JOC delivery cuts costs, headaches for owners
Job order contracting, pioneered by the military, is a delivery system
that offers some advantages
By David Carrithers
building owners by reducing costs and eliminating headaches that stem
from traditional delivery methods. That's because alternative methods don't
focus on obtaining the lowest bid, but on generating customer value, quality
and cooperation in innovative solutions-the very things owners seek from
any contractor in the long run.
One alternative delivery method that's growing every day in popularity
throughout Ohio and around the country is Job Order Contracting (JOC). JOC
provides the means to execute a multiplicity of indefinite delivery/indefinite
quantity fixed-price orders for renovation, rehabilitation and repair work
for large facilities and infrastructures.
JOC contractors are selected based on qualifications and performance
at best value, not lowest bid. JOC is all about reliability, dependability
and quality. At the same time, it's about results-plus the ability to work
within budget- and time-constraints. In simplest terms, JOC contractors
provide "on call" construction services from concept to closeout,
becoming an extension of the facilities support team.
JOC's greatest advantage lies in the fact that it provides a way to get
commonly encountered construction projects done quickly and easily through
multiyear contracts. JOC eliminates unnecessary levels of engineering, design
and contract procurement time and cuts construction-project procurement
costs by awarding long-term contracts.
A recent survey conducted by the Center for JOC Excellence found that
86% of owners who employ JOC are either more or equally satisfied with its
results over those of traditional delivery methods.
Why superior results?
One major reason JOC produces superior results can be traced to its reliance
on a unit price book (UPB). UPBs list costs for specific construction work
and materials. In responding to an owner's RfP, JOC contractors submit their
qualifications and a "price coefficient" (multiplier) for the
items described by the owner. The price coefficient refers to the UPB cited
in the RFP. Owners can cite either generic UPBs, such as those published
by R.S. Means, or custom-published ones.
Gary Aller, director of the Alliance for Construction Excellence, believes
that JOC really begins and ends with the RFP. Aller thinks the RFP is important,
"because we're establishing a competitive price in a process of selecting
a contractor, without quantities, known delivery schedules, or times specified.
That's what makes JOC a delivery process."
Price, however, is not the major determining factor. Performance is.
A contractor responding to a JOC RFP submits a bid naming a price coefficient
that factors in not only the contractor's overhead and profit, but also
any adjustment that may be needed between the UPB prices and the actual
prices being charged in the local market. But a JOC contract doesn't define
actual, individual jobs. Instead, it awards a potential maximum amount of
work over a year. For example, a contract may have an annual maximum of
$5 million, with a minimum amount for individual work orders, such as a
total of $35,000 per work order.
As a result, the JOC contractor is not guaranteed a specific amount of
revenue-driving it to generate the best possible performance and building
a long-term relationship with the customer. Winning a JOC contract gives
the contractor the strongest possible motivation to provide outstanding
service and high-quality work.
Most frequent outcomes
JOC most commonly provides owners these important benefits:
Fast and responsive delivery. The Center for JOC Excellence calls this
the greatest advantage of JOC. Owners see an up-front time reduction of
up to 75% over traditional design-bid-build methods.
High quality. The way JOC contracts are structured gives incentive to
the contractor to focus early on its relationship with the owner. If the
contractor doesn't perform early during the contract period, the owner can
choose not to award additional work.
Dependability. Long-term relationships, fixed pricing and simplified
paperwork combine to meet owners' expectations of performance and price.
The contractor is motivated to impress the owner with dependable service,
in order to receive the greatest amount of work from call-backs and referrals.
Simplicity. The simplified design documents and acquisition process eliminate
the need for complicated and repetitive contract documents. Individual orders
are negotiated on a line-by-line basis under the guidelines and specifications
of the overall contract.
Cost savings. Reductions in administration, design and construction-management
time reduce overall costs. Prices are driven down, while quality is maintained.
BXM
David Carrithers is vice president of marketing for Vienna, VA-based
Centennial Contractors Enterprises and chair elect of the Center for JOC
Excellence.
JOC in OHIO
Job Order Contracting can trace its origins back to the U.S. military.
But since the late 80s it has captured the attention of the private sector
and government agencies. Ohio was on the forefront of the movement, when
the hospital at The Ohio State University implemented a JOC program in 1995.
The program has been used to modernize lab facilities, classrooms, HVAC
systems and improve other needed site projects. OSU was the third university
in the country to implement a JOC program.
To help accommodate the growing trend, the Ohio Department of Transportation
recently set up guidelines and points of clarification to help the construction
industry understand the finer points of JOC and other alternative delivery
methods when it comes to transportation projects. BXM
