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With or without the participation of an architect/engineer, job order contracting can save significant time vs. traditional design-bid-build. Image courtesy of the author.
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As facility owners look for ways to reduce construction costs, they must first analyze the delivery methods they use to obtain construction services. Just as various sizes and shapes of tools are available to complete certain tasks (for instance, a claw hammer vs. a mallet vs. a sledge hammer), various construction methods are available, each with pros and cons, depending on the type, size and complexity of each project.
Job order contracting is a delivery method that can suit some jobs much better than conventional design-bid-build, particularly if the job involves a routine or minor renovation/rehab/repair (or, more likely, a series of such projects) rather than a major new construction or large-scale renovation project. In its emphasis on early-stage cooperation by the contractor, it bears some resemblance to integrated project delivery, which is gaining popularity, particularly for new projects.
In most building projects, a design professional takes an owner’s ideas and concepts and transforms them into a 2-, 3-, or 4-dimensional document that will enable a contractor to build, create or renovate to reach the desired end result. The typical—and possibly archaic—method used to reach a completed construction project has been design-bid-build. This method, described simplistically, provides for a three-step process:
- A design professional completes the project design, based on conversations and site inspections with the owner.
- The design professional and/or owner develops formal construction specifications referencing the drawings.
- The plans and specifications, along with formal documents, are placed out to bid with the goal of obtaining the lowest price from a qualified contractor.
In the world of new construction, design-build and construction manager at risk have come to the forefront as ways to help reduce overall cost and create a respectful relationship between the owner, architect and contractor. Much has been written on design-build, a method supported through the Design-Build Institute of America. Job order contracting, which is also a performance-based delivery method, is still relatively unknown, even though it has been used for over 20 years throughout the U.S.
Job order contracting is a markedly different way of working than design-bid-build. According to the Center for Job Order Contracting Excellence (www.jocexcellence.org), job order contracting involves using long-term IDIQ (indefinite delivery, indefinite quantity) contracts for construction services delivered on an on-call basis through firm, fixed-price delivery orders based on pre-established unit prices. Large organizations, and/or organizations with large facilities, may do certain tasks or types of construction work repeatedly; with JOC, each task does not have to be initiated from scratch. Preset unit pricing for common tasks, from painting to door or window replacement, can simplify costing for the duration of the contract.
Similar to an integrated project delivery (IPD) approach, but more tailored to smaller-scale or repetitive work, job order contracting is based on the collaborative nature of all parties involved (owner, architect/engineer, end user, JOC contractor, sub-contractors, etc). In the 2007 AIA California Council and McGraw Hill white paper, “IPD a Working Definition,” IPD is described as “a project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and optimize efficiency through all phases of design, fabrication and construction…. Integrated Project Delivery is built on collaboration. As a result, it can only be successful if the participants share and apply common values and goals.”
The drive toward shared values, goals and information is common to both IPD and JOC. As one would not use a sledge hammer to attach crown molding, why use a construction delivery method that may not be ideally suited for the project(s)? Both the owner and the design professional need to identify the best solution to meet their construction needs, by looking at the price and the actual cost to complete.
Price vs. cost
One may think that “price” and “cost” are the same thing, but slight variations in their definitions and the way an owner handles each can result in a greater expense in the end.
Webster’s Unabridged Dictionary defines “price” this way: “The sum or amount of money at which a thing is valued, or the value which a seller sets on his goods in market; that for which something is bought or sold, or offered for sale; equivalent in money or other means of exchange; current value or rate paid or demanded in market or in barter; cost.
“Cost,” however, is defined as follows: “1) An amount paid or required in payment for a purchase; a price. 2) The expenditure of something, such as time or labor, necessary for the attainment of a goal.”
Thus “price” can be seen as the bottom-line dollar figure paid for the result, but the actual cost of completing a task can involve many variables that don’t show up in this number. The team should question if there are alternative ways to reach the end that may in fact reduce overall expenditures.
Relationship issues
Even more pressing than the cost of a project is the working relationship between the owner, design professional and contractor. A positive relationship will not only help reduce intrinsic costs, but create a pleasant atmosphere in which each party is treated with respect. Negative relationships can lead to distrust and disdain among the varied parties involved, which can lead to additional expenses such as law suits and false claims.
It is the owner’s responsibility to obtain construction services that result in quality work, being completed as safely as possible and at a fair and reasonable price. Both the design professional and the contractor have a responsibility to the owner and their bottom line to complete projects on time, with the highest quality, as safely as possible and at a fair and reasonable price.
Although used by most owners and design professionals, design-bid-build doesn’t allow for up-front discussion and understanding by all parties and thus can promote discontent, misunderstandings, distrust and delays, which can lead to higher procurement costs and change orders that result in a higher total cost of the project to the owner. When design-bid-build is used for new construction, both the owner and design professional have at least some flexibility to design the end product as needed. However, when the project involves renovating or rehabilitating existing space, many unknowns may occur that cannot feasibly be predicted and dealt with during the design phase.
Unique advantages of JOC
Advantages and benefits working under job order contracting include the ability of the owner, designer and contractor to work and communicate in an open forum, discussing the needs of the project, while providing targeted design for that project. This gives all parties a point of reference and an agreed-upon level of expectation.
Another benefit is the contractor’s familiarity with the owner’s building systems and standards. The effort and amount of man hours to document design intent can be simplified if the contractor is already familiar with an owner’s facilities and preferences, providing possible savings in time and money.
Although communication and familiarity are important, the quality of the contractor is as equally important. If the contractor doesn’t have the appropriate skills and abilities, or fully understand how a job order contract works, the end result could be very disappointing. The contractor should be able to create and construct with limited design, provide feedback as to the best way to execute a plan, use a unit price book to develop a line item price for the owner, and be willing to openly discuss the entire process.
Skeptics of JOC tend to say that the delivery method is more expensive then traditional means, but they typically overlook the savings on the design side, where targeted plans are developed compared to more in-depth specifications, and the reduction in total procurement costs, since multiple projects can be placed through the term of the contract.
Additionally, owners normally don’t consider the cost of change orders, whether contractor- or owner-initiated, when comparing the total price of a project. In particular, the cost of owner-initiated change orders will not be as transparent as a change order that utilizes the pre-established line items in the unit price book of a job order contract.
The ease of working on a job order contracting renovation project for the design professional, the success of the contractor, and satisfaction of the owner are a result of key attributes of this alternative delivery method, which include:
- The design professional, contractor and owner work and communicate in an open forum, up front during the project development and scoping stage.
- Targeted design is achieved, based on the skill of the job order contractor.
- The start and completion of multiple projects can be expedited without being bogged down in the normal procurement process.
- The contractor is part of the project dialogue before a notice to proceed, and even reviews project design and strategies to offer input on how to best complete the job.
If you were able to obtain the desired results—a happy and satisfied owner, a project completed on time and within budget, at reduced time and effort—wouldn’t it be wise to look at an alternative delivery method?
Through job order contracting, the design professional can reduce the time required to prepare plans for projects, working collaboratively with the owner and job order contractor to complete a project on time and to the pre-established budget.
Debbi Mulcahy is a principal of the firm with 19 years at Wilson Architectural Group, Houston (www.wilsonargroup.com). She is a registered interior designer in the state of Texas. Mulcahy has experience with job order contracting, in both private and public sectors.
Published in Laboratory Design newsletter: Vol. 15, No. 9, September, 2010
