Best Practices Guide to Job Order Contracting
Your community’s needs never stop growing.
There are always streets to pave. There are always police stations, local parks and water treatment plants to renovate, maintain and upgrade. There is always construction work to be done. But while your to-do list is growing, your resources aren’t. And that’s if you’re lucky enough to do more with the same amount of money and manpower as last year.
Chances are, you have to do more with less. The imperative to stretch fewer dollars, fewer people and fewer resources further than ever before has many city and county government agencies getting creative about construction project delivery.
Maximize Your Resources with Job Order Contracting
Job Order Contracting (JOC) is an Indefinite Delivery/Indefinite Quantity (IDIQ) project delivery method that can help your public agency control costs and supplement its in-house staff. JOC empowers you to complete a number of projects with a single, competitively-awarded contract. Best of all, JOC establishes prices for construction Tasks up front, helping you control costs. Even when change orders happen or an emergency arises, Unit Prices don’t change — you’ll know exactly how far your dollars need to stretch.
Gordian, founded by a creator of the JOC delivery method, has implemented and supported hundreds of programs across the country, serving thousands of owners.
Speaking the Language: JOC Terminology
Job Order Contracting has its own set of terms that will help you understand the process. Click to explore the Job Order Contracting terms.
A contractor’s competitively-bid or negotiated adjustment to be applied to the Unit Prices listed in the Unit Price book.
A document setting forth the work the Contractor is obligated to complete for a particular Job Order.
A written order issued by the Owner requiring the Contractor to complete the Detailed Scope of Work within the Job Order Completion Time for the Job Order price.
The time within which the Contractor must complete the Detailed Scope of Work.
The value of the approved Price Proposal and the amount the Contractor will be paid for completing the Detailed Scope of Work within the Job Order Completion Time.
A Task not in the Unit Price book.
A task set forth in the Unit Price book, which includes a description of the task, a unit of measure and a Unit Price.
Every JOC program is unique in its own way, but all successful programs have a few common elements that make them strong.
Element One: An Accurate and Comprehensive Unit Price Book
At the heart of every JOC program is a Unit Price book, the document that will be used as the basis to competitively-award JOC contracts and price every Job Order once the contract is in place.
The quality of the tasks listed in the Unit Price book will make or break a JOC project. A comprehensive and accurate Unit Price book allows the parties to focus on completing projects. That is how JOC is supposed to work. Conversely, generalized or generic Task descriptions, inaccurate pricing and missing Tasks all put a strain on the Owner-Contractor relationship as the parties work through the tough pricing issues.
Creating Accurate Task Descriptions
All Task descriptions should be specific and accurate, so the owner gets exactly what they pay for.
Certain construction materials can be described in generic terms, but the Task description should contain specifics about the material, such as size or thickness and use the recognized industry-standard terminology; gypsum board instead of drywall, for instance. For other materials, the Task description should reference the salient features of the product, reference industry standards or a manufacturers series number or model number.
The Importance of Local Pricing
The Unit Prices appearing in a Unit Price book should be calculated using only local labor, material and equipment costs.
This will result in more accurate Unit Prices, instill confidence in bidders and result in more competitive pricing. Unit Price books that feature national average pricing and adjust to the local market by applying an area cost index will not result in accurate Unit Prices for all Tasks. Gordian does not consider this approach to be a best practice.
Example: If the cost for a Task is $100 and your contractor’s adjustment factor is .1, then the cost for that contractor to perform that task is $110.
Additionally, adjustment factors determine how contractors are paid for work performed under a Job Order Contract. Awarded contractors competitively-bid an adjustment factor to the Tasks in your agency’s Unit Price book for the duration of the contract. For example, if the cost for a Task is $100 and your contractor’s adjustment factor is .1, then the cost for that contractor to perform that task is $110.
Using the previous example, the contractor cannot raise his adjustment factor to .3 just because you need him or her to perform emergency work.
Element Two: A Pool of Quality Contractors
Getting high-performing contractors to bid on JOC contracts is essential to the success of a program.
In addition to the required contract advertisement, Gordian recommends that public owners notify high-performing contractors about the contract if your procurement laws allow for such notification. To be clear, the details of the contract cannot be discussed with contractors, but it is wise to deepen the pool of potential, qualified bidders, even those with no JOC experience.
Bringing Contractors Up to Speed
Contractors unfamiliar with the JOC process may be somewhat hesitant to submit a bid. A detailed explanation of the JOC process and the benefits of participating in JOC contracts may convince a contractor, experienced in construction but unfamiliar with JOC, to bid.
Gordian recommends conducting a comprehensive and informative pre-bid conference. This conference is an excellent opportunity to explain the contract and JOC process in detail and encourage new contractors to submit a bid. Be sure to discuss key contract terms, review the steps to developing a Job Order and leave plenty of time for questions.
Element Three: Program Management Software
The JOC process involves managing many small projects all under one contract.
It’s important to have a comprehensive program management software built specifically for Job Order Contracting to centralize all communications, documents and information.
At a minimum, a JOC program software should generate formatted Price Proposals; offer a module to review, comment and record changes; track key project dates; store project documentation; record budgets and create management reports. A robust and reliable software application will give you far greater controls over your program.
Track Contractor Participation Goals
Building a strong, well-rounded community means creating equitable opportunities for all businesses. To meet that end, many local governments have put participation goals in place. Any JOC program management software worth its salt will help you track your agency’s performance against those goals. These tracking features help ensure you’re running a transparent JOC program and protects your agency from audit.
JOC Program Management Software Should:
- Prevent the Contractor from altering the Unit Prices or Adjustment Factors after the contract is awarded
- Verify the calculations appearing in the Price Proposal (Unit Price x quantity x Adjustment Factor)
- Creating a transparent, auditable record of each JOC project and each dollar spent by the Owner
Element Four: Documented Program Procedures
A well run JOC program needs a formal set of written procedures.
The procedures should detail each step in the process, from project selection and initiation to issuing the Job Order. The procedures will likely be different for each JOC program and should, at minimum answer some standard questions, including, but not limited to:
- Who can initiate a project?
- What should be discussed at the Joint Scope Meeting?
- Who must sign a Job Order?
Element Five: Strategic Project Selection
There’s more than one way to contract for construction work.
Using in-house staff, time and material contracts, design-build and the traditional design-bid-build processes are all tools at an agency’s disposal. Ideally, project owners should use the most efficient procurement process for the work they need finished. Gordian recommends using JOC for the following types of projects:
- Small- or Medium-Sized Projects.
Projects that can be scoped, priced and completed quickly are ideal for JOC.
- Time-Sensitive Projects and Emergency Work.
For tight deadlines, JOC contractors are already awarded and ready to respond immediately to minimize downtime. You have the security of using preset prices instead of high emergency construction rates.
- Punch List Work on Traditionally Bid Projects.
JOC is a great tool for completing the outstanding portions of work for a traditionally bid project.
- Backlogged Projects.
JOC Contractors can supplement in-house staff by completing backlogged projects or teaming with in-house staff and performing a portion of the work.
- Maintenance, Repair and Operations (MRO).
JOC contracts can be put in place to specifically address MRO work – quickly eliminating a backlog of pending work and keeping up with current MRO requests.
- Grant Projects.
Job Order Contracting can help you complete work with a fixed budget, like a state or Federal grant. JOC allows the contractor to prepare a Price Proposal to maximize the work for the allotted budget. With traditional bidding, if the prices exceed the available budget, the project must be redesigned and rebid.
- Replacement-In-Kind Projects.
These projects generally require little design work and can be scoped and priced quickly. Using JOC saves you the time and cost of preparing full plans and specifications and conducting a formal bid process.
- End of the Year Funding.
The end of the fiscal year can leave owners scrambling to commit available funds or risk losing them. JOC projects can be scoped and priced quickly, allowing the you to obligate funding.
Job Order Contracting is not the right delivery method for every project. Selecting the right construction work for a JOC contract is necessary for success.
Element Six: Trust in the Process
Once an agency has identified a project for Job Order Contracting, it should follow a time-tested process for ordering the construction work.
It is important to give every step the respect and attention it deserves. Just like with construction itself, cutting corners is dangerous.
Conduct a Joint Scope Meeting
The purpose of the Joint Scope Meeting is for the owner, contractor and other project stakeholders to meet at the site to see the project conditions, discuss the proposed work, consider value engineering options and to agree on the work to be performed. Before the Joint Scope Meeting, you should develop a preliminary Scope of Work and share it with the contractor, along with any documents concerning the site and the work being scoped. Give the contractor enough time to review the information so they can prepare questions and concerns and invite subcontractors if need be.
In addition to the contractor, you may want to invite the site architect, an engineer, Haz Mat representatives — anyone whose input will be valuable. Determining the guestlist for the Joint Scope Meeting can be tricky. Your local program representative should advise you on who needs to attend.
The Joint Scope Meeting isn’t complete until the following has been addressed:
- The work to be performed
- Presence of hazardous materials and testing required
- Permits – including drawings for permits
- Identify long lead time materials
- Protocol for workers entering the site
- Staging areas, signage and temporary fencing or partitions
- Construction schedule and work hours – with critical milestones and phasing requirements
- Controlled inspections, testing requirements
- Value Engineering suggestions
- Organization of Price Proposal – CSI, floor, room, phases, etc.
- Due Date for Detailed Scope of Work and for Price Proposal
- Open issues (identify who is responsible)
Write a Detailed Scope of Work
After the Joint Scope Meeting, you should have sketches, photographs, quantities and notes from all parties involved in the project. This treasure trove of information will help you write a Detailed Scope of Work. The Detailed Scope of Work documents and governs the work the contractor must perform, so it must be crystal clear.
An easily-defined Detailed Scope of Work will result in a complete and accurate Price Proposal. In turn, you’ll spend less time reviewing the proposal and avoid (or at least reduce) confusion during progress check.
Receive Price Proposal
After receiving the Detailed Scope of Work, the contractor writes up a Price Proposal using Tasks from your agency’s Unit Price book. This is one reason why accurate Unit Prices are essential to program success.
The Price Proposal should include:
- Only the Tasks required to complete the Detailed Scope of Work
- Accurate quantities for each Task
- The correct Adjustment Factors
- Quantity calculations and explanations in the User Notes for each Task