraries, courthouses, sewers, and water mains. The Department uses job order contracting (JOC), a construction procurement method, for performing small- or medium-sized construction projects. Under a job order contract, the Department’s Job Order Contracting Unit (JOC Unit) can direct a contractor to perform individual tasks as needed rather than awarding individual contracts for each small project. The cost of JOC work is based on previously established unit prices for specific items (e.g., roofing, drywall, etc.). Using the established unit prices, the JOC Unit will issue a job order to a job order contractor to carry out the work based on specific tasks.
The Department’s use of JOC began in 1996 when the Department employed a consultant, The Gordian Group, to develop and implement the Department’s JOC program that included creating a catalog of unit prices, software (PROGEN), and training and ongoing management throughout the life of the contract.
In Fiscal Years 2009 and 2010, the Department utilized 19 job order contracts authorizing up to $74 million in construction expenditures. Under these contracts, the Department executed 139 specific job orders totaling $24,549,827.
Audit Findings and Conclusions
The Department is unlikely to attain between $2 million and $3.7 million in cost savings from the JOC program because the program is not being administered as effectively as it should be. Had the program been administered more effectively, the Department might have achieved a cost saving that, according to the Department’s JOC Training and Reference Manual, could “save a typical facility owner 8-15% [highlighted in the manual] in overall project costs as compared to traditional contracting methods.” Specifically, we found that job orders are not developed in a timely manner, cost estimates are not reliable indicators of the actual cost of work, and construction work is not carried out in a timely manner. Moreover, there is a lack of guidelines that spell out the circumstances and monetary threshold for job order work and a lack of standards for measuring whether the JOC program is, in fact, achieving anticipated cost savings.
Furthermore, when job order work was delayed, the Department did not impose liquidated damages totaling more than $450,000. Additionally, problems with the Department’s PROGEN database impede the Department’s ability to effectively monitor the status of JOC project work and ensure that projects are proceeding expeditiously. Finally, our observation of sampled job order projects and a review of file documentation leads us to conclude that the quality of work overall was satisfactory.
This report makes a total of 12 recommendations, including that the Department:
- Formulate measurement criteria to assess whether the JOC program is attaining its goal of achieving savings in overall project costs.
- Complete development and submit job orders for registration within the required 45-day timeframe.
- Provide independent estimates for job order work.
- Ensure that JOC contractors complete work on schedule.
- Develop and implement written guidelines that stipulate the circumstances and monetary threshold under which the use of job order contracts would be appropriate.
- Ensure that all job orders contain provisions for liquidated damages. Determine whether liquidated damages should be assessed for the cases noted in this report.
- Ensure that accurate and complete information is recorded in the PROGEN system.
What JOC should be….
“Job Order Contracting (JOC) is a method of managing multiple details of renovation, rehabilitation, repair, and other construction projects on a predetermined set of pricing and standards. By using JOC customers take advantage of a process that is fast and responsive to their needs while providing excellent quality construction.”
–Center for Job Order Contracting Excellence (www.jocexellence.org)\
Benefits that could be realized by implementing a robust job progam:
Faster project delivery (3-9 months less), Streamlined engineering and design, Cost visibility/transparency, Better contractor performance, Integrated Team – Partnering/collaborative owner/contractor relationship, More opportunities for local business, Effective use of year-end funds, Higher overall satisfaction
Items to Consider for a Robust, Transparent, and Successful JOC Program:
Assess in-house capabilities
Project Management Capacity
Line-item estimating, or ability to review estimates, Proactive definition of scope, In-house maintenance crews
How will JOC interface with your design professionals?
Flowcharting how JOC process will interface with purchasing, management and board approvals
Company culture of high performance needed to succeed in JOC?
Ability and capacity to create productive teams?
Proactive rather than reactive?
Line item estimating capabilities?
Additional items for consideration for implementing or improving a JOC – Job Order Contracting or SABER Program:
o Your specific requirements, implementations, responsibilities, level of involvement, and rules for youre JOC or SABER Project Delivery Program
o Basic elements of JOC
o Requirements of a Successful JOC Program and is it the right method
o JOC Operations including how to set up a JOC Program
o Roles and Responsibilities of those involved
o Individual Job Order to include Preconstruction Services, Scope of Work, Price schedule and change orders
o How to manage a JOC Program to include training, reporting, communication tools, relationship building techniques and audits
o Job Order Pricing
o JOC Selection Process
o Legal considerations and contracts which are key to a successful JOC Program
o JOC Operations Manual
o Collaborative Thinking to ensure win-win-win results
o Review of past experiences / case studies of others
o Role of Technology and selecting appropriate JOC Program Partners
o The Value / Importance of Objective third-party cost data / UPBs
– Premier providers of cost estimating and project management software for efficient project delivery – Job Order Contracting – JOC, SABER, IDIQ, SATOC, MATOC, MACC, POCA, BOA.