Beware of Using Assemblies for Job Order Contracting

Some suppliers of Job Order Contracting software and cost data use “Assemblies” within what is supposed to be a unit price book (UPB).

A fundamental element is Job Order Contracting (JOC) is line item estimating which involves breaking down the cost of  construction into discrete, granular tasks, each item representing a specific material, labor, and equipment components.  An example of a line item would be “0611162814000100 Framing- Walls- Studs- 8 ft High Wall- 2 in X 4 in”  This is in contrast to estimating based on assemblies, where pre-established sets of materials and labor units are used for common tasks, for example a “Structural or nonstructural interior partition wall Studs- 8 ft High Wall- 2 in X 4 in”  .  The latter includes studs, wiring, wallboard, etc.

Here are some key points to consider when using line item estimating for job order contracting:

1. Detailed Breakdown: Line item estimating requires a detailed breakdown of all the elements involved in a project. Each aspect, such as materials, labor, equipment, and overhead, should be itemized separately.
2. Unit Costs: Assign a unit cost to each line item. This could be the cost per unit of measurement (e.g., cost per square foot, linear foot, or unit) for materials, labor hours, or other resources.
3. Accurate Quantities: Ensure that the quantities associated with each line item are accurate. This requires a thorough understanding of the project scope and specifications.
4. Adjustments for Site Conditions: Consider any site-specific conditions that may affect costs and make appropriate adjustments. Factors such as site access, soil conditions, and local regulations can impact the cost of construction activities.
5. Labor Rates: Include current, local market labor rates for different types of work involved in the project. These rates may vary depending on the skill level and type of labor required.
6. Material Costs: Specify the cost of  materials for each line item based on current pricing for the local market.
7. Overhead and Profit: Factor in overhead costs and profit margins using the establish/accepted coefficient. These are essential for covering indirect costs associated with the project and ensuring a reasonable profit for the contractor.
8. Documentation: Clearly document each line item, including descriptions, quantities, unit costs, and any assumptions or considerations that went into the estimation using detailed notes.
9. Regular Updates: Regularly update the line item estimates contained within the unit price book/constructon task catalong.  Market conditions can fluctuate frequently.  (Note: 4BT recommend quarterly updating.)

Line item estimating provides a detailed and transparent breakdown of costs, making it easier to track expenses and communicate with stakeholders.  It is a fundamental element and requirement for Job Order Contracting. It allows for a more granular understanding of the project costs compared to estimating based on assemblies.

Four BT, LLC – Efficient, integrated construction planning, procurement, and project delivery solutions.