By May 20, 2010 Read More →

Time to Consider Job Order Contracting

Job Order Contracting makes the scoping phase of a construction job simpler for all parties, says a principal with Wilson Architectural Group in Texas.

By Debbi Mulcahy

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 there are various sizes and shapes of tools to complete certain tasks (e.g. claw hammer, mallet and sledge hammer) there are various construction methods, each with their pros and cons, depending on the type, size and complexity of each project.

A design professional takes an owner’s ideas and concepts and transform them into a two, three, or four dimensional document that will enable a contractor to build, create, or renovate to reach the desired end-result.

Archaic Methods
The typical and could be described archaic method used to reach a completed construction project has been design-bid-build. This method, simplistically, provides for a three-step process:

  1. A design professional completing the project design, based on conversations and site inspections with the owner.
  2. The design professional and/or owner developing formal construction specifications referencing the drawings.
  3. Placing the plans and specifications, along with formal documents out to bid with the goal of obtaining the lowest price, and a contractor qualified to complete the project.

As one would not use a sledge hammer to attach crown molding, why then utilize a construction delivery method that may not be ideally suited for the project(s) needing completed? Both an 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.

One may think that “price” and “cost” are the same, but slight variations in their definitions and the way an owner handles each can result in a greater expense in the end. While price can be seen as the bottom-line dollar figure paid for the result, one must look at the intrinsic items included in the actual cost of completing a task and question if there are alternative ways to reach the end that may in fact reduce overall expenditures.

Relationships are Key
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 those intrinsic costs, but create an atmosphere in which each party is treated with respect. Negative relationships can lead to distrust and disdain for the others 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 possibly 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 the flexibility to design the end product as needed, but when the project involves renovating or rehabilitating existing space, many unknowns may occur that can not entirely or justifiable be captured during the design phase.

If you were able to obtain the desired results; a happy and satisfied owner, a project completed on time and within budget and be able to reduce your time and effort wouldn’t it be wise to look at an alternative delivery method?

Job Order Costing Relatively Unknown
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 and supported through the Design-Build Institute of America, but another performance-based delivery method, Job Order Contracting is still relatively unknown, even though it has been used for over 20 years throughout the US.

Where Design-Build is making strong in-roads with new construction, Job Order Contracting is more ideally suited for renovation, rehabilitation and repair projects. Advantages and benefits working under Job Order Contracting include the ability to work and communicate with the contractor and owner 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 level of expectation. The expectation and understanding of the final product, up front, will ensure a successful project.

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 by having a contractor that is familiar with an owner’s building systems and standards; therefore providing possible savings in time and money.

Although communication and familiarity is important, the quality of the contractor is as equally important. If the contractor doesn’t have the skills, ability or fully understands 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, utilize a unit price book to develop a line item price for the owner, and be willing to openly discuss the entire process.

Skeptics of Job Order Contracting tend to say that the delivery method is more expensive then traditional means, but they typically overlook the reduced 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, especially the cost of owner-initiated change orders which 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 is a result of key attributes of this alternative delivery method, which include:

  1. The design professional, contractor and owner working and communicating in an open forum, up front during the project development and scoping stage,
  2. Providing targeted design, based on the skill of the Job Order Contractor,
  3. Expediting the start and completion of multiple projects without being bogged down in the normal procurement process, and probably the most important,
  4. Communicating with the contractor prior to a notice to proceed and even reviewing project design and thinking to gain their experience and thoughts in how to best complete a project.

Through Job Order Contracting, the design professional can reduce the time required to prepare plans for projects, work collaboratively with the owner and Job Order Contractor to complete a project on time and to the pre-established budget.

About the Author
Debbi Mulcahy is a Principal of the firm with 19 years at Wilson Architectural Group and is a registered Interior Designer in the State of Texas. She has experience with Job Order Contract, in both private and public sectors.

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Posted in: AEC/Geo, Featured

About the Author:

Randall S. Newton is Managing Editor of GraphicSpeak. He has been writing about engineering and design technologies for more than 25 years.

3 Comments on "Time to Consider Job Order Contracting"

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  1. I like the way this article focuses on the results of JOC and the importance of the design professional. Well written. Cost should always be an important factor because we must be good stewards of the public’s money. JOC should result in lower construction cost in addition to savings in other areas because of volume buying. When the construction costs of JOC are excessive, it’s time to look for a different JOC system. The high cost of construction under some JOC systems are rationalized with savings during other phases. There is no rationalization necessary when you are also saving on construction. It is possible with the right JOC system.

  2. Anthony J Bianchi Jr., R.A. says:

    As the manager of a Job Order Contracting program I am pleased to see a JOC’s article that also addresses the “perceived” higher cost of JOC’s and points out the cost savings the programs can provide. For our program we require our contractors to ask any and all questions about document and/or scope ambiguities before submitting a proposal. We also require them to make a site visit. This results in what appears to be a “higher” initial cost when compared to traditional bidding because these costs are then included in the initial proposal and not added later as a change order. On the other end, in the 10+ years our program has been in existence we have virtually never had a Supplemental Job Order for document interpretation and we have about half the field condition changes when compared to our regular bid process. These two factors alone make our construction cost competitive with traditional bidding.

  3. Great write up and it is super to see someone from the A&E side of the industry talk about Job Order Contracting. For too long there has been a misunderstanding that a Job Order Contracting program is at odds with A&E firms and objectives. JOC allows for greater collaboration, improved communications and better end results for all involved. One additional point to consider is the increasing demand in public funded facilities and construction to move towards sustainability in both new and existing buildings. The Green Building Council has discussed the need for greater upfront collaboration, interaction and clear goals of any suitability projects by the owners, the designers, the constructors, the subcontractors and even the building/facility end users. Very few public procurement contracting methods allow for this necessary dialogue like job order contracting and/or design-build. For more information on job order contracting people should look at the industry website, http://www.JOCexcellence.org