Owner Perspective:

Richard Bee

Assistant VP

DFW Airport

Contractor Perspective:

Leo Wright

VP, JOC Division

FH Paschen

Lisa Cooley, LEED AP

Managing Principal

lisa@lisacooleyassociates.com

“Job Order Contracting (JOC) is a method of managing multiple details of renovation, rehabilitation, repair, and other construction

projects on a predetermined set of pricing and standards. By using JOC customers take advantage of a process that is fast and

responsive to their needs while providing excellent quality construction.”

--Center for Job Order Contracting Excellence, www.jocexcellence.org

JOB ORDER CONTRACTING

Contractor Definitions?

Contractor:

A gambler who never gets to shuffle, cut or deal.

Bid Opening:

A poker game in which the losing hand wins.

Low Bidder:

A contractor who is wondering what he left out.

Engineer's Estimate:

The cost of construction in Heaven.

Low-bid Contractor?

JOB ORDER CONTRACTING

HISTORY, USE AND

RESEARCH

History of Job Order Contracting:The Dilemma: US Army, 1980’s

Smaller projects were taking up to 1 year to procure

8-22% of project costs were consumed in design and

procurement

Change orders could increase project costs by 50%

Claims and litigation

Low bid procurement produced low

quality results

Impact

Large backlog of projects

Impact to mission

A long-term (3-5 years) umbrella

contract

Competitive pricing through the use of

a competitively-bid coefficient

applied to a unit price book (UPB)

Best Value selection to ensure

contractor performance

Individually-priced delivery orders

Early JOCs had line item unit

pricing or government-

generated price lists, but there

were too many pricing gaps

and a standardized unit price

book was adopted to better

cover the full scope of multi-

trade projects.

History of Job Order Contracting:

The Solution

20101990s 2000s1980s

Examples of Owners Using JOC Today

Federal Government

• Army

• Navy

• Air Force

• US Postal Service

• VA

• GSA

Higher Ed

• University of Texas System

• University of California System

• University of New Mexico

Healthcare

• Harris County Hospital District

• Maricopa Integrated Health

• Parkland Hospital

State

• State of Washington

• State of Arizona

• State of Massachusetts

Transportation

• Phoenix MetroRail

• DFW Airport

• MARTA (Atlanta)

• Los Angeles World Airports

Municipalities

• City of Phoenix

• City of Houston

• Baltimore Housing Authority

• Prince George’s County

• Los Angeles County

K-12 Districts

• Ft. Worth ISD

• Houston ISD

• Mesa Public Schools (AZ)

*NEW TO JOC

Faster project delivery (3-9 months less)

Streamlined engineering and design

Assurance of cost reasonableness

Better contractor performance

Partnering relationship

More opportunities for local small and

disadvantaged business

Effective use of year-end funds

Cassell, Jordan W., and Linda T. Gilday. Improving the Army’s Job Order

Contracting Program. Logistics Management Institute, September 1997.

History of JOC: Results

Different JOC contracts judged

based on a variety of performance

factors:

Overall Satisfaction:

History of JOC: Results

0% 25% 50% 75% 100%

Non-Partnered/LowBid

Non-partnered/BestValue Selection

Partnered/Best ValueSelection

Factors Studied:

• Quality

• Safety

• On-Time Completion

• Scheduling and

Performance of Subs

• Warranty Service

• Responsiveness of

Support

• Innovation and Value

Engineering

• Responsiveness to Client

Needs

• Preventing and Solving

Problems

• Contractors Management

Effectiveness

• Dispute Resolution

• Level of Trust

• Communication

Mulcahy, Francis S. The Effectiveness of Partnering and Source Selection in Job Order

Contracting. Master’s Thesis, University of Washington, 2000.

Qualitative Study of Owners

• 75% Say JOC Requires Less Time To Start Up A Project

• 57% Say JOC Requires Less Time To Design A Project

• 63% Say JOC Requires Less Time To Close Out A Project

• 71% Say JOC Is Easier To Use

Ohrn, Greg. The Influence of Job Order Contracting as a Construction Project Delivery

Method on Owner Satisfaction, PhD Dissertation Indiana State University – 2009.

History of JOC: Results

JOC Schema*JOC brings the advantages of the most progressive delivery methods to smaller projects

– Design-Build Lite

– CM At-Risk Lite

– Integrated Project Delivery Lite

– Performance-based Contracting Lite

Integrated Team

Early Collaboration

Best Value or Qualifications Based Selection

Performance Incentives

Pricing Transparency

“Great service,

less change orders?”

“Everything you ever wanted

in a construction project?”

*

Where JOC Fits – Ideal Project Size

JOC

$25k

to

$1.5m

Capital

Projects

$1m and up

In House Trades/

T&M Contracts

$0 - $50,000

JOC is:

• Ideal for mid-sized projects.

• Can be utilized for smaller capital projects and maintenance tasks as well.

• The size range varies according to owner resources and the nature of the project.

THE VALUE OF

JOB ORDER CONTRACTING

JOC Benefits to Owners• Focus your personnel on mission critical and

priority needs.

• Expand and change based on the needs and demands of your facilities and organization

• Improved quality of delivery and results.

• Achieve small and disadvantaged business goals.

• A contractor partner who knows your facility as well as you do.

• Flexibility, matching scope to budget.

• Fewer warranty issues.

• Saves time.

• More cost-effective. Value-added service.

Schedule Comparison

Cost and Scope Comparison

Activity Job Order Contracting Design-Bid-Build

Procurement Costs: Admin and re-

bidding

Done One Time, or Via Purchasing

Cooperative

Varies: 10% to 15% of Project Cost

Bid Advertising Costs Included Newspaper Ad Costs

Design Completion Fees Included A/E Fees @ 5% of base

Architect Inspection Fees Included A/E Management Fee of 1% of base

Scope Definition Costs Included Owner Staff Costs

Testing and Inspection Included Allowance to contract amount

Contingency Included Industry average

Quality Control Included Owner Provided @3% to 6%

Small Business Minority Goals Included Owner provided

Safety and Security Included A/E Management Fee @ 1% of base

Risk Assessment and Mitigation Included Owners Assumes Risk and potential

change order @10-15%

Legal Actions None 15% of program cost

Time Savings—On Time Over Runs

Budget On Budget Over Budget

Control of Outcomes Client Control Contractors Control

Innovation Included Owner Managed

Quality of Life Approaching Normal Stress and Fatigue

JOC Benefits to Contractors

• Market Exploration/Business Development• Serving the customer across the building lifecycle

• Reward for performance• Contract has no or minimal work guarantee

• Contract has clear volume potential

• Base year with 3 or 4 option years

• Incentive to perform

Happy Customer = More Work = Profitability

• Steady revenue stream and stability.

The Importance of Relationships

Long-term contract fosters a

higher level of investment in

making the working

relationship work.

A program not a project.

Allows development of a

trusted partner.

JOC is about Performance!

Faster Delivery of Projects

Overall Higher Quality

Fewer Change Orders

Fewer Warranty Issues

Maximizing construction

budgets

JOB ORDER CONTRACTING

PRICING

The Competitive Pricing Component of JOC

Pricing structure relies on a Unit Price Book• standardized (RS Means), or

• customized/localized (The Gordian Group)

Competitively-bid coefficient (multiplier, factor) establishes pricing at the outset of the contract.

Coefficient includes all costs including materials, labor, overhead, profit, and sometimes bond and tax.

Effectively bidding every imaginable component of construction on bid day

Example:

1 sf drywall $1.00

Coefficient .92 - .08

Contractual Price $ .92

Delivery Order PricingDelivery orders are firm fixed price,

lump sumUPB is an estimating tool, not a billing

tool.Unit price proposals represent

contractor’s committed price—it converts to lump sum.

Change orders rare, and with consistent pricing structure.

Different from other on-call contracts.Brings CM advantages to smaller

projects but in an efficient way with an at-risk incentive to perform.

No surprises!

23

What if an item is not in the Unit Price Book?

• Items not appearing in the Unit

Price Book are considered Non

Pre-priced Items (NPP)

• Typical NPP options:1. NPP coefficient serves as a markup on three

transparent subcontractor bids

2. NPP markup can be set per contract provisions Warning: can skew pricing/coefficients

3. Once a new unit price is negotiated it can be incorporated into the contract

4. Some contracts will prohibit or limit NPP items as a percentage of delivery orders.

Sample Contractor Bid:

UPB Coefficient .92

applied to line items

NPP Coefficient 1.18

applied to actual sub costs

Cost Escalation

• Either the Unit Price Book or the Coefficient

is usually adjusted annually (quarterly

updates)

• Dynamic cost databases generally update

the unit pricing and maintain the same

coefficient

• Customized price books typically adjust

coefficient annually according to an industry

benchmark (e.g. ENR Construction Cost

Index)

• Goal is to distribute risk appropriately

between contractor and owner

How Change Orders Are Handled

• Change Orders are rare in JOC• Owner-initiated

• Truly unforeseen conditions

Single-source responsibility

=

complete scope of work

• UPB governs original scope of work and scope added after• Puts owners at an advantage when

directing changes in the work

Preparing for JOC: Owner Perspective• Analyzing potential JOC volume

• Look at historic project data (2-3 years) and reconcile with budget projections. Segregate projects by size, location, type, etc.

• What will your JOC “bandwidth” be?

• All-inclusive, or selective? As defined by scope, or urgency.

• Size limits? Consider in-house capabilities, other contract vehicles, and political influences

• Defining contract footprint, including potential regionalization

• Single or multiple award

• The Magic Numbers:• $2M—minimum annual volume for standalone JOC program

• $6M—maximum efficiencies are achieved, allowing addition of support staff

• Many owners with less volume can access JOC through purchasing cooperatives

Preparing for JOC: Owner Perspective

• Assess in-house capabilities• Project Management Capacity

• Skillsets

• Line-item estimating, or

developed ability to review estimates

• Proactive definition of scope

• In-house maintenance crews• Size threshold

• First right of refusal

• Training Plan

• How will JOC interface with your design professionals?

• Flowcharting how JOC process will interface with purchasing, management and board approvals

One Owner’s

Management Plan:

Each PM manages 15-

20 projects

simultaneously, up to 50

per yearSource: RS Means White Paper

Preparing for JOC: Contractor Perspective

• Do you have the company culture of high performance to succeed in JOC?

• Creating a dedicated team—ability and capacity to match personalities• Small or Special Projects Division

• How do these relationships interface with other divisions (business development, etc.)

• Proactive rather than reactive

• The Soft Skills

• Developing line item estimating capabilities

Preparing for JOC: Contractor Perspective

Considerations that drive the coefficient:

• Contract volume (higher volume = ⇩)

• Geographic dispersion of projects (further apart = ⇧)• Type of work

• Average size and size range of delivery orders

• Three S’s: Supervision, Security, Safety

• Contract Administration Cost

• For RS Means, Division 1 provisions and column used (Bare Costs vs. O&P column)

• UPB used

• Marketing costs

• Look at historic coefficients, but beware of changes that can impact the coefficient!

Bidding the Coefficient: Three Approaches

Unit Price-based Historic Costs

Analyze UPB against historic job costing

Adjust for project size, additional services within JOC, etc.

• Focus on Divisions 2, 9, Mechanical and Electrical?

Project-based Historic Costs

Reconcile 2-3 historic projects where final costs are known against a line item

estimate generated from UPB

• Tests line item estimating capability (lack of thoroughness will skew

estimate low, resulting in too high coefficient)

Program Costs

Calculate total personnel and overhead costs to manage the program,

reconcile with typical project costs and then reconcile unit costs with select

line items

Preparing for JOC: Contractor Perspective

JOC MARKET AND

COMPETITIVE LANDSCAPE

Cost Data Leaders

RS Means Gordian

Ownership Reed Construction Data, publicly traded

company

Warburg Pincus, Private Equity Firm

System Commercial, open source with various

electronic support and consulting options

Turnkey, bundled: typically includes cost data,

software, consulting

Cost Data Commercial, open source Proprietary

“Standardized” “Customized”

National cost basis Local cost basis

Pricing Cost of data format + electronic support +

consulting (optional); Multiple service options

Percentage of volume fee through life of contract

Investment Owner and contractor purchase own software

and support

Software and support provided as part of turnkey

system

Mega-contractors

Dedicated JOC Contractor

Small and Disadvantaged

Business

• Special Projects Arm

• Business Development Component

• Early Adopters

• Specialized Skillset

• Growth Platform

• Setaside Opportunities

Competitive Landscape

Market Opportunities

Market Opportunities

Market Opportunities

JOB ORDER CONTRACTING

PROCESS

Reiterative process providing

for continuous improvement

of results over time

Joint Scope Development

Notice of Work Requirement

Site Visit/Job Walk and

Documentation

Scope Development and Design

Options

Scope and Work Plan

Submission and Approval

Notice of Work RequirementLevel of owner scope preparation varies according to:

• Owner preference and skillset

• Owner people resources available

• When in planning cycle project was identified for JOC

Owner Provides:

Project Need, Target Budget

Owner Provides:

Defined Scope Document

Owner Provides:

Complete Bid Documents

More turnkey, contractor led involvement More proactive owner

Range of Owner Preparation

Site Visit or Job Walk

• Typically within days

• Collaborative Process

• Goal of capturing every necessary component of work

• Tools: photographs, measurement, as-builts

Joint Scope Development

Site Visit Documentation

• Demo / dispose of 3 existing lights Reuse existing circuit

for new lights.

• Remove & replace 2 existing HVAC grilles

• Install gyp ceiling at 8' 8" with 4 new surface mounted

explosion proof lights. Relocate existing smoke detector to

new ceiling

• Demo CMU for 42" opening min. (exist opening +/- 36")

• Demo & dispose of existing metal partitions and replace

with new 4" CMU covered completely with ceramic tile,

with one block scupper at bottom of each

• Remove and reinstall existing 3 urinals and 2

commodes

• Demo ceramic tile, floors and walls, (exist ceramic on walls is

approx. 8'-0" high)

Targeted or Incidental Design

Performed in-house

Included in coefficient

Will engage design professional when needed (line item fee or separate coefficient)

Major building system engineering

Structural

Life-safety

Permitting requirements

Scope and Work Plan Submitted

Presented to owner

for approval

Important

confirmation step for

aligning vision and

expectations prior to

proceeding with

labor-intensive line

item proposal

JOC Proposal Package

Work Order Request or RFP (optional)

Proposal Package

Independent Owner Estimate (optional)

Owner review of proposal including

discussions/alignment

Revisions (if necessary)

Delivery Order/PO issued by Client

Proposal Package

• Generation of the line item estimate

• Assurance of a fair price:

• Are the line items appropriate?

• Are the quantities correct?

• Owner has to understand the process and have faith that it provides competitive value

• No other bids for comparison Paradigm Shift

Project Work Execution

Final Project Schedule

Pre-construction Meetings

Project Safety and QC Plans

Selection of Subcontractors and

Suppliers

Project Management and Site

Supervision

Inspections

Project Closeout and

Documentation

Continuous Warranty Service

JOC Means Superior Project Execution

OWNER AND CONTRACTOR

PERSPECTIVE

Richard Bee

Assistant VP

JOC AT DFW AIRPORT

Outline

• Consultant Selection Process

• Construction Contracting Options

• Project Delivery Methods Used at DFW Airport

• Other Construction Contracting Options

• Construction Contracts ($3K - $50K)

• JOC

52

CONSULTANT SELECTION

PROCESS

Construction in the Airport Environment

• Airport Development and Engineering (ADE) concept implemented in 1991

• ADE Consultants provide Design and Construction Support Services to meet the Board’s objectives

• Airport Board Staff administer and manage the various Projects

• ADE Consultants deliver Professional Services not always available with Airport Board Staff

• Consultants support DFW departments (i.e., Environmental Affairs, Planning, Parking, Concessions, etc.)

CONSTRUCTION

CONTRACTING OPTIONS

Project Delivery Methods Used at DFW Airport

• Competitive Sealed Proposals• Specialty Work

• $0M - $15M

• Design-Bid-Build (Competitive Bidding)• Civil Type Projects

• $1M - $15M

• Construction Manager at Risk (CMR)• Heavy / Extensive Construction

• $10M - $2B

• Design – Build• Only when Needed

• Qualification Based Selections

• Job Order Contracting (JOC)• Interior Facility Work

• Delivery Orders up to $500K without Board Approval

NOTE: Delivery methods may vary from those noted above.

Construction Contracts $3K - $50K

• Requests at least three (3) quotes

• Two (2) from historically under-utilized businesses

(HUBs)

• Two (2) from certified disadvantaged, minority/woman

business enterprise (DMWBEs) if available

• Note: If the two HUBs are also DMWBE certified,

quotes from two additional DMWBEs is not required

Other Construction Contracting Options

Contracts over $50K

• Competitive Sealed Bidding

• Contract awarded to lowest responsive and

responsible bidder

• Competitive Sealed Proposal

• Factors other than price used for selection

• Job Order Contracting

• Used for on call construction services for facilities

• Factors other than just price are used for selection

JOC

JOC

• JOC Contract, current contract amount is not-to-exceed $14,000,000 • Awarded in August 2008, two year contract with (3) one year options

• Centennial Contractors Enterprises, Inc. of Reston, Virginia

• Best Value Selection• Past performance• Proposed Personnel and Project Management Ability• Affirmative Action and M/WBE Participation Plan• Price (coefficient)

• Amount of work issued to date is $10,869,848.88

• 181 projects including: • 272 Delivery Orders (DO) issued

• Average DO amount is $39,962.68

JOC: Top 12 Projects

• Corporate Aviation Facility Renovations, $934,902.85

• SkyLink Elevators Cab Upgrade, $478,304.23

• SkyLink Entry Mats, $382,833.3

• Terminal E Checkpoint Consolidation – Remodel,

$374,079.57

• Terminal E UA Relocation, $340,737.78

• TRIP Office Trailer Modifications, $273,802.07

• Delta Airlines Carpet Replacement, $242,296.53

• Rental of 8 Portable Jet Bridge Cooling Units,

$197,079.08

• Modify RAC Bus Maintenance Facility, $195,303.37

• Speaker Installation for PA/VE in Restrooms Terminals

A, B, C, & E, $188,919.10

• Asbestos Abatement of Sky Chef In-Flight Kitchen,

$177,197.40

• Terminal C Parking Garage C Valet Parking

Enhancements, $176,628.55

JOC: One Owner’s Perspective

• Design for JOC Projects

• DFW lessons learned

• What DFW looks for in a Job Order Contractor

• Value of JOC to DFW

Schedule Comparison at DFW

Soft Costs Comparison

Contractor Perspective

F.H. Paschen

Leo Wright

Vice-President of Job Order

Contracting Division

Introduction

• Leo Wright, Vice-President of Job Order

Contracting Division

• F.H. Paschen

• General Contractor for over 35 years

• Civil

• Building

• JOC

F.H. Paschen and JOC

• First JOC Contract with the USPS in 1986

• JOC Division was formed in 1994

• Past 5 years – Completed over $650 million

• Currently 68 active contracts across the

country

• Clients

• Over 85 professional devoted solely to JOC

JOC Services

• Typical Projects• Building Renovations

• Abatement

• Paving

• Security Upgrades

• Landscaping

• Roof Replacements

• ADA Upgrades

• Station Renovations

• Athletic Fields

• Playgrounds

• Masonry

• Fire Alarm Upgrades

• HVAC

• Concrete

• Elevator/Escalator Installation

• Offices

• Parking Lots

• Painting

Benefits to the Contractor

• Explore different opportunities and expand into

new markets

• Establish relationships

• Steady flow of work

• Manage overhead & efficiency

• Quick turnaround

• Work directly with client on scope

Benefits to the Contractor

• Best value vs. lowest price

• Training tool for employees

• Experience variety of projects and agencies

• Opportunity to choose subcontractors

• Mentoring

• Introduce small contractors to larger markets

• 80-90% of subs are small business ($5 mil or less a year)

Benefits to the Client

• Savings – 10-15% over other delivery methods

• Faster – 75-80% over traditional contracting

methods

• Performance-Based – “On call” services with a

fixed price

• Inclusive – Local vendors and M/W/DBE

compliance

Resources and Skills Needed

• Start-up Costs

• Computers, software, vehicles, equipment, etc.

• The Right Project Manager

• JOC Training

• Safety Training

• Task Catalog

• Software

• Scheduling and Project Management

Challenges

• Start-up Costs

• Financing

• Fluctuation and Volume

• Maintaining work force

• Ex.: School Construction

• Managing Multiple Contracts

• Shifting employees around

Challenges

• Staff Mindset

• JOC vs. Lump Sum

• Small Subcontractors

Sample Project

Marine Safety Station

• Chicago Department of General Services

• January 2004 – August 2005

• Features:

• Historical Renovation

• Concrete Repair

• LEED Certified

Sample Project

MRI Facility

• University of Illinois - Chicago

• February 2012 – May 2012

• Features:

• Machine Replacement

• System Installation

• Chiller Installation

Lessons Learned

• Proper Staff is Key

• Project Manager

• Client Management

• Right mindset for the long haul

• Capable of switching between lump sum and JOC

• Overall Customer Service – Estimating,

Scheduling, Engineering, Communication

• Responsiveness

IN CONCLUSION

The Future of JOC

• Emphasis on Pricing Transparency

• Integration Across the Building Lifecycle

• Technology Changes:

• Building Information Modeling

• Cost Databases and Estimating Approaches will further

evolve to reveal lifecycle costs

• “Greater Good” goals

• Small and disadvantaged business utilization

• Sustainability

My favorite “JOC of the Future” blog:

http://buildinginformationmanagement.wordpress.com/about/

JOC Resources• Center for Job Order Contracting Excellence—

professional association

www.jocexcellence.org

• Lisa Cooley Associates, LLC—JOC implementation, training, line item estimating and estimate review

www.lisacooleyassociates.com

• RS Means—Unit Price Books, data customization, Training, JOC Consulting

http://www.reedconstructiondata.com/market-intelligence/job-order-contracting/

• 4clicks—Estimating software for JOC programs, training on software and line item estimating

www.4clicks.com

• The Gordian Group—Turnkey JOC Programs

www.gordian-group.com

• Alliance for Construction Excellence, ASU—JOC certification program

www.ace4aec.com

Lisa Cooley

505-239-3446

lisa@lisacooleyassociates.com

Purchasing

Cooperatives with Job

Order Contracts

TCPN

www.tcpn.org

National Joint Powers

Association

www.njpacoop.org

Mohave Educational

Services (Arizona)

www.mesc.org

Cooperative Educational

Services (New Mexico)

www.ces.org

E and I

www.eandi.org