Estimating Construction Costs for Job Order Contracts properly is critical to the success of any JOC program.
As a real proper owner, facilities management professional, or construction contractor, is important to review internal policies, procedures and controls with respect to your JOC Program and Estimating Construction Costs for Job Order Contracts:
- Are there areas of risk and/or compliance issues?
- Are management controls sufficient and effective?
- Is the JOC Program delivering expected benefits?
- Is the unit price book being used truly independent, objective, and transparent?
- As an owner are you truly managing the process or relying heavily upon a JOC consultant?
- Is your JOC Program free of the risk of fraud and/or improper relationships?
Reduction in the procurement lead-time and construction cost for work orders is a benefit promised by some JOC Consultants and/or service providers. That said, several independent and/or internal audits have found that the cost savings has not occurred. This failure, however, is not due the fundamental aspects of JOC, but rather the failure of the Owner and/or the JOC Consultant to implement the JOC Program properly.
Direct owner leadership, involvement, management, and the exploration/implementation of opportunities are all key to the successful implementation of any JOC program.
A JOC Operations Manual and/or JOC Execution Guide must be present and a part of the the JOC contractual documents. They serve a detailed written workbook that defines roles, responsibilities, tools, workflows, metrics, and overall expectations.
Proper and ongoing training must be a requirement, as well as owner and indepent oversight, and supporting technology to assure that adequate controls are in place to mitigate risk.
Owners JOC project management processes must be both efficient and
effective with respect to meeting the operational goals and assuring compliance.
There are always opportunities for improvement within JOC Programs and JOC program management processes, policies and procedures, however, these cannot be fully realized is JOC program management is outsource to a third party/ JOC consultant.
It is the real property owner’s sole responsibility to mitigate risk, increase organizational efficiency, and align current processes with industry best practices.
As an owner, what should you expect from a JOC Program?
- A low change order rate 5%-16% or lower
- Elimination of legal disputes
- Faster project delivery
- Reduced procurement costs
- Higher construction quality
- Higher satisfaction rate for all involved participants, facility end-users, and oversight groups.
- Reduction in management process redundancies
- High participation by local and/or disadvantaged contractors
Key performance indicators related to Estimating Construction Costs for Job Order Contracts:
- Average work order/project price
- Number and dollar value of change orders
- Basis for change orders (owner vs. contractor changes)
- Standardized lead-time days for all project stages
- Project on time.
- Internal person-hours savings
- Number of owner/contractor negotiations
- Costs of JOC projects versus alternative delivery methods
- Training and certification requirements and compliance
- JOC work order/task order checklist including clear definition of acceptable JOC projects
- % of priced versus non-prepriced line items and values
