Here is a listing of Job Order Contracting FAQs frequently asked questions.
Job Order Contracting FAQs are provided to assist in understanding JOC processes and procedures.
What is Job Order Contracting (JOC)?
Job order contracting is a project delivery method developed to expedite numerous repair, renovation, maintenance, and “minor” new construction projects facing real property portfolio owners. The United States Army developed an initial JOC-like concept that was then significantly improved over time by the United States Air Force, and finally deployed in concert with LEAN practices by Four BT, LLC. Currently available deployment tools and support services provide far more powerful capabilities and significantly enhanced benefits to all participants and stakeholders than early deployments.
JOC solutions now integrate construction planning, procurement, and project delivery, participants, and stakeholders. Individual projects range in size from approximately $50,000 to over $20,000,000, depending upon the specifics of the contract, location, type of use, etc. 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. JOC contracts have a one-year term and may have up to four option years. Financial transparency is provided using an associated locally researched detailed unit price book. (Note: Location factors and/or economic factors do not provide adequate cost visibility, thus cost data should be researched and updated regularly.) The locally researched unit price book allows each project and workorder to be defined and estimated using labor, material, and equipment costs that go into each task required for the specific location. Contractors then total the line items and multiply it by a predetermined/preapprove factor that accounts for overhead and profit as defined by the associated contract.
LEAN Job Order Contracting (JOC) uniquely leverages a robust programmatic process to all related Contracts, Proposals, Estimates, Projects, and Workorders throughout their lifecycles.
Since JOC is used for repetitive work, which may involve repair, renovation, maintenance (preventive, unscheduled, scheduled), sustainability, and new construction. LEAN JOC focuses on achieving best value, mutually beneficial outcomes for all participants and stakeholders.
- LEAN JOC is cost-efficient and provides superior cost visibility and transparency.
- LEAN JOC creates a long-term, positive relationship between owners and design-builders.
- LEAN JOC gets more projects completed faster, on time, on budget, and with higher quality
- LEAN JOC reduces deferred maintenance backlogs.
- LEAN JOC has fewer change orders and lower administrative burden and costs.
- LEAN JOC reduces legal disputes and fees.
- LEAN JOC exclusively incorporates “best management practices”.
As an Owner, how can I participate in a Job Order Contract?
Depending upon applicable regulations, an owner may be able to establish its own JOC Program, or “piggyback” on an existing Job Order Contract as allowable. An owner may also be able to participate via a JOC Cooperative and/or inter-local agreement.
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.
Are all JOC Programs the same?
No. JOC programs are deployed 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. This assures optimal benefits are achieved. Furthermore, attention should be paid to the costs of JOC Program development and ongoing support. Owners must provide leadership and an understanding of the JOC process. (Note: Having a “JOC Consultant” manage a JOC Program is in direct conflict with LEAN construction principles, can require excessive program costs, and may create a potential for conflicts of interest to develop.) JOC Programs may be structured to support general repair, renovation, and new construction, or be limited in some way. “Single trade JOCs” such as fencing, electrical, communications, roofing, etc., may also be put into place.
Should ASSEMBLIES be used for Job Order Contracts?
No. The definition of a Job Order Contract invovles the use of a unit price book, thus discrete unit price construction tasks not ASSEMBLIES. Unfortunately some Owners allow the use of ASSEMBLIES as to some “JOC Consultants’ and “JOC Vendors”. The practice has a negative impact upon cost visibility and cost transparency.
Are there special skills or additional criteria required to establish and 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. Remember, people and process come first!
How many JOC Contracts do Owners bid?
Owners may bid a single contract or bid several contracts based upon geographic area and/or type of work required (roofing, paving, electrical, etc.)
How do Owners evaluate JOC Contractors?
JOC contractor evaluation is an ongoing process, begining with their response to a Job Order Contract Request for Propsals for design-builders and continuing throughout the life-cycle of the JOC Program.
Here is a considerations for JOC contractor evaluation.
•Responsiveness of the contractor in terms of requests for site visits, requests for proposals, participation ins proposal evaluation, mobilization, daily site management, completion of required forms, and handover of required information post construction.
• Ability to collaborative work with owner staff in the scope of work definition.
• Timely creation of detailed line item proposals using locally researched construction cost data in compliance with Job Order Contract requirements.
• Ability to create and maintain a safe and clean work environment.
• Timely project mobilization and start.
• Efficient and collaboration crew and subcontractor mangement in a manner that maximizes the expertise of those doing the work.
• Projects are complete in a quality manner, per specfications, on time and on budget, without change orders.
• Ability to create a long term, mutually beneficial relationships with owner and subscontractor staff as well as material suppliers and other stakeholders.
• Acceptable levels with respect to defined, JOC quantitative performance indicators.
Are JOCs awarded via lowerst bidder or best value?
Owners may elect to award JOCs to responsible and eligible bidders bidding the lowest coefficients per solicitation. We, however, suggest that a best value approach be used. This considers the bidder’s previous work history as well as the coefficient.
How is are individual JOC Projects (or work orders) price?
Pricing for individual projects are based upon the 4BT OpenJOC Unit Price Book and the subsequently applied contractor’s 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” to the UPB. The coefficient generally includes all project general conditions as described in the contract, such as general supervision, overhead and profit. Projects, under a a JOC contract are scoped and priced as part of the process described in the contract. Once a project is approved, the price becomes a lump sum price for the project.
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 approved new line items. 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 rather focus on key commonly used tasks. If a contractor maintains good job costing information, they can select corresponding line items out of the Unit Price Books and compare actual costs including general conditions, overhead and profit. Projects selected for comparison purposes 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.xx, where “xx” represents the contractors overhead and profit and other factors as allowed in the associated JOC RFP. JOC co-efficients typically range in the 1.3-1.4 area, however, can also vary 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 introduce gross cost errors.
What items should be included in a JOC estimate?
All JOC estimates should include 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 the 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 specified. 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 to be used for all related state, county, or local 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 opportunities for emerging businesses, whether they serve as prime contractors or a trade subcontractors. Note that not all JOCs allow for subcontractors.
What is overview of your company and what differentiates your products and services from your competitors ?
We founded 4BT in 2016 upon seeing a clear need to rethink, reshape, and rebuild JOC. We believe… 1. LEAN planning, procurement, and project delivery processes should be deployed in a manner that is mutually beneficial to all participants and stakeholders, 2. Full cost visibility and transparency and compliance must be provided, 3. JOC solutions should not burden users with excessive fees and costs, and 4. Cost data should reflect local market conditions.
Where are you located and in what region of the US do you conduct business?
4BT’s business locations are in Houston, TX, and California. Our team members are located across the United States, including California, Arizona, Texas, Midwest, Southeast, and the Northeast, and serve clients nationwide.
What training do you offer, and do you provide free software trials to real property owners?
4BT offers free trials of our SAAS technology, inclusive of our locally researched construction cost data to any owner interested in a JOC Program. Multi-level, and multi-level training is available including on-site, virtual, regional, advanced and introductory.
Is there a specific project management software or estimating software that works best with your data?
Our 4BT Building-in-Cloud SaaS technology stands alone in providing Program Management, Contract Management, Proposal/Bid Management, Estimate Management, Document Management, Location Management, Building Management, Asset/Component Management, and Contractor/Subcontractor Management, as well as the ability to integrate BIM information and view BIM models. That said, our construction cost data is organized using CSI MasterFormat and therefore could be easily integrated within various technology applications.
Do you sample contractors pricing in any given area to confirm accuracy of your cost data?
Yes, we sample local contractor pricing… however, more importantly, we research all aspects of local market conditions using our 4BT cost research methodology. We research local labor trades inclusive of fringes, material costs, and equipment costs within targeted areas. If we find a variance of 5% or greater in areas in which work is being done, we create a separate UPB.
Does your software take into consideration of how contractors prepare a coefficient?
Yes. We believe a properly researched UPB should enable a contractor to submit a co-efficient of greater than 1.0. For example, if a UPB should reflect the local cost of construction minus contractor profit and overhead. Thus a contractors bid co-efficient for standard hour construction is generally in the 1.10-1.30 range.
What additional support services do you offer customers?
Our customers include real property owners and managers, builders, cooperatives, and private companies, therefore our support services vary.
A partial listing of 4BT’s 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 and User Support Services – Online, Phone, Email.
Does your software factor for multiple coefficient usage? (Example: Standard Hours, Non-Standard Hours and Non-Pre-priced Items)
Yes. Our SaaS technology supports multiple co-efficients and then associates and locks co-efficients to specified JOC contract and awarded contractors. Non-prepriced items are automatically tracked and in terms of both identification and usage.
Non-Pre-priced Items tends to be commonly used. What is the capability of your software to incorporate non pre-priced items? Is it included in your service or an additional service charge?
4BT SaaS technology enables the creation and use of non-prepriced line items. Most importantly the UPB itself is locked and can only be changed per contract specifications. Additional non-prepriced line items can be easily created from existing UPB line times at a detailed level, include changes to material, labor, crew, and equipment costs. All changes at noted and maintained perpetually. All non-prepriced line item are automatically tagged as such, and there used is track and calculated. For example, a proposal will note the dollar are percentage of non-prepriced line items as well as highlight their individual usage. All of the above are included within our standard pricing.
What are the reasons for the failure of a JOC Program and/or poorly performing JOC Program?
The primary reason that a JOC Program fails to deliver significant benefit to an owner and its participants is poor initial goal setting and poor initial program set up and training. Proper expectations must be established for owners, participants, and stakeholders. The goal of a JOC Program should not be solely to expedite procurement of construction projects, but rather, more efficient project planning, procurement, and project delivery on an overall basis. Failure to require initial and ongoing (at least annual) training is another reason for poor performance. A JOC Program should require regular independent third-party audits., the lack of which has created significant issues. Lastly, the improper or excessive use of JOC consultants can set the landscape for fundamental performance, cost, or legal issues. For example a JOC consultant should never be compensated based upon a percentage of JOC construction volume if the consultant is responsible for approving JOC projects.
How are the cost data items maintained and how often are they updated? Do they become a normal line item priced annually in future annual price book revisions?
The 4BT UPB is changed based upon JOC contract requirements. That said, we recommend that labor be updated quarterly, and the UPB be updated annually for mutually approved (owner and 4BT) line item additions. Approved annual additions of line items become part of the standard UPB for the associated JOC.
Can your unit price book be localized by market values related to a specific City without using historical national averages, but localized averages based on a specific location’s historic cost and not adjustment to a dataset?
4BT’s UPB’s and cost databases are always locally researched. We do not use national averages or cost factors. The use of national averages and cost factors can introduce significant errors in cost data.
What is a unit price contract?
A unit priced public works contract allows public organizations to procure an unknown number of small, defined construction projects over a fixed period and is like an indefinite quantity, indefinite contract. A unit price contract is….
A competitively bid contract in which repair, renovation, maintenance, and/or new construction projects are anticipated on a recurring basis to meet operational needs of the organization, under which the contractor agrees to a fixed period indefinite quantity delivery of work, at a defined unit price for each category of work.”
While traditional construction contracts are awarded for specific projects/scopes with a specific total dollar value, unit priced contracts are not associated with a particular project, do not guarantee any amount of work, and do not establish a total dollar value, although the contract sets maximum and minimum values for each project and for the life of the contract.
The prices for different tasks may be based upon different units. Commonly used units include:
- Weight, such as tons
- Surface area, such as square feet or acres
- Volume, such as gallons or cubic yards
- Length/depth, such as linear feet or vertical linear feet
- Time, such as hours
- Quantity of items
- Lump sum per task
When a specific project is identified, individual work orders are authorized based upon either a “not-to-exceed” time and cost with a detailed unit price breakdown of tasks.
Unit priced contracts allow public agencies to contract for multiple or recurring small projects over time without having to bid each project separately. This saves the agency time and money, especially for unanticipated projects that may arise at the last minute.
Unit priced contracts are often used for repair, renovation, or maintenance of public facilities, all of which fall under “public work”.
Contact us to if you like to add to our Job Order Contracting FAQs