The lack of continuous competent leadership is the root cause of environmental and economic woes impacting the DoD’s real property portfolio and its mission.

https://www.militarytimes.com/news/2022/02/01/nearly-a-third-of-defense-department-structures-have-exceeded-their-lifespan/

The DoD has NEVER implemented a robust, system-wide process to monitor and manage planning, procurement, and project delivery for repair, renovation, maintenance, and new construction.  It short, there is a basic lack of management as well as very little financial visibility and transparency.

The DOD has at least a $137 billion deferred maintenance backlog.   The DOD fails to have accurate maintenance cost estimates and cannot efficiently allocate available funding to conduct adequate maintenance.   The DOD’s failure to implement a sustainment management system remains an unacceptable reality.

Tools and support services are readily available to support efficient facilities planning, procurement, and project delivery to enable asset life-cycle total cost of ownership management.  The missing link is the lack of leadership commitment to do so.

Facilities Preventive Maintenance requires the following information to minimize downtime and unscheduled maintenance and repairs.

• Installed model and features of each system.
• Manufacturer’s schedule for routine preventive maintenance, inspections, condition monitoring (predictive tests) and adjustments required to ensure proper and economical operation and to minimize repairs. Provide instructions stating when the systems should be retested. Provide manufacturer’s projection of preventive maintenance workhours on a daily, weekly, monthly, and annual basis including craft requirements by type of craft. For periodic calibrations, provide manufacturer’s specified frequency and procedures for each separate operation.  Define the anticipated time required to perform each of each test (workhours), test apparatus, number of personnel identified by responsibility, and a testing validation procedure permitting the record operation capability requirements within the schedule. Provide a remarks column for the testing validation procedure referencing operating limits of time, pressure, temperature, volume, voltage, current, acceleration, velocity, alignment, calibration, adjustments, cleaning, or special system notes. Delineate procedures for preventive maintenance, inspection, adjustment, lubrication and cleaning necessary to minimize repairs. Repair requirements must inform operators how to check out, troubleshoot, repair, and replace components of the system. Include electrical and mechanical schematics and diagrams and diagnostic techniques necessary to enable operation and troubleshooting of the system after acceptance.
• Include potential environmental and indoor air quality impacts of recommended maintenance procedures and materials
• Lubrication Data-Include the following preventive maintenance lubrication data, in addition to instructions for lubrication required, including a table showing recommended lubricants for specific temperature ranges and applications, charts with a schematic diagram of the equipment showing lubrication points, recommended types and grades of lubricants, and capacities, lubrication Schedule showing service interval frequency.
• Cleaning Recommendations-Provide environmentally preferable cleaning recommendations. Provide the manufacturer’s recommended procedures and instructions for correcting problems and making repairs for the installed model and features of each system. Include potential environmental and indoor air quality impacts of recommended maintenance procedures and materials
• Troubleshooting Guides and Diagnostic Techniques-Provide step-by-step procedures to promptly isolate the cause of typical malfunctions. Describe clearly why the checkout is performed and what conditions are to be sought. Identify tests or inspections and test equipment required to determine whether parts and equipment may be reused or require replacement
• Wiring Diagrams and Control Diagrams-Provide point-to-point drawings of wiring and control circuits including factory-field interfaces. Provide a complete and accurate depiction of the actual job specific wiring and control work. On diagrams, number electrical and electronic wiring and pneumatic control tubing and the terminals for each type, identical to actual installation configuration and numbering.
• Repair Procedures-Provide instructions and a list of tools required to repair or restore the product or equipment to proper condition or operating standards.
• Removal and Replacement Instructions-Provide step-by-step procedures and a list of required tools and supplies for removal, replacement, disassembly, and assembly of components, assemblies, subassemblies, accessories, and attachments. Provide tolerances, dimensions, settings, and adjustments required. Use a combination of text and illustrations.
• Spare Parts and Supply Lists-Provide lists of spare parts and supplies required for repair to ensure continued service or operation without unreasonable delays. Special consideration is required for facilities at remote locations. List spare parts and supplies that have a long lead-time to obtain.
• Repair Work-Hours-Provide manufacturer’s projection of repair workhours including requirements by type of craft. Identify, and tabulate separately, repair that requires the equipment manufacturer to complete or to participate
• Real Property Equipment-Provide a list of installed equipment -information usually listed on manufacturer’s name plate, include, as applicable, the following for each piece of equipment installed: description of item, location (by room number), model number, serial number, capacity, name and address of manufacturer, name and address of equipment supplier, condition, spare parts list, manufacturer’s catalog, and warranty.
• Warranty Information-List and explain the various warranties and clearly identify the servicing and technical precautions prescribed by the manufacturers or contract documents to keep warranties in force. Include warranty information for primary components of the system. Provide copies of warranties.
• Extended Warranty Information-List all warranties for products, equipment, components, and sub-components whose duration exceeds one year. For each warranty listed, indicate the applicable specification section, duration, start date, end date, and the point of contact for warranty fulfillment. Also, list or reference the specific operation and maintenance procedures that must be performed to keep the warranty valid. Provide copies of warranties.
• Personnel Training Requirements-Provide information available from the manufacturers that is needed for use in training designated personnel to properly operate and maintain the equipment and systems.
• Testing Equipment and Special Tool Information-Include information on test equipment required to perform specified tests and on special tools needed for the operation, maintenance, and repair of components. Provide final set points.
• Testing and Performance Data-Include completed prefunctional checklists, functional performance test forms, and monitoring reports. Include recommended schedule for retesting and blank test forms. Provide final set points.
• Field Test Reports and Manufacturer’s Field Reports-Provide a copy of Field Test Reports and Manufacturer’s Field Reports submittals documented with the required approval.
• Contractor Information-Provide a list that includes the name, address, and telephone number of the General Contractor and each Subcontractor who installed the product or equipment, or system. For each item, also provide the name address and telephone number of the manufacturer’s representative and service organization that can provide replacements most convenient to the project site. Provide the name, address, and telephone number of the product, equipment, and system manufacturers
• SCHEDULE OF OPERATION AND MAINTENANCE DATA PACKAGES- The type of O&M data needed for any product, system, or piece of equipment depends upon the complexity of that item. If not, specify the appropriate Data Package number in the technical section using the Data Package Number from the choices 1 through 5 as follows: below. Data Package 1 is typically used for architectural items requiring simple but specific maintenance and replacement; for example, acoustical ceiling, floor tile or carpeting system. Data Package 2 is used for an item that is less simple; for example, an item having a motor and some sequence of operation such as a refrigerated drinking fountain. Data Package 3 is used for a complex piece of equipment, having a specific troubleshooting sequence, but one which does not require an operator on watch, for example, HVAC temperature controls. Data Package 4 is used for an extremely complex piece of equipment, having an extensive sequence of operation, a complex troubleshooting sequence and one requiring frequent operator attention; at least for start-up and shutdown. Examples of this case would be small boilers and small diesel generator sets. Data Package 5 is used for electrical equipment, components or systems on which wiring, and control diagrams are needed for operation, maintenance or repair. Examples of this case are 400 Hz frequency converters, annunciator panels and cathodic protection systems.
• Provide the O&M data packages specified in individual technical sections. The information required in each type of data package follows:
  • Data Package 1 a. Safety precautions and hazards b. cleaning recommendations c. Maintenance and repair procedures d. Warranty information e. Extended warranty information f. Contractor information g. Spare parts and supply list
  • Data Package 2 a. Safety precautions and hazards b. Normal operations c. Environmental conditions Lubrication data e. Preventive maintenance plan, schedule, and procedures cleaning recommendations g. Maintenance and repair procedures h. Removal and replacement instructions i. Spare parts and supply list j. Parts identification k. Warranty information l. Extended warranty information m. Contractor information
  • Data Package 3 a. Safety precautions and hazards b. Operator prestart c. Startup, shutdown, and post-shutdown procedures d. Normal operations e. Emergency operations f. Environmental conditions g. Operating log h. Lubrication data i. Preventive maintenance plan, schedule, and procedures j. cleaning recommendations k. Troubleshooting guides and diagnostic techniques l. Wiring diagrams and control diagrams m. Maintenance and repair procedures n. Removal and replacement instructions o. Spare parts and supply list p. Product submittal data q. O&M submittal data r. Parts identifications. Warranty information t. Extended warranty information u. Testing equipment and special tool information v. Testing and performance data w. Contractor information x. Field test reports
  • Data Package 4 a. Safety precautions and hazards b. Operator prestart c. Startup, shutdown, and post-shutdown procedures d. Normal operations e. Emergency operations f. Operator service requirements g. Environmental conditions h. Operating log i. Lubrication data j. Preventive maintenance plan, schedule, and procedures k. Cleaning recommendations l. Troubleshooting guides and diagnostic techniques m. Wiring diagrams and control diagrams n. Repair procedures o. Removal and replacement instructions p. Spare parts and supply list>q. Repair work-hours r. Product submittal data s. O&M submittal data t. Parts identification u. Warranty information v. Extended warranty information w. Personnel training requirements x. Testing equipment and special tool information y. Testing and performance data z. Contractor information . Field test reports
  • Data Package 5 a. Safety precautions and hazards b. Operator prestart c. Start-up, shutdown, and post-shutdown procedures d. Normal operations e. Environmental conditions f. Preventive maintenance plan, schedule, and procedures g. Troubleshooting guides and diagnostic techniques h. Wiring and control diagrams i. Maintenance and repair procedures j. Removal and replacement instructions k. Spare parts and supply list l. Product submittal data m. Manufacturer’s instructions n. O&M submittal data o. Parts identification<p. Testing equipment and special tool information q. Warranty information r. Extended warranty information s. Testing and performance data t. Contractor information u. Field test reports v. Additional requirements for HVAC control systems

JOC PROCEDURES FOR ORDERING WORK 

Initiation of a Job Order

1. Contract Administrator notifies the Contractor of a Project, schedules a Joint Scope Meeting, and issues a Notice of Joint Scope Meeting. Contractor attends the Joint Scope Meeting with owner JOC Project Manager and discusses, at a minimum:
   1. general Scope of the Work (SOW) to be performed,
   2. alternatives for performing the work and value engineering,
   3. access to the site and protocols,
   4. hours of operation,
   5. staging area and areas that are off-limits,
   6. requirements for documentation – technical data, samples, BIM models, drawings,
   7. requirements for professional services, sketches, drawings, and specifications,
   8. construction duration, due date for Detailed Scope of Work and contractor’s line-item proposal,
   9. presence of hazardous materials,
   10. applicable Federal, County, State, and/or local regulations, requirements.

Request for Proposal

1. Contract Administrator issues a Request for Proposal (RFP) to JOC contractor (alternately process can require contractor to submit a draft detailed SOW for owner review prior to issuance of RFP).  Proposal form contractor is due within established timeline.
2. Contractor prepares/updates Detailed Scope of Work referencing any sketches, drawings, photographs, and specifications required to document accurately the work to be accomplished and prepares a detailed line-item proposal of the planned work activity using the current unit price book (UPB).  It is the Contractor’s responsibility to include the necessary line-items and quantities in the Proposal and apply the appropriate Adjustment Factor(s) prior to delivering it to the Owner. Both Owner and Contractor review proposal based upon the detailed SOW.  If the Contractor requires additional information to clarify the Detailed Scope of Work before preparing the Job Order Proposal, the Contractor will make such request so that the Job Order Proposal can be submitted on time.  Contractor proposal is prepared and submitted with the JOC System and includes:
   1. Line-items for all require construction task as selected from the UPB, and associated quantities
   2. Any required documentation and/or forms
   3. Any associated subcontractor information
   4. Schedule
   5. Justification for any non-pre-priced line items
   6. Totals, without and with associated adjustment factor/JOC coefficient, and totals of priced and non-pre-priced line-items
3. Owner reviews and approves/rejects Contractor’s proposal.  The Owner evaluates the entire Contractor’s Proposal and compare these with the Detailed Scope of Work and the Owner’s estimate if completed and/or otherwise determines the reasonableness of approach, including the appropriateness of the line-items and quantities proposed.  The Owner’s review includes the pre-priced Tasks, quantities, adjustment factors/co-efficients, and non-pre-priced tasks. If rejected, the owner can discuss modifications required for a new proposal with the Contractor.

Execution

1. Owner issues a Notice to Proceed
2. Contractor set up a kick-off meeting and mobilizes
3. Owner regularly inspects the site
4. Contractor issues a notification of substantial completion and submits appropriate documentation for project close-out
5. Owner conducts final inspection and issues final notice of substantial completion (or owner creates a checklist of items required for completion)

Note:  Change orders should be mitigated via the job order process, however, an owner-defined process within the contractor outlines how changes in the Detailed Scope of Work are to be handled, such as by adding to, changing, or deleting from the Detailed Scope of Work, by issuing a Supplemental Job Order or a Change Order.  All Supplemental Job Orders follow the same workflow and procedures as the original work order.

Glossary

Adjustment Factor:  Approved factor/JOC co-efficient for the associated work order/project and contract.

Change Order (CO): Any subsequent change in the work to the initial construction job order/workorder proposal as accepted which has been subsequently authorized by the Owner and issued to the Contractor.

JOC Administrator / Procurement Officer: Procurement professional of record for the government entity, responsible for Job Order Contract administration.

Non-Prepriced Line-item (NPP): A line-time cost/task not found in the current unit price book, but within a JOC proposal.  A limit of 10% of the total cost of a proposal is imposed within Job Order Contracts and contracts must supply associated required support information, such as independent quotes for the item(s).

Pre-priced Line-item/Task: A line-time found within the current and approve unit price book for the associated work-order/project

Task Order, Job Order: Individual projects/work orders performed under the umbrella procurement.

Unit Price Book (UPB):  A web or server-based compilation of detailed construction task listings with pre-set prices individual line-items for each unit of work (unit price) establishing the basis of each job order/work order/project assignment.

“Culture change requires company leaders who lead by example. It is impossible to push cultural change if toxicity, noncompliance, and distrust remain at the top. Additionally, leaders need strong personal values, such as humility and accountability, to support the values of their organization and drive change.

Lastly, change involves processes and measurement. Without measuring change, how does one know if the team is moving forward? Agree on what a ‘good’ culture looks and feels like, then determine the KPIs by which it will be measured.” 

• Nathan C. Wood

www.4bt.us

• Experience working with Contractors of all sizes – Four BT, LLC (4BT) is a certified veteran-owned small business (Veterans Administration), and fully understands the needs of smaller contractors when working with government organizations for the first time and on an ongoing basis. As a small business ourselves, we know what smaller contractors face and have experience meeting their needs and have experience building their capabilities. We also have experience with national JOC contractors with decades of JOC expertise.
• Experience with currently available JOC Solutions – We have migrated contractors (and owners) who have previously worked with products and services provided by our competitors to 4BT OpenJOC (TM) Building in Cloud Solutions. Examples include JOC program set up, marketing to contractors, and support of JOC Programs with over 20 contractors. I
• Best-in-class training and support – 4BT has the ability to market to, train, and support JOC contractors at all levels of Job Order Contracting capability ranging from those with limited line item and/or JOC estimating experience with unit price books, to builders with national JOC expertise.  We also train owner all owner staff including project managers, procurement teams…
• JOC program marketing –  Marketing and building awareness for a JOC Program is critical to success.  Marketing to prospective JOC contractors and growing internal awareness are important program aspedts.
• Current, easy-to-use, powerful technology – Powerful technology should be easy to use and also not derived from older legacy platforms.  4BT exclusive integrates Program Management, Contract Management,  Proposal Management, Automated and Collaborative Real-time Prposal Reviews, Estimate Management, Workflow Management with integrated forms and approvals, Progress Tracking, Full Document Management (versioning, check-in, check-out, not a simply on-line filing system), Contractor and MBE/WBE Management and Tracking, Team Management, Building Management, Asset Management, BIM information viewing, and more.
• Locally researched detailed line item cost data – No use of location factors or economic factors that simply don’t provide reliable cost visibility.
• Compliance reviews for all contractor proposals – JOC Program compliance is critical. 4BT exclusively provides Informal Compliance Reviews (ICRs) (TM), and Formal Compliance Reviews (FCRs).
• Mutual benefit to Owners and Design Builders – 4BT equally support the needs of owner and design-builders.

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

Job Order Contracting has never been easier.

91% of FM managers say there’s a gap between the knowledge and skills their team has and what they need to excel. – 2021 PMI Survey

1. Improvement is never easy and is especially difficult in the public sector where the same methods have been in place for decades.
2. Savvy public facility management professionals are diligently working to significantly alter the ‘status quo’ and achieve significant performance gains.
3. Proven successes can be found where public sector FMers have, through their leadership, competence, and commitment, begun to implement lean integrated planning, procurement, and project delivery processes for their real property portfolio’s ongoing repair, renovation, maintenance, sustainability, and new build requirements. Examples include integrated project delivery, IPD, for major new construction, and lean job order contracting for repair, renovation, and “minor” new construction.
4. With respect to these new processes, technology is an enabler,  but never be the driver. Technology’s role is to simply help to accomplish objectives more efficiently.   Robust processes are embedded within tech to provide a solid platform within which professionals can perform meaningful work. All FM and procurement teams need is the training and tools to help them do their work. Generic “Program Management”, “IWMS”, “ERP”, and other “general purpose” systems don’t cut it. They don’t improve efficiency, but rather simply add another layer of administrative burden.

In short, a focus upon robust processes across all core FM related activities… planning, procurement, and project delivery… and subsequent selection and implementation of domain-specific technology, is the most direct path to best value outcomes.

Set up a quick 15-minute introductory call to learn more?

Also, feel free to send this email to any of your colleagues who might be interested.

All the best,
Peter Cholakis
Senior Vice President

The 4BT-PEP is a new, innovative Job Order Contracting Information Management Solution (JOCIMS).

The 4BT JOCIMS enables owners, designers, engineers, contractors, and trades to  collaborate  and  share project information within a common data environment (CDE), and in real-time,  significantly  improving outcomes.

All projects and work orders are performed using the the same robust LEAN programmatic process to virtually eliminate miscommunication of scope of work, change orders, delays, and excessive costs.

Learn more…

It’s now easier that ever to Remove Construction Barriers to Efficient Planning, Procurement, and Project Delivery… that, in the past, have resulted in rampant waste and poor satisfaction for everyone involved.

Facilities repair, renovation, and new builds are NOT complex, unmanageable beasts.  On the contrary, if a programmatic approach is applied for all projects and work orders, any organization can assure quality, on-time, and on-budget outcomes.

Time to learn how?

Lean Construction – Overcoming decades of mistrust, lack of communication, and opposition between facilities owners, designers, engineers, and builders… possible?

Only two of the following construction delivery methods are LEAN. Do you know which they are?

Construction Project Delivery Overview & Comparison

Design-Bid-Build

Traditional design-bid-build (DBB) delivery process with design, bidding, and construction in separate, sequential steps. Construction contract is generally awarded to the lowest bidder and/or lowest qualified builder, who then utilizes the subcontractors included in his or her bid.

Advantages

• Process most familiar to public sector design and construction community.
• Owner controls the design, which is completed under direct owner-A/E contract prior to construction.
• Direct way to provide competitive pricing for entire construction contract.

Disadvantages

• Adversarial, change-order-oriented environment is common between owner, A/E, and contractor.
• Planning, procurement, and project delivery is inefficient and disparate.
• Time-consuming redesign and rebid, and over-budget, unsatisfactory outcomes are common.
• Project cannot be expedited with a collaborative fast-track process; drawings and specs must be 100% complete to bid (though latter rarely occurs).
• Construction contract may be awarded to low bidder, without consideration to qualifications.
• No contractor and limited A/E assistance with detailed estimating, plan checking, and constructability reviews during design phase.
• General lack of technical and cost visibility and transparency. Bid shopping can occur and actual overhead and profit amounts are unknown.
• Construction price is not fixed until after design and bid phases are completed, and original “lump sum” target cost is rarely met.

Design-Build

Design and build (DB) construction are provided under a single design-build contract initiated at the beginning of the project. A DB contract is awarded on the basis of price and/or qualifications.

Advantages

• Single point of responsibility for both design and construction of the project.
• A/E and contractor work together through all phases of the project.
• Guaranteed maximum price (GMP) is fixed early in design phase of the project.
• Construction contract is awarded on basis of design-build team qualifications and/or price.
• Project can be expedited with fast-track construction, which can also reduce costs.
• Generally less adversarial relationship between owner, A/E, and contractor.
• Change orders may be reduced versus DBB due to A/E-contractor collaboration and contractual relationship.
• Designer and builder have a greater motivation than DBB to ensure owner satisfaction when selections are based on qualifications and performance.

Disadvantages

• High initial set up costs make DB suitable only for major new construction
• Not a fully collaborative multiparty agreement. Owner can still be at odds with designers and builders.
• While high set up costs required larger projects, project types must be relatively straightforward, where requirements can be fully documented at request for proposals (RFP) stage.
• Major pre-planning effort is needed to prepare sufficient material for the request for quotations (RFQ)/RFP process.
• Owner has less control (vs. IPD or LEAN Job Order Contracting) of design process, with the A/E typically working for the contractor.
• Design changes can result in costly impacts to drawings or construction work in progress.
• Disagreements related to intended quality of work are not uncommon.
• Will generally not work any better than DBB if mutual trust relationships are not built.
• May not be allowed some states.

Construction Manager at Risk

Construction manager at risk ( CM@R) includes a construction manager who works with the owner and A/E through design and proposals and manages subcontracts to complete the work. The CM@R is required to complete the project within the agreed-upon amount, or else is at risk to cover the additional costs.

Advantages

• Project can be expedited with fast-track construction.
• Construction contract is awarded on basis of CM@R qualifications and past performance.
• Construction work is competitively priced through low bids of prequalified subcontractors.
• Change orders are may be reduced due to A/E and contractor coordination through the design phase.
• Owner controls the design, which is completed under direct owner-A/E contract.
• Suitable for complex building types.

Disadvantages

• Not fully collaborative.
• Contingency costs are generally higher due to high risk of construction manager.
• Fast-track construction presents risks related to incomplete construction documents.
• Design changes during construction are extremely costly.
• No process to assure mutual trust relationships built for all parties.
• Is allowed in some states.

Construction Management with Bid of Fees and General Conditions

Construction is performed through a CM, who is selected on the basis of the lowest bid of fees and general conditions.

Advantages

• A/E, owner, and contractor (CM)may work together through all phases of the project.
• GMP may be fixed early, during the design phase of the project.
• Project can be expedited with fast-track construction.
• Owner can control the design.
• Provides design-change flexibility for complex building types.
• CM fee and/or general conditions amounts set through bid process.

Disadvantages

• Lowest bid of fees and/or general conditions is not an indicator of CM capabilities or potential outcomes.
• No sure path to cost savings. Fee and/or general conditions savings are generally much less than the cost of CM process inefficiencies.
• Fast-track construction presents risks related to incomplete construction documents.
• May not be allowed in some states.

Agency Construction Management with Design-Bid-Build

Agency construction manager is hired as a consultant to help represent the owner’s interests during the construction phase of a DBB project.

Advantages

• Same pros as noted for DBB process.
• Agency CM can provide industry experience and estimating, scheduling, and project management expertise for the owner’s benefit.

Disadvantages

• Same cons as noted for DBB process.
• Agency CM has no direct accountability for the success of the construction process.
• Owner must pay the fees of an agency CM in addition to the contractor’s fees for the construction work.
• Agency CM must be committed to representing the owner first… as a result, same potential antagonistic environment as DBB.

Multiple Prime Contracts

Multiple direct owner-contractor prime construction contracts that are bid for various trades, or groupings of trades, as needed to complete the entire scope of construction.

Advantages

• Construction method required by the procurement law in certain states.
• Can reduce markups of general contractors.
• Can be preferred by some established subcontractors who have prime contracts with the owner.
• Project can be expedited with fast-track construction.

Disadvantages

• Construction is awarded to multiple low bidders, without consideration of their qualifications.
• No single point of responsibility for the construction of the various trades related to the project.
• The owner is responsible for conflicts and inefficiencies between the multiple prime contractors.
• No contractor assistance with estimating, plan checking, and constructability reviews during design.
• Bid shopping can occur and actual overhead and profit amounts are unknown.
• Adversarial, change-order-oriented environment common, similar to DBB.
• Construction price is not fixed until after the design and all bid processes are completed.
• Time-consuming redesign and rebid is common, as is late, over-budget outcomes.
• Is not legal in some states.

Job Order Contracting

Job Order Contracting is a fully collaborative indefinite delivery, , indefinite quantity, long-term (one year, with up to four option years) construction method with general contractors and/or trades/subcontractors who are selected through a fee markup (co-efficient/factor) bidding process using an selected detailed unit price book (UPB), and who perform multiple projects through work orders. Based upon location, projects may include repair, renovation, and new construction.

Advantages

• Expedites projects by eliminating project-specific bid phases and reducing design documentation requirements.
• Properly employed, JOC is a highly collaborative environment that can consistently deliver quality, on-time, and on-budget outcomes.
• Allows for construction price “negotiation” based on an established construction cost unit-price book. (Note: prices are non-negotiable, however, quantities and selection of line items can be revised prior to acceptance of contractor proposal).
• Fully collaborative relationship between owner and awarded design/builder.
• Can be utilized with single or multiple job order contracting (JOC) contractors.
• Bid shopping is not allowed.
• Performance-based reward system.
• Fully cost and technical transparency.
• Robust, proven, auditable, and compliant process.
• Support, training, and technology for implementation and management is readily available.

Disadvantages

• Owner must possess requisite leadership skills and technical competencies.
• Organization must be committed to collaborative process that mutually benefits all parties.
• Not suitable for major new construction. Works best on the typical numerous and ongoing repair, renovation, sustainability, and minor new build projects.
• Allowable JOC total annual JOC Program size and individual JOC project size may be limited by jurisdiction procurement codes.
• May not be allowed, or be limited in some states.
• JOC vendors basing their services upon a percentage fee of total annual JOC construction volume can provide highly costly.
• JOC can be inappropriately simply speed project procurements and/or approve projects that otherwise would not have been approve via traditional methods.

Disadvantages

• Owner must possess requisite leadership skills and technical competencies.
• Organization must be committed to collaborative process that mutually benefits all parties.
• Not suitable for major new construction. Works best on the typical numerous and ongoing repair, renovation, sustainability, and minor new build projects.
• Allowable JOC total annual JOC Program size and individual JOC project size may be limited by jurisdiction procurement codes.
• May not be allowed, or be limited in some states.
• JOC vendors basing their services upon a percentage fee of total annual JOC construction volume can provide highly costly.
• JOC can be inappropriately simply speed project procurements and/or approve projects that otherwise would not have been approve via traditional methods.

Integrated Project Delivery

Integrated project delivery (IPD) is a fully collaborative, environment supported by multi-party agreement. The owner, the design team, and the primary contractor and subcontractors collaborate for the design and construction of a project on an early and ongoing basis. The goal of the collaboration is to minimize conflict among participants and steer the project to a favorable outcome for all participants. A sharing of project risk/reward is a key feature of IPD.

Advantages

• Expedites projects by assuring early and ongoing information sharing among all participants and stakeholders.
• Can significantly reduce project costs and improve other outcomes for all participants.
• Fully collaborative relationship between all parties throughout all phases.
• Focus upon process improvement.
• Overall cost savings.

Disadvantages

• Owner must possess requisite leadership skills and technical competencies.
• Organization must be committed to collaborative process that mutually benefits all parties.
• High initial set up costs make IPD suitable only for major new construction projects.
• Additional work required from all parties.
• May not be allowed in certain jurisdictions.

A thorough understanding of this Construction Project Delivery Overview & Comparison is a first step towards consistent achievement of best value outcomes for all participants and stakeholders.

California Contractor Tests the Bounds of Job Order Contracting

By Garret Murai, February 15, 2021 (source: https://calconstructionlawblog.com/2021/02/15/california-contractor-tests-the-bounds-of-job-order-contracting/)

Most contractors have heard of design-bid-build, design-build, construction manager at risk, and even public private partnerships, various project delivery methods, which, at their heart, focus on balancing the interests of the various parties involved in a construction project, from owners, to design professionals, to contractors. There’s one project delivery method you may not be as familiar with though: Job Order Contracting, also known by its acronym JOC.

JOC contracting is a project delivery method used on public works projects and has been authorized to be used by California K-12 school districts, community colleges, CalState universities, and the Judicial Council of California, which, among other things, is responsible for the construction of California state courts. It is intended to be used on smaller, independent, long-horizon project typically involving maintenance, repair and refurbishment. Think periodic maintenance of facilities.

JOC contracts are administered by public entities issuing a request for proposals. The public entity then awards a JOC contract to the lowest responsible bidder. The lowest responsible bidder then enters into a JOC contract with the public entity. JOC contracts typically have a duration of one (1) year and are limited to a total construction value of $4.9 million increased annually based on the Consumer Price Index. When entering into a JOC contract, a JOC contractor agrees to perform work at prices set forth in a Construction Task Catalog also known as a unit price book which includes current local labor, material and equipment costs. Unit prices are then adjusted by a “bid adjustment factor” based on the JOC contractor’s bid. When work is needed, the public entity will then issue a job order to the JOC contractor.

The next case, Los Angeles Unified School District v. Torres Construction Corp., Case No. B291940 (October 26, 2020), 2nd District Court of Appeal, involved a JOC contract, a JOC contractor who charged rates higher than those specified in the unit price book, and the JOC contractor’s defenses against claims by the public entity that it had overcharged for its work.

The Torres Case

Torres Construction Corp. was awarded a JOC contract by the Los Angeles Unified School District. The JOC contract included a Construction Task Catalog with unit prices as well as general conditions. Under the general conditions, after a job order is issued by LAUSD, Torres and LAUSD were to participate in a “joint scope meeting” from which the parties would develop a detailed scope of work. LAUSD would then issue a request for proposals to Torres who would prepare a “job order proposal” setting forth the cost of performing the work in accordance with the unit prices set forth in the Construction Task Catalog. Once approved, the job order proposal becomes a part of the JOC contract.

Between 2005 and 2008, Torres performed work on five projects under the JOC contract involving the installation of kitchen equipment and electrical upgrades. In 2011, LAUSD audited Torres’ project files as it was permitted to do under the JOC contract. Under the JOC contract, LAUSD was permitted to conduct an audit for period of up to four (4) years from the date a notice of completion was recorded. If the audit revealed overpricing or overcharges in excess of one percent (1%) of the total contract amount, then, an adjustment would be made equal to the overpricing or overcharging and LAUSD would be entitled to be reimbursed for the cost of the audit. The audit performed by LAUSD revealed substantial irregularities in the amounts charged by Torres, specifically, Torres did not supply equipment specified in its job order proposals, did not use pricing in line with unit bid pricing in the Construction Task Catalog, and did not provide the services specified in its job order proposals.

In 2012, LAUSD filed suit against Torres and its performance bond surety Western Surety Company. While the case was pending, LAUSD filed a motion for summary judgment on certain of the job order proposals which it prevailed on. As to other job order proposals, the trial court granted LAUSD’s motion for directed verdict following trial at the close of evidence. And, finally, as to the final job order proposals, the jury found in favor of LAUSD, and the trial court later awarded LAUSD prejudgment interest and attorney’s fees.

Torres appealed.

The Appeal

On appeal to the 2nd District Court of Appeal, Torres made a number of arguments challenging the trial court’s granting of LAUSD’s motion for summary adjudication, LAUSD’s directed verdict, and the jury verdict. Among other things, Torres argued:

1. The JOC contract, because it required that job order proposals be submitted after-the-fact, was not an enforceable contract but merely an agreement to negotiate.
2. The JOC statute required that LAUSD obtain an estimate so that it could compare Torres’ job order proposal with the estimate, and because LAUSD failed to obtain an estimate, no contract was formed because LAUSD failed to satisfy a condition precedent to entering into a contract.
3. By accepting Torres’ job order proposals, LAUSD waived its right to claim that Torres breached the pricing provisions of the JOC contract.

A. JOC Contract: Enforceable Contract or Mere Agreement to Negotiate

As to the first issue, whether the JOC contract was an enforceable contract or merely an agreement to negotiate, the Court of Appeal held that the JOC contract was an enforceable contract not merely an agreement to negotiate, because it contained “every key term of future job orders except one: the Scope of Work for any projects which LAUSD would assign to Torres.”

Further, held the Court of Appeal, as to the one key term not negotiated, the scope of work, a scope of work was ultimately agreed to by the parties after Torres submitted and LAUSD approved Torres’ job order proposals:

LAUSD is not suing on a Scope of Work that never materialized. There is no claim that the required Scope of Work for each job order was not established as required by the General Conditions of the JOCs. Under the General Conditions, once the Scope of Work is properly established, LAUSD issues its RFP, and the contractor is required to respond with a proposal which prices the work using the applicable formulas in the General Conditions. This is arithmetic, not negotiations.

B. LAUSD’s Failure to Obtain an Estimate: Failure to Satisfy a Condition Precedent or Not

Under the JOC statute, “[I]n order to prevent fraud, waste, and abuse,” a K-12 school district using a JOC project delivery method is required to “[p]repare for individual job order developed under a job order contract an independent unified school district estimate.” The estimate it to be “prepared prior to the receipt of the contractor’s offer to perform work” and is supposed to be “compared to the contractor’s proposed price to determine the reasonableness of that price before issuance of any job order.”

According to Torres, the statutory requirement that LAUSD obtain an estimate “prior to” receipt of Torres’ job order proposal was a condition precedent to entering into an enforceable contract, and because LAUSD failed to obtain an estimate “prior to” receipt of Torres job order proposal, the JOC contract was unenforceable.

The Court of Appeal disagreed finding that “[t]here is no language in the statute expressly conditioning a contractor’s duty to prepare a correctly priced proposal on LAUSD obtaining an independent estimate.”

Note: While I don’t necessary disagree with the Court’s conclusion that obtaining an estimate is not a condition precedent, I’m also not quite sure that I see the Court’s logic here, since the condition precedent argued by Torres’ is not its duty to prepare a correctly priced proposal, but rather LAUSD’s duty to obtain an estimate before receipt of Torres’ job order proposal as stated in the JOC statute (i.e., “prior to”).

C. Acceptance of Torres’ Job Order Proposals: Waiver by LAUSD of the Pricing Provisions of the JOC Contract or Not

Finally, Torres argued that by accepting Torres’ job order proposals, LAUSD waived the pricing provisions of the JOC contract even if the pricing contained in the job order proposals were at variance with the pricing provisions of the JOC contract. Again, the Court of Appeal disagreed.

First, the Court of Appeal pointed out, the JOC contract includes an anti-waiver provision which provided that:

No action or failure to act by [LAUSD] shall constitute a waiver of a right, remedy, or duty afforded to [LAUSD] under the Contract Documents, nor shall such action or failure to act constitute approval of or acquiescence in a breach thereunder, except as may be specifically agreed to in writing.

Second, the Court of Appeal pointed out, for there to have been a waiver, LAUSD would have had to have waived two rights, the right to have a proposal prepared by Torres in accordance with the JOC contract, and the right to audit Torres’ project files and recover overcharges:

Further, in order for appellants to prevail, LAUSD would have to have waived two rights: 1) the right to have a proposal prepared in accordance with the pricing formulas; and 2) the right to later audit the job order and recover overcharges. Appellants have not pointed to any admissible evidence showing that LAUSD personnel were aware that Torres’s proposals violated the General Conditions pricing formulas or that LAUSD expressly relinquished the right to require those formulas. Appellants point to the conduct of LAUSD personnel in approving and signing the job orders. Even assuming for the sake of argument that signing a job order without checking for pricing conformity could be viewed as conduct inconsistent with an intent to enforce the General Conditions pricing formula and that such waiver was not prohibited by the express terms of the anti-waiver provision, this conduct would only be inconsistent with an intent to enforce the pricing formulas through the job order issuance process. The conduct is not inconsistent with a belief that a subsequent audit could and would make a compliance determination and that any overcharges could be recovered. Thus, for waiver purposes, LAUSD’s conduct is not inconsistent with an intent to enforce the pricing formulas.

Finally, the Court of Appeal held that permitting a waiver would be inconsistent with the JOC process “by removing the requirement that a contractor follow the pricing formulas in the General Conditions in preparing its proposal.”

Conclusion

So, there you have it. A broad overview of the JOC project delivery method, which, unlike other kinds of project delivery methods, essentially includes two different proposal mechanisms, one when a contractor bids on a request for proposals, and another when a JOC contractor bids on a specific project, and one Appellate Court’s view of the application of contractual principals to that project delivery method.

Actionable construction cost data is required to assure financial visibility and transparency and to create a detailed, well-communicated scope of work.

The use of “national average” cost databases and “location factors” or “cost indexes” does not provide sufficient information to create reliable construction cost estimates.

Locally researched detailed unit price books, when used by an experienced construction cost estimator, are the only tool available to create reliable construction cost estimates for owners and their design/builders.

Actionable cost data is critical for successful …

• Forecasting cost of future projects

• Cost comparisons

• Establishing unit rates for tasks / work orders

• Monitoring and controlling of construction cost

• Design cost planning

• Compliance and Risk Mitigation

via www.4bt.us – Unlike other cost databases available, 4BT construction cost data includes locally researched labor, material, and equipment costs not national averages.  4BT construction cost data is created and maintained by an professional team with decades of cost engineering, project management, and capital planning experience, including working for organizations such as the R.S. Means Company, LLC,  and VFA, Inc.  A team that saw the need for more representative detailed line unit price construction cost data.

4BT OpenCOST Cost Data is available via the Cloud and comes with the 4BT-CE Cloud Cost Estimating Module.

JOC unit price book updates should be done annually, at a minimum.

The updates should include research and associated appropriate granular changes for all labor items (trades), as well as material and equipment updates for the specific local market.

Using a economic index, or an “adjustment factor” applied to the UPB at the end of each year is NOT RECOMMENDED. The use of factors as a means to update a UPB does provide sufficient cost visibility.

#constructioncostdata #adjustmentfactor #UPB #jobordercontract #jobordercontracting #unitpricebook #constructioncostmethodology #constructioncostresearch

Most people don’t truly understand JOC, and the the question “What is JOC / Job Order Contracting” invariably gets a a wide range of answers.

Below is a listing of items that define JOC.

1. JOC, in this case is an acronym for Job Order Contracting
2. JOC is a integrated planning, procurement, and construction delivery method that, depending upon applicable regulations/statues, can be used for repair, renovation, maintenance, and new construction for facilities and/or horizontal physical infrastructure.
3. JOC has improved significantly in its levels of comprehensiveness, and capabilities versus its early introduction to America in the 1980s.
4. JOC is a program-centric environment within which a contracts, projects, bids, estimates, and work orders follow specified stages and work flows.
5. All JOC tasks and costs are determined by a locally researched detailed unit price book.
6. Reward is performance-based.
7. Collaboration and training is mandatory for all participants.
8. Long-term mutually beneficial relationships are a hallmark of JOC.

JOC Benefits

1. Consistent detailed definition of, and clearly defined Scope of Work
2. Fewer change orders and disputes
3. Shorter procurement and overall project delivery times
4. Lower project life-cycle costs
5. Higher quality and satisfaction levels
6. Higher percentage of dollars spent on actual construction
7. Full financial visibility and transparency
8. Auditable and compliant