How Do I Set Up a Job Order Contracting (JOC) Program?

Whether it’s the construction of a high-tech lab or a simple demolition, before a JOC project can a lot of work has to be done to set up a Job Order Contracting program. This post digs into that process so that you have a better idea of how JOC works and whether it is right for any of your upcoming projects.

How Are JOC Projects Bid?

Instead of bidding a price on an individual project, with Job Order Contracting bid a multiplier on the costs in the applicable Unit Price Book. At Gordian, we call this multiplier an Adjustment Factor because it is, effectively, a market adjustment for the costs in the UPB, but in other circles they call it a coefficient. By any name, this multiplier is a calculation applied to every cost that represents the contractor’s overhead and profit – how they make money. An Adjustment Factor (or multiplier or coefficient) is legally binding for any work done over the life of the contract.

How Do I Set Up a Job Order Contracting Program?

The steps below refer to tailored JOC solutions, where the organization that develops and holds the contract is the only organization that uses it, and Cooperative JOC, where one organization develops and holds the contract but many use it for construction project delivery.

Step 1: Research and Verify Procurement Code

For public sector organizations like government entities and school districts, the most important thing to remember about implementing a JOC program is that it must comply with procurement law. Before setting up a Job Order Contract, familiarize yourself with applicable statutes so you understand your cost and project parameters and ensure you meet every standard required by law. All Gordian Job Order Contracts, whether a tailored solution or a shared contract (like those available via purchasing cooperatives), are compliant, meaning no extra legwork for contract holders, but that is not necessarily the case for every JOC provider.

Step 2: Assess Organizational Needs

Once you understand the legalities of JOC in your area, you can identify how you will use JOC to your greatest advantage. Keeping in mind that Job Order Contracting is best suited for work requiring little (if any) design work, many organizations use it to complete routine, operational projects that often feel like more trouble than they are worth to send out for bid individually – think repairs, renovations and replacements-in-kind.

Many organizations also turn to Job Order Contracting to complete emergency work like disaster response and recovery projects. Since unit prices are preset at contract solicitation, project owners avoid paying a premium for emergency work. This cost control is an incredible advantage over more conventional approaches to construction delivery like Design-Build and Design-Bid-Build, where emergency work is accompanied by a steep markup.

For a breakdown of all types of “JOC-able” projects, check out our infographic.

Step 3: Estimate Annual JOC Volume

Once you have agreement on how you’ll use JOC, you can estimate an annual volume of work. This is an important step because there may be regulations governing the volume of Job Order Contracting work permitted in a given time period. (See? Understanding procurement law is important.) The last thing you want is to assume you can do a project with JOC only to discover you can’t, forcing a chaotic scramble to send the work out for bid.

There are a couple of good resources you can use to calculate your expected JOC volume. Start with last year’s bills. Gather up purchase orders and invoices for the type of work you would have done with JOC to develop a baseline estimate of how much JOC volume to expect. Another good resource to tap is internal estimates of deferred maintenance projects. Since this work is typically “JOC-able,” the deferred maintenance list can help inform volume.

Before you settle on an estimated volume, don’t forget to ask around. Gather intel about expected renovations and recurring maintenance needs from construction project managers and other facilities personnel and consider what might be done with JOC. Finally, recent facility condition assessment data should include estimated costs, so give this a look as well.

Add up your work from last year (or an average of the last three to five years), add any planned work you can complete with JOC and build in a contingency buffer (10-20% should do it) for scope changes and emergency projects and – voila – you have your estimated annual JOC volume.

Step 4: Select a Unit Price Book

Now that you know what kinds of projects you plan to complete with Job Order Contracting and have an educated estimate of annual volume, it is time to select a Unit Price Book. This step is critical, as the UPB is the backbone of any Job Order Contracting program. Contractors will bid on it and use it to price construction, so it is vital that the UPB is clear, accurate and thorough.

It may be tempting to use construction estimating costs for project delivery. As natural as that practice sounds, it is a mistake. For starters, procurement law (there it is again) may require a specific UPB or a UPB that meets requirements estimating cost books do not. Beyond statutory requirements, there is the practical concern that construction estimating and construction procurement are different activities requiring different data. That’s why it is a Job Order Contracting best practice to use a procurement-specific Unit Price Book.

The difference between a procurement-specific Unit Price Book and an estimating cost book lies in the details included in each line item. The line items in procurement-specific Unit Price Book, like Gordian’s Construction Task Catalog® (CTC), offer all-in costs covering everything from material, labor, equipment and demolition. Furthermore, these costs reference industry standards and/or a manufacturer’s serial or model number to assure product quality and include modifiers for variations and quality discounts.

When it comes to selecting a UPB, location matters. The closer the costs are to the job site, the more relevant they areare, and the more accurately contract owners can budget for every JOC contract.

Step 5: Determine Necessary Adjustment Factors

In our earlier discussion of the JOC bidding process, we mentioned contractors bidding an Adjustment Factor on the Unit Price Book. They actually bid Adjustment Factors, plural, that account for different construction scenarios. Common scenarios include projects undertaken during normal working hours, those completed after normal working hours and/or on weekends, emergency construction and projects that require extra security, training or certification, such as hospital work. Once you’ve estimated contract volume, selected a Unit Price Book and determined the necessary Adjustment Factors, you’re ready to put your Job Order Contract out for bid.

Step 6: Advertise Your Job Order Contract

JOC bidding advertisement requirements differ from state to state, sometimes even from city to city. That’s why it’s important to go back to Step 1 and ensure you do everything in accordance with applicable procurement laws. You may be required to advertise a Request for Proposal (RFP), a Request for Information (RFI), neither of these, or some other form of notice to the local contracting community that you have a Job Order Contract coming up for bid and the requirements for bidding. It’s also a good idea to let your existing contractor partners know about the upcoming opportunity, if doing so complies with applicable procurement laws.

Step 7: Hold a Pre-Bid Meeting

As soon as possible after advertising your JOC contract, hold at least one pre-bid meeting for contractors. This information session should cover the basics of Job Order Contracting, details about the kind of work you expect or plan to complete with your JOC program, how to develop an Adjustment Factor and the process for submitting questions before bidding.

The goal of these meetings is for contractors to leave feeling confident about bidding. To that end, Gordian co-presents with our customers at these sessions, explaining how to read the Construction Task Catalog, the nuances of bidding and project execution best practices.

Step 8: Review Submissions and Award Contractors

At the end of the submission period, it is time to evaluate bid packages and award contractors. How bids are evaluated will be determined by the preferences of the organization and applicable procurement laws. While they will vary, evaluation criteria commonly include contractor experience (have they completed similar projects, have they worked with the organization before, etc.), contractor references, current and projected contractor workload, and, of course, the submitted Adjustment Factor. Awarding contractors based on best value and not on price alone (which is common with Design-Build and Design-Bid-Build) ensures high project quality, lower risks and better long-term value for your JOC program.

Make certain you award enough contractors to complete your estimated volume of JOC work and maintain legal compliance.

How Do I Initiate a JOC Project?

Once you’ve set up your JOC program, initiating a project is easy. Simply call the awarded contractor you want to complete the work (or your Gordian JOC representative if you’re working with us) and let them know you want to get the ball rolling on a JOC project. It really is that seamless.

As Michael Courtney, Public Works Manager for the City of Irvine, California told us, “Right now at any given time, if I have an issue somewhere, I can call a contractor and they’re going to pick up no matter what.” Gordian’s 300+ JOC customers across North America could not agree more.