An Introduction to Job Order Contracting

An Introduction to Job Order Contracting – The LEAN OpenJOC(TM) Way!

#1 JOC is  PROGRAM not a PROJECT

Job Order Contracting (JOC) is a way for organizations to get numerous, commonly encountered construction projects done quickly and easily through multi-year contracts. 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 new construction projects.

The OpenJOC Solution integrates processes/workflows, training, tools, cost data, and technology to drive collaboration and team work between owners and contractors.   This enables owners and their awarded JOC contractors to execute a wide variety of numerous repair, renovation, sustainability, and minor new construction projects.

JOC Programs are competitively procured, performance-based, and supports long-term owner-contractor relationships.    JOC’s history begins with the US Army in Europe in the 1980’s.   Smaller projects were taking up to 1 year to procure creating a growing backlog of work.  8-22% of project costs were being consumed in design and procurement.  Change orders easily increased project costs by 50% or more,  and claims and litigation were the norm, versus the exception.   Additionally, traditional low bid/design-bid-build procurement produced low quality results.     From these early beginnings, the multiple Army projects were piloted in the U.S.   The Air Force also got involved, naming a more refined approach SABER.    The Air Force and other DOD and non-DOD federal departments then went on to make JOC a huge success.

JOC Basics

1. JOC Solution – A long-term (3-5 years) contract for on-call construction • Competitive pricing established at outset of the contract through the use of a coefficient applied to a unit price book (UPB) • Best Value Procurement/Qualifications-based selection to ensure contractor performance • Individually-priced job orders
2. JOC Benefits – Faster project delivery (3-9 months less) • Streamlined engineering and design • Assurance of cost reasonableness • Better contractor performance, a partnering relationship • More opportunities for small and disadvantaged business • More efficient/effective use of  funds (JOC Performance Study, 2016, Cassell, Jordan W., and Linda T. Gilday. Improving the Army’s Job Order Contracting Program. Logistics Management Institute, September 1997, et al.)
3. JOC – Pricing structure relies on a Unit Price Book (over- the-counter or customized) • Competitive coefficient (multiplier, factor) establishes pricing at the outset of the contract • Effectively bidding every most common construction tasks.
4. Job Order Pricing Job orders are firm, fixed price, lump sum – Unit price proposals represent contractor’s committed price—converts to lump sum • Owner driven change orders may happen • Contractor driven change orders are almost non-existent • Always a consistent pricing structure with the UPB • Different from other on-call contracts. Not Time and Materials, not cost-plus-fee, not Construction Manager @ Risk….   • Incentive to perform efficiently
5. JOC contractors strive for: • Fast Delivery • High Quality • No Change Orders • No Warranty Hassles • Maximize budgets
6. Contract may or may not have minimal work guarantee • Contract has clear volume potential ($3m minimum, up to $10m annually) • Base year plus up to 4 option years • Incentive to perform is more awarded work.
7. Long-term contract fosters a higher level of investment in making the working relationship work • Allows development of a trusted partner • JOC Team operates as an extension of owner’s staff

Job Order Contracting Process  – Scope – Proposal – Execution

Scope

1. Once a JOC Program is in place, owner requests individual projects.  JOC Process: –
2. Typical JOC Process: Scope – Detailed Scope Developed – Notice of Work Requirement – Site Visit – Detailed Scope Development & Incidental Design – Scope Approval

Proposal

1. Site Visit or Job Walk – Typically within days • Collaborative Process • Identifying components of work and discussing the options • Value Engineering suggestions
2. Project Proposal Presented – Job Order Request (RFP) – Proposal Package – Negotiations / Further Input – Revised Detailed Scope and Proposal (if necessary) – Preliminary Schedules Developed – Final Job Order Form Approved – Job Order Issued by Client (NTP)
3. Components of the OpenJOC UPB Estimate – Determine quantities of work • Build the estimate from UPB • Summarize the estimate and apply coefficient
4. JOC Estimate – Owner must be competent, provide leadership, and have strong estimating skills to provide proper support and oversight… Are the line items right?  Quantities?

Execution

1. Project Work is Executed – Final Project Schedule – Pre-construction – Project Safety and Quality Control Meetings – Selection of Subcontractors and Suppliers – Project Management and Site Supervision – Ongoing Communications with Owner/Client – Inspection – Project Closeout and Turnover of Documentation

OpenJOC Benefits

1. Focus limited staff and budgets on mission critical and priority needs
2. Adapt and expand OpenJOC Program to your changing needs
3. Getting more work done on-time, on-budget, and right!  Improve building user experiences and satisfaction. Improved quality of delivery and results.  Achieve measurable cost savings.

How to Get Started with JOC

1. Solicit your own contract – Need at least $2-3 million of annual repair, renovation, minor new construction volume
2. Piggyback or ride on another contract (allowed in some States, check your statues/regulations)
3. Utilize cooperatives.
4. Contact us.
5. Review white papers, research, and other resources.