Job Order Contracting: Understanding the Method

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Job Order ContractingUnderstanding the Method
RS Means
1 Question? How do I know I am getting the best
value with JOC?
JOC RS Means
December 2009
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Overview

• For nearly a decade, Mohave Educational Services
  Cooperative and its Job Order Contracts have been
  meeting the needs of Arizona schools, cities,
  counties, and other entities
• In fact, meeting the needs to the tune of over
  150 million in completed projects (with no
  litigation and virtually no vendor change orders)
• For the past several years, members and others
  have heard many comments about the
  cost-effectiveness of RS Means JOC
• After several years of educating Mohave members
  on our JOC contracts, the number one question
  remains?
• How do I know I am getting the
• best value with JOC?

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How do I know?

• Across the country, and in fact the world, Job
  Order Contracting or JOC continues to gain favor
• The skeptics who argue that I bid everything
  are realizing they have missed some valuable time
  savings and partnerships
• To truly understand JOC, you must first
  understand the differences between DBB and JOC
• Understand the differences,
• you will understand
• the value of JOC!

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JOC vs DBB The Major Differences

• JOC is collaborative DBB is confrontational
• JOC is a partnership DBB is traditional
  owner-customer
• JOC using RS Means is knowing exactly what you
  will pay DBB is more guesswork
• JOC is about knowing exactly when your project
  will be completed DBB is about knowing your
  project will be completed, but not sure when and
  with how many change orders
• JOC is certainty DBB is uncertainty
• JOC is win-win DBB is someone wins
• and someone loses

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Exactly What is JOC?

• Job Order Contracting or JOC is an Alternative
  Delivery Procurement Method authorized by the
  Arizona legislature in the early 2000s
• JOC is primarily intended for and used for
  renovations, repairs, and remodels (although some
  minor new construction may be completed)
• JOC and other ADPMs set win-win relationships
  between qualifications selected contractors and
  their customers
• When time, budget, and value engineering are
  important, JOC should be considered!
• Not all JOC contracts are
• the same!

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• JOC Types of Projects
• Any renovation, repair, replace or minor
  construction project that is operating under
  pressure due to time, budget constraints and/or
  lack of dependable resources
• Minor construction projects (generally under 1
  Million)
• HVAC and Electrical
• Routine repairs
• Renovations of all types
• Upgrades to ADA standards
• Emergency repairs
• Site work and utilities
• Parks and playgrounds
• Upgrade landscaping
• Classroom additions
• Classroom labs
• Complete new buildings
• Replace flooring
• GREEN enhancements
• And, more

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What is JOC is not!

• It is not for every minor renovation, repair, and
  remodel
• Quality JOC contractors will help advise what
  method of procurement may be better suited for
  your project
• In general, new construction and projects over
  3M are better done via other procurement or ADM
  methods
• When time, budget, and value are scored in the
  decision process, JOC is often the best tool to
  get work done

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Understanding Mohaves JOC Award

• In the past several years, more Arizona entities
  have negotiated their own JOC awards
• In nearly every case, these new awards are
  different from each other in several key areas
  which should be reviewed closely
• Coefficients are applied to varying data columns
  in RS Means
• Some awards allow for billing of certain
  categories that are not chargeable with the
  Mohave contract
• As with all Mohave contracts, members and anyone
  else may download the complete Mohave JOC
  solicitations from our website at www.mesc.org

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Now what?

• To truly understand the differences between JOC
  and DBB, we are going to walk you through a Case
  Study and then we will look at RS Means in more
  detail
• After that, we will look at some more specific
  Cases and then conclude with some final questions
  to ask yourself before deciding if JOC is right
  for your next project

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Case Study

• The following case is meant to show the value of
  the method of JOC
• In some cases, JOC is less expensive than
  design-build in other cases, it is not
• The important question to be answered by the
  decision maker is the following
• In-house, Bid, or JOC?
• What goes into that decision?

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• Case Study 1 - Actual Mohave Delivery Order
• Owner had formal design completed for rebuild on
  an existing athletic field.
• Project was bid and prices came in 10 over the
  estimate.
• Owner asked Mohave JOC contractor to price the
  job.
• Contractor priced the job per plans and
  specifications.
• Contractors price included required work that
  was missing from the plans and specifications.
• Owner awarded the project to the JOC contractor
  and included contingency.
• Project was completed on time with no change
  orders and contractor returned the contingency.
• Time saved 10 weeks
• Money saved 74,350

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Case Study 1 Data Analysis

• Design was done under separate contract as part
  of the DBB project. Design could have been done
  under the Mohave JOC professional services or may
  have been eliminated under Mohave JOC.
• Low bid.
• Price proposal developed from the UPB and
  coefficient.
• During the JOC scoping session, additional
  work was
• identified that was missing from the
  specifications.
• This would be a change order under DBB.

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More on the Method RS Means

• JOC is a multi-step process (as many as 10-steps)
• RS Means is the cost estimating component of one
  of the steps
• Sample cost estimate
• How RS Means differs from Bid piece of paper
  estimate

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Step 1

• The JOC Process
• The Reality--A 10-Step Process
• Step 1 Initial Request
• Step 2 Scoping Session
• Step 3 Scoping Confirmation
• Step 4 Estimate Preparation
• Step 5 Plan the Job
• Step 6 The Actual Construction
• Step 7 Updates
• Step 8 Final Inspection
• Step 9 Close Out
• Step 10 Warranty Issues

Step 10
Note Steps 1-5 are what makes JOC so much
different than DBB
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JOC Steps 1 through 3

• Step 1 Initial Request
• Step 2 Scoping Session
• Step 3 Scoping Confirmation

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• Step 4 Estimate Preparation
• Determine quantities of work.
• Build the estimate from the UPB.
• Summarize the estimate and apply coefficient.
• Apply city cost index.
• Apply applicable bond, permit taxes.

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Step 4 (Continued) Estimate Preparation
Quantity
CSI
Unit Cost w/OH P
Apply City Cost Index
RS Means Index
Apply Coefficient
Tax
Bonds
Total Cost
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Step 5 Plan the Job (Prepare a schedule)
Plan the Work... Work the Plan
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No Surprises!

• Step 6 The Actual Construction
• Step 7 Updates
• Step 8 Final Inspection
• Step 9 Close Out
• Step 10 Warranty Issues

The easy stuff!
Who will fix?
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Mohave Cast Study 2 Renovation JOC

• RS Means

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Mohave Cast Study 3 HVAC JOC

• RS Means

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Mohave Cast Study 4 Fencing JOC

• RS Means not used for Mohave JOC

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• Case Study 5 - Mohave JOC 35-Month Summary
• (Nov 2005 Oct 2008)
• Mohaves general construction JOC contractors
  completed more than 1,000 projects over the
  35-month period.
• Actual DBB costs for the projects are unknown
  however, DBB costs can be approximated by using
  factors and estimates from practitioners or other
  studies.
• Comparison of DBB and JOC requires total cost
  (construction soft costs).
• Comparison of DBB and JOC requires final cost,
  rather than initial bid price.
• Cost comparison of DBB and JOC is insufficient
  because it fails to include a comparison of time.
  
• Owners saved (avoided) significant total project
  time. However, it is difficult to assign a
  dollar value to time savings.
• Study data substantiates the savings resulting
  from JOC. However, JOC is not the answer for all
  construction.

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Case Study 5 Explanatory Notes
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So, did I get the best value?

• DBB (look at your last comparable DBB)
• How long was my solicitation process?
• Was I satisfied with the vendors who responded?
• Was there a Bid protest?
• Did my project get done without any change
  orders?
• Was there any litigation?
• Did awarded vendor provide any value engineering?
• Was my project done on
• time and on budget?

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So, will I get better a value with JOC?

• How long will my solicitation process be? 0 days
• Am I satisfied with the vendors who are
  available? YES
• Will there be a Bid protest? NO
• Will my project get done without any change
  orders? YES
• Will there be any litigation? NO
• Will my selected vendor provide any value
  engineering? YES
• Will my project done on
• time and on budget? YES

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Making a Successful JOC!

• Ensure the project is funded or that funding is
  readily available
• Owners representative must understand JOC
• Not simply another price quote for the work
• Not a free estimating service
• Owner still has a lot involvement in the job
• Allow adequate time for the process
• Contractor invests a lot of front end effort
• Owner can expect excellent execution of the work
• JOC eliminates most change orders
• Ensure that all owner contractor stakeholders
  have had sufficient input into the job
• Ensure owner contractor consensus on scope,
  schedule and cost
• Owner contractor must each holdup its end of
  the bargain
• Successful JOC is a non-adversarial relationship

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Summary

• JOC is one of the fastest growing construction
  procurement methods in the world
• Value is created from the startqualifications
  based selectioncontinued throughout
• When all construction factors are considered,
  such as budget, time, quality, etc., JOC provides
  an excellent value
• Ask the questions, ask the experts, consider JOC
  for your next project

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• Thank you for your attendance today
• Please complete the presentation questionnaire
• Questions may be directed to Mark Kinsey at
  Mohave or any of the Mohave awarded JOC vendors

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• Training Development Team
• Bel-Aire Mechanical (Specialty)
• Browns Fence (Fence Contractor)
• Centennial (General Contractor)
• Parsons (General Contractor)
• Phoenix Fence (Fence Contractor)
• Pueblo Mechanical (Specialty)
• SDB, Inc (General Contractor)

Note Please feel free to contact any of the
presenters directly with any questions regarding
JOC.