Real property owners can struggle with improving JOC Programs.
JOC is a LEAN construction delivery method and requires change management and competent, accountable leadership on the part of owners to implement continuous improvement.
As a result, backlogs seem to always grow and resources are always inadequate to satisfy facility user needs. Additionally, perceived benefits of cost savings do not occur.
When designed and managed using best management practices and optimal tools, Job Order Contracting, JOC, is a proven solution capable of providing quality on-demand construction services on-time and on budget, and help to reduce repair, renovation, and capital renewal backlogs.
When implemented and deployed improperly, however, even JOC programs can take longer than planned, cost more than budgeted, and be subject to scrutiny.
Common Errors Lead to Major Problems
#1. Project Management Failure
JOC is a LEAN construction delivery method and requires change management and competent, accountable leadership on the part of owners to implement continuous improvement. Upper management must be fully committed to communicating and supporting new collaborative management practices internal and external to the organization.
Failing to communicate the value of JOC to every stake holder and participant is the most common problem found in JOC failures. All participants must want the benefits that JOC can provide.
JOC project managers also must make certain that all participants are clear on what roles each person must play, and how each person’s contributions to the project will be evaluated and/or compensated.
Failure is assured from the beginning if collaboration support is being shown by all participants. Also, proper procedures must be in place to address issues, problems, and concerns. Focus must be upon negotiation and mutually satisfactory resolutions.
Over, communication and collaboration is central to success. All communications must be consistent, regular, and reinforcing.
#2. Cutting Corners on Initial and Ongoing Training
A common mistake is assigning design, implementation, and/or management of the JOC program to someone who is not sufficiently skilled, trained, and experienced. For example, it requires specialized skills to collaboratively provide leaderships from an owner perspective. Consultants can assist in this progress; however, consultants should not be solely responsible for a JOC program. (Note: Under no circumstances should a consultant be responsible for approving JOC projects and be paid a fee based upon construction volume.)
Training should include multiple levels and occur on an annual basis at a minimum. Examples include Introduction to JOC, Introductory Line Item Estimating, Advanced Line Item Estimating, and Negotiating Task Orders. Training should also be available in multiple formats to assure participation, including Regional, On-site, and Virtual.
Specific hands-on training should be provided for any JOC software, reporting, and/or documentation.
Proof of training in the form of a certificate should be required.
#3 JOC Misused to Bypass Procurement
Unfortunately, some owners employ JOC simply as a way to bypass controls and delays imposed by traditional procurement procedures. In this instance, projects get approved that others would not withstand the rigor of traditional improvement, and the benefits of JOC are not recognized. This is common in case where owners are not experience with JOC and/or there is little project oversight. JOC misuse is generally more common when an owner is not directly involved in the day-to-day administration of a JOC, for example JOC management is outsourced to a third party.
#4 Improper JOC Technology, or Technology Misuse
JOC programs should not, in general, be managed in spreadsheets, or within systems that do not provide full transparency. JOC programs should provide easy searching and use of the JOC Unit Price Book and at a minimum provide Contract, Project, Estimate, Contractor, Coefficient, and Document Management. JOC unit price books should be locally researched and updated annually. Localization factors should not be used as do not provide sufficient cost granularity are a subject to wide cost variations. Annual economic updates should also not be used due to errors induced by such a global approach.
#5. Inadequate Implementation Time & Resources
While a JOC program can be up and running “from scratch” within a six-month time frame, it generally takes a year to eighteen months for the program for participants to gain significant benefit. Furthermore, improvement will be continuous as participants discover new ways to address work. Furthermore, the change from reactive, traditional work relationships to proactive, collaborative teaming takes time. Internal and external participants will need to dedicate long time to changing day-to-day work habits.
Outside consultants can help to set up the JOC program, provide certain support, training, audit services, and to accelerate progress. Again, however, Owners must demonstrate leadership and actively manage the JOC program to obtain the major benefits associated with JOC.
Major issues facing Job Order Contracting (JOC) include insufficient owner oversight, misuse of the system to bypass competitive bidding, and reliance on inaccurate, non-local unit price books. Programs can be improved by mandatory specialized training, implementing independent third-party audits, utilizing localized cost data, and strengthening performance metrics.
- Lack of Oversight and Audits: Many JOC programs suffer from weak internal controls, creating risks of fraud, errors, or overpayments.
- Misuse of Procurement: JOC is sometimes wrongly employed to bypass conventional, transparent bidding processes for projects not suited for it, or for projects that exceed approved monetary limits.
- Inadequate Training: Programs often fail due to a lack of specialized training for owners and contractors in estimating and negotiating task orders.
- Non-Local Pricing Data: Using national average price books instead of localized, specific labor/material data leads to poor unit prices and inaccurate project costs.
- Over-reliance on Non-Prepriced Items: Frequent use of items not in the established catalog reduces the competitive effectiveness of the contract.
How JOC Programs Can Be Improved
- Independent Auditing: Require regular, independent third-party audits to ensure compliance and prevent “hidden” costs or improper contractor selection.
- Locally Researced Unit Price Books (not localized priced books with location factors): Use accurate, localized cost data to enhance fairness, competitiveness, and accuracy in project proposals.
- Mandatory Training and Certification: Implement mandatory, recurring training for all stakeholders on JOC best practices, including software, estimating, and negotiation.
- Enhanced Performance Metrics: Develop and track Key Performance Indicators (KPIs) to measure efficiency and ensure high-quality, timely work.
- Proper Project Selection: Restrict JOC usage to appropriate repair, renovation, or small construction projects, ensuring it is not used to bypass procurement for large, complex new construction.
- Ease-to-Use, Secure Technology: Purpose-built estimating and task management software.
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