1. 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
2. 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.
5. 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
6. 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
8. 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
9. 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
10. Different JOC contracts judged
based on a variety of performance
factors:
Overall Satisfaction:
History of JOC: Results
0% 25% 50% 75% 100%
Non-Partnered/Low
Bid
Non-partnered/Best
Value Selection
Partnered/Best Value
Selection
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.
11. 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
12. 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?”
*
13. 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.
15. 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.
17. 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
18. 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.
19. 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.
20. JOC is about Performance!
Faster Delivery of Projects
Overall Higher Quality
Fewer Change Orders
Fewer Warranty Issues
Maximizing construction
budgets
22. 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
23. Delivery Order Pricing
Delivery orders are firm fixed price,
lump sum
UPB 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
24. 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
25. 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
26. 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
27. 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
28. 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 year
Source: RS Means White Paper
29. 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
30. 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!
31. 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
33. 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
40. 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
41. Notice of Work Requirement
Level 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
42. Site Visit or Job Walk
• Typically within
days
• Collaborative
Process
• Goal of
capturing every
necessary
component of
work
• Tools:
photographs,
measurement,
as-builts
43. 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)
44. 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
45. 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
46. 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
47. 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
48. 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
52. Outline
• Consultant Selection Process
• Construction Contracting Options
• Project Delivery Methods Used at DFW Airport
• Other Construction Contracting Options
• Construction Contracts ($3K - $50K)
• JOC
52
54. 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.)
56. 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.
57. 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
58. 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
60. 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
61. 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
62. 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
66. Introduction
• Leo Wright, Vice-President of Job Order
Contracting Division
• F.H. Paschen
• General Contractor for over 35 years
• Civil
• Building
• JOC
67. 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
69. 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
70. 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)
71. 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
72. 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
73. Challenges
• Start-up Costs
• Financing
• Fluctuation and Volume
• Maintaining work force
• Ex.: School Construction
• Managing Multiple Contracts
• Shifting employees around
75. Sample Project
Marine Safety Station
• Chicago Department of General Services
• January 2004 – August 2005
• Features:
• Historical Renovation
• Concrete Repair
• LEED Certified
76. Sample Project
MRI Facility
• University of Illinois - Chicago
• February 2012 – May 2012
• Features:
• Machine Replacement
• System Installation
• Chiller Installation
77. 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
79. 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/
80. 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
