Key Points:
- Instead of asking contractors to submit one bid on one project, Job Order Contracting asks contractors to submit one bid, in the form of an Adjustment Factor, for many projects.
- Gordian Job Order Contracts require organizations to solicit multiple Adjustment Factors that cover a wide range of construction scenarios.
- For the most part, these Adjustment Factors cover non-standard hours and environments, like hospitals or correctional facilities.
Used to complete over 40,000 projects every year, Gordian’s Job Order Contracting (JOC) is a popular construction project delivery method in North America, particularly among the public sector. However, when it comes to solicitation and bidding, JOC is a unique animal.
Here’s why: Instead of soliciting individual bids for individual projects, with Gordian JOC, owners ask contractors to bid a multiplier called an Adjustment Factor on a Construction Task Catalog®, a rigorously researched and granular book of construction tasks priced specifically for the local market and used to price any project completed under the Job Order Contract. In other words, owners solicit bids on projects that do not yet exist.
At an elementary level, that’s all owners and contractors need to know about Adjustment Factors. But construction doesn’t operate at an elementary level. In practice, owners ask contractors bidding Gordian JOC programs to submit multiple Adjustment Factors. Let’s examine those Adjustment Factors and why they are necessary.
First, a brief refresher.
What is an Adjustment Factor?
An Adjustment Factor is a multiplier or a coefficient applied to Gordian’s Construction Task Catalog, or CTC, which contractors use to identify the necessary line items to build a Price Proposal for each project completed under the JOC contract.
Most Adjustment Factors fall between 0.80 and 1.20, meaning they may increase or decrease the costs listed in the CTC. In effect, by applying an Adjustment Factor, a contractor is saying, “This is how much I need to be paid for these tasks to turn a profit.”
What Costs Should Be Included in an Adjustment Factor?
In order for a contractor to be paid fair wages for the project’s market, an Adjustment Factor should include all direct and indirect costs not included in the CTC’s preset prices, plus the contractor’s overhead and profit. Subcontractor overhead and profit should be factored in as well.
Business costs to include in a competitive Adjustment Factor:
- Insurance, bonds and indemnification
- Supervision
- Project Management
- Site superintendence
- Office management and equipment
- Business risks such as a lower-than-expected volume of work, smaller-than-anticipated job orders and material cost fluctuations
- Regulatory compliance, including permitting and reporting
- Security requirements
- Vehicles and gas
- Chemical toilets
- Gang Boxes
- Storage containers
This list is just a sample, and it does not include everything a contractor should include in an Adjustment Factor. It’s a lot to think about. That’s why Gordian trains project owners and contractors in JOC best practices, including understanding Adjustment Factors.
Adjustment Factors Required in Gordian JOC Bids
Now that we’ve established what an Adjustment Factor is and what costs it includes, let’s discuss the Adjustment Factors owners should expect to solicit from contractors and why they are different.
Normal Working Hours, Non-Acute Environment: For most organizations, this will represent the bulk of their JOC work. This Adjustment Factor is used for standard projects, completed between 7 a.m. and 4 p.m., Monday through Friday in sites that do not require special procedures, certifications, etc.
This is the baseline Adjustment Factor, the one that contractors will use the most often.
Outside Normal Working Hours, Non-Acute Environment: Think night and weekend work in standard environments. This Adjustment Factor applies to work done between 4 p.m. and 7 a.m. Monday through Friday, and all day on Saturday, Sunday and Holidays.
This Adjustment Factor will be higher than the previous one to account for overnight, weekend and holiday pay.
Normal Working Hours, Acute Environment: This Adjustment Factor is for work done during the typical construction schedule, but in an atypical construction environment. Largely, this applies to sensitive areas like hospital and medical facilities, like this Jackson Health lobby expansion, or those requiring special certifications and/or extra safety protocols, like correctional facilities.
This Adjustment Factor will be higher than the previous ones to cover the costs of specialized training, licenses and certifications, plus any extra precautions and protocols.
Outside Normal Working Hours, Acute Environment: Used exclusively for work done both on an atypical construction schedule and in an atypical construction environment.
This seldom used Adjustment Factor will be higher than the previous ones because they require extra training and licensure and take place at night and/or holidays and/or weekends.
Non-Prepriced Items: Gordian’s Construction Task Catalog is incredibly thorough, containing over 275,000 unit line items added over our decades of experience implementing JOC programs and overseeing JOC projects. However, there are rare occasions, such as a recent elevator repair at a Broward County, Florida library, where it is necessary to complete construction tasks not listed in the CTC.
This is the highest Adjustment Factor, as it is unknown what training and/or expertise the Non-Prepriced item requires.
Learn more about adding Non-Prepriced items to Job Order Contracting projects.
Gordian requires these Adjustment Factors in every JOC solicitation to account for all construction scenarios an owner may face and to ensure contractors are properly compensated for working in those scenarios. By asking for these Adjustment Factors upfront, organizations maximize both the flexibility and the utility of their Job Order Contracting programs.
