Construction Procurement: Job Order Contracting Basics

Whether you’re tackling repairs, deferred maintenance, renovations or new construction, you face countless challenges. These challenges include controlling costs, change orders and claims, project delays, schedule overruns, poor construction quality and limited staff or resources. But, before you can even start to build, there’s the construction proposal and procurement process, which is often longer, more expensive and more challenging than you ever planned.

A Construction Procurement Method Forged from Necessity

Each construction project is unique in its own way; there’s no perfect “one size fits all” approach to getting projects done. This is exactly why Job Order Contracting (JOC) was created. Back in 1982, Gordian’s founder, Harry H. Mellon, had the same challenges construction professionals face today. To overcome those challenges, it was necessary for him to invent JOC.

Harry had just started working as the Chief Engineer for NATO at the Supreme Headquarters Allied Powers Europe (SHAPE) in Belgium. He was responsible for maintaining a large number of facilities and it was taking him forever to get things done using traditional construction contracting methods.

Harry H. Mellon worked for NATO at SHAPE in Belgium.

Harry says, “All of those projects required a great deal of time through the traditional design-bid-construct system, which was typically, in the best case, eight to ten months after a requirement was defined and funded.” In order to more quickly get projects started, keep them on schedule and stick to budgets, Harry devised his own process that he called the “open-end contracting system.” He applied the same approach commonly used for procurement in general: A vendor agrees to a contract for a period of time that will lock in pricing and cover multiple orders. Like many of those types of contracts, there would be the opportunity for numerous orders or jobs, but not a guarantee. Additionally, this early system used the same fair-bidding, proposal and awards standards, but only one time rather than for every single job. And that’s how Job Order Contracting was created.

Fast-Forward to Today

Job Order Contracting has continued to grow in popularity, allowing property and project owners to build and maintain crucial facilities and infrastructure with less hassle. JOC manages more than $2 billion dollars in construction projects annually. Now that we’ve covered the history, let’s run through the Five Ws and how you can access JOC.

Who Utilizes Job Order Contracting?

Public and private organizations in healthcare, higher education, K-12 institutions, federal, state and local governments successfully use JOC as another approach to construction procurement.

What is Job Order Contracting?

JOC is a unique Indefinite Delivery Indefinite Quantity (IDIQ) contract that allows multiple projects to be completed through a single, competitively-awarded contract. Here’s a very basic description: Let’s say you have 10 construction projects to complete and each of these has to be put out to bid, which could take months. Job Order Contracting allows you to complete these projects with a single contract that is bid one time.

How Does JOC Work?

JOC contracts establish Unit Prices up front. Each Unit Price is calculated using localized labor, material and equipment costs, meaning no more hidden charges and surprise costs. Contractors bid an adjustment factor to the catalog of tasks with preset Unit Prices, called the Construction Task Catalog® (CTC). Once a contract is awarded, the contractor can perform a variety of projects, always using the preset prices in the CTC.

Gordian Construction Cost Catalog

Why Use JOC?

With the one-bid process, project owners and facility managers can eliminate the hassle of bidding projects separately, save procurement time, overcome the challenge of pricing negotiations, access readily available contractors and begin work faster. The Job Order Contracting process enables project owners and awarded contractors to become long-term partners, resulting in higher quality work and a better experience.

When to Use Job Order Contracting?

Whether it’s repairs, renovations, upgrades or straightforward construction, Job Order Contracting allows you to put contractors in place immediately on a substantial number of projects with one, competitively-awarded contract. But remember: No project delivery method is a silver bullet.

Job Order Contracting is most effective when used for:

  • Time-sensitive projects and emergency construction – Contractors are ready to respond immediately and will be paid the preset competitive prices. No negotiating high emergency rates.
  • Small or medium-sized projects – These projects can be scoped, priced and completed quickly.
  • Punch list work – Complete the outstanding portions of work for a traditionally bid project with JOC.
  • Fuzzy scope projects – The contractor can help facility owners define the Scope of Work.
  • Advance work for large projects – When planning for a large construction project, JOC can be used to perform preliminary work such as demolition, hazardous material abatement and site work.
  • Supplement in-house staff – JOC contractors can add to your in-house staff capabilities to complete backlogged or deferred maintenance projects or team with staff for current projects.
  • Maintenance, repairs and operations (MRO) – JOC contracts can be put in place to specifically address MRO work, quickly eliminating your backlog of pending work and keeping up with current requests.
  • Projects with a fixed budget – Whether using a federal or state grant or another fi­xed budget, using transparent, fixed Unit Prices can prepare a Price Proposal to maximize the work for the allotted budget. With traditional bidding, if the prices exceed the available budget, the project must be redesigned and rebid.
  • Replacement-in-kind projects – These projects generally require little design work and can be scoped and priced quickly. Using Job Order Contracting saves the time and cost of preparing full plans and speci­fications and conducting a formal bid process.
  • Planning for limited scheduling windows – Projects can be scoped and priced well in advance of limited scheduling windows for completing the work, such as school breaks.
  • Change order management – Include the Construction Task Catalog® in the contract documents on traditionally bid projects as a way to preset pricing for all change orders. Control costs and reduce project delays by establishing pricing upfront.
  • End of the year funding – Sometimes, owners scramble at the end of the ­fiscal year to commit available funds or risk losing the money. JOC projects can be scoped and priced quickly, allowing the owner to obligate the funds.

How do I Access JOC?

Whether you need robust procurement data and software to supplement your in-house expertise, or you need a program installed and supported from start to finish, Gordian has the right Job Order Contracting program for you. You can also access Job Order Contracting through national and regional cooperative purchasing networks.

Imagine your renovation, alteration, upgrade and replacement projects completed on time, delivered on budget and streamlined to minimize disruptions to ongoing business operations and optimize operational efficiency. Eliminate disputes and project delays, all while increasing budgetary control. Watch the Job Order Contracting 101 four part video series to learn more.