Job Order Contracting viable for Federal Preventive Maintenance – NJDOT

job order contracting case study

 

Based on the evaluation conducted, NJDOT believes Job Order Contracting is a viable alternative to the established, standard Federal Preventive Maintenance Contracting method. The quicker procurement process in general for JOC Contracts, as well as allowing for the addition of new structures throughout the term of the JOC Contract without the need for procuring additional contracts, are time and cost saving qualities beneficial to the Department. In addition, the increase in efficiency of the JOC Contracts does not compromise the quality of work or direct cost of work within the Contracts, as both are comparable to that of the established standard Federal Preventive Maintenance Contracts.
It is believed that for every new contractor that is awarded a JOC contract, there may be a learning curve in getting acquainted with new software and pricing methodology. However, once learned, NJDOT anticipates receiving from new contractors the same expediency and responsiveness of current JOC contractors.
NJDOT sees JOC as an efficient and effective procurement method that should be employed further.

Via http://www.4BT.US – Best Value, Independent, and Objective Job Order Contracting Solutions

Source – www.fhwa.dot.gov/programadmin/contracts/sep14nj2015eval.pdf

The 7 Basic Steps of Job Order Contract Program Implementation

The 7 basic steps involved in Job Order Contract Program implementation include;

  1. Strategic evaluation of objectives, goals, and appropriateness
  2. Development of an acquisition/procurement approach
  3. Facility management/engineering/technical planning
  4. JOC procurement/award process
  5. Work execution and contract administration
  6. Monitoring
  7. Ongoing training/improvement

For independent, objective, and best value Training, Education, & Tools, visit http://www.4BT.US

The 7 basic steps of job order contract program implementation

job-order-contract-task-order-life-cycle

Pros & Cons – Learn About Job Order Contracting

Job Order Contracting is a collaborative LEAN construction delivery method that can enable Owners to execute a higher percentage of quality facility renovation repair and renovation projects on-time and on-budget, IF implemented and management properly.

This video is important for anyone with a current Job Order Contract, or planning to participant in a JOC as an Owner, Contractor, Subcontractor, or Consultant.

 

Job Order Contracting Metrics – LA County June 2016

The Board of Supervisors routinely authorizes County departments and agencies to sign Job Order Contracts (JOCs) with contractors, which are used as an alternative to traditional procurement methods in order to expedite and competitively bid various construction and refurbishment projects.

In the last four months alone, the Board has authorized departments to sign 17 separate JOCs for $4.5 million each, totaling $76.5 million.

A recent article in the Long Beach Press Telegram reports that an audit of the City of Long Beach’s use of JOCs found “a significant lack of controls over all key areas of the process, creating an environment that is highly vulnerable to fraud.” The audit found that contractors would lowball their bid for a JOC in order be awarded the contract, and then proceed to charge the City for multiple change orders, unnecessary parts and labor, and specialty items that are not listed within the price book, for which the City must pay full value plus a 10 percent premium.

Over the 17- month period of the City’s use of JOCs that was reviewed in the City’s audit, 91 percent of JOC projects had change orders and cost overruns, and cost city taxpayers $1.9 million.

Given the County’s extensive use of JOCs and the large amount of public funds used to pay for them, it is imperative that the processes and procedures used by our County departments to administer their JOCs ensure that this type of abuse does not happen.

I, THEREFORE, MOVE that the Board of Supervisors instruct the CEO, in coordination with the Auditor-Controller and all departments that utilize JOCs, to report back in 45 days on:

1. The percent of JOC projects over the last year that exceeded the initial project cost estimate due to change orders or fees for specialty items not listed in the price book; and

2. The process by which departments evaluate requests by JOC contractors for change orders and fees for specialty items; and

3. The frequency with which contractors made unreasonably low bids for JOCs, and whether the County was warned about these low bids by The Gordian Group, with whom the County contracts to help administer JOCs;

4. A thorough review of the concerns raised in the audit released by the City of Long Beach’s Auditor on May 25, 2016, and identification if similar concerns exist within the County’s use of JOCs, with recommended corrective actions if any similarities are found.

(Source: MOTION BY SUPERVISOR DON KNABE June 14, 2016 )

Job order contracting performance metrics

job order contracting

City of Long Beach Job Order Contract Audit

City Auditor shares findings of an audit which found that
” that found LB’s (City of Long Beach) Public Works Department had let some contractors receive roughly $1.9 million more than they should have under the Job Order Contracting program. The actions involved projects costing an average of $100,000 each, meaning LB taxpayers didn’t receive as many as 19 infrastructure projects that they might have. ”  (Source: LBReport.com)

“In April (entering the campaign cycle for the sales tax increase portrayed as for infrastructure), Mayor Garcia agendized an item seeking changes in the Public Works Dept. program without disclosing Audit findings of which the Auditor had made him aware. On May 24, the Council approved City Attorney office-drafted changes to the Job Order Contracting program without disclosing the Audit-based underlying reasons for them. On May 25 (after vote by mail ballots had been circulating since roughly May 9), the Auditor’s office released its findings. The Auditor’s office has told LBREPORT.com that its timeline for releasing its Audit findings was coincidental.” – LBReport.com

Learn more

Proper oversight, education, and training are required for developing and implementing a Job Order Contract.

Improving Construction Productivity = Collaboration & Alternative Project Delivery

 

Eight Steps Toward Improving Construction Productivity

Partnering and collaboration must be a key performance metric by which real property owners and facility management professionals are measured.  Until this occurs, there is little hope for construction sector productivity improvement.

 

  1. Owners Foster and Mandate Collaborative Construction
  2. Best Value versus Lowest Bidder Procurement
  3.  Full Financial Transparency
  4.  Shared Risk / Reward
  5.  Mutual Goals & Trust
  6.  Common Terms, Definitions, and Data Architectures
  7.  Continuous Education, Improvement and Monitoring
  8. Adoption of LEAN Alternative Construction Delivery Methods – Job Order Contracting, JOC & Integrated Project Delivery (IPD)

JOB ORDER CONTRACTING

BIM has stagnated, and the construction industry (Architecture, Engineering, Construction, Operations, and Real Property Owners) as a whole remains unproductive due lack of focus upon process change management.

While most of us are aware that early and ongoing communication among all renovation, repair, or new construction stakeholders is the path to success, its rare that a team is established that is both clear on objectives and working towards common objectives.

Successful outcomes should be the objectives of ALL participants and partnering must not only be encouraged but mandated by real property owners.

Partnering is can not be accomplished solely through the implementation of technology. Nor is excessive management and control the path to success.  Adopting and fostering of LEAN best management practices, specifically developed for construction and which focus upon outcomes, is the path to productivity improvement.

Job order contracting and integrated project delivery are two examples of LEAN construction delivery methods that share decades of successful implementation and enable higher quality and a higher percentage of projects to be completed on-time and on-budget.

The most important element to successful project delivery is an educated and capable Owner.  An Owner that understands collaborative construction delivery and is focused upon successful outcomes for ALL project participants and stakeholders.

Technology will do little to solving the construction industry’s productivity issues. Despite the marketing of software vendors, technology is simply an enabler for faster and lower cost consistent deployment.  The key to success is the best management practices and processes embedded within technology.

Real property owners required training and ongoing professional development.  This includes real property executives, facility management, technical/engineering teams, cost estimators, purchasing/procurement, and facility users.   Educational institutions must also alter their programs.   Examples of competencies and content include; life-cycle management of the built environment, total cost of ownership practices, LEAN best management practices, and collaborative and/or alternative construction delivery methods.

Mandatory Partnering

While mandatory partnering may seem contradictory, it is not.   All construction contracts, projects, and programs should include a operational manual.  The manual describes the roles, responsibilities, deliverables, and outcomes for all parties.  While each manual can, and should be tailored to each owner’s requirements, common components of the core framework are ever present.  The operations manual spells out all requirements, terms, etc., associated with the collaborative construction delivery process.  An example of a job order contracting process is shown below.

job order contracting

OpenJOCcycle

Common elements to any LEAN Collaborative Construction Delivery Method

Common elements to implementing a productive LEAN construction delivery methods include the following:

 

Owner Leadership of Team Collaboration

Best Value Procurement

Mutually Beneficial Goals and Outcomes

Performance-based Reward System

Shared Risk/Reward

Common Terms, Definitions, and Data Archtectures

Outcome-based Key Performance Metrics – KPIs

Continuous Monitoring, Improvement, and Education/Training

Global Oversight with Local Implementation

 

” Great care is taken to establish an IPD team where participants can work together as a collaborative unit. Team formation considers capability, team dynamics, compatibility, communication, trust building and commitment to an integrated process….Once a team is formed, it’s important to create a team atmosphere where collaboration and open communication can flourish.” – AIA

 

One of the most important life lesson that I have learned is that success or failure is generally not determined by a problem, issue, or even an opportunity, but rather by how we react and deal with the situation.   Whether it’s a construction project, or other situation,  if we react and act as a team versus as individuals, outcomes are ultimately improved.

“The goal of everyone in the industry should be better, faster, more capable project delivery created by fully integrated, collaborative teams. Owners must be the ones to drive this change, by leading the creation or collaborative, cross-functional teams comprised of design, construction, and facility management professionals.” – CURT

Job Order Contracting – Audit Results

Job Order Contracting provides several significant benefits to real property owners, building users, and construction contractors.    A certain threshold of expertise, however, is required on the part of all stakeholders.

job order contracting

Furthermore, multiple deployment methods have been used for Job Order Contracting: Owner- managed JOC programs, JOC participation using cooperatives, and JOC as a service (outsourcing JOC program set-up and management via a third party).

The results of several audits of job order contracting programs demonstrate that education, experience/professional capability (technical and business), implementation of and adherence to robust business processes,  and the mode of deployment affect outcomes.

job order contract

Contractor price proposals were not always adequately reviewed prior to acceptance.

insufficient number of comparable projects to objectively support a conclusion as to whether the JOC Program resulted in overall lower or higher costs.

JOC construction contractors complied with the costing requirements for non-prepriced items; however, a number of projects had a high percentage of non-prepriced items to total project costs, which diminished the appearance of cost effectiveness.

No one indicated that the contractor’s adjustment factor was reviewed for accuracy. Nearly half of the Project Managers interviewed could not provide support for the pricing of non-prepriced items

 

OBSERVATIONS

JOC permits the issuance of job orders without competition because the tasks ordered were  competed as part of the original award. Non-prepriced items are tasks required by the scope of work, but are not included in the Construction Task Catalog. Contractors are required to separately identify non-prepriced items, provide support for pricing, and obtain approval for inclusion in their project proposals. Because non-prepriced items have not been competitively bid, their use should be kept to a minimum to ensure the cost effectiveness of the JOC program.

Of the 298 job orders recorded in PROGEN (the JOC application), 47 included one or more non-prepriced items. Ten of those were issued due to reductions in the scope of work. The following table presents the ratios of non-prepriced items (NPPI) to total project costs for the remaining 37 job orders:

Percentage of NPPI Number of Projects

Less than 25%                                 5 projects

From 25% to 50%                           5 projects

From 50% to 75%                            5 projects

From 75% to 99%                           11 projects

100% NPPI                                       11 projects

Job Order Contract Audit – City of Tampa JOC Audit –  2010

 

 

The Job Order Contract Program Lacks Sufficient Oversight to Ensure Program Effectiveness

The JOC program inadequately assesses contractors’ qualifications, resulting in a heavy reliance on lowest bid criteria when awarding JOCs.

The JOC program inadequately monitors the quality of contractors’ work. The program does not consistently and promptly inspect JOC projects and ensure SFPUC’s JOC program lacks a policy establishing the program’s purpose that could provide staff guidance when determining which projects to authorize for implementation under JOCs.

SFPUC’s use of JOCs for some projects undermines the intent of the JOC program. The Administrative Code indicates that repair, maintenance, and minor construction projects with costs less than $400,000 should be completed under JOCs. However, four of SFPUC’s

JOC projects were not for repair or maintenance and exceeded the $400,000 limit. Also, some evidence indicates that SFPUC may have divided some larger projects into smaller projects and executed them under JOCs.

Despite prepricing of construction materials and tasks being a practice that helps ensure that the City and County of San Francisco (City) receives competitive pricing for JOC projects, 14 (35 percent) of 40 sampled task orders contained non-prepriced tasks. In eight cases, the non-prepriced tasks represented the majority of the total project costs.

Heavy reliance on non-prepriced tasks reduces the effectiveness of the competitive solicitation process for JOCs.

SFPUC lacks procedures for choosing among JOC contractors when assigning projects and does not document project assignment decisions.

SFPUC may have intentionally divided larger projects into smaller ones. Despite prepricing of construction materials and tasks being what ensures that JOCs are not used to circumvent the regular competitive bidding process, 14 (35 percent) of the 40 task orders reviewed contained non-prepriced tasks. In 8 task orders, the non-prepriced tasks represented the majority of the task order’s total cost. SFPUC also inappropriately approved 5 task orders for federally funded projects, which occurred because federal regulations contradict the expectations of the SFPUC’s commission for JOCs.

Of the 40 task orders reviewed for the audit, four (10 percent) were not repair or maintenance in nature and exceeded the JOC program’s $400,000 limit in the Administrative Code. Of 312 task orders with a status of closed or in construction, 14 (4 percent) had total costexceeding the $400,000 limit. The Office of the City Attorney interprets this limit as delineating minor construction from major construction. Although some of these 14 task orders were originally under the threshold and their total costs increased due to unforeseeable issues, 4 JOC task orders appeared to be major projects…

SFPUC’s administration of the JOC program should be improved. The program’s policies and procedures lack criteria and guidance for key processes. For instance, the program lacks formal procedures for choosing which contractor receives a given project. The policies and procedures also omit criteria for allowing exceptions to the notice to proceed policy and, in 13 percent of task orders reviewed, the contractor began work before SFPUC issued a notice to proceed. The JOC program also maintains no documentation of how it made its project assignment decisions.

= San Francisco – 2012 – OFFICE OF THE CONTROLLER CITY SERVICES AUDITOR

 

 

 

  1. Establish a policy for the JOC program that specifies the intent of the program an may inform project authorization decisions.

  2. Not authorize projects that rely heavily on non-prepriced tasks.

  3. Use qualified staff to evaluate contractor qualifications and weight qualifications more heavily than lowest bid when awarding JOCs.

  4. Develop procedures for assigning projects to JOC contractors and document project assignment decisions.

  5. Consistently inspect JOC contractors’ work and ensure that project managers submit contractor evaluations on time.

     

– Recommencations for improvement – OFFICE OF THE CONTROLLER CITY SERVICES AUDITOR

 

 

 

We concluded the JOC program was developed with internal control weaknesses, implemented with management deficiencies, and abused by a contractor. In addition, the JOC consultant, The Gordian Group (Gordian), did not fulfill all its responsibilities under its contract. As a result, the HAKC was not adequately prepared to administer its JOC program.

The JOC program can be a useful system for accelerating the process of completion of rehabilitation work at Public Housing Authorities (PHAs). However, the JOC program (as implemented at HAKC) contained internal control weaknesses that contributed to abuses. Because the JOC program is used by other PHAs, we recommend the Assistant Secretary for Public and Indian Housing (PIH) require Gordian to amend its training program and instructional material to require that PHA inspectors use contractors’ detailed proposals when conducting JOC work inspections; and ensure PHAs develop detailed Scopes of Work and independent estimates adequate for comparison to contractors’ detailed proposals…

– Housing Authority of Kansas City, Job Order Contracting Program Kansas City, Missouri 1998

Based on the results of our testing, we found the County Divisions reviewed did not comply with contract provisions for issuing purchase orders under the job order contract.

Specifically, we noted that work was not priced in accordance with contract terms and dollar limits were exceeded.  In our opinion, the controls over the review and approval of price proposals, including whether the items proposed were needed to perform the agreed-upon scope of work and whether the price proposed and paid represented an appropriate amount for the actual work performed, were not adequate.

Work awarded under the County’s job order contract was not priced in accordance with contract terms. Section 1.0 of the contract states, “the general guide for pricing and determining allowable work [under the job order contract] is the current RS Means Facilities Construction Cost Data price index.” It was a generally accepted practice for the job order contractor (Contractor) to obtain a quote from a subcontractor for each task needed for a project and prepare a RS Means cost proposal to “back in” to the total of the quotes obtained. Consequently, for many of the projects in our sample, we noted significant differences between the items included in the price proposal and the items actually needed to complete the project.

–  Limited Review of Orange County’s Job Order Contract 2012 County Comptroller

 

 

Management should improve monitoring activities to ensure the JOC program is only used for projects that meet defined requirements. In addition, systems and processes should be implemented to regularly analyze the dollars spent with each JOC vendor. Data analysis revealed that some vendors currently receive a disproportionate share of the JOC work

While guidelines have been developed to assist in determining when a Job Order Contracting (JOC) project is appropriate, there is currently no systematic monitoring process to ensure JOC projects are awarded objectively and conform to the UT System guidelines. The following risks may occur within the current JOC process, although our review did not identify any specific instances of such:

  • The type of project may not be for the “minor construction, repair, rehabilitation, or alteration of a facility,” as required by the guidelines.
  • JOCs may be used for time-sensitive projects that would not normally be appropriate under the existing JOC contracting mechanism.
  • Absent capability and merit considerations, a JOC Contractor may be awarded a disproportionate percentage of the total JOC work.
  • Projects within the same area or location may be split between multiple projects so the spend amount falls under the $600,000 JOC threshold.

In addition, the JOC Contractor Selection Form that is used to collect data about the proposed project does not contain information to assist management in identifying potential exceptions to the guidelines.

-MD ANDERSON CANDER CENTER, Job Order Contracts, Strategic Area: Facilities Risk Type: Financial, Operational, Reputational, Audit Manager: Paul Pettit

 

 

 

City unlikely to achieve anticipated cost savings.

Program not being admisitered as effectively as it should be…

Department training manual states 8-15% total project cost savings with JOC.

– City of New York, Comptroller, JOC Audit

 

 

JOC Program did not comply with code requirements and there were internal control deficiencies.

The FSD was not making a determination that using job order contracting would result in cost savings for each project before approving the use of job order contracting … The FSD misused job order contracting to purchase furniture and equipment and payfor storage fees to store excess equipment.  FSD has not implemented policies and procedures to check the calculations and input of adjustment factors into Progen by The Gordian Group. The adjustment factors for 4 out of 20 job order contracts we tested were not correctly calculated or input into Progen.

-Los Angeles Unified School District, Office of the Inspector General, Contract Audit Unit  Contract Audit Report Performance Audit Job Order Contracting Program

 

 

 

Conclusion

Our review found that the JOC contractor prequalification and selection policies and procedures are not operating effectively. As a result, the contractor prequalification scores (CPS) do not accurately reflect the performance of the bidders and the JOC master contracts are not always awarded to the most qualified prequalified bidders as required by the Public Contract Code.

– Los Angeles Unified School District Office of the Inspector General, Contract Audit Unit Contract Audit Report Special Review Job Order Contracting Program –Contractor Prequalification and Selection Processes CA 15-1044 October 30, 2015

 

 

  • Labor, Material, Equipment, and Subcontractor markups were inconsistently applied resulting in $163,084 in excess costs to the city.

  • Supervision charges were added to invoices where the charges did not appear to be

appropriate thereby costing the city $219,939.

  • Labor rates were not billed consistently with the labor rates that were actually paid to employees thereby costing the city $73,742.
  • Certain construction activities and related charges were billed at rates much higher than rates generated by comparable resources designed to evaluate the reasonableness of proposed construction charges. These higher rates cost the city an additional $84,852.
  • Equipment was not consistently billed in accordance with the Rental Rate Blue Book for Construction Equipment as required by the city’s standard contract requirements (SCR).

These inconsistent billing practices cost the city an additional $54,037.

  • Approximately 25% of the change orders tested appeared as if they should have been included in the design phase of the project, where our experience indicates they would have resulted in less expensive costs.

-City of Philadelphia – Office of Comptroller, DEPARTMENT OF PUBLIC PROPERTY, Change Order and Requirements Contract Review August 2014

Department of Public Works: The Job Order Contract Program Is Generally Effective But Requires Improvements to Ensure Accountability and Consistency

 Specifically, Public Works needs better policies and procedures to guide staff on how to use the JOC program, manage JOC projects, and document key decisions. Public Works can also improve its written guidance over determining which projects should be executed through JOC and develop formal practices for assigning project work to JOC contractors.

CITY AND COUNTY OF SAN FRANCISCO OFFICE OF THE CONTROLLER Ben Rosenfield Controller 7/16/2013

 

 

The JOC Program Was Developed With Internal Control Weaknesses, Implemented With Management Deficiencies, And Abused By A Contractor

 – Audit Report – District Inspector General for Audit- Great Plains District

 

SUBJECT: Housing Authority of Kansas City

On December 19, 1994, the HAKC contracted with a JOC consultant, The Gordian Group (Gordian), to set up a JOC system at the HAKC. By mid-March 1995, the HAKC had contracted with two general contractors, F.H. Paschen Venture, Inc. (Paschen) and Brown and Root Services, Inc., to provide renovation work using the JOC process. From April 1995 through February 1997, JOC contractors renovated units and completed various maintenance and repair projects with contracts totaling $10 million.

Although our report addresses only the HAKC JOC program, we understand similar JOC programs are used by at least nine other PHAs throughout the country.

OpenJOC-Job Order Contracting win-win