The Proactive Construction Project Management Solution
Public sector facilities management professionals now have a proactive construction project management solution to assure quality, on-time, and on-budget repair, renovation, and new builds.
Public sector facilities management professionals now have a proactive construction project management solution to assure quality, on-time, and on-budget repair, renovation, and new builds.
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…
The FM mismanagement problem defined simply is the lack of leadership among real property owners and the associated lack of robust, programmatic processes across the AECOO sector (AECOO-Architecture, Engineering, Construction, Owner, Operator).
Unless the fundamental root causes are addressed, there is little hope of for ending the endemic economic and environment waste associated with building and other forms of physical infrastructure. The latest stimulus package, like those before them, will not even address the issue.
#1. Public and private sector real property owners pay the bills, thus are ultimately responsible.
#2. There is not a single public sector organization that has a robust, proven programmatic planning, procurement, and project delivery method that provides financial visibility and transparency, and the ability to support decision-making to assure the consistent quality, on-time, and on-budget outcomes, system-wide. (A fact support and noted for decades by several GAO Studies.)
#3. Levels of waste currently average 20%-50%+.
#4. All of the above are present despite the availability of proven solutions.
What to discuss the issue?
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Bad data is leading to poor decision-making and outcomes. Thirty percent of respondents indicated that more than half of their project data is “bad” and results in poor decision making more than 50 percent of the time. Decisions made using “bad data” are estimated to have cost the industry $88.69 million in rework alone, accounting for 14 percent of all rework performed in 2020.
References:
Watanabe-Crockett, Lee. “The Daily Data Diet: Information Creation in Numbers.”
Global Citizen. 2016.
Famous, Gabriele. “Three Technology Trends Shaping the Future of Design and
Construction in 2018.” Aconex Group. 2018.
Hill, Brian L. “Digging for the Big Data Gold in Today’s Construction Projects.” Xpera Group. 2017.
“2017 Construction Technology Report.” JB Knowledge. 2017.
Marr, Bernard. “How big data and analytics are transforming the construction industry.” Forbes. 2016.
Wood, Chris. “Betting on Big Data: How Construction Firms are Leveraging Digitized Job Sites.” Construction Dive. 2016.
“How to Break Down Data Silos: Problems and Solutions.” Status. 2018.
“Construction Disconnected. 2018 Industry Report.” PlanGrid and FMI. 2018.
The 5 Essential Components of a Data Strategy.” SAS. 2018
PS:
Strategies in place to collect, manage, and analyze usable data drive benefits such as fewer project delays and budget overruns, less rework, fewer change orders and reduced safety incidents.
In the construction sector, gross margin has averaged 17.08-23.53% over 2020. However, margins can be as high as 42% for remodeling, and 34% for specialty work.
Type of construction | Industry margin |
New construction | 20-25% |
Remodeling/repair/rehabilitation | 34-42% |
Specialty work | 26-34% |
The elephant in the facilities management room is ever-present.
The reality is that planning, procurement, and project delivery teams are misaligned… or simply not aligned at all.
This causal factor for the relatively dismal performance associated with facilities repair, renovation, and new builds is the lack of leadership, support, and commitment of senior management.
All of the processes, workflows, tools and services are readily available to mitigate the rampant economic and environmental waste.
While facilities, procurement, design, and construction professionals certainly want to improve and can improve, they are constrained by lack of leadership capability and support.
“Digital transformation”, “BIM”, and other technologies are not capable of solving the fundamental issue. Public sector real property owners must fundamentally change how they manage on a strategic and day-to-day basis. People, Process, Information, and Technology must be integrated, along with Planning, Procurement, and Project Delivery.
Here’s what can happen if systemic problems exist in a JOC Program. The potential for fraud is real. In this case the owner paid at least $1.9M more than they should have. These funds should have been used for construction and not wasted.
See the video…. Laura Dowd, Independent Auditor.
Job Order Contracting should be deployed as a integrated LEAN planning, procurement, and project delivery system, complete with independent third party oversight.
Learn more about JOC Program best management practices.
Program transparency drives Best Value facilities project outcomes by empowering owners and design-builders alike. Internal and external planning, procurement, and project delivery teams follow the same robust lean programmatic process for all projects.
All have easy access to project information, in one platform, and using a common data environment, inclusive of locally researched detailed cost information, organized using CSI MasterFormat.
Team member can improve and accelerate important decisions, measuring, validating and continuously improving the building process in real time.
The 4BT OpenJOC(TM) and 4BT OpenBUILD(TM) frameworks provide all the tools and support services to enable teams to consistently deliver quality repair, renovation, and new builds on-time and on-budget.
What are you waiting for?
Set up a quick 15-minute exploratory call right now.
If you want a proven solution that enables you to consistently deliver quality repair, renovation, and “minor” new builds on-time and on-budget, keep reading.
Integrating People, Process, Information, and Technology isn’t a simple task, but one that is required in order to drive efficient facilities management outcomes.
If you are ready to stop spending money on costly on-site “consultants” or the latest great “technology”, then let’s talk about a robust solution based upon a proven programmatic approach.
The solution is relatively simple….
You can save 20%-40% of the costs of projects while assuring complete financial visibility and transparency, as well as compliance. Change orders will be virtually eliminated and costly procurement delays avoided.
Sure, all the above is embedded in an enterprise collaborative cloud environment, however, in our case, technology is just a means to an end… not the driver.
Schedule a quick 15-minute introductory call.
Four BT, LLC 303 Riverwood Lane Dunsmuir, CA 96025
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.
Best value construction delivery requires a focus upon assessing a project’s cost over the whole life of the investment; planning, procurement, project delivery, and operations/maintenance.
An improved, programmatic approach to integrating planning, procurement, and project delivery is readily available, inclusive of all needed tools and support services.
Value management is now possible that enables real property owners to consistently plan and execute quality project on-time and on-budget. The following elements are common in robust collaborative repair, renovation, and new build delivery systems.
Request a quick 15-minute introductory call, or the Collaborative Construction Project Delivery Solution white paper.
A collaborative construction solution, capable of consistently delivering quality repair, renovation, and new builds, on-time and on-budget, is available to any Public Sector real property owner. All that is needed is owner leadership and commitment.
The Public Sector facilities management sector has long suffered from poor productivity growth and high levels economic and environmental waste. The root cause can be traced to poor owner leadership and commitment and the associated misalignment of owners and other project participants caused by traditional project delivery methods.
Traditional contracting methods typically involve the non-owner participants tendering a lump-sum price based on the owner’s proposed allocation of responsibilities and risks. Each non-owner participant has strong incentives to perform the contract package allocated to it well, but is far less invested in how other participants perform their contract packages. The project becomes a collection of disparate sub-projects, with each non-owner participant rewarded by performance of its sub-project, rather than the performance of the entire project.
Poor performance of one participant will often excuse other participants from the need to strictly fulfil their obligations, or entitle them to claim additional money from the owner. When things inevitably go wrong, the participant’s financial interests are often served by blaming others and defending contractual positions, rather than working collaboratively to overcome the problem.
The over-riding goal of most contractor becomes minimizing the cost of performing the agreed scope or activity and maximizing profit. This is so even if doing more would reduce the owner’s total costs or otherwise result in better outcomes for the owner. If the owner wants a participant to do more than the bare minimum required, to overcome a problem or achieve a better outcome, or to coordinate and integrate its work with those being delivered by other non-owner participants, the owner will typically have to compensate that participant for its additional costs, to restore its profit margin. Traditional construction project delivery simply doesn’t provide any incentive for non-owner participants to deliver outstanding performance in areas that deliver value to the project owner. Just the opposite, traditional contractual incentives, such as liquidated damages and performance security, provide only negative incentives to ensure compliance with minimum requirements.
Finally, the workflow of traditional construction planning, procurement, and project delivery is just plain wrong! Scoping and design of conventionally procured projects is generally completed, or well progressed, before the owner calls for proposals from constructors. Engaging a constructor to provide input during the scoping and design process to try to make the project easier and less costly to build, or to fast track the project by overlapping the scoping, design, procurement, and construction phases, simply isn’t even considered, let alone done. This adversely affects the owner’s ability to run a highly competitive, efficient process for the renovation, repair, or new construction work, and 90% of the time results in the owner paying a higher construction prices and late projects.
It was out of these realities that the concept of integrate LEAN construction planning, procurement, and project delivery was born, and enabled. An example is the 4BT PEP Solution, which embraces a wide and flexible range of approaches to overcome the misalignment of interests associated with traditional contracting, including
Thus, LEAN, integrated construction planning, procurement, and project delivery fully addresses relationships of all parties to cost, time, quality, liability, decision-making.
Many public sector facilities professionals are well aware that actionable project (repair, renovation, new build) estimates should use current, locally researched unit price cost data, complete with labor, material, equipment, and productivity/crew information, in order to achieve reliable cost visibility and transparency.
Unfortunately most can’t achieve this due to lack of knowledge, awareness, and or support from their “leadership”. Senior organizational leadership rarely, if ever, supports the “cost” to develop requisite decision-support tools and fully trained in-house facilities teams.
The next result is 20%-40%+ waste, excessive change orders, and late delivery, for 80%+ of ALL projects.
That’s the “hidden elephant” in the room.
Unless an owner has a good starting point, he/she, for all intents and purposes, is just monitoring and comparing their relative “guesstimate” (or those of their contractor and/or subs… not what the project should cost. Secondly, unless robust processes are required and continuously improved (for example LEAN job order contracting and integrated project delivery), achieving targeted goals is unlikely.
www.4bt.us – Proven construction project delivery solutions
There are major disadvantages of having a construction acquisition/procurement plan lacking granularity.
With respect to construction, renovation, maintenance, sustainability or repair procurements, lacking granularity results in a lack of cost visibility and transparency and financial management inefficiencies. A detailed unit price cost proposal should be required for all such projects. The information provided should be in a standardized data architecture, such as CSI Masterformat. Locally researched detailed unit price cost books provided the highest ability to represent actual costs and should be used by owners and service providers, in addition to other reliable tools and techniques.
via www.4bt.us –
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
In short, a focus upon robust LEAN processes across all core FM related activities… planning, procurement, and project delivery… and subsequent selection and implementation of domain-specific technology, is a most direct path to best value outcomes.
Set up a quick 15-minute introductory call to learn more?
LEAN Job Order Contracting, as represented by the 4BT OpenJOC(TM) Framework, is a programmatic methodology applied to all construction projects and work orders.
Typically all individual construction projects have been considered to be unique, with each requiring its own approach, means, and methods. This is a fundamentally flawed perspective that has significantly contributed to rampant historical economic and environmental waste across the AECOO sector (AECOO – Architecture, Engineering, Construction, Owner, Operator).
For example, the Project Management Institute (PMI) defines a project as follows; “a project is a temporary endeavor. undertaken to create a unique product or service”. Certainly each construction project has a beginning and an end, however, unless they are all addressed in standardized, professional, and robust manner and associated workflows and a common data environment. While there are certain unique elements to each construction projects, the granular tasks for virtually any construction project can be defined in advance and stored in a database. This database, also referred to a detailed unit price book (UPB), or a construction task catalogue, includes the following information for each task:
Using a UPB enables any construction project to be represented in standardized terms which all involved parties can understand. A UPB solves several major issues that have traditionally faced real property owners, architects, and builders. First, a robust, detailed scope of work can be easily created and communicated and understood by all parties. A poorly defined and/or poorly communicated scope of work is responsible for the majority of change orders and cost overruns encountered. Secondly, a locally researched UPB provides the highest possible certainty with respect to costs. Furthermore, the discrete elements of a UPB can be then organized into an appropriate work schedule.
A locally researched UPB is one of several key elements of Programmatic LEAN Job Order Contracting. (Note: a “national average” cost database with/without location factors and “historical costs”, as well as lump sum cost from contractors or subcontractors do no provide requisite cost visibility, transparency, or cost management.)
Holistically, Programmatic LEAN Job Order Contracting is a performance improvement environment, consisting of proven processes, tools, data sources, and techniques. It is a structured method of eliminating waste from throughout the
“project” life-cycle, from conceptualization, through integrated planning, procurement, and execution. Value management for all participants and stakeholders is a key focus that is achieved through everyone having a clear understanding of requirements on an early and ongoing basis and enhanced team dynamics.
Furthermore Programmatic LEAN Job Order Contracting doesn’t require pubic sectors to pay a percentage of JOC total annual construction for access to world class JOC tools, cost data, and support services, saving owners up to 10x+ in JOC administration fees.
Learn more?
Variability is an inherent characteristic of construction. The lack of a robust programmatic process-centric approach causes instability in performance of construction processes causing negative fluctuations of work and poor information flow.
Phases: Conceptualization-Planning-Procurement-Execution-Closeout
Primary Failure Causes:
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#1 FM managers identify capital planning and compliance & standards as their top training priorities for themselves.
#2 FM managers say their teams’ top training needs are leadership skills, strategic planning, emergency management, and communication.
#3 FM staff say their top training needs are capital planning, financial management, strategic planning, and compliance & standards.
Where FM Teams Need Training (According to Managers)
• Leadership skills
• Strategic planning
• Emergency management
• Communication
• Capital planning
• Environmental health & safety
• Compliance & standards
• Innovation
• Project management
• Sustainability
Where FM Staff Need Training
(Self-Identified)
• Capital planning
• Financial management
• Strategic planning
• Compliance & standards
• Project management
• Contract management
• Sustainability
• Construction
• Emergency management
• Innovation
Where FM Managers Need Training
(Self-Identified)
• Capital planning
• Compliance & standards
• Strategic planning
• Leadership skills
• Emergency management
• Environmental health & safety
• Contract management
• Space management
• Financial management
• Project management
The current conditions of America’s schools are far from acceptable.
“In the last year, several school districts across the country have temporarily closed schools due to hazardous conditions of the school buildings that can pose health and safety risks to students, teachers, and
staff. For example, water damage caused by a leaking roof or heating, ventilation, and air conditioning (HVAC) system can lead to problems with indoor air quality and exposure to substances such as mold or asbestos.
To address these and other concerns, public school districts collectively spend tens of billions of dollars each year on facilities construction needs at the nearly 100,000 K-12 public schools across the nation, according to
Department of Education data.
School districts’ highest priorities for their school facilities were improving security (an estimated 92 percent), expanding student access to technology (87 percent), and monitoring health hazards (78 percent), according to GAO’s school district survey. In school districts GAO visited, officials said they first address health hazards and safety issues. In nearly all districts GAO visited, security also had become a top priority, with some districts prioritizing security updates over replacing building systems, such as HVAC.” (Source: 2020, GAO Report – K-12 EDUCATION
School Districts Frequently Identified Multiple Building Systems Needing Updates or Replacement GAO-20-494)
These types of schools projects can be expedited with the use of LEAN Job Order Contracting. Full cost visibility and transparency are provided and the majority of projects are completed on-time and on-budget. Unfortunately most school districts don’t leverage LEAN Job Order Contracting due to lack of aware or leadership.
Request LEAN Job Order Contracting white paper…
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
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.
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.
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.
Construction is performed through a CM, who is selected on the basis of the lowest bid of fees and general conditions.
Agency construction manager is hired as a consultant to help represent the owner’s interests during the construction phase of a DBB project.
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.
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.
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.
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.
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.
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.
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:
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.”
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.
The following are auditor recommended JOC Program best practices. (Partial Listing)
A JOC program should never be used to bypass the lengthy traditional procurement process so that projects can be pushed along quickly, regardless of size or type, and without considering if JOC is the best option.
▪ Negotiating individual projects is critical to ensuring quality work at fair and reasonable prices.
▪ You should establish guidelines for evaluating and negotiating Job Order Contract proposals.
▪ Place limits (caps) on the use of non-catalog items.
▪ Proposals should be reviewed and priced by a fully independent source aside from the project manager and contractor creating a mechanism to gauge whether the contractor’s proposals are reasonable
▪ CONFLICTS OF INTEREST-Projects where the consultant, acting as project manager, reported directly to another consultant instead of reporting directly to the JOC program manager. Excessive use of consultants. No JOC program controls to monitor or prevent multiple consultants from one consulting firm working in different capacities on the same project.
▪ Develop specific training academies or programs that provide skills needed specifically for managing JOC projects and your entity’s policies and procedures.
▪ Provide a detailed scope of work (SOW), which should serve as the roadmap for the JOC contractor to build an accurate and thorough cost proposal that meets the needs of your entity.
▪ Ensure procurement internal control processes are well designed, rigorous and consistent (there should be no conflicting T&Cs).
▪ Use a standard sign-off and checklists to capture requirements.
▪ If low bid is not selected, have a document separate from the scoring sheets with a thorough explanation.
▪ Have a succession plan for turnover (loss of an experienced player in middle of the process may have a serious impact on the project).
▪ Rotate duties occasionally (to help avoid the above).
▪ Provide more staff training as the need is identified.
A LEAN Facilities Repair and Renovation approach drives optimal capital reinvestment outcomes via a collaborative environment and transparent costing.
LEAN Facilities Repair and Renovation is a programmatic systems approach that integrates the planning, procurement, and project delivery process for public sector facilities owners and their design/builders. Unlike traditional methods, LEAN job order contracting assures a detailed scope of work and reliable costs via a locally researched unit price book. Furthermore, work flows, documents, and required approvals are clearly defined for all participants and stakeholders.
While each of the numerous repair, renovation, and new builds may be unique, all are optimally execute within a common process and common data environment. This fact has been proven via numerous research projects and case studies.
With appropriate leadership and support, any public sector organization can implement a LEAN facilities repair and renovation framework and significantly improve life-cycle outcomes. Furthermore, the programmatic approach virtually assures compliance and financial visibility and transparency.
The single biggest barrier is cultural resistance to change.
Let’s schedule a quick 15-minute chat to see if you organization is ready for the challenge.
Up to 57% of productivity is lost during the construction process. – 2014, Lean Construction Institute
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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 …
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.
Kuwait Job Order Contracting market size and facilities management market size for repair, renovation, and new construction.
The Kuwait facilities management sector is estimated at over $1.2B with a anticipated 10% annual growth through 2025.
Job order contracting and similar IDIQ projects are being performed at Camp Arifjan, Ali Al Salem Air Base, Camp Buehring, Al Jaber Air Base, Camp Patriot, Udari Range, and Kuwait Naval Base.
via Four BT, LLC – Best value job order contracting and lean construction planning, procurement, and project delivery solutions.
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
Job Order Contract Performance Measurement is required in order to achieve best value and in order for public sector administrators to meet their fiduciary responsibilities. Unfortunately, JOC Program performance measurement is severely lacking. Instead, JOC is being treated as a commodity and used primarily to speed procurement.
In order for a JOC Program to provide its full potential, provide significant benefits, and also be in compliance with applicable statutes, independent third-party audits and continuous performance measurement are needed.
Public sector owner Leadership, Policies and Strategies, People, Process, Information, and Technology are core considerations when developing key performance indicators (KPIs). KPIs should monitor financial perspectives, internal process perspectives, and client/end-user perspectives.
Learn more about JOC, and how to stop all those underperforming repair, renovation, and new builds…
A LEAN JOC Program enables any public sector facilities management team to integrate construction planning, procurement, and project delivery… and consistently deliver quality repair, renovation, on-time and on-budget with full compliance and cost visibility, and with the lowest administrative cost.
How a LEAN Job Order Contracting differs from “traditional” Job Order Contracting….
4BT provides methods and tools for optimizing repair, renovation, and new build deliver via the implementation of a proven process-based approach. Many public sector owners overlook the core means and management of facilities construction planning, procurement, and project delivery. As a result, each project is dealt with as a totally “new” exercise. This results in excessive, redundant, and inefficient activities and poor outcomes.
Overlooking the significance of the construction delivery method and the need for a consistent programmatic approach is the primary cause of construction project failure. Without a efficient core process applied to every project, waste in all formats is the most likely outcome. The result is incompatible with a public sector professional’s role of financial stewardship.
Improving construction outcomes is an owner’s responsibility. Owner leadership and commitment remain the only solution to rampant facilities repair, renovation, and new build waste. It is up to an owner to define, implement, and manage a robust, repeatable, and efficient process to assure best value project planning, procurement, and project delivery, including building strong, outcome-focused internal and external teams.
“People never want to be part of the process, but they want to be part of the outcome. The process is where you figure out who’s worth being part of the outcome.”
A robust process, that embeds a LEAN programmatic approach for all projects, can assure the consistent delivery of quality, on-time, and on-budget repair, renovation, sustainability, maintenance, and new build requirements. All of the tools and services required are readily available. If you are a public sector facilities management professional, it’s your choice whether to implement significant improvement, or continue to make the mistakes of the many.
Rethink, rebuild, and improve your repair, renovation, and new build activities and reduce costs 20% – 30%+ by implementing robust, integrated LEAN construction planning, procurement, and project delivery. If you already have a Job Order Contracting Program to manage you repair, renovation, and minor new builds, you can reduce your administration costs up to 10x, and while improve service levels. We are excited to introduce a super-efficient Job Order Contracting Solution that simplifies the JOC process, adds transparency, and assures compliance.
You can now easily deploy robust LEAN JOC methods and consistently deliver quality repair, renovation, and new build project success with the lowest possible administrative burden.
You already know that 80%-90% of ALL construction projects are late, over-budget, or poorly completed.
Cost effectively managing your facilities to support your organization’s mission requires the ability to
1.) define scope and cost reliably and in a detailed manner,
2.) procure services cost effectively, and then
3.) execute projects efficiently.
Fully defining, implementing, and managing best value repair, renovation, or new construction processes is a fundamental requirement for achieving any level of measurable improve in outcomes. Studies have clearly demonstrated that a poorly prepared, poorly communicated scope of work is the primary cause of construction project failures. These same studies have shown that the construction delivery method, the PROCESS, impacts all aspects of a project more than any single element in this regard.
The term “sustainable development’ was first used in 1987 by the Brundtland Commission, a United Nations initiative to improve the global environmental, economic and social conditions (WCED, 1987). Similarly “sustainable construction” was a term used in 1998, and perhaps best defined as “the creation and operation of a healthy built environment based on resource-efficiency and ecological principles”(Huovila and Koskela, 1998) (Kibert (2005). Robust processes, methods, and tools have existed for decades, and have subsequently been refined to help organizations implement these approaches. Owner leadership and commitment remains the only significant barrier to widespread adoption.
References:
Huovila, P. and Koskela, L. (1998). “Contribution of the Principles of Lean Construction to
Meet the Challenges of Sustainable Development.” IGLC-6, Guarujá, Brazil.
Kibert, C. J. (2005). “Resource Conscious Building Design Methods.” Sustainable Built
Environment, 1, 1–11.
WCED (1987). “Our Common Future: The Brundtland Report.” World Commission on
Environment and Development, (ed.), Oxford University Press, Oxford, UK.
Any facilities owner or management professional can virtually eliminate change order for repair, renovation, and new builds.
Change orders, or modifications to the parties’ construction contract, can be owner generated, but typically are the result of a poorly defined and or poorly communicated scope of work. Change orders easily add 20%-30% or more to the total cost of a project, create delays, and generally frustrate the parties involved.
Project delivery methods have evolved over the past few decades that significantly mitigate change orders. Integrated project delivery (IPD) and LEAN job order contracting (JOC) are the most widely known and robust of these collaborative and integrated construction planning, procurement, and delivery methods.
Early and ongoing communication, a common data environment, a collaborative mindset and an operating environment that facilitates best value outcomes for all participants, limits both risk and change orders.
Any real property owner can significantly improve likelihood of success of construction project outcomes. It simply requires owner leadership, commitment, and support to implement and maintain a robust programmatic approach for all facilities repair, renovation, maintenance, sustainability, and new build projects.
Here’s the truth…
While all the tools and services are readily available to assure consistent delivery of virtually all facilities projects in a quality manner, on-time, and on-budget, there are multiple barriers to implementation and continuous improvement. The barriers are largely cultural and involve the ability of an owner to shift from traditional ad hoc inefficient methods.
Quite simply, an owner can elect to continue to make the mistakes of the many, or implement a robust program to support best value project planning, procurement, and project delivery.
Team with us to….
1. Deliver the best possible tools and services to support LEAN Job Order Contracts and other forms of integrated project delivery for public sector facilities repair, renovation, maintenance, sustainability, and new builds.
2. Promote a better understanding of how the built environment influences human behavior, health and organizational productivity,
3. Build awareness of the strategic and operational value of LEAN, collaborative facilities management practices with respect to meeting emerging environmental and economic challenges,
4. Forge closer links and collaboration between the financial, technical, sociological and operational aspects of facilities management through an integrated resource management and service delivery approach,
5. Disseminate information about proven business process, tools, and research specific to best management practices (BMPs),
We support Relationship-based and Knowledge-driven Construction Planning, Procurement, and Project Delivery. This is a programmatic process-based approach that integrates disparate teams throughout the planning, procurement, and project delivery phases on an early and ongoing basis. With appropriate owner leadership and support, lean construction better meets customer needs while using fewer resources.
Job Order Contract Performance Measurement is critical, but often overlooked. JOC Programs can provide significant benefit when designed and managed properly. Unfortunately, they can easily just become an abused process of simply speeding repair, renovation, and new build projects through without proper oversight and at excessive cost.
JOC, when properly used, is an integrated LEAN construction planning, procurement, and project delivery method in which the owner provides leadership and oversight within a collaborative, mutually beneficial relationship with design/builders. JOC can consistently delivery quality projects, on-time, and on-budget.
First and foremost, using consultants as project managers is problematic, as is paying a % of construction volume for “JOC consulting services”. This approach, as highlighted in independent JOC audits sets a stage for mismanagement, waste, and potential fraud.
Schedule a call to discuss the above, and how to monitor JOC Program performance.
via www.4bt.us – making JOC simple
If you are wondering how to How to Achieve 25%-30%+ average construction savings, it’s really simple. Just stop doing the same old things that will never work.
An average savings on the order of 25 to 30 percent can be achieved when facilities repair, renovation, maintenance, and new build processes are standardized at a program level. Integrated planning, procurement, and project delivery is conceived and executed with the same supply chain approach over the life of a program in which the owner teams (procurement, facilities management, leadership) and suppliers (architects, engineers, builders, subcontractors) remain unchanged. The integration of People, Process, Information, and Technology within a standardized framework has consistently proven to yield significant cost savings (see references below).
References:
Ballard, G., Howell, G., A. 2003. Competing Construction
Management Paradigms. Proceedings of the 2003 ASCE
Construction Research Congress, Honolulu, Hawaii.
Ballard, G., Howell, G., A. 2004. Competing Construction
Management Paradigms. Lean Construction Journal, 1(1),
Koskela, L., Application of the New Production Philosophy to Construction, technical report No. 72, Center for Integrated Facility Engineering, Department of Civil Engineering, Stanford University, CA, 1992.
Merrow, E. and Walker, J. , The Efficacy of Unusual Contracting Approaches, UIBC 2018, IPA, November 2018.
Oswald, T. H. and Burati, J. L., “Guidelines for implementing total quality management in the engineering and construction industry”, CII Source Document 74, report to the Construction Industry Institute, Austin, TX, 1992.
Walker, D.H.T., “An investigation into factors that determine building construction time performance”, PhD thesis, Department of Building and Construction Economics, Royal Melbourne Institute of Technology, Melbourne, Australia, 1994.
via 4bt.us – making construction simpler
JOC simplifies construction and is an appropriate delivery method for any type of repetitive work, such as concrete work, painting, carpeting, roofing maintenance, HVAC, electrical, ADA compliance projects, design and minor new construction.
It also allows for a longer relationship with the awarded JOC contractor as various job orders issued under the contract are performed during the contract term. Because the contractor is selected and the unit price is fixed (by a locally researched detailed unit price book), a job order contract allows contractor input prior to design, which can expedite the work and save money by mitigating errors, omissions, and change orders.
JOC services and tools should not be acquired using a “% of total construction dollars” method, but rather simple procurement of tools and services required. Using a % of total construction dollars approach generally results it payments of 10x versus simple procurement of tools and services.
via www.4bt.us – making construction planning, procurement, and project delivery better.
Paying 11% of total construction value is not a job order contracting program solution in concert with the fiduciary responsibilities of any public sector real property owner.
Unfortunately, such a practice is far from rare.
Leadership and understanding are critical qualities for any public sector civil servant.
Learn more?
At the end of the day, Public Sector Facilities Portfolio Management 101 is a PASS/FAIL course for practicing professionals.
As a public sector facilities management professional, your days are as endless as the list of repairs, renos, and new builds.
Savvy FM professionals know, however, that at the end of day, that only two things really matter…
Contact us to set up a brief 15-min introductory call if you want to….
Via 4BT www.4bt.us – Improving Operational Performance, Optimizing Spend and Cash, & Reducing Risk
Facilities management professionals… here is an introduction to a LEAN Implementation ROADMAP for CONSTRUCTION, including all the processes, tools, and support services you need to consistently drive quality, on-time, and on-budget repair, renovation, and new builds.
LEAN is a philosophy dating back as far as Henry Ford. At it’s core LEAN is quite simple. LEAN is a way of thinking that bases decisions on long-term objectives rather than short-term wins, builds leaders and teams that thoroughly understand the work and share knowledge and practices with everyone involved, and “walk the talk”.
While simple, LEAN is rarely practiced by real property owners and facilities management teams. Therein lies the rub, and the cause of rampant economic and environmental waste throughout the AECOO sector (AECOO-Architecture, Engineering, Construction, Owner, Operator/Operations).
Relational construction contracts rest as the core of LEAN construction (The term “construction” is used, but incorporates all repair, renovation, maintenance and new build activities) . They specify norms and mutual expectations that govern relationships between real property owners and architects, engineers, and builders.
Organizations can consistently attain best value outcomes for all participants by integrating Planning, Procurement and Project Delivery within an open, collaborative environment.
The owner’s level of leadership and competency, the degree of internal collaboration and skill levels of procurement and facilities management teams, and the selected construction delivery method ultimately determine construction-related success or failure. The individuals and factors involved in building and managing the teams ultimately drive success or failure.
Success or failure of a construction activity and is measured by cost, time, quality, and the overall satisfaction of participants.
80%-90% of all construction projects are over-budget, late, poor quality, or result in one or more parties being dissatisfied. In any other sector, this level of performance would be considered unacceptable. In the facilities management, architecture, engineering, construction sector, it is a way of life.
The tools and support services to enable the consistent delivery of quality repair, renovation, maintenance, and new builds on-time, and on-budget and to everyone’s satisfaction are readily available.
Successful implementation, however, requires changing from traditional methods as well as the associated support and understanding of senior management.
Job Order Contracting, JOC, is a form of lean construction delivery, as is integrated project delivery, IPD. JOC is designed for repair, renovation, maintenance, and “minor” new construction, while IPD is reserved for major capital projects.
The benefits of implementing LEAN are clearly demonstrated in the below graphic.
Contact us if you’d like to get on a quick 15 minute call to see if we can help each other out.
via Four BT, LLC, your trusted information source for integrated construction planning, procurement, and project delivery.
How are Industry 5.0 and AEC connected?
Simple… climate neutrality, digital leadership, and the built environment are inexorably intertwined.
Efficient stewardship of the built environment in concert with environmental and economic resource considerations is mandatory for real property owners, facilities management professionals, architects, engineers, builders, building users, and oversight groups. t
The following is a list of considerations and/or requirements for achieving measurable success.
Reference: Enabling Technologies for Industry 5.0
What is Job Order Contracting (JOC)?
Job order contracting is a project delivery method that was developed to expedite the numerous repair, renovation, maintenance, and “minor” new construction projects facing real property portfolios owners.
The concept was initially developed by the United States Army, however, currently available deployments, tools, and support services provide far more powerful capabilities and significantly enhanced benefits to all participants and stakeholders.
Current JOC solutions integrate construction planning, procurement, and project delivery, associated participants and stakeholders, and more! Individual projects range in size from approximately $50,000 to over $20,000,000, depending upon the specifics of the contract and location. Both the maximum individual project size and type, as well as the maximum overall annual size of the JOC Program are typically stated in the contract documents. Financial transparency is provided through the use of an associated detailed unit price book (UPB).
As an Owner, how can I participate in a Job Order Contract?
Depending upon applicable regulations, an owner may be able to issue an RFP for a JOC Program and engage in self-management, or an owner might be able “piggyback” an existing Job Order Contract via an inter-local agreement. An owner may also be able to participate using via a JOC Cooperative.
Is setting up a JOC Program difficult?
No. Information, tools, and services are readily available to stand up an owner-managed JOC program. JOC consultants may also be of value in establishing a JOC Program for the first time. A JOC Program can be set up in as little as 90 days.
Are all JOC Programs the same?
No. JOC can vary in a myriad of ways. It is critical to assure that the JOC Program is based upon fundamental LEAN planning, procurement, and project delivery methods that mutually benefit all participants.
Furthermore, attention should be paid to the costs of JOC Program development and ongoing support, as well as assuring that owners are directly involved in management. (Note: Having a “JOC Consultant” manage a JOC Program puts a layer between the Owner and the Contractors and my negatively impact relationships and overall JOC Program performance. Base upon the JOC consultant selects, there may be excessive “program management: costs, and may create conditions for a potential conflict of interest. These costs can exceed 8% of total construction value.) JOC Programs may involve general repair, renovation, and new construction, or be limited in some way. “Single trade JOCs” such as fencing, electrical, communications, roofing, etc., also may be structured.
Are there special skills or additional resource required to manage a successful JOC Program?
Owners must have leadership skills and a degree of competency with respect to LEAN collaboration construction planning, procurement, and project delivery.
Unlike traditional construction procurement and project delivery, JOC operates optimally within an environment of mutual trust and respect, shared risk and reward, and a focus upon best value outcomes for all participants and stakeholders. The ability to build and understand detailed line item cost proposals and estimates is also required for owners and contractors. Remember, people and process come first!
How many JOC Contracts do Owners bid and execute?
Owners may bid a single contract or bid several contracts base upon geographic area and/or type of work required (roofing, paving, electrical, etc.).
Are JOCs awarded via lowers bidder or best value?
Owners may elect to award JOCs responsible and eligible bidders bidding the lowest coefficients per solicitation. We, however, suggest that a best value approach be used. Owners should considers the bidders previous work history as well as the coefficient.
How is are JOC projects priced?
Pricing for individual projects is based upon contractor/s proposals prepared from the approved locally researched unit price book, and the applied contractor JOC coefficient. The coefficient (or multiple coefficients), serve as an adjustment factor, to the applicable unit price book(s) approved for the JOC. For instance, a coefficient of 1.20 would represent a 20% markup. The coefficient generally must include all project general conditions as described in the contract, including but not limited to supervision, overhead and profit. The proposal represents the total cost for an installed unit. Projects and work orders under a a JOC contract are generally scoped and priced as part of a defined process described in the contract. Once a project is approved, the price becomes a lump sum price.
How often should a unit price book, UPB, be updated, and how?
A unit price book must be updated as stipulated in contract documents. That said, best management practice is to update the UPB at least annually for labor, material, and equipment updates, as well as, the addition of any new line items that may be required. Updating labor on a more frequent basis and adjusting materials based upon major shifts should also be considered.
How do I, as a contractor, develop a coefficient? What is a typical coefficient?
Contractors may develop the coefficients that they choose to bid by any means they desire based on their own experience.
Some contractors develop coefficients by analyzing the unit prices in the Unit Price Books and comparing them to historic and anticipated actual costs, plus overhead and profit. They can not analyze all unit price line items (generally 30,000-40,000+) but focus on key commonly used tasks. They select corresponding line items out of the Unit Price Books and compare actual costs including general conditions, overhead and profit.
Historical project analysis, where you take a past project where costs are known, and then generate a line item estimate based on the applicable Unit Price Book is also a good technique. The differential between the estimates (including overhead and profit) may provide a reasonable basis for the coefficient is an appropriate cross section of tasks is selected and other aspects are properly considered. Projects selected should be similar in size, general condition requirements, and possible distribution of work items.
If a locally researched unit price book is properly prepared, the contractors co-efficient should be 1.x, where “x” represents the contractors overhead and profit and other factors as allowed in the associated JOC RFP. JOC co-efficients typically range in the 1.2-1.4 area, however, can deviate based upon other environmental and economic factors.
Is the 4BT OpenJOC Unit Price Book similar to a national average price book and the associated used of location factors?
No. The 4BT OpenJOC Unit Price Book has been locally researched for the specified JOC area(s). We do not recommend the use of commercial and/or national average price books. National average cost books can introduce gross cost errors.
What items should be included in a JOC estimate?
All JOC estimates should include within the cost estimate all allowable costs, which a prudent and experienced contractor would expect to incur. Any design costs (if applicable) are the responsibility of the JOC contractor as well as all construction efforts needed for project completion. Cost must include consideration of performance specifications, deliveries, site preparation, access, cleanup, and other such items not included in the plans and specifications but would be part of the costs a prudent contractor would expect to incur.
What are prevailing wage requirements?
Labor rates required for the JOC Program are typically specified in a JOC RFP and associated contract. Prevailing wage rates represent an average wage rate in a particular geographic region. How prevailing wage rates are calculated, and which prevailing wage rate source to be used, should be detailed. Davis-Bacon Wage Rates are required for federal government projects and/or those using federal funds. They also generally provide a reasonable approximation of local prevailing wage rates. It is critical that labor is locally researched and that national average data not be used. States may may also publish prevailing wages rates that much be used for all related public sector JOC programs.
How may the Job Order Contracts support Minority and Women-owned businesses?
Studies of JOC in the federal government have shown that JOC increases opportunity for small and disadvantaged businesses. The type of work performed under a JOC should provide provide opportunities for emerging businesses, whether they serve as prime contractors or a trade subcontractors. Note that not all JOCs allow for subcontractors.
What JOC support services are available ?
A partial listing of JOC Program support services would include:
JOC Program Development
JOC Program Oversight, Including Formal and Informal Compliance Audits
JOC SaaS Technology Customization
Multi-level and Multi-format training
24/7 JOC Technology User Support Services – Online, Phone, email.
I always tell owners, builders, architects, and engineers to forget construction cost estimating accuracy. I would also avoid estimators and, or cost data providers that claim to provide accurate construction cost estimates.
Why?
Reliable Construction Cost Estimate
Instead, everyone should focus upon the reliability of a construction cost estimate. A reliable estimate is one that is “able to be trusted” and “consistently good in quality.” In short, reliability is the ability of the estimate to be trusted.
The ONLY reliable construction cost estimate is one that is 1.) detailed, 2.) reflects current local market conditions, and 3.) is communicated clearly and plainly in a common format that all participants can understand.
Process and Tools
Thus, a robust process and appropriate supporting tools are critical to developing reliable construction cost estimates.
A process ALWAYS should come first. Adopting continuous improvement of a robust process is equally important.
Research and case studies have proven that early and ongoing communication of all participants and stakeholders within a common data environment providing technical and cost visibility and transparency is a primary factor affecting final outcomes. In this regard integrating internal and external terms and associated planning, procurement, and project delivery activities, combined with owner leadership and understanding is a fundamental requirement. Processes centered around integrated project delivery (IPD) and LEAN job order contracting provide such environments.
Tools and services that support the above are readily available. One example is a locally researched detailed line-item unit price book, or unit price cost database. Granular tasks and their subcomponents of labor, materials, and equipment, organized in a standard data format such as CSI MasterFormat, can be combined and totaled to reliable define project technical, costs, and schedule requirements.
Summary
Reliable construction cost estimates are required in order to develop and maintain high levels of client and stakeholder trust, satisfaction, and retention.
Unfortunately, reliable construction cost estimating has not been practiced on an organization-wide basis across the public sector. For example, not a single Federal Government Department or Agency, whether DoD or non-DoD requires the use of detailed locally researched unit price cost data. Not surprisingly, the GAO has noted their associated failure to reliable predict construction related costs for decades.
So, let us forget construction cost estimating accuracy and focus upon reliably estimating costs and schedules, and implementing processes that consistently deliver the majority of repair, renovation, maintenance, and new builds in a quality manner, on-time, and on-budget.
www.4bt.us – Your trusted information source for integrating construction planning, procurement, and project delivery.
Avoiding construction cost overruns is best accomplished by,
The root cause of cost overrun, is the fact that DoD teams keep underestimating scope changes and complexity in project after project. Unfortunately DoD leadership supports facilities cost problems by mandating dated, ‘ad-doc’ processes
While planners, cost estimators, and other professional are generally well aware of the factors that impact “capital projects” and how they may be mitigated, the fundamental cost estimation methods are flawed, dated, and ‘ad hoc’ from an organizational perspective. In short, DoD leadership has handcuffed their own people.
Bias and underestimation has become the the norm.
“We have met the enemy and the enemy is us” comes to mind.
It’s time to stop blaming the “complexity” and/or “uniqueness” of construction and deal with the fundamentals.
Competent, continuous LEADERSHIP is sorely needed, and has been for decades. We have great people actually doing the work, however, we tie there hands with inane practices. For example, the DoD continues to use national average cost data, construction cost indexes (CCI), and area cost factors (ACFs) for construction cost estimating. This approach has been proven error prone for decades. And that’s just one example of many. Don’t even get me started on “parametric” estimating.
The fundamental behaviors of LEANDERSHIP are what leads the causal chain of underestimating of scope of work during planning, procurement, and project delivery, and “unaccounted for” scope changes during delivery which lead to cost overrun.
This is not profound, just proven fact.
Chose the right Job Order Contract Platform to achieve significant benefits with minimal administration costs. Chose the wrong one, and you will likely pay hundreds of thousands to millions of dollars for “JOC services” and do little more than automate previous poor business practices.
In order to chose the right Job Order Contract Program, it is important to understand that JOC isn’t simply a way to speed you numerous repair, renovation, maintenance, and new builds.
JOC is a entirely different way of doing business on a day to day business. It requires by owner leadership and understand. If you are ready for the right JOC Platform, you will consistently execute quality projects on-time, on-budget and likely save up to 10x over your current “solution”, and do so with full compliance and cost visibility.
Simplify the JOC Process –
We provide the work flows, documents, locally researched cost data, support, and documents you need. No more, no less. And we don’t charge a percentage (%) of your JOC construction value. You get a user friendly JOC environment that embeds LEAN principles, for a fraction of the the cost of alternative “solutions”.
Address variation, the primary cause of poor performance –
While each project of work order has is own unique attributes, the common myth is that construction is complex and difficult to manage. The fact is that when a common approach is applied within a defined, collaborative environment, change order, errors, and omissions are minimized.
Measure, so you can manage –
Measurement via metrics such a key performance indicators (KPIs) based upon reliable, current, actionable information, is a key responsibility of management. It’s impossible to improve at any scale without proper measurements. Our workflows, information, environment, and tools assure that each phase of a project only begins and is approve for the next if at tasks have been completed and all require information is available and approved.
Embed continuous improvement a core practice –
Mandatory introductory and ongoing multi-level and multi-format training for all program participants and stakeholders is combined with an environment that encourages problem-solving, not blame. Building long-term, mutually beneficial relationships and networked communities is a core practice.
via Four BT, LLC, www.4bt.us – Your trusted information source for integrated construction planning, procurement, and project delivery.
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.
JOC Benefits
Construction prices continue rise as prices increase 3.5% in March (U.S. Bureau of Labor Statistics). One a year to year basis, cost for non-residential construction are up 12%. Lumber prices have shown one of the highest surges, going up as much as almost 80%+ versus last year, and over 5% in March alone.
Introduction
Construction Procurement Costs can be effectively managed within integrated planning, procurement, and project delivery environment. Often owners focus only on initial purchase cost when they make decisions on repair, renovation, maintenance, or new build planning, design, procurement & construction.
The above, when combined with the owner’s level of leadership and competency, internal collaboration and skill levels of procurement and facilities management teams, and the selected construction delivery method ultimately determine construction success or failure.
Success or failure of a construction procurement and the final outcome is measured by cost, time, quality, and the overall satisfaction of participants.
80%-90% of all construction projects are over-budget, late, poor quality, or result in one or more parties being dissatisfied. In any other sector, this level of performance would be considered unacceptable. In the facilities management, architecture, engineering, construction sector, it is a way of life.
Solving the Construction Procurement Puzzle
All the tools and support services are readily available to enable the consistent delivery of quality repair, renovation, maintenance, and new builds on-time, and on-budget and to everyone’s satisfaction. Implementation, however, requires changing from traditional methods and the associated support and understanding of senior management.
basis of initial purchase cost (Woodward, 1997). The initial capital cost is only the portion of
an assets life cycle, that need to be considered while making the right choice.
Requirements for Measurable Improvement
Procurement process in any organization has a major role which
demands heavy purchasing, management of logistics & requires managing waste at every stage.
We are solving facilities repair, reno, new build Knowledge Problems, Process Problems, Data Problems, and Management Problems
What You Can Do
People, Process, and Information Solve Problems, not technology.
Building competent internal and external teams and having them working toward common, mutually beneficial goals, via an established robust process is the ONLY pathway to consistent BEST VALUE outcomes.
If you are not willing to change Culture, Principles, and Outcomes, do not bother to read further.
It will take fundamental disruption beyond BIM to bring the construction industry forward.
If you believe BIM, CMMS, CAFM, IWMS, or any other technology will resolve you track record of over-budget, late, and poor-quality project, do not bother to read further.
The Path Forward
Significant opportunities and benefits are available to any real property owner willing to address the ever-present challenges associated with facilities life-cycle management and the myriad of ongoing repair, renovation, maintenance, and new builds.
The benefits of collaborative teams working within an integrated Planning, Procurement, and Project Delivery Environment are well documented. Instead of the common industry average high (80%-90%) project failure rates, owners and their services partners can consistently deliver quality projects on-time and on-budget.
All the tools and support services are readily available to drive added value for all project participants and stakeholders. The key is to set up a programmatic approach, within with all projects are planned, procured, and executed.
Once adopted, everyone involved, owners, designers, and builders have complete, detailed technical and cost visibility and transparency. This fact alone eliminated the #1 cause of project failure…. a poorly defined, poorly communicated Scope of Work.
Conventional planning, procurement, and project delivery methods are incapable of consistently delivering best value outcomes. In fact, any approach lacking the focus upon integrating teams, processes, and information for all parties approach without the integration of people, processes, and common information induces excessive costs and failure rates.
The 4BT OpenJOC and OpenBuild Environments embed proven processes that enable all projects and work orders to be consistently planned, procurement, and executed. When properly implemented, projects can be procured and executed in weeks versus months, project delivery times will be shorter, and cost savings of 20%-40% achieved. If you already have a JOC program, administrative costs can be reduced 3x to 10x!
Here is what we can do together….
Let us work together to remove the barriers and build a solid foundation for the future!
Job Order Contracting doesn’t have to be complex or expensive. The numerous, ongoing facilities repair and construction project facing real property owners and facilities management professionals unfortunately have a high probability of failure. 80%-90% are late, over-budget, or basically a train wreck for one or more participants.
While there are many reasons why projects fail, it is the project delivery method and owner leadership and culture that ultimately is the primary cause.
The Design-Bid-Build (DBB) model has perpetuated an antagonistic inefficient environment for decades. Construction Management at Risk (CM at Risk) and other methods have done little to improve the situation.
If you want different outcomes, it’s time to try something different.
Job Order Contacting (JOC) and Integrated Project Delivery (IPD) are the only project delivery methods that have proven to consistently delivery superior outcomes for all participants.
That said, not all JOC Programs are the same. Some favor the owner, while others charge a percentage of total construction value. Neither of these two types of JOC approaches delivers the full benefit of JOC to the owner or involved builders, designers, or engineers.
Collaborative, Open, and Best Value Job Order Contracting
JOC Programs like the 4BT OpenJOC Solution, maintain fundamental collaborative principles that assure early and ongoing collaboration between of all participants, as well as mutually beneficial outcomes.
Below are examples of best practices to be considered when structuring and executing a JOB ORDER CONTRACTING PROGRAM.
If you are tired of late, over budget, train wrecks, then stop supporting traditional processes that force everyone to be selfish and work against each other. Build effective teams that focus on results and problem solving. Support these teams with tools and services and promote continuous improvement.
Conclusion
Your JOC Program shouldn’t be complex or expensive. Collaborative, open, and best value job order contracting delivers provide superior benefits with lower administrative and cost burden.
www.4bt.us
MasterFormat Construction Cost Estimating involves using the CSI Masterformat data architecture for discrete construction line items/tasks. When combined with locally researched cost data, Masterformat provides the most efficient method for developing reliable, verifiable repair, renovation, and new build costs. A cost common data environment (CDE), using Masterformat and locally researched line-item construction cost data, inclusive of labor, material, equipment, and productivity information, is a requirement for efficient, best value, construction planning, procurement, and project delivery,
CSI Masterformat is a data architecture that can be readily expanded to cover virtually any repair, renovation, maintenance, or new construction task, including variants to account for quantities, means and methods, etc. Cost databases, such as those provided by Four BT, LLC, have up to twenty characters.
MasterFormat Construction Cost Estimating is critical to enabling cost visibility, transparency, and best value outcomes.
Locally researched cost data provided at this level of granularity provides superior cost visibility for specified projects when compared to Uniformat and/or assembly level categorizations of construction requirements, or parametric modeling. Uniformat level and/or assembly level, or building level cost data is useful for budgeting purposes only, and should not be used for bidding, procurement, and execution actual projects with builders, construction managers, etc.
It is critical that cost data is locally researched, current, and is composed of elements suitable for the specific purpose. National average cost data, with or with the uses of factors for localization, does not accurately reflect site specific variables for labor, material, and equipment. Such databases should be used exclusively for basic reference only. Similarly using historical cost data to predict current or future costs is untenable and should not be employed.
Locally researched cost data, however, can be used to determine actual project requirements, bid, and procure projects, and to verify contractors and contractor quotes. The information can also be used to create projects to quantify and address deferred maintenance levels.
Additional Considerations
Using the term “accurate” or “accurate costs” in conjunction with construction cost estimating is a fool’s errand. The definition of the word estimate per the Oxford Dictionary is as follows….
“estimate” noun / an approximate calculation or judgment of the value, number, quantity, or extent of something. “
By definition, a construction cost estimate is an approximation. Then there is the definition of “accurate” to consider.
“accurate” adjective / (of information, measurements, statistics, etc.) correct in all details; exact.
Accuracy must be measured against a specific standard. For construction, the actual cost of a construction project is typically used. This, however, is clearly inappropriate as there are multiple variables impacting the final construction cost. Accuracy can only truly be applied against specific components, such as labor rates for the various trades, or material rates, both at a particular point in time.
“Verifiable”, “granular”, and “current” are terms better suited for describing construction cost data and associated cost estimates.
Does this mean that construction cost data and/or databases are a commodity and/or have limited value? Absolutely not! Just the opposite, they must be selected and used for an appropriate purpose. Further, it can easily be argued that if sourced and maintained properly, they should be required for ALL repair, renovation, maintenance, and new builds.
For example, a locally researched detailed unit price cost database can be used to plan and communicate the needs of projects to all participants and stakeholders more efficiently. The following questions, however, must be considered and correspondingly appropriate decisions made…
Key Steps in Creating a Construction Cost Estimate
More information about CSI Masterformat
DIVISION 00 – PROCUREMENT AND CONTRACTING REQUIREMENTS
DIVISION 01 – GENERAL REQUIREMENTS
DIVISION 02 – EXISTING CONDITIONS
DIVISION 03 – CONCRETE
DIVISION 04 – MASONRY
DIVISION 05 – METALS
DIVISION 06 – WOOD, PLASTICS, COMPOSITES
DIVISION 07 – THERMAL AND MOISTURE PROTECTION
DIVISION 08 – OPENINGS
DIVISION 09 – FINISHES
DIVISION 10 – SPECIALTIES
DIVISION 11 – EQUIPMENT
DIVISION 12 – FURNISHINGS
DIVISION 13 – SPECIAL CONSTRUCTION
DIVISION 14 – CONVEYING EQUIPMENT
DIVISION 21 – FIRE SUPPRESSION
DIVISION 22 – PLUMBING
DIVISION 23 – HEATING, VENTILATING, AND AIR CONDITIONING (HVAC)
DIVISION 25 – INTEGRATED AUTOMATION
DIVISION 26 – ELECTRICAL
DIVISION 27 – COMMUNICATIONS
DIVISION 28 – ELECTRONIC SAFETY AND SECURITY
DIVISION 31 – EARTHWORK
DIVISION 32 – EXTERIOR IMPROVEMENTS
DIVISION 33 – UTILITIES
DIVISION 34 – TRANSPORTATION
DIVISION 35 – WATERWAY AND MARINE CONSTRUCTION
DIVISION 40 – PROCESS INTEGRATION
DIVISION 41 – MATERIAL PROCESSING AND HANDLING EQUIPMENT
DIVISION 42 – PROCESS HEATING, COOLING, AND DRYING EQUIPMENT
DIVISION 43 – PROCESS GAS AND LIQUID HANDLING, PURIFICATION AND STORAGE EQUIPMENT
DIVISION 44 – POLLUTION AND WASTE CONTROL EQUIPMENT
DIVISION 45 – INDUSTRY-SPECIFIC MANUFACTURING EQUIPMENT
DIVISION 46 – WATER AND WASTEWATER EQUIPMENT
DIVISION 48 – ELECTRICAL POWER GENERATION
Abbreviations
BCY BANK CUBIC YARD
BF BOARD FEET
C HUNDRED
CFL HUNDRED SQUARE FEET PER FLOOR
CCF HUNDRED CUBIC FEET
CF CUBIC FEET
CLF HUNDRED LINEAR FEET
CRT CATHODE RAY TUBE
CSF HUNDRED SQUARE FEET
CWT 100 POUNDS
CY CUBIC YARD
EA EACH
ECY EMBANKMENT CUBIC YARDS
FLR FLOOR
FXTR FIXTURE
GAL GALLON
HDR HEADER
HOR HORIZONTAL
HR HOUR
KIP 1000 POUNDS
KW KILOWATT
LB POUND
LCY LOOSE CUBIC YARD
LF LINEAR FEET
M THOUSAND
MBF THOUSAND BOARD FEET
MCFM THOUSAND CUBIC FEET PER MINUTE
MLF THOUSAND LINEAR FEET
MO MONTH
MSF THOUSAND SQUARE FEET
OPNG OPENING
OTLT OUTLETS
PNT POINT
PR PAIR
PRJC PROJECT
PRSN PERSON
QT QUART
RISR RISER
RSR RISER
SCTN SECTION
SF SQUARE FOOT
SFCA SQUARE FOOT CONTACT AREA
SGNL SIGNAL
SHLF SHELF
SPKR SPEAKER
SQ HUNDRED SQUARE FEET
STDN STUDENT
STG STAGING
STLL STALL
STTN STATION
SURF SURFACE
SY SQUARE YARD
SYST SYSTEM
TN/D TON/DAY
TONC TON AC
TOTL TOTAL
TRD TREAD
TRSS TRUSS
VLF VERTICAL LINEAR FOOT
via Four BT, LLC – www.4bt.us – 4BT is the AEC industry’s innovative integrated project delivery, construction cost data, and SAAS technology provider. We help guide organizations to achieve accelerated improvement of their facilities repair, renovation, and construction outcomes through the development of a culture and client-specific program centered upon delivering customer value, and driven by proven LEAN processes, actionable data, enabling cloud technology, and ongoing training.
Biden’s Infrastructure Plan (Source: https://www.nytimes.com/interactive/2021/03/31/upshot/whats-in-bidens-infrastructure-plan.html?campaign_id=9&emc=edit_nn_20210401&instance_id=28723&nl=the-morning®i_id=115060493&segment_id=54658&te=1&user_id=855c843c332a90cacba8c5933a647bf7)
If your are a facilities Owner, Builder, AE, or Architect and are TIRED OF THE SAME OLD PROJECT BS, keep reading….
THE TECHNOLOGY MYTH – Technology will solve my construction issues. No! Technology alone won’t solve your stream of late, over-budget, and poorly completed repair, renovation, maintenance, or new build projects. BIM won’t do it, CMMS won’t do it, IWMS won’t do it, ERP won’t do it.
Culture, People, Process, and Information
FACT – Only Owners can improve the situation – To effect significant positive change requires moving away from things that have caused low productivity, waste, and dismal relationships with vendors and created dissatisfaction among building users.
While you’ve like heard about LEAN, IPD, JOC, etc. it’s time to learn about it… really learn about it. “Last Planner”, “Six Sigma”, “Kaizen”, et al are NOT LEAN construction delivery solutions, but rather LEAN concepts or philosophies. Nor do the directly target the core issues associate with construction delivery. IPD and JOC are both lean construction delivery methodologies, but again, they are not full solutions.
Solution
Beginning with the commitment of senior management, the next step is to develop a plan and your desired goals for integrating your Planning, Procurement, and Project Delivery activities. It will come as no surprise that integrating theses elements and all participants on an early and ongoing basis, within a transparent, common information sharing environment, has alone proven capable of consistent delivery of 80%-90% of ALL repair, renovation, maintenance, and new builds on-time, on-budget, and to everyone’s satisfaction. When compared to the industry average of 10%-20%, I’d say that is “significant improvement”… wouldn’t you?
A construction delivery method and associated contract, with appropriate tools and support services which integrate planning, procurement, and project delivery, is the ONLY proven method to consistently achieve BEST VALUE outcomes for ALL participants and stakeholders.
If you are Tired of Late, Over-Budget, and Just Plain LOUSY Facilities Repair & Renovation Outcomes, then do these 3 steps!
1. Reshape your teams and raise transparency. Too often, organization fail to build solid internal and external teams in concert with their mission goals. The root cause causes behind poor outcomes, even more so than technical factor, is lack of competent teams working collaboratively toward mutually beneficial goals. Ensure robust nontechnical risk management by developing long-term relationships with well defined roles, responsibilities, workflows, information requirements, and deliverables.
As real property owners, it’s your roles to encourage innovation and new approaches by prescribing means and methods of planning, procurement, and project delivery and requiring compliance.
2. Rewire the contractual framework. The interests of ALL participants and stakeholders must be aligned and resources marshalled towards well-defined outcomes. Individual projects WILL NOT consistently achieve bst value outcomes unless they are conducted within an overall programmatic environment! Disengage your organization from traditional and hostile, contracting environments, and move to robust collaborative and integrated planning, procurement, and project delivery environments.
All the tools and support services are readily available to enable best value, highly efficient outcomes. The move toward best practice, alternative contracting models such as integrated project delivery (IPD) and LEAN Job Order Contracting enables continuous outcome improvement for all parties.
Adopting a program mentality versus a traditional and narrow project focus, requires addressing culture, principles, and systems that change and improve behaviors, attitudes, and skills.
Real proper owners and the AECOO sector in general would be better served by moving away from purely transactional contracting to purely relational contracting.
3. Rethink procurement, planning and project delivery processes. There is a major opportunity to improve productivity by truly integrated planning, procurement, and project delivery teams. Most owners says they are doing this, but in reality this rarely occurs. For example procurement typically knows very little about fundamental facilities management practices and the same if true visa versa. Additionally, few, if any owners, required the use of a standardized, locally researched unit price book for cost estimating and improving scope of work definition. Achieving this level of common information sharing alone would greatly reduce miscommunications, error and omissions, and change orders!
#1 IPD isn’t new, it has around for decades. It is the lack of real property owner leadership and competency that has limited its use. As a result, facilities repair, renovation, maintenance, and new construction remains inefficient.
#2 LEAN Job Order Contracting is IPD for repair, renovation, and maintenance, and and minor new construction. It consistently delivers quality projection on-time and on-budget when implemented and managed properly.
#3 Lastly, BIM is simply a technology tool. It is integrated LEAN construction planning, procurement, and project delivery that drives significant improvement in outcomes.
Learn more @ https://www.4bt.us/simple-guide-to-lean-construction/
News Flash – Best value facilities repair, renovation work order delivery is now available to any real property owner.
An industry standard set of terms and definitions, written in plain English, supported by a database of locally researched detailed line item cost information assures accurate technical and cost work scope definition.
All parties can visualize project and work order requirements at a granular level and drive efficient life-cycle management.
Needs and deliverables are fully visualized and issues address earlier in the process. Lean processes support real-time problem solving in concert with a common understanding of values and goals for all participants and stakeholders.
Best value management of the total cost of ownership for facilities and other physical infrastructure is best accomplished with implementation of robust programmatic methods.
Within this approach, all projects and work orders are undertaken within a structured process which fully defines roles, responsibilities, tools, and required outcomes. The environment retains sufficient flexibility to enable local/on-site decision-making within global parameters.
A programmatic approach centered upon LEAN fundamentals assure common understanding among diverse internal and external teams. Implementation and continuous improvement is facilitated by initial and ongoing training targeting the varied associated groups, functions.
Relevant criteria is tracked and monitored via enabling real-time collaborative technology and key performance indicators.
All the tools and support services required to focus teams upon delivering value are readily available. While the fundamental processes have existed for decades and have a proven track record, the adoption and use of new tools and services is early stage.
Furthermore, the silo-based mentality which is a hallmark of the architecture, engineering, construction, owner, operations, and facilities management domains has proven a formidable barrier to positive change.
Formal education and professional training has also faltered by retaining a focus upon technology and/or discrete knowledge domains, instead of addressing the fundamental holistic aspect of asset life-cycle total cost of ownership management and programmatic versus project principles and processes.
Reliable construction cost estimating is important to real property owners, facilities management professions, architects, and engineers.
If a job is estimated correctly all parties should have a detailed understanding of the scope of work, costs, time, labor, and materials required.
If the job is poorly estimated the lack of technical and cost visibility for all participants spells disaster…. as noted by the fact that 80% – 90% of repair, renovation, and new builds are over budget, late, or not completed satisfactorily.
Reliable construction cost estimating…
Whether planning, procuring, or delivering a repair, renovation, maintenance, new construction project, the following questions are important considerations.
Four BT, LLC, for trusted advice and services of the highest caliber. www.4bt.us
We are ready…. are you?
As a facilities management professional… how do I Develop and Continuously Execute Optimal Facilities Repair, Renovation, Maintenance, and New Build Strategies?
3 Key Steps
I’d like a free eBook to learn more.
via www.4bt.us
Construction project management is better when it’s visual and includes a common data environment…. including shared, locally researched unit price cost data.
Unit Pricing Estimating within the CSI MasterFormat™ is the most reliable and efficient means of ascertaining construction costs based on
materials, labor, and equipment content, and it just got better.
Locally researched unit price cost data is now available from Four BT, LLC. This means there his no need for area cost factors (ACFs) or other construction cost indexes (CCIs).
Having a detailed scope of work and the entire project divided into small discrete unit price work items delivers full cost visibility and transparency while also mitigating errors and omissions.
Each unit price is is multiplied by the required quantity to find the cost for each work item. All costs are summed to obtain the total estimated construction cost.
The availability of verifiable locally researched unit price cost data is a powerful tool for owners, architects, engineers, and builders. Significantly improved cost estimates can be developed and also finalized faster.
The 4BT OpenJOCTM Job Order Contracting Solution saves money by significantly improving facilities project planning, procurement, and project execution service delivery.
www.4bt.us
Successful Construction Project Delivery, whether repair, renovation, maintenance, or new builds, can only be consistently achieved with a primary focus upon People….then Process, Information, and enabling Technology.
Understanding core requirements is critical for real property owners and facilities management professionals.
A robust processes assures answers to the following questions are known.
The above represents the initial “concept” or “planning” stage, however, the steps must be repeated throughout the planning, procurement, and project delivery phases.
In addition, collaborative teams, robust processes, and current actionable information are critical.
Additional Information
Principles, Culture, and Robust Workflows should be the primary focus of any facilities management professional. Only improved early and ongoing collaboration and communication across all participants and stakeholders has proven to reduce errors and omissions, minimize the number of change orders, shorten overall project delivery times, improve quality, and reduce total project costs. The above is possible with the application of proven LEAN processes that can be easily tailored to the individual needs of an organization, and improved over time. IMPROVE Construction Cost Control Improve cost control by using common core information, including a locally researched detail unit price database. Early and ongoing communication of scope of work requirements using detailed tasks within a collaborative environment optimized planning, procurement, and project delivery. Having common, centralized access to detail repair, renovation, maintenance, and new build task significantly increases cost visibility transparency and overall construction project cost control. Unit price detailed line time cost data, using locally researched information, provides the highest level of estimate reliability. ![]() ![]() |
Real Property Owners and Facilities Management Professionals would better serve their organizations by focusing upon process improvement and alignment. The role off technology is solely to enable process. Far too many in the AECOO world view technology as a solution (AECOO – Architecture, Engineering, Construction, Operator, Owner).
www.4bt.us
All aspects and stages of a repair, renovation, maintenance, new build activities, should be integrated…..planning, design, estimating, procurement, and project delivery.
Robust, mutually beneficial, collaborative processes are capable of consistent delivering quality projects on-time an on-budget. (request white paper)
Construction cost estimate validation is a process to determine the relative level of reliability. Note that the work “accuracy” is purposely not being used. Any use of the work accuracy with the word construction estimate is simply foolish. If, you would like to learn more on this particular topic…visit here.
Construction cost estimate validation is basically an objective risk analysis and assessment of information reliability.
In order for a construction cost estimate to be reliable, it must reflect the local labor, materials, and equipment cost at a granular level and a detailed scope of work (SOW). Granular in this case means detailed line item construction tasks that capture work requirements in terms of crews, productivity, and required materials and labor.
Locally researched detailed unit price books are very useful in validating estimates provided by contractors and subcontractors/trades, ass well as preparing independent owner estimates, They significantly reduce time, while also reducing the number of errors and ommissions.
National average cost books and/or the use of area cost factors, or construction cost indexs (CCIs) of any type do not provide sufficient reliability to aid in construction cost estimate validation.
Real property owners would greatly benefit from assessing construction estimate results using appropriate metrics. The practice of comparing construction cost estimates to final construction costs as a metric, for example, is just plain silly.
Construction Cost Estimate Validation is critical to achieving best value outcomes for owners, architects, engineers, and builders.
2021 Construction Materials Cost Increase was reflected by nearly 5% on a January look back versus past twelve months.
LOS ANGELES UNIFIED SCHOOL DISTRICT (LAUSD filed a complaint against
an awarded JOC contractor for breach of contract concerning cafeteria renovations. LAUSD prevailed on its claims for breach of contract and was awarded $3,941,829 in damages. Download Case Filing
A well designed and well managed Job Order Contracting Program (JOC Program) should accelerate planning, procurement, and project delivery off repair, renovation, maintenance, and minor construction projects, as well as associated cost savings, quality improvements, and elimination of legal disputes.
While LAUSD prevailed in this dispute, it is arguable that the associated issues could have been detected at the proposal negotiation stages and other phases… prior to the JOC Program Audit that subsequently identified the issues.
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2021 Construction cost data that is verifiable, locally researched, and fully transparent, for when actionable information is important.
Four BT, LLC, OpenCostTM locally researched detailed unit price cost data. www.4bt.us
JOC is not a project, it is a program. Job order contracting is a program-based LEAN, integrated planning, procurement, and project delivery method.
Focus of all participants and stakeholders is upon well defined and well communicated mutually beneficial outcomes. Roles, responsibilities, and all other aspects associated with final outcomes are fully defined. Financial and technical detailed are also shared within a common data environment (CDE), which included a locally researched unit price book.
A JOC Program can handle a wide range of facilities and/or infrastructure repair, renovation, maintenance, sustainability, or new build requirements.
JOC must, however, be employed within a collaborative environment, with appropriate owner leadership, and in concert with fundamental LEAN principles. JOC should NEVER be used solely as a means to speed procurement and/or bypass requisite procurement oversight. JOC should also be employed only with full collaboration and joint support and decision-making the owner procurement and technical (facilities management, DPW, CE, etc.) teams. JOC Programs should also be audited by independent third parties, and compliant with all applicable laws/regulation.
Locally researched line item cost data is the foundation to best value construction outcomes. It exclusively assures financial visibility and transparency and a well defined and well communicated scope of work (SOW).
The CDE (Common Data Environment) provided by locally researched detailed cost data is organized using CSI Masterformat to provide ease of use and information reuse.
When linked with integrated planning, procurement, and project delivery such as the OpenJOC FrameworkTM (OpenJOCTM) or integrated project delivery (IPD), participating teams can consistently deliver over 90% of repair, renovation, maintenance, and new build task on-time, on-budget, and to everyone’s satisfaction.
All the requisite tools and support services are readily available to begin today.
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Sebbene il CDE sia al centro delle attenzioni continua a leggere…
Over eighty percent (80%) of construction projects are over-budget, late, or not competed correctly. Sixty (60%) percent of all project fail to meet both cost and and schedule targets. Fortunately there are proven processes to better manage construction costs, schedules, and quality.
Reasons for Poor Repair, Renovation, Maintenance, and New Build Outcomes
The fundamental reason for poor outcomes is the failure to implement and properly manage robust and integrated LEAN planning, procurement, and project delivery processes.
All off the require tools and support services to create integrated environments, to address all of the above issues, and more, are readily available.
Solution
Real property owners can establish collaborative, multi-discipline teams, working toward mutually beneficial outcomes whereby 90%+ of all projects are on-time, on-budget, and completed to the satisfaction of all participants and stakeholders.
The implementation of a long term programmatic approach versus continued use of traditional short-sighted project methods is critical. Integrated LEAN planning, procurement, and project delivery methods assure that each individual project is aligned with overall program and organizational goals as well as understood by and committed to by all service organizations (architects, engineers, builders…).
Sufficient time & resources are allocated to defining the scope of the project with the involvement of all participants and stakeholders. Everyone works jointly within a shared, common data and operational environment to identify and meet individual project and work order goals and objectives, required functions, phases, and schedules, within fully identified constraints.
A detailed scope of work is associated with a detailed line item cost estimate and builder’s proposal based upon a locally researched unit price book. It is defined within and Lean environment government by a long-term multi-party agreement and associated written Operations Manual / Execution Guide.
Fundamental Principals and Components of a Lean Integrated Planning, Procurement and Project Delivery Environment
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Reliable construction cost estimating is critical to the success of any repair, renovation, maintenance, or new build project.
RELIABLE – the quality of being able to be trusted to do what somebody wants or needs
Oxford Dictionary
A construction cost estimate must be trusted and what is needed by a real property owners, architects, engineers, builders, or oversight groups to plan, procure, and execute a repair, renovation, maintenance, or new build projects. In theory, all groups should share the same need; to determine the cost for a planned construction activity.
While there may be several types of estimates in terms of granularity, this discussion is limited to detailed line item estimates. This is the most reliable form of estimate and a requirement before proceeding to the procurement and execution of a specific repair, renovation, maintenance, or new build activity.
Components of Cost Information: A detailed construction cost estimate is comprised of individual line items for granular tasks.
Each task has a description and should be organized using the CSI MasterFormat data architecture. Each task should also have the following break downs and associated information (cost and descriptions as appropriate) for (1) labor, (2) material, (3) construction equipment. Construction supervision, and general office overhead, as well as any other costs should also be itemized separately. Considerations of crew composition, availability, and productivity, among others, also need to be addressed and fully defined. A locally researched unit price cost database can be of great value in this exercise both speed and validate the effort.
Each detailed line item in a locally researched detailed unit price book defines a a specific relationship between the output of a task/process and the necessary inputs and resources in terms of a production function. It is expressed by the relationship between the volume of construction and the associated factors labor, material, equipment, and capital. A unit of measure is associated with each line item (for example, square foot, linear foot, each, etc.) to associate the line item to a specific production requirement.
A unit cost is assigned to each repair, renovation, maintenance, or new construction task, and per designated quantities, as represented by the bill of quantities. The total cost is the summation of the products of the quantities multiplied by the corresponding unit costs. The unit cost method is straightforward and can be extremely labor intensive, unless supported by a locally researched unit price book. Each task has an associated time requirement, thus scheduling is also significantly enhanced. The final listing represents all tasks that must be completed for the associated project or work order.
Learnings.
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To use public funds effectively, the government must employ effective
management practices and processes, including the measurement of
data.
Reliable construction cost data is the foundation of any repair, renovation, maintenance, or new build requirement and associated planning, procurement, and project delivery activity.
All public sector departments and agencies would greatly benefit, and meet their fiduciary responsibilities by implementing a consistent, robust methodology based on current best management practices.
The use of locally researched detailed unit price book (UPB) cost data across the federal, state, county, and local government sectors for developing, managing, and evaluating program cost estimates is the current best practice for assuring cost visibility, transparency, and providing appropriate validation.
Implementing a reliable, high-quality cost estimate and associated best
practices associated with effective program level management should be a priority.
The current practices of using parametric cost modeling, sole reliance upon contractor or subcontractor lump sum bids, national average cost database, area cost factors, city cost indexes or other location and/or economic “factors”, and “historical information”, should be abandoned
Furthermore, construction cost estimating should be a component within an overall LEAN integrated planning, procurement, and project delivery environment. This would assure the early and ongoing used of information by all participants and stakeholders within a shared, common environment. All information would be verifiable, current, and traceable, as well as reflective of current local market condition.
All the tools and support services are readily available to support implementation of the above. The result would be 30%-40%+ gains in productivity and cost savings.
All that is needed is leadership.
Preparing Independent Government Estimates – IGEs is fundamental to achieving best value outcomes. Unfortunately, the process is largely done inappropriately and without cost transparency or visibility, and rarely is verifiable.
The usefulness of an IGE to a contracting officer and other Government interest depends largely upon its supporting documentation. Most IGEs do not use appropriate data sources and this is particularly true for CONTRUCTION activities (repair, renovation, maintenance, new builds).
The best source of information for “construction” IGEs is a locally researched detailed unit price book. Unfortunately, most Government agencies use “historical information”, “parametric modeling”, or national average cost data and associated construction cost indexes and/or area cost factors. In fact, the United States Army Corps of Engineers (USACE) has been using the later archaic and ineffective methods for decades, and continues to this day.
The net result is that without verifiable, current, and local detailed cost data, contracting offices and facilities sustainment and/or management teams are at a significant disadvantage. This has lead to the vast major of construction cost estimates (80% or more) being inaccurate. The associated lack of detail has results in change orders and errors and omissions that cause 90% of a ALL construction projects to be late, over budget, or completed to the dissatisfaction of one or more participants or stakeholders.
All of the tools and support services are readily available to resolve the above and virtually assure that 90% of all projects are well documented and completed on-time, on-budget, and in a quality manner.
The Federal Acquisition Regulation requires independent government estimates of construction costs for contracts exceeding the simplified acquisition threshold.
FAR 36.203.
Agencies may use simplified acquisition procedures to purchase goods and services where the aggregate amount does not exceed $150,000.
FAR 2.101 and 13.000.
“An independent Government estimate of construction costs shall be prepared and furnished to the contracting officer at the earliest practicable time for each proposed contract and for each contract modification anticipated to exceed the simplified acquisition threshold. The contracting officer may require an estimate when the cost of required work is not anticipated to exceed the simplified acquisition threshold. The estimate shall be prepared in as much detail as though the Government were competing for award.”
“Access to information concerning the Government estimate shall be limited to Government personnel whose official duties require knowledge of the estimate. An exception to this rule may be made during contract negotiations to allow the contracting officer to identify a specialized task and disclose the associated cost breakdown figures in the Government estimate, but only to the extent deemed necessary to arrive at a fair and reasonable price. The overall amount of the Government’s estimate shall not be disclosed except as permitted by agency regulations.”
Preparing an Owner’s Estimate
Real property owners must develop a detailed written scope of work. Estimating the right project cost is should not be a challenge if appropriate source information and tools are used.
Any professional estimator should be able to read and interpret the owner’s scope of work in sufficient details to select appropriate material, equipment and labor and associated quantities.
A joint site visit with critical to the above, with all potential participants and stakeholders. Costs should be based upon local market prices and associated regulatory requirements.
GAO, Cost Estimating and Assessment Guide Best Practices for Developing and Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: Mar. 2009) and Standards for Internal Control in the Federal Government, GAO-14-704G (Washington, D.C.: Sept. 2014)
The IGCE can be part of a broader cost estimating process for programs, which sums individual cost elements to establish future program costs. GAO-09-3SP
Relational construction contracts specify norms and mutual expectations that govern relationships between real property owners and architects, engineers, and builders.
Relational contracting supports mutually beneficial outcomes for all participants, and do not favor the unilateral use of power.
Flexibility in the face of changing circumstances, especially empowering those actually doing the work with decision-making authority, is a hallmark of relational construction processes.
Integrated project delivery and LEAN job order contracting are robust, proven examples of relationship construction contracts. Tools and services are readily available to support relational construction contracts and associated integrated planning, procurement, and project delivery environments.
Driving collaboration and mitigating conflicts among project participants and stakeholders, require leadership and commitment of real property owners.
Integrated Project Delivery (IPD) and Open Job Order Contacting align the interests of the real property owner organization with its physical infrastructure, and teams of architects, engineers, and builders. Each party remains engaged throughout the project and commits the necessary resources to allow integrated teams to achieved mutual beneficial outcomes.
All projects are actually aligned under an IPD/JOC Program, under which a Program and Project Managers are appointed to assure consistent implementation of all projects and work orders.
The Program Manager (PM) provides relationship and management-level guidance for planning, design, and project delivery to consistently meet defined objectives. The PM also monitors benchmarks, metrics, and standards to enable continuous improvement through all fundamental LEAN phases. These LEAN phases include VALIDATION, FINAL DESIGN and PROCUREMENT, EXECUTION/CONSTRUCTION, and WARRANTY.
30%-50% OFF Facilities Repair, Renovation, and Maintenance Costs on an ongoing basis is possible for real property owners who elect to support integrated construction planning, procurement, and project delivery. This can be achieved by implementing LEAN principles with readily available tools and services.
Owners can create an environment in which lead times and overall project delivery time are shorter, productivity is increase, and changed orders are virtually eliminated.
Reducing project time and cost by 30% to 50% is not a pipe dream, especially that current reports indicate that all projects average project average project overages in the 30 to 45 percent range.
Relational norms are governance mechanisms in economic exchanges.
Technology is not the solution. What is required are fundamental changes in Principles, Processes, and Systems. These basic changes would drive consideration of both short-term cost management and long-term, outcomes; improve early and ongoing communication between participants and stakeholders within a common data environment, and create environments that consistently follow established workflows capable of both adapting to changing issues and leveraging local decision-making and expertise of those actually doing the work.
Within LEAN integrated planning, procurement, and project delivery environments, projects and/or work orders can be procured and begun within weeks versus months or years. Both costs and technical aspects are fully transparent and defined in a granular, line item basis using detailed task descriptions, labor costs and crew definition, productivity, material costs, and associated equipment costs are required, as well as the overall total costs for the task associated with an appropriate unit of measure.
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Collaborative Construction Procurement Planning and Project Delivery is a robust process for consistently achieving long-term best value for all participants and stakeholders.
Early and ongoing collaboration between contractors, designers and owners…procurement, facilities management, building users…. drives consistent attainment of on-time, on-budget, and satisfactory outcomes for all….But…. it requires a change in CULTURE, and the adoption of LEAN SYSTEMS AND PROCESSES.
There are existing best management practices, tools, and support services for real property owners with appropriate leadership and competencies to support positive change.
Following these best practices leads to major gains in productivity and significant improvement in resource utilization. Change orders, errors, and omissions can be virtually eliminated.
Lean Asset Management significantly improves the availability, dependability, usefulness, and safety of facilities and other physical assets, while also lowering life-cycle costs.
Lean Asset Management differs from traditional approaches in several ways. First and foremost is the application of Principles and Systems within a Culture that drives internal and external participants to focus upon clearly defined, mutually beneficial results. Common sense right? Of course, but rarely practiced by real property owners.
Integrating People, Process, Information, and Technology is another aspect of LEAN Asset Management. Robust workflows integrate planning, procurement, and project delivery methods. Well defined environments enable decision-making by those actually doing the work.
People skills and developing and maintaining an appropriate culture are fundamental elements. Create the right culture. Sharing information must become a desire, rather than an obligation. This requires developing and supporting a transparent and innovative environment, allowing internal and external individuals and teams to feel safe. A knowledge-sharing mindset is encouraged. The value of participants is recognized as crucial to overall outcomes. Everyone continuously learns and improves through the process of knowledge sharing.
A shared common data environment (CDE) is also required in order to provide current, actionable information. Granular data is a requisite component for integrated lean planning, procurement, and project delivery, principles and processes as well as life-cycle total-cost-of-ownership management. Common industry standard terms and definitions and locally researched detailed line item cost data serve to enable financial and technical visibility and transparency.
Supporting technology lowers process deployment costs, provides team-based collaboration, maintains version control, and provides real-time monitoring and reporting. The following is a partial listing of functionality that can be supported by technology:
• Building, system, and asset location, condition, and general information
• Program Management
• Contract Management
• Bid/Proposal/Estimate Management
• Work Order Management
• Work Flow Management
• Document Management
• Issues/Tasks Management
• Space Management
• Team Management – Internal (Procurement, Facilities Management), Contractors, Subcontractors, MBE/WBE
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Construction cost knowledge management is a component of integrated LEAN construction planning, procurement, and project delivery. It is required in order to consistently achieve best value repair, renovation, maintenance, and new build outcomes.
Despite the fact that construction cost knowledge management is a required component for assuring consistent on-time and on-budget project delivery, fewer than 5 per cent of five percent of owners are qualified to address it.
The transfer of cost knowledge is essential at a granular, task level. The ability to clearly define detailed line item tasks defining the desired scope of work is critical to mitigating errors and omissions, reducing the number of change orders, as well as achieving defensible cost visibility and transparency. Information must be presented in plain English, using industry standard terms and definitions, and organized in a standard data format (CSI Masterformat). In order to truly reflect actual conditions, it also must be locally researched and customized to owner needs. The use of national average cost databases and/or location factors, or parametric cost models are insufficient.
Most real property owners have not yet recognized the importance of construction cost knowledge management and thus have not developed the capabilities needed to support it. They have a false sense of security, believing that contractor or subcontractor quotes, or historical information, or square foot level cost models provide defensible cost visibility.
Platforms, tools, and training are readily available to help owners and dispersed teams of architects, engineers, and builders to build and collaborate within a construction cost knowledge environment. Technology alone, however, is not enough to harvest the value of cost knowledge management. It must be combined with LEAN principles, processes, and workflows in order to fully leverage available resources.
Whether the AECOO and facilities management sectors evolve from the legacy of dismal performance will depend largely upon improvement of real proper owner leadership. Organizations need to shift their focus from knowledge capture to knowledge creation and transfer, adopt LEAN principles and processes, and truly champion a collaborative, mutually beneficial culture and environments. It is not surprising that exclusive emphasis upon technologies as a solution (BIM, IWMS, CMMS,ERP, etc.) has proven relatively fruitless. Creating cultures that connect and support those actually doing the work via of LEAN, robust collaborative integrated planning, procurement, and project delivery structures and associated shared common data environments (CDEs), is the path forward.
While technological infrastructure of tools and platforms help manage knowledge, a knowledge-transfer culture must be developed and sustained with individuals on internal and external teams as part of the equation. Most organizations underestimate or simply don’t have the leadership skills and either underestimate or don’t truly appreciate the human factor.
The driver of knowledge sharing is simple, individuals and supporting teams must have a feeling of contributing to overall success.
A deeper understanding of the context and value of knowledge needs to be spread across all skills, enabling individuals and teams to embed knowledge into all aspects of their working life. It is all important that individuals and teams are able to differentiate valuable knowledge from general information.
Owners must provide leadership….
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What defines a great JOC Contractor?
▪ Experienced professional
▪ Ability to manage multiple projects at multiple locations simultaneously
▪ Consistent delivery of high quality on-time and on-budget
▪ Capable of managing a number of subcontractors
▪ Responsive with a “can do” attitude
▪ Support of for MBE/WBE initiatives
▪ Sponsors development of subcontractors through mentorship and training
▪ Routine open communications with the owner’s team
▪ Non-adversarial approach to project scoping and negotiations
▪ Cooperative…. seeking to find the best solution for everyone
▪ Team approach to building a successful JOC program
▪ Clear documentation of project scope of work / requirements
▪ Cost proposals using locally researched unit price cost data and collaborative technology
▪ Legitimate proposals based on approved scope related items only and correct correct adjustment factors / approved coefficients
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If your organization would like to better reflect and respect the concerns and values of your stakeholders and not just push paper around, read on. Agility, adaptability, and customer centricity are fully supported by the 4BT JOC Solution.
The 4BT JOC Solution was developed to address the many unforeseen risks and unanticipated costs associated with traditional JOC offerings.
Emphasis on greater efficiency, productivity, cost visibility, and compliance has culminated in a suite of tools and service that fully support collaborative, outcome-focused environments.
Past independent JOC Program Audits have clearly highlighted what can happen if LEAN principles and best management practices are not applied and implemented with robust tools.
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Construction critical success factors span principles, systems, culture, and teams. Whether projects involve repair, renovation, maintenance, or new builds, the integration of planning, procurement, and project delivery is needed across all participants and stakeholders on an early and ongoing basis. Continuous and competent real property owner leadership is a critical success factor.
Productivity and technology adoption have been poor in the construction sector.
The role of facilities management (FM) is to cost effectively provide the appropriate physical environment for organizations to support core activities. Their relative level of success impacts society, the economy
productivity, and sustainability.
Real property owner senior leadership and FM professionals are ultimately responsible for stewardship of the build environment. Critical success factors are dependent upon the following:
Upskilling real property owners is key.
www.4bt.us – Standards of behavior and a positive vision for the future.
What is a successful project? Whether its a repair, renovation, maintenance, or new build, understanding what constitutes success is a fundamental starting point.
Below is the start of a checklist for a successful construction project… your adds to the list?
Today, there are integrated construction planning, procurement, and construction delivery methods that assure consistent positive outcomes as well as supporting tools and services. procurement methods are available in the construction industry.
Selecting the proper construction delivery method is the single most important decision any real property owner or facilities management professional can make.
Inappropriate selection can increase project risk and negatively impact value cost, quality & timing.
Project delivery method selection is critical for the successful delivery of repair, renovation, maintenance, and major capital projects.
Choose wisely.
Relationship-based FM (facilities management) is a knowledge domain that is critical to improving associated environmental and economic outcomes.
Culture must be the primary focus of leadership. Without full support in this regard any LEAN repair, renovation, or new construction initiative will fail.
While it clearly difficult to grasp the perceived value of something that can’t be “touched”, successful facilities management requires a laser focus upon mutually beneficial outcomes for all participants and stakeholders, and associated Culture, Systems, and Processes that support associated efforts.
Unrealistic expectations, incompetence, poor/improper relationships generally result from the lack of leadership and robust processes. Clear leadership and robust systems create a culture of is teams and teamwork…. the most powerful mechanism for supporting efficient of building ownership practices.
Real proper owners and FMers bear the responsibility for professionally managing processes and creating sustainable value via relationship management.
High perceived relationship quality facilitates interactions in support of best value. Traditional methods are antagonistic in this regard.
Robust LEAN implementations build long-term relationships wherein owners, service providers, and building users know and appreciate the value of each other… through processes that support open, construction, and ongoing interactions.
A fundamental challenge remains. Most senior leadership members view FM as being a mainly technical/engineering and cost-driven discipline that deals with the built environment. Alignment between the built environment and organizational mission therefore remains a continuous challenge.
Until greater understanding is attained relative to the specific needs and requirements along the intertwined relationship and physical life-cycles across the AEC sector, the dimensions and drivers of perceived value in FM will continue to suffer.
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References:
Alexander, K. (2012), “Co-creation of value in FM”, in Alexander, K. and Price, I. (Eds), Managing Organizational Ecologies: Space, Management and Organizations, Routledge, New York, NY
Coenen, C. (2002), “Prosocial service behaviors and their role in influencing perceived service quality”, in American Marketing Association (AMA) (Ed), Conference Proceedings of 11th Annual AMA Frontiers in Service Conference, Maastricht (NL)
Coenen, C., von Felten, D. and Schmid, M. (2011), “Managing effectiveness and efficiency through FM blueprinting”, Facilities, Vol. 29
Coenen, C., von Felten, D. and Waldburger, D. (2012), “Beyond financial performance: capturing relationship value in FM”, in Jensen, P., van der Voordt, T. and Coenen, C. (Eds), The Added Value of Facilities Management: Concepts, Findings and Perspectives, Polyteknisk Forlag, Lyngby
European Committee for Standardization (CEN) (2006), EN 15221-1: European Standard in Facility Management-Part 1: Terms and Definitions, CEN, Brussels
Roper, K. (2012), “Educational implications of FM social constructionist view”, in Alexander, K. and Price, I. (Eds), Managing Organizational Ecologies: Space, Management and Organizations, Routledge, New York, NY
Ware, J. and Carder, P. (2012), “Raising the bar: enhancing the strategic role of facilities management”, RICS Research Report, London, November 2012
Proven Construction Cost Management Policies and Practices are readily available to owners and service providers hoping to consistently achieve best value outcomes.
Policies and Procedures for implementing cost, schedule, and quality control throughout an organization, and its real property portfolio, have been available for decades. Today, these have been implemented into complete systems, complete with all required tools and support services.
Robust Cost, Schedule and Value Management Programs focus upon fundamental principles that support long-term, mutually beneficial relationships and outcome-focus teams.
Technical and cost information is shared on an early and ongoing basis via a common data environment, inclusive of locally researched granular unit price data.
Defined goals, responsibilities, and outcomes are provided within operations manuals / execution guides, and supported by dedicated workflows and enabling, collaborative technology.
Fundamental math for every real property owner… Knowledge Problems + Data Problems + Management Problems = Outcome Problems
Facilities and infrastructure project investments
have long-term consequences.
Knowledge Problems
Data Problems
Management Problems
Knowledge Problems + Data Problems + Management Problems = Outcome Problems
Why should we care… Construction projects and physical infrastructure contribute to 40 % of carbon emission, consume 40 % of global energy & also consume 32 % of the world’s resources….. yet, 75-95% of cost of operation, maintenance & replacement costs can be determined during the procurement stage… so….
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References
Cartlidge, D. P. (2004). Procurement of built assets. Elsevier Butterworth-Heinemann, 2004.
Eric Korpi, & Timo Ala‐Risku. (2008). Life cycle costing: a review of published case studies.
Heralova, R. S. (2017). Life Cycle Costing as an Important Contribution to Feasibility Study Construction Projects. Procedia Engineering
Janz, D., & Westkämper, E. (2007). Design to Life Cycle by Value-Oriented Life Cycle Costing. In Advances in Life Cycle Engineering for Sustainable Manufacturing Businesses
Kirkham, R. J. (2005). Re‐engineering the whole life cycle costing process. Construction Management and Economics
Luu Duc Thanh, Ng S. Thomas, & Chen Swee Eng. (2005). Formulating Procurement Selection Criteria through Case-Based Reasoning Approach. Journal of Computing in Civil Engineering
Mostavi, E., Asadi, S., & Boussaa, D. (2017). Development of a new methodology to optimize building life cycle cost, environmental impacts, and occupant satisfaction.
Woodward, D. G. (1997). Life cycle costing—theory, information acquisition and application. International Journal of Project Management
Goh, B. H., & Sun, Y. (2016). The development of life-cycle costing for buildings. Building Research & Information
John W.Bull. (2015). Life Cycle Costing: For the Analysis,Management & Maintenance of Civil Engineering Infrastructure
PD 156865:2008 Standardized method of life cycle costing for construction procurement. A supplement to BS ISO 15686-5. Buildings and constructed assets. Service life planning. Life cycle costing. (2008). BSI Standards Limited.
Life-cycle FM – Asset Total Cost of Ownership Management considers the cost off facilities planning, design, acquisition, operation, maintenance and disposal costs. It can be used, in addition to LEAN repair, renovation, and construction delivery methods (Integrated Project Delivery and LEAN job order contracting) to optimize resource utilization.
When considered during the planning and procurement phases, Life-cycle FM – Asset Total Cost of Ownership Management can greatly improve the likelihood of best value outcome attainment for all participants and stakeholders.
Increasing added value per dollars expended has been problematic for most real property portfolio owners, but especially so within the public sector.
In order to effect measurable positive advancement it is important to understand the full costs of repair, renovation, maintenance, and new build projects and opportunities to optimize the supply chain.
Conventional procurement approaches lack the robust, collaborative processes that are required to provide requisite levels of either 1.) financial and technical visibility and transparency, or 2.) principles, systems, and workflow to support integrated planning, procurement, and project delivery.
The significance of adopting readily available tools and services to support efficient Life-cycle FM – Asset Total Cost of Ownership Management is far from trivial. Projected cost savings could easily reach 30%-40%, while consistent delivery of quality repair, renovation, or new construction projects on-time and on-budget is virtually guaranteed.
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Cohesive, seamless, and proven FM policies and procedures support efficient alignment between facilities and organizational mission requirements.
Integrated planning, procurement, and project delivery is the only proven method for consistent delivery of best value facilities repair, renovation, maintenance, and new construction projects. Despite this fact, less than 5% of real property owners engage at this level of deployment, and not a single federal sector owner does so on a organization-wide basis.
Collaborative, integrated construction planning, procurement, and project delivery, as well as asset life-cycle total cost of ownership management, has been proven, and available for decades. It can consistent assure that 90% of all projects are completed satisfactorily, on-time, and on-budget…. with full financial and technical visibility. The current industry norm is that less than 10% of projects meet this level.
Cost and productivity management issues have plagued the AECOO sector for decades (AAECOO – architecture, engineering, construction, owner, operator).
Nowhere is the issue of poor facilities management more pronounced than in the federal sector. The basic lack of continuity of competent leadership and associated zero accountability has perpetuated an environment within which there is little financial visibility or transparency.
Despite the fact that all the requisite tools and services are available to assure best value facilities management, the federal sector remains mired in archaic, antagonist, and wasteful policies, procedures, and systems.
Fundamental change is desperately needed, but is not visible on the horizon.
If only federal FM leadership would consider positive change….
Clear definition of information requirements, aligned with robust Lean
processes, and collaborative delivery teams is a proven pathway to best value construction.
Primary barriers:
Solutions:
Introduction – 2021 Facilities Repair Renovation and New Construction Cost Management spans multiple principles, practices, domains, and more.
The consistent achievement of best value quality, cost, and schedule outcomes requires the strategic and tactical integration of planning, procurement, and project delivery in concert with the core organizational mission.
With appropriate levels of owner leadership and competency and currently available tools and support services efficient facilities repair, renovation, maintenance, and new construction (life-cycle management) can be achieved.
Integrating in-house and contracted resources to achieve optimal outcomes requires a full understanding of expected deliverables and associated strategies and workflows, in addition to a fully skilled and dedicated team.
Integrated cost and quality management – An integrated cost management process can be established and consistently followed throughout the project planning, planning, and execution when fundamental principles, systems, behaviors, and expectations are defined and supported by a multi-party, long-term, mutually beneficial agreement, associated operations manual/execution guide, and enabling technology.
All of the above are available within integrated project delivery (IPD) and LEAN job order contracting (LEAN JOC) frameworks and enabling solution sets. These environments, when properly deployed and managed, drive unparalleled levels of efficiency quality. Studies have noted that ninety percent of associated projects can be deployed on-time, on-budget, and to the satisfaction of all participants and stakeholders. This is a clear improvement over the decades long running average level of only 10%-20% of all projects being deployed on-time or on-budget.
A cohesive, efficient, and fully transparent set of principles, policies, procedures, workflows, and a corresponding common data environment (CDE) area foundational elements of both IPD and LEAN JOC. An outline of these and additional components of these proven frameworks is provided below.
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ISSUE-The required standards for the currency and accuracy of construction cost data used for IGEs have not been met for years, and there is appears to be no plan to address this major failing.
An independent Government estimate of construction costs shall be prepared and furnished to the contracting officer at the earliest practicable time for each proposed contract and for each contract modification anticipated to exceed the simplified acquisition threshold. The contracting officer may require an estimate when the cost of required work is not anticipated to exceed the simplified acquisition threshold. The estimate shall be prepared in as much detail as though the Government were competing for award.
FAR 36.203 Government estimate of construction costs.
Construction cost-estimating processes should establish verifiable, current, and actionable detailed project costs. This is a fundamental requirement to providing cost visibility and transparency and associated efficient use of financial resources.
Currently, many organizations use a one or more of the following, all of which are generally incapable of meeting current regulatory requirements;
Historical construction costs simply reflect the results of past practices, good or bad. As the AECOO sector has well documented history of rampant economic and environment waste due, further dependencies upon past outcomes clearly represents a problematic practice at best (AECOO – architecture, engineering, construction, owner, operator)
“National average” cost databases, many of which provide granular detail with respect to labor, material, and equipment costs, by there very design do not adequately consider local market variances. The later are significant due to multiple issues, including but not limited to… highly variable workers compensations rates at the trades level, site access, material availability, etc.
Areas cost factors of various types and/or economic indices represent an attempt to localize cost data at a granular or higher level (i.e. building type), and/or temporize cost data. The fundamental math issues of attempting to adjust the numerous tasks, labor needs, equipment and material requirements, etc., to derive an verifiable and representative cost for a repair, renovation, or new build projects at a particular location and current time period are readily apparent. The proof lies in the fact that actually construction costs rarely meeting budgeted costs for ANY government construction project.
Parametric cost modeling, the process of estimating construction costs via mathematical applications to building systems or structures, provide little in the way of verifiable or actionable information.
FUTURE-Processes, information sources, support services, and tools are readily available to provide government department and agencies with current, verifiable, and actionable cost data. Locally researched detailed unit price cost data provides the granularity to drive defensible and transparent cost estimates at any level. Furthermore these tools and processes significantly improve the detail and accuracy of the initial project scope scope of work… a primary cause of failed repair, renovation, and new construction projects.
The barrier to measurable improvement is not the availability of solutions, but the lack of continuity of competent leadership with respect to facilities capital planning and management, and the component of cost construction cost estimating. This problem was recognized decades ago, and is document in books, research studies, and GAO reports, yet there is no current corrective plan.
Additional Reading/Reference Information –
2019, Substantial Efforts Needed to Achieve Greater Progress on High-Risk Areas, GAO-19-157SP
2016, Indefinite Delivery/Indefinite Quantity project selection framework using stochastic techniques, Jorge Andres Rueda Benavides
2008, Military Construction Pricing Inequities
2000, Letter, Federal Facilities Council’s Report on the Role of Facility Design Reviews in Facilities Construction
“After GSA rebaselines a project, costs may differ from the project estimates approved by Congress…. Congress lacks information about GSA’s performance: such as whether final costs are consistently above, below or meeting estimated costs. Reporting such information could benefit Congress’ ability to carry out its oversight role and improve transparency about the full costs of major federal construction projects.” – According to the report, GSA rebaselined 25 of the 36 projects GAO reviewed from fiscal years 2014 to 2018, to account for things like safety concerns or new tenant needs.
Adopting a Program versus a Project Approach Improves Facilities Management and Construction Outcomes by… 1. Eliminating redundant costs and activities and 2. Aligning strategies and objectives with processes and workflows.
Volumes have been written about the fragmentation of the AECOO (architecture, engineering, construction, operator, owner) and Facilities Management sectors and their relative high levels of economic and environmental waste.
Traditionally, architects and engineers, prime contractors, specialty subcontractors, and material suppliers come together one time to execute a single project for a specific owner. Clearly, this process “reinvents the wheel” each time, and as a result rarely captures learnings, and in the end is typically characterized with adversarial short-term relationships driven by first-cost driven competitive bidding process. The process is further negatively impacted it the owner is required to select the low bidder, and owner’s “shop” prices before awarding bids. This particular process can be further deteriorated when subcontractors low bid primes to gain awards. The overall is the current “state of the union” in which 95% of participants don’t engage in integrated, collaborative, and efficient planning, procurement, and project delivery practices, and even fewer maximize the associated potential benefits.
What is the most critical factor in facilities management and sector? Time. Every other factor… collaboration, information environment, team members, quality, project delivery method, materials, equipment, environment…. impacts time. Every real property owner has an almost exclusive focus upon time, yet as noted, 95% of them don’t even understand that robust program-based solutions exist to provide higher visibility and control of time and all the other areas combined.
Greater alignment of a program-centric approach with organizational goals integrates all core aspects of FM and associated facilities repair, renovation, maintenance, and new build planning, procurement, and project delivery. This enable over 90% of all projects and work orders to be consistently delivered on-time and on-budget, and to the appropriate specifications. Clearly this level of performance has previously been elusive across the AECOO sector.
All the tools, information, and support service resources are readily available for any owner to deploy robust, integrated planning, procurement, and project delivery via a programmatic environment. The later also provides complete financial visibility and transparency via a locally researched detailed unit price database, versus lump sum, or national price average, or other unverifiable cost source.
Program and outcome based coordination and collaboration between owners, design professionals, prime contractors, subcontractors, and suppliers involved during the life-cycle aspects of the project is accomplished via ongoing training, client specific workflows, and supporting Information environments accessible to all. The traditional situation of information generated by various sources in an environment of chaos, without any viable controls of formats, revisions, level of detail or abstraction… is not tolerated. Early and ongoing sharing of actionable information, a situation required within a program-based environment, resolves issues such as low productivity, cost and time overruns,
change orders, inadequate design specifications, liability claims,
conflicts and disput.
A program-based systematic step-by-step approach to operating a value-driven FM and AECOO sector is the only proven path to significant improvement.
Owner responsibility for construction waste is clearly documented.
Early and ongoing collaboration between teams working towards mutually defined and beneficial goals is a prerequisite for consistent achievement of maximum integration and utilization of available resources.
A comprehensive, step-by-step execution guide detailing roles, responsibilities, workflows and information environments, among real propter owners, design engineers, architects, prime contractors, and subcontractors and an associated multi-party long-term mutually beneficial contract is also a fundamental requirement
It is the owner’s responsibility to provide leadership and oversight with respect to an established strategic framework to meet the budgetary, scheduling, and quality/technical goals of any associated project.
While all of the above is far from common across the architectural, engineering, construction, operations, owner sector (AECOO), both the fundamentals and associated implementation tools and services are readily available. The proven principles, systems, workflows, etc. are far from complex and are documented and executed in a logical, simple, and concise manner. The only steep “learning curve” facing most organizations the needed to change from archaic and antagonistic traditional process, to significantly higher performance means and methods.
Integrated construction(repair, renovation, maintenance, sustainment, or new build) planning, procurement, and project delivery is a “no brainer”, but rarely practiced. The efficiencies of early and ongoing financial and technical communications among all project participants and stakeholders are well known. While robust processes have existed for decades to support these major improvements, owner leadership and commitment simply been present to drive widespread adoption.
As are result, rather than leveraging proven systematic approaches embedded with LEAN principles and processes, the AECOO continues to treat each projects as a separate “beast”. The result, of course, is failure to leverage past learnings and inordinate levels of waste. Adversarial short-term relationships driving by sector-wide focus upon “first-costs” continues to be the status quo across all public and private sectors.
Alignment creates construction value and is the primary responsibility of real proper owners.
Continuous optimization of facilities repair, renovation, maintenance, and new build outcomes is only possible through owner leadership with respect to core principles, systems, culture, and results.
While clearly each project is different, it is important that each is in overall alignment with a robust program (a defined and integrated construction planning, procurement, and project delivery programmatic process).
Integrated LEAN construction planning, procurement, and project delivery methods are solely capable of defining and managing a multi-party and multi-objective environment. While tailored to the needs of each real property owner and their established teams, and continuously improved upon, fundamental elements are constant throughout all deployments. These core elements include…
All the tools and services are ready to create and maintain alignment for any repair, renovation, maintenance, or new construction task.
Construction cost transparency assures Client Value, and make no mistake, 2021 will be a difficult year.
Contractors that are more transparent can convince building owners that procuring through them will yield good value; and be much more likely to win business and develop long-term, mutually beneficial relationship.
The construction planning, procurement, and deliver method and the associated use of locally researched detailed unit price cost data can play an significant role in achieving both construction cost transparency and maintaining/developing a robust, satisfied client base.
Efficient Facilities Operations and Maintenance Planning involves integrated planning, procurement, and project delivery support mechanisms. These are fundamental to achieving best value repair, renovation, and maintenance outcomes.
Adaptable and flexible methods while maintaining the LEAN BEST VALUE principles, objectives, and practices help drive more efficient Facilities Operations and Maintenance Planning.
A critical learning for any facilities management professional and real property owner is that RELATIONSHIPS drive Construction QUALITY improvement and COST REDUCTION.
Volumes have been written about the excessive waste and low productivity of the architecture, engineering, and construction sector. Unfortunately, most of the writings have not provided a solution.
Continuous and competent OWNER LEADERSHIP has been, and remains the barrier to measurable improvement of economic and environmental outcomes concerning facilities repair, renovation, maintenance and new construction.
Construction relationships drive quality improvement and reduction of underlying costs by taking out wastes and inefficiencies. It is the responsibility of real property owners to adopt and deploy proven Principles and Systems, that support a Culture of mutually beneficial, long-term partnering, both internal and external to the organization. Continuous and competent OWNER LEADERSHIP has been, and remains the barrier to measurable improvement of economic and environmental outcomes concerning facilities repair, renovation, maintenance and new construction.
Customer focus, system thinking, culture and people development, work flow management and performance measurement principles have proven to significantly improve outcomes.
Strategic and tactical alignment of planning, procurement, and project delivery can only be addressed via partnership-based relationships, systems, and contracts that focus upon continuous improvement and mutual benefit.
All the requisite tools, information environments, and support services are readily available for those owners ready to address positive, measurable improvement.
Best value FM (facilities management) involves change management. While many organizations are demanding more, despite the availability of fewer resources, few facilities management professionals can meet the challenge.
Achievement of basic goals, such as those listed below, is attainable only through changing the ‘status quo’.
Fortunately all the tools and support services are readily available to any facilities management professional that has the leadership skills to promote positive change.
LEAN FM FUNDAMENTALS
“This is clearly going to be a difficult year for the construction
industry. Demand looks likely to continue shrinking, projects are
getting delayed or canceled, productivity is declining, and few firms
plan to expand their headcount.”
-Stephen E. Sandherr, CEO, AGC, January 7, 2021
General contractors expects the 2021 commercial construction outlook to be far from robust.
Following a year in which 44% of firms reported they had projects canceled many construction companies will need to focus upon survival.
2021 projects have already begun to be delayed or cancelled.
Is it a a fact that Lean methodology is ignored by the construction sector. While there has been a fair amount written about Lean principles, actual application in the form of an integrated construction planning, procurement, and project delivery methodology has been limited to 5% or less actual work. Furthermore, of this 5%, most of the applications have not leveraged, or even been designed to leverage the full valued of Lean.
Research has readily noted the causal factors for the relative lack of adoption of Lean across the construction and facilities management sectors. These factors include….poor formal and professional education in the domain, low investment in research and development, deep
rooted project culture, perceived long life-cycle of associated return on investment, resistance from construction projects’ participants and stakeholders, and lack of real property owner leadership and competency. (Bayfield & Roberts, 2005, Hook & Stehn, 2008, Howell, 1999, McGrath-Champ & Rosewarne, 2009)
Lean construction is not simply a matter of applying Lean manufacturing concepts. Little benefit would be achieved by attempting to directly apply the Toyota Production System (TPS), or similar approaches to the AEC sector, exclusive of as a general background learning exercise.
That said, all the tools and services to implement integrated LEAN construction planning, procurement, and project delivery are readily available to any real property owner to deploy and subsequently achieve significant benefit.
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OpenJOC(TM) Job Order Contracting is an innovative and integrated project delivery method that provides more responsive facility maintenance and repair and minor construction.
The OpenJOC Job Order Contracting Solution reduces design/engineering and procurement lead times dramatically by awarding a competitively bid, firm-fixed-price, indefinite quantity, multi-task contract to a previously approved contractor. OpenJOC JOC Programs exclusively use locally researched detailed unit price cost data and do not rely upon national average cost databases, location factors, and/or economic indexes. Cost visibility and transparency is therefore unparalleled.
Furthermore, the integration of robust LEAN processes drive continuous improvement and best value.
The below items highlight serval consideration for facilities management and procurement professionals involved in JOC PROGRAM PLANNING.
JOC PROGRAM PLANNING Considerations
1.0 Goals, Objectives, and associated Strategy
2.0 Roles and Responsibilities
3.0 Implementation Processes
4.0 Common Data Environment
5.0 Enabling Technology
6.0 Regulatory Compliance
7.0 Training
8.0 Continuous Improvement
9.0 Recordkeeping
Maintain a safe, healthy, and comfortable environment for occupants
Maintain, or restore the facility and all related elements (i.e. finishes, structure, landscape, equipment and systems) to ensure they serve their intended purpose
Provide a timely and effective response to job order/work requests
Maximize the productive lifespan of the building and equipment ·
Maximize building efficiency
Lower overall operating costs
Protect the organization’s capital investments
Promote Environmental Sustainability
DRIVE PRODUCTIVITY, QUALITY, AND ASSURE COMPLIANCE with the Allied States Cooperative (ASC) JOC Program, which exclusively integrates LEAN Construction planning, procurement, and project delivery, with locally researched cost data and mandatory audits, to drive optimal outcomes for your repair, renovation, and minor new construction projects.
The selected construction delivery method impacts the success or failure of facilities repair, renovation, and construction programs more than any other single element. It establishes roles, responsibilities, levels of shared risk/reward, scheduling, defines information and reporting requirements and key performance metrics (KPIs) and sets the overall tone project start to completion and beyond. JOC is proven to provide superior outcomes, however, all JOC programs and cooperatives are not the same.
Fewer than 5% of public sector real property owners use Job Order Contracting, with even fewer leveraging its full benefits cost effectively. This is especially troublesome when combined with the fact that 80% of all construction projects are over budget or late, and deferred maintenance levels continue to grow.
Supplement your in-house staff and traditional contracts and consistently deliver projects on-time, on-budget, and to everyone’s satisfaction with the ASC JOC Program.
Supporting JOC technology, locally researched line item cost data, and training are provided by Four BT, LLC.