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Measure Twice, Cut Once
How the JOC Scope of Work Process Limits Surprises on a Project’s Bottom Line

By Vince Duobinis

Quite a few articles describe the benefits of Job Order Contracting (JOC) for facilities owners, but few come from a different angle and discuss the actual process of developing a scope of work utilizing the JOC process and a unit price book.

One might say if you have reached the scoping stage, the most difficult and challenging part of JOC is over—obtaining buy-in from others within the organization and the preparation and award of the solicitation.

True, the construction phase of JOC may be more complex and may require more technical knowledge, but once there is an understanding of how the pieces are put together, construction becomes second nature.

In the white paper, “Qualification Based Selection of Contractors” , The Associated General Contractors of America identifies four challenges to Qualification Based Selection (QBS), of which JOC is considered a key delivery method;

1) Team members must adopt a true “win-win-win”
collaborative culture,
2) Different procurement methods, processes and contracts
are required for success,
3) Everyone must understand that a timely, proactive and escalated
dispute resolution process must be implemented, and
4) QBS requires the complete involvement and support of all
key members of senior management.

These challenges, if not overcome are more often than not the reason for failure for a JOC program.

Once a JOC contract has been executed, the owner and contractor begin to work in a cyclical manner to complete each delivery order placed through the term of the contract. JOC is different than other forms of construction in that the contractor may or may not have full detailed plans and specifications to start. A key benefit of the JOC method is that the owner and the contractor will jointly scope each project and develop a plan for completing the project as efficiently as possible and within the predetermined budget.

For the novice JOC owner, this different way of thinking can be challenging at first, but once the learning curve has been conquered the process becomes part of their daily construction routine. Not only does the owner need to learn and adjust to a new construction method, but the contractor has to learn how the owner operates. By building a common understanding and learning the ‘ways’ of each other, the owner and contractor begin to develop a working relationship, one of trust and purpose.

Step 1: Owner contacts JOC contractor with project that they would like to utilize the JOC contract as the means to complete. This could also be initiated via a written request from the owner. A successful JOC contractor will have processes in place to track every contact made by or to the owner for each project, almost like a construction diary. When the owner’s project manager (OPM) contacts the contractor, the contractor’s project manager (CPM) will obtain a basic description of the project and schedule a site visit to conduct a joint scope of work.

Step 2: Site Visit. Depending on the type of project and its complexity the CPM may require a superintendent and quality control officer to attend the walk-through, as well as key subcontractors. They may also request the OPM invite the ultimate end-user for which the project is being completed. The goal: To have as many eyes review and discuss the needs and desired outcome of the project and help avoid potential owner change orders during construction and reduce if not eliminate the chance of unforeseen circumstances arising. The time-frame of the initial site visit is typically dictated by the JOC contract, but may be extended by the owner or agreed upon by the owner at the request of the contractor.

The purpose of the site visit is probably obvious to most, to obtain a better understanding of what the project is about and what codes and safety measures will need to be addressed. Beyond this, it also provides a time for the contractor and owner to discuss how the project will be constructed and possibly value engineer a better way of doing it. Keep in mind, that plans and specification in any form may not be available at the time of the initial site visit. Similar to design-build, JOC provides an opportunity for the contractor to develop the plans and specifications or work with the owner’s architectural/engineering firm to best meet the construction objective and owner’s budget.

Planning and pre-planning are paramount to success for any JOC project. During the initial site visit, the contractor will address its concerns, such as storage availability, access requirements, whether the space will be occupied or vacant during construction and what will be required to work at the site on a daily basis. If additional safety precautions are required, the safety officer will develop a safety plan as well as schedule additional safety training. This may occur, for example, if work will be conducted in a confined space or around additional hazards.

Throughout these initial discussions, the CPM will take photos of the existing space, take and retake measurements and begin to discuss the needs of any specific equipment or material that will need to be ordered. The JOC contractor, to alleviate the burden and upfront cost to the smaller subcontractors, may purchase long lead items but typically materials and installation items are obtained by the subcontractors.

Step 3: Written Scope of Work. Once the site visit has occurred, the CPM will develop a written scope of work based on the information obtained and discussions had. The owner may also prepare a written scope to compare to the contractor’s version. Again, the time-frame for the scope is identified in the original terms of the JOC solicitation/contract. After completion, the scope is provided to the owner for review. If there are no modifications, changes or clarifications required, the owner signs off on their approval.

Step 4: Line Item Estimate. After the contractor receives the approved scope, it will develop a detailed line item estimate, identifying all aspects of the project, from any demolition, safety items, through construction. The construction software utilized, is again, typically identified within the original solicitation or contract. The software utilized will determine the format of the estimate. Since the unit price books are based on national averages with adjustments to location, some line items may appear high to some owners and low to others, with the concept that over time the cost of the line items average out for both the owner and the contractor.

As the contractor identifies the appropriate line items for each task to be completed, the software program categorizes them by the appropriate division, provides a subtotal for each and then a total. Depending on the complexity and size of the project, the estimate could range from few to many pages. Key for the owner is the need to review each line item (especially at the beginning of the relationship) to ensure that the appropriate quantities and line items are being used. If there are questions about either, then a discussion as to why a particular one was chosen over another should take place. Examples where the owner and contractor may differ concerning the use of a particular line item may include the use of a pre-package HVAC unit compared to one that is self-contained, or a water-cooled versus air-cooled chiller. Although clarification is usually addressed during the site visit some items may need to be addressed and or negotiated during the estimating phase.

The scoping and estimating process is as much the owner’s responsibility as the contractor’s. The owner’s due diligence involves monitoring and questioning, as needed, the line items and quantities used by the contractor. The success or failure of a JOC contract could depend on the ability of the owner and contractor during this phase to mutually work to and agree upon line items and quantities used.

Depending on the original contract, the contractor may or may not have the ability to use line items from Division 1 of the unit price book, which have a significant impact in regard to safety practices and the use of appropriate items. Some owners prefer a contract that does not use Division 1 items and have all costs (engineering fees, equipment rental, safety, dust protection, etc) included in the coefficient. The one drawback to this preference is that the owner may spend more over the term of the contract since the contractor will adjust the coefficient at the time of the bid to assume that each project will require Division 1 items, but with this option there is no debate between the owner and the contractor concerning those items as they would be automatically included in each project as needed and covered by the coefficient.

As the relationship grows, the owner has the option to review only the subtotals for each division to check for viability or merely review the final cost of the project, with the exception of many department of defense contracts which require a review of each division on all delivery orders. Again, trust grows over time and it is in the best interest of the contractor to make sure they are using the appropriate line items, quantities and ultimately keeping the best interest of the owner in mind, while at the same time insuring that in the long-run, the contract meets their business model and financial return requirements.

Many owners will take the step of preparing their own estimate and compare it to the one submitted by the contractor. This not only ensures both parties are on the same page as well as provides additional documentation for any audits.

During the scope and estimating phase the contractor will contact its subcontracting base to obtain bids for the various tasks and trades required to complete the project. Although, each JOC contractor has its own internal procedures, it is probably prudent to obtain bids from at least three to five subcontractors per trade, thus providing additional transparency and allowing for the most and best open competition. The contractor will also review the preliminary scope of work with them to obtain additional insight, knowledge and ideas as to the best means and methods for a safe and quality completion of the project. As with the owner selecting a JOC contractor based on a QBS, so too should the JOC contractor select subcontractors based on their abilities, capabilities, quality and safety practices, and not necessarily the lowest price.

Step 5: Approval and Notice to Proceed. Upon approval of the final written scope of work and the line item estimate, the owner will issue a task order, purchase order or work order, along with a notice to proceed. At this point the contractor will work with the owner to schedule a pre-construction meeting. This meeting is probably the most critical meeting other than the initial site visit.

Since the contractor will be reviewing the “whens” and “hows” for completing the project, it is in the best interest of the contractor and the owner to have all key individuals attend this meeting. This would include, but not limited to owner agents or representatives, both in quality control and assurance, contractor representatives that may include a project manager, safety officer, quality control, superintendent, and a senior site representative. Additionally, representatives from the end user and other stakeholders, such as the Fire Department or Facility Safety Department should attend, to ensure everyone is aware of the construction schedule and what to expect during construction.

During this meeting a construction schedule will be established, based on the needs of the owner and end user. The schedule will define long lead items, specialty items as well as owner requested items. All parties will review the schedule to identify any lapse in work due to site conditions or owner required stoppages. Any owner/end user requirements for occupied space will also be addressed at this time. Although all subcontracting trades may not be identified at this time, the contractor will review any on-site requirements such as badges, clearances, or escorting.

Construction then begins, based upon the agreed upon schedule. Throughout the construction phase, the CPM will maintain constant contact with the OPM via weekly or bi-weekly construction status meetings (as well as daily phone contact if needed) to review all projects being worked. Site visits are strongly recommended of the OPM and possibly the end-user as various stages of the project are completed. This ensures that the work being completed is “what was discussed” during the initial site visit and in the written scope of work and allowing all to “see” what was previously represented in the initial plans and specifications. The OPM is able to identify any deficiencies that can be corrected by the contractor as soon as possible, helping reduce if not eliminate punch list items at the completion of the project. The goal for both the owner and the contractor should be a project, finished on time with a zero punch list.

About the Author
Vince Duobinis is senior market development manager at Centennial Contractors Enterprises. He has written several articles and white papers about Job Order Contracting and blogs about the subject at http://jobordercontracting.blogspot.com. He can be reached at vduobinis@cce-inc.com.

About Centennial Contractors Enterprises
For more than 20 years, Centennial Contractors Enterprises, Inc., has been a leader in providing responsive construction solutions supporting government, educational and business facilities and infrastructures. Its project focus is on renovation, rehabilitation and repair, including adding sustainable systems into its clients’ existing facilities. Centennial is headquartered in Reston, VA and has 40 offices across the country. To learn more, go to www.cce-inc.com or follow on Twitter@centennialnow
 


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