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Job Order Contracting Is A Relationship Business


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We forget sometimes that construction in the end is about people working together for a common goal and end result. This article by Carl DeVilbiss gives some thinking on the topic worth reading.

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Job Order Contracting Is A Relationship Business

  1. 1. CJE Newsletter December 2005 JOC Contracting is a Relationship Business Carl E. DeVilbiss, PE1 When Lesson Number One: Don’t Assume! I facilitated my first JOC Partnering session 13 years ago, I was intrigued with the prospects of JOC as a contract vehicle. Never once have I entered a room where everyone said “I got what I expected.” But did everyone involved know what was expected? The need for clear and expressed expectations begins in the early planning stages of any JOC program. There is a big difference between a clearly stated, well-communicated objective and an unexpressed expectation. All parties to a JOC need to take the time to carefully discuss and share their expectations of the working relationship. Ask questions like “What exactly are we trying to achieve with this contract?” “Should a JOC Delivery Order be the same price as equivalent work done by lump sum bid?” “What is the project delivery process? Is it clearly modeled and communicated to all parties?” “Who is doing what? Are all roles and responsibilities clearly defined and does everyone understand them?” “What does success look like to all of us together?” My experience as a structural designer, subcontractor, general contractor, construction manager, and owner’s agent, plus my training in buying design and construction services for the U.S. Navy as a Navy Reserve Civil Engineer Corps officer was a perfect fit. JOC made sense to me then. It makes sense to me now. JOC allows you to build a long-term relationship that expedites project development within a pre-determined pricing process. The customer and contractor work together to develop project scopes and then agree upon a fair and reasonable price. From my perspective, it is a very effective way to perform repair, renovation, and minor construction work. Lesson Number Two: JOC is a Program, not a Project. But it takes work to make it work. As one JOC Partnering workshop grew into another, and then into several dozen, I saw clear patterns of issues that challenged success across all types of customers. None of them involved primarily technical aspects of construction. The issues that surfaced in my JOC Partnering workshops were invariably relationshipbased. Trust was the “biggie.” One battle cry was “You bid a low coefficient, so you’re padding your estimates to make up for it.” Another oft-heard question was “We have a Unit Price Book, so why do you wait for subcontractor bids?” Then there was “The contract says ten days for proposals, but you take longer.” Invariably these misunderstandings were based on unclear or unexpressed expectations, miscommunication, and/or an inability or unwillingness to resolve conflict. By the very nature of JOC, some Delivery Orders will be “winners” and some will be “losers” for both the customer and the contractor. It is very important to recognize the need to evaluate the overall program, not simply specific projects. The customer is buying from a JOC contractor much more than just the direct and indirect costs of putting a project’s work in place. Additional services include incidental design, value engineering, scope development and control, alternatives evaluation, constructability review, emergency response, and many others. It is a mistake to try to evaluate the cost effectiveness of JOC by scrutinizing specific projects instead of stepping back and looking at the global relationship to see the total value of all that is going on. It became very apparent to me that JOC is a Relationship Business. I’d like to share a few lessons I’ve learned that will help any Relationship Business find the path to success. 1 Lesson Number Three: Tell the truth. Construction is a complex challenge fraught with unexpected conditions. In all parties’ parts, it is President, Aegis Building Concepts, Inc., Nashville, TN., (615) 604-0929, 3
  2. 2. CJE Newsletter December 2005 inevitable that glitches will occur that will impede progress. Everyone wants to please others who rely upon their performance, so there is a tendency to tell people what they want to hear. Please recognize that any misrepresentation about a problem leads to doubt and suspicion about other issues. Good partners working in productive relationships tell each other what is going on. Be clear in expressing expectations. But when things don’t go as expected, be courageous, communicate the problem, and work together to deal with it to avoid the perception of deception. actually fear of loss. People tend to be driven more by a concern for negative consequences than by a desire to take advantage of someone else. By remembering this and by staying focused on build-ing trust through honesty, it is pos-sible to cultivate faith in one another and in the process of cooperation. When one party has a concern, address it openly and have faith in the other party that you can work together to achieve a win/win outcome. Commit yourselves to one another and then have faith – in yourself, in your partner, and in the process. Lesson Number Four: Help each other. There is a tendency in all kinds of relationships to believe that the other party is “supposed” to know what you need. Yet people are different and organizations are different. What worked well with one customer or contractor, may not work well with another. Just as with expectations, it is most productive to take time to share with each other what you need in order to be able to perform your part most effectively. The most common issue that comes to mind is a clear, mutually agreed upon Scope of Work (SOW) for a Delivery Order. Both the customer and contractor have certain specific needs in order for the SOW to be clear. Take time to identify those needs to each other so that you can work together to get them all met. And the Winner Is: Everyone! Job Order Contracting is much more than construction, it is relationship business. By entering into a JOC, customers are looking for solutions to problems. Generally, they are seeking to expedite project delivery, lessen administrative overhead, and satisfy facility users more effectively. Construction work will get done one way or another. The beauty of JOC is that it provides a structure within which to cultivate a long-term win/win relationship for suitable projects. Yet as with any longterm relationship, it doesn’t happen spontaneously. All parties can and must work together to develop and nurture effective relationships that serve the best interests of all. In essence, you work together to produce the same kind of high quality outcomes in the relationship that you strive to achieve with the technical work of construction. A 19th century industrialist named John Ruskin said it well: Lesson Number Five: Deal with issues quickly. Unresolved conflicts build stress and challenge trust. Senior managers in all organizations involved in a JOC need to make a commitment to confront and deal with all issues or conflicts quickly. Because of the long-term nature of the relationship and the multiple project nature of the work, unresolved conflict has a compounding effect. Any issue not dealt with today will affect work tomorrow and every day thereafter until it is resolved. What I have found to be the most productive approach is to take time on the front end to agree upon a consensus Conflict Resolution Process. Actually write down a stepby-step process for dealing with issues and putting them to bed. And then use the process religiously. “Quality is never an accident. It is always the result of high intention, sincere effort, intelligent direction, and skillful execution. It represents the wise choice of many alternatives.” We all have alternatives in the way we interact and conduct our relationships. In JOC contracting, it is prudent to choose alternatives that encourage productive, mutually supportive relationships that result in win/win outcomes. Lesson Number Six: Have Faith! This may sound trite to some, but it is important. Over time, I have found that what often looks like greed is 4