Outsourcing Job Order Contracts is contrary to the fundamental concepts this LEAN construction delivery method and at best should be considered only as a temporary solution.
Job order contracting is a collaborative construction delivery method capable of consistently executing 90%+ of renovation, repair, and minor new construction project on-time, on-budget, and to the benefit of all stakeholders… if designed, implemented and managed properly. That said, while there are many, here are three reasons not to outsource job order contracts.
First, however, a quick explanation about what I mean by outsourcing job order contracts is called for. Hiring a JOC consultant and paying them a fee based upon the total construction volume, to “manage” a JOC program is basically outsourcing from a business and process perspective. This is inherently contradictory to the core aspects of JOC such as direct early and ongoing participation by real property owners and building uses, as well as owner leadership and furthermore can create conflicts of interests and even set the stage for fraud.
Organizations, large and small, have difficulty managing the numerous repetitive renovation, repair, and minor new construction projects required to sustain a facility portfolio and maintain performance requirements cost effectively. Most organizations suffer a large number of project failures: slow response times, poor quality, excessive costs, and/or excessive costs.
Traditional project delivery methods such as design-bid-build, lowest bidders, and even design-build have provided fully adequate solutions.
Outsourcing Job Order Contracts – Three reasons NOT to do it.
- Poor or lack of planning: No on knows your organization better than its own staff. Building users, technical teams (DPW, engineering), and procurement staff should have the required experience, competence, and local knowledge to provide requisite planning. Relying upon an outside consultant heightens the risk of poor or lack of planning. The AECOO industry has suffered far too long from failure to implement change management, specifically a failure to remove the adversarial relationship between real property owners/facilities managers and service providers. Adding a third party to this mix does little to resolve the situation.
- Poor Estimating: It is key that owner’s review all JOC estimates as well as prepare internal estimates for project over a certain size. This element of a JOC process helps to communicate project requirements via a through review of line item detailed cost estimates as well as mitigate errors and omissions. Relying upon a third party for this process introduces an increased potential for miscommunication. It is also important the the cost data used be locally researched, independent, and objective.
- Unclear or improper roles: Every JOC Program should have a written JOC Operations Manual/JOC Execution Guide as part of the contract. The role of the the real property owner/facilities management is to provide leadership, experience, and local knowledge. Outsourcing this role immediately negates these responsibilities at worst, and at a minimum creates confusion. The addition of another “layer in the game of telephone” is never a good thing, if it is not adding value. It generates a situation where the owner/facilities manage assumes the JOC consultant doing a particular task, and is fully compliant with the JOC program and associate rules, regulations, statues. As multiple independent government audits have demonstrated, the latter is not the case. As a result project timelines and benefits are put at risk.
While there may be reasons to hire a JOC consultant initial to “manage” a JOC Program, owners/facility managers should use this interim period to learn to be self sufficient. There are currently far too many real properly owners wasting millions of dollars on non-valued-added services, not to mention less than efficient JOC programs versus running efficient owner-managed JOC programs.
Hopefully real property owners, and the AECOO industry as a whole will deals with these addressable, time saving, money saving ideas will increase the success rate and efficiency of their numerous renovation, repair, and minor new construction projects.
What to learn more…
via Four BT, LLC – Independent, Objective, and Best Value LEAN Construction & Job Order Contracting Solutions