Job Order Contracting: Everything Owners and Builders Need to Know

Job order contracting is neither difficult to understand, nor costly to practice, yet is virtually it assures the consistent delivery of quality, on-time, on-budget repair, renovation, and new construction projects…if the JOC Program is designed, deployed, and managed correctly.

Of course, the question remains… why don’t more real property owners and facilities management teams leverage the benefits of job order contracting?

Contributing factors include to JOC’s limited acceptance and proper implementation include the need for improved formal and professional education for real property owners with a focus upon leadership and core LEAN construction delivery concepts and processes., as well as total cost-of-ownership asset management.

What Is Job Order Contracting?

Job order contracting is a LEAN construction planning, procurement, and delivery methods. It is a Program, System, and Process, rather than a single project. It develops and support long-term, collaborative relationships between real property owners and builders. Typically JOC Programs are single year IDIQ ( indefinite delivery/indefinite quantity) agreements with up to four (4) additional option years. Minimum and maximum dollar values (per year, per project, and total) and types of construction are clearly stipulated. Procurement costs, project delivery times, overall construction costs, changes orders, and legal disputes can all be mitigated via properly established and managed JOC Programs.

How Does JOC Work?

The above is an example of a JOC workflow. All processes, roles, responsibilities, etc. are detailed within a written JOC Operations Manual or JOC Execution Guide.

In order to implement job order contracting, a LOCALLY RESEARCHED JOC unit price book is a core requirement. (Note: Using a UPB based upon national averages and associated locations factors is not a best practice and not recommended.) Ain UPB is a detailed listing of construction tasks developed to include at least ninety (90%) percent of the work anticipated to be done via the JOC Program. Each task should include a description in plain English, using industry standard terms, a total cost per unit of measure, and detailed associated cost breakdowns for labor, material, and equipment. The UPB should also contain crew information and be updated annually at a minimum, and quarterly if possible for labor and material fluctuations. The using of “economic indexes” for updated a JOC UPB is also not a recommend best management practice. The JOC UPB should be organized using CSI Masterformat. JOC UPBs can be created for general construction, or some area of specialization such as roofing, communications, fencing, electrical, etc.

Each construction project includes a owner’s request for proposal to an awarded JOC contractor. The JOC contractor then responds with a proposal/project estimate developed using the approved current UPB. A coefficient is applied to the total of the proposal/estimate which included the contractor’s overhead and profit and other items as allowed per the JOC Program.

When Is JOC Used?

Job order contracting is used for planning, procuring, and executing repetitive repair, renovation, maintenance, sustainability, and new construction tasks. Design work is typically minimal and the responsibility of the builder. Any costs for this are generally within the contractors coefficient(s).

What Are the Benefits of JOC?

Quality Repair, Renovation, and New Construction Projects consistently delivered on-time, on-budget and to the satisfaction of all participants and stakeholders.
Full Financial Transparency and Compliance
Shared Risk/Reward
Long-term Mutually Beneficial Owner/Builder Relationships Based Upon Mutual Trust/Respect
Virtual Elimination of Change Order and Legal Disputes
Optimal User of Available Owner Funding to Reduced Deferred Maintenance, and Execute New Construction Projects

Proof That JOC Works

JOC, a form of integrated project delivery (IPD), has a proven thirty year (30 yr.) track record.

In addition, multiple researched studies and case studies have been performed over this time period, as well as independent audits of JOC Programs. A 2016, Arizona State University study noted the following…

99% of respondents recommend the job order contracting
96% of projects were satisfactorily completed
91% of projects were on-budget
87% of projects were on time
Reductions in administrative costs and total costs versus design-bid-build, design-build, etc.

Unfortunately JOC Is NOT for all Owners and Builders

Job order contracting requires certain levels of owner leadership, competency, and willingness to engage in change versus traditional construction planning, procurement, and project delivery. The same is true for builders.

Many JOC Programs have not achieved anticipated results due to lack of owner competency and poor support on the part of “JOC Consultants”. Also, many JOC Programs have been set up whereby the “JOC Consultant” actually manages the JOC Program and is paid a fee based upon a percentage of JOC construction volume performed. This is not only NOT a recommend best management practice but a a situation that sets the stage for potential fraud (as noted via third party independent audits).

Nonetheless, properly designed and managed JOC Programs can resolve the productivity problems that have plagued the construction sector and AECOO community for decades!!