Key Points:
- The Unit Price Book plays an all-important role in any Job Order Contracting program. Used as part of the bidding process and for pricing projects, a Unit Price Book should be procurement-specific and accurate.
- The Unit Price Book Gordian provides as part of managed JOC programs, the Construction Task Catalog, is built on tens of thousands of hours of research and validation.
- The Unit Prices in the Construction Task Catalog are developed with location accuracy and program relevance at the forefront.
The bedrock of any successful Job Order Contracting (JOC) program is the Unit Price Book (UPB). Used for bidding on JOC contracts and pricing individual projects, a UPB must be procurement-specific, accurate and relevant if owners and contractors are to derive maximum value from the program. As the creator of Job Order Contracting, Gordian has decades of experience researching and validating costs and using that data to develop procurement-specific UPBs. In terms of rigor and accuracy, Gordian is the standard-bearer in the field.
As Principal Product Manager, I have a front row seat for the impressive work that goes into unit cost development. In this post, I pull back the curtain a bit and discuss how we determine and validate prices in our Construction Task Catalog® (CTC), the organization of the CTC, the component parts of a unit price and why this work is necessary for the health of managed JOC programs.
The Power of Procurement-Specific Costs
Gordian offers the Construction Task Catalog for our Managed and Cooperative JOC programs. The CTC is purpose-built for construction procurement, offering our customers several benefits.
First and foremost, the costs published in the CTC have been researched and developed specifically for Job Order Contracting, meaning they contain all the major components – material, labor, equipment and demolition – so project owners see an all-in price for every line item.
In today’s economy, when construction costs are volatile, it is crucial to use relevant procurement costs like those found in the CTC, which are developed for a particular time and place. Geographic price variations are present in every state in the U.S. and every province in Canada, and these variations have significant cost impacts. By offering time- and location-specific pricing, we ensure every CTC reflects the realities of the local market, helping owners deploy budgets wisely, and ensuring contractors are paid a fair wage.
Finally, the CTC includes cost modifiers and quantity discounts. Every project is unique. Even two projects that look similar upon completion came with two entirely different sets of specs. Every custom-built CTC includes the correct labor and material modifiers, so project owners can capture the work that needs to be done, and awarded contractors can complete that work correctly and to the owner’s satisfaction.
Unit Price Research and Development
Now let’s dig into how Gordian builds its CTC. The work begins with an incredible amount of research into local labor, material and equipment costs. Without sharing too much about how the sausage gets made, Gordian puts approximately 20,000 hours per year into building our Construction Task Catalogs. That’s because we build each CTC from the ground up, using hyper-local cost research. Our team contacts suppliers, distributors, OEMs and others to find accurate pricing for that location.
Furthermore, Gordian maintains a massive library of 275,000+ construction tasks from which to build a CTC. Not all of those tasks will go into any one catalog, but this body of research ensures that every catalog is as comprehensive as possible for that contract.
In addition to cost researchers, we also employ a team to create detailed specifications that go with each of the 700 Construction Task Catalogs we produce every year, so there are no questions about what is in spec for any section of the CTC.
The Organization of the CTC
Gordian’s Construction Task Catalogs are governed by the Construction Specification Institute (CSI) MasterFormat. A good trick for anyone unfamiliar with MasterFormat is to think of it from a trade and work basis. If a mason would do the work on the job, then it is likely priced out in the Masonry division in the CTC. If a plumber does the work, then it is likely priced out of the Plumbing division. Most CTCs follow MasterFormat version 04 (MF04), which has 50 divisions. In rare cases, a CTC follows MF95, which has 16 divisions only.
Unit Price Development
All Unit Prices in the CTC are based on three primary pillars of research: material, labor and equipment. For material, we try to emulate our research as closely as possible to what a contractor would experience in their normal pricing work. Hence, all the effort expended researching costs from local suppliers and distributors. In addition to this legwork, Gordian leverages data analytics and material price indicators to ensure cost accuracy.
Material price indicators are factors that govern known materials across various sizes we allow into the CTC. We validate and update material price indicators frequently as part of our material cost research.
Gordian has a team dedicated to labor price research, and four primary resources inform its work. Union wages are a great resource, and we lean on Davis-Bacon wages to make sure labor wage floor is appropriately set. We also collect and analyze local prevailing wages and contract labor agreements to make sure we capture what is happening in a particular location.
In terms of equipment, it’s useful to know that we’re referring to heavy, civil equipment – your yellow iron, green iron and site support. We work directly with rental houses and equipment dealers across the country to get their daily, weekly and monthly rates, and calculate operating costs and fuel costs to roll up to one overarching equipment cost.
Finally, we combine material, labor and equipment as crew with productivity, the daily output of an average crew doing the work described, to create the cost of a task or unit price.
Components of a Unit Price
There are several pieces of information found in Gordian’s Unit Prices that make them unique. We define them below and label them in an image to help you understand their application.
- CSI Number – Each Unit Price has a separate and unique CSI number
- Unit of Measure (UOM) – The proper measurement for the Unit Price: square foot, each, cubic yard, etc.
- Task Notes – Information about what costs a Unit Price (or group of Unit Prices) includes or excludes
- Task Description –Describes the task completed in the Unit Price. Note that Gordian intentionally leaves many task descriptions generic because, for many tasks, the source of the material has no impact on the cost of installation. It doesn’t matter who made the drywall, so long as it takes the same length of time to install it. However, some descriptions are make/model specific for one of several reasons. The owner’s design standards may require a specific material; some materials take a longer time to install; some manufacturers’ prices set them apart from others, and some make/model combinations are, in fact, quality leaders.
- Install Unit Price – Direct costs of labor, material and equipment to install one UOM of the task completed in the Unit Price
- Demo Unit Price – Direct costs of labor, material and equipment to demo one UOM of the task completed in the Unit Price
- Modifiers – Increases or decreases to Unit Price based on a change in quantity, a change in construction operation or a change in material
The Difference is in the Details
There’s a reason Gordian spends so much time and care in developing Construction Task Catalogs for managed Job Order Contracting programs. Using a procurement-specific UPB enables our customers and their JOC contractors to maximize the value of their programs, deliver high quality projects and build better communities.
