Job Order Contracting (JOC)

1. JOC Presented by… Job Order Contracting (JOC) “Taking the mystery out of JOC…” February 12-13, 2008

2. Procurement 101 • Brief introduction to some very important terms and State of Arizona rules • Fully understanding (or “taking out the mystery of”) JOC • There continues to be a lack of understanding of JOC • JOC: 10-Step Process • Benefits of JOC • Immediate Access - Schedule - Quality - Force Multiplier - Cost Effective/Best Value • Decision Tree: • Do with In-House labor/mgmt? Existing JOC? My own Bid? My Own JOC Contract? • Questions and Answers • Everything is fair game…ask the question you have been dying to ask JOC: Overview

3. JOC Procurement 101 Mark Kinsey, Mohave

4. In the beginning…there was the State Procurement Code…and it was good and necessary • And, more was good…the Arizona State Board of Education (SBE) rules • And, then, even more was better…SBE implementing alternative delivery methods (recently added) • Due to the efforts of key groups and individuals in the state, Arizona has been able to successfully implement Alternative Project Delivery Methods such as Construction Manager at Risk and Job Order Contracting (JOC) Procurement 101

5. In the State of Arizona, JOC is specifically allowed for in the following situations (Statutory reference: A.R.S. Section 34-101, 41-2503, R7-2-1116) “Job Order Contracting means a project delivery method in which… • The contract is a requirements contract for indefinite quantities of construction. • The contract to be performed is specified in delivery orders issued during the contract. • Finance services, maintenance services, operations services, preconstruction services, design services, and other related services may be included.” *Summer 2007, Department of Education added some additional implementing rules. Procurement 101

6. Types of Projects JOC is intended for minor new construction, renovations, repairs and additions, including but not limited to the following… • Any project that is operating under extreme pressure due to time constraints and lack of dependable resources • Minor construction projects (under $1 Million) • HVAC and Electrical • Routine repairs • Renovations of all types • Upgrades to ADA standards • Emergency repairs • Site work and utilities • Parks and playgrounds • Upgrade landscaping • Classroom additions • Complete new buildings • Replace flooring Some JOC contracts very specific (e.g., landscaping); others allow for broader range (e.g., 16 divisions of work) Procurement 101

7. JOC Terms • JOC - Acronym for Job Order Contracting • IDIQ - Indefinite Delivery/Indefinite Quantity • UPB - Unit Price Book • RS Means - Industry standard unit price cost book • Coefficient - Multiplier applied to UPB • Task Order, Delivery Order or Job Order - Individual construction projects performed under the umbrella procurement • Non-prepriced item - A construction task added to the UPB Procurement 101

8. What is JOC? • JOC is a project delivery method using an Indefinite Delivery, Indefinite Quantity (IDIQ) contract for a specified period of time (it has a long history of success in US and has been called many different things in different government agencies). • Note: Like all other procurements, JOC is only as good as the written contract and contractors selected to perform the work • JOC provides an "on-call" contractor at a guaranteed competitive rate structure. • JOC is targeted for small to medium sized construction projects. • JOC has a specified term, generally up to five years. • JOC pricing is based on a coefficient tied to a Unit Price Book (UPB) such as RS Means. Procurement 101

9. What is JOC (Continued)? • The JOC contractor bids a coefficient or coefficients that includes direct and indirect costs and overhead & profit. • Unit prices form the basis for establishing the lump sum value of each task order. • JOC has a high performance incentive for the contractor to provide exceptional customer satisfaction; they are only as good as our last task order. • Pre-qualified, local small businesses perform most of the in-place construction. • JOC places an emphasis on building relationships through team collaboration to provide the highest possible quality and service. Procurement 101

10. *Procurement Considerations (Do You Need JOC?) • Look at past history, annual volume, of work done in these type of areas • Is this year different, more or less need for these type of services • Look at available JOC contracts for your use • Ask for applicable JOC contractor to provide cost estimate on a project • If you believe necessary, complete your own JOC contract • This requires significant commitment of your organization resources • Is this best use of in-house purchasing staff, facilities manpower, etc. • Determine unit price book to use • Determine the desired contract terms • Cost your organization (facilities, equipment, etc.) • Determine a workable coefficient for some preliminary estimating • Estimate some construction jobs similar to work expected using the unit price book *In part from February 2002, Alliance for Construction Excellence presentation. Procurement 101

11. If you determine to proceed with your own JOC, the following is the selection Process for JOC… Developing your own JOC…you may do in either of the following fashions: (Note: All State Procurement Code implementing rules apply in addition recently approved State Board of Education rules apply for schools) • One-step Competition (RFQ) • Short list • Negotiate with top person/firm on the short list • Two-step Competition (RFQ and RFP) • Short list • RFP from short listed person/firm • Negotiate with highest scoring proposer Recommendation: Seek outside assistance to develop if you have not done previously Procurement 101

12. You Make the Call! The City of XYZ wants to build a new side walk and several ADA accessible ramps for the upcoming “Extra Special Pizza Eating Bowl.” They need it done in the next 30 days. It has been previously estimated to costs between $75K and $100K. Could this be a candidate for a Job Order Contract? Procurement 101

13. You Make the Call (Continued)! Of course the answer is that more information is needed; however, in general, this could be an excellent candidate for JOC. What are some of the things that City XYZ would want to consider? So, the real answer is, it depends!!! Procurement 101

14. JOC Fully Understanding JOC Charlie Bowers, Parsons-3DI

15. Step 1 The JOC Process • The Reality--“A 10-Step Process” • Step 1: Initial Request • Step 2: Scoping Session • Step 3: Scoping Confirmation • Step 4: Estimate Preparation • Step 5: Plan the Job • Step 6: The Actual Construction • Step 7: Updates • Step 8: Final Inspection • Step 9: Close Out • Step 10: Warranty Issues Step 10 Fully Understanding JOC

16. Step 1: Initial Request (Getting the Owner’s Thoughts on Paper) “Communication is Key to Success” • Are all the interested parties represented? • Who are the decision makers? • Has JOC been selected as the project delivery method? • Is the project funded? • Is the project under $1 Million? • Do you have any pre-determined expectations? • Are there special wage considerations (i.e., federal funded projects)? • Are you relying on existing plans, estimates or budgets? • Are there any time or critical constraints? • Are permits required? • Are there MBE/WBE goals? • Etc… Fully Understanding JOC

17. Step 2: Scoping Session • Visit the jobsite and document conditions • Establish project goals • Determine if design services are required • Define building systems and quality of materials • Identify client’s responsibilities • Determine project schedule and major milestones • Identify safety, security and hazardous material issues Fully Understanding JOC

18. Step 3: Scope Confirmation • Confirm scope of work and quantities • Review any qualifications and assumptions • Revise the scope as necessary • Perform value engineering • Review the schedule • Confirm start and completion dates • Understand and mitigate impacts on existing operations and facilities • Review safety concerns and requirements Fully Understanding JOC

19. Step 4: Estimate Preparation • Determine quantities of work. • Build the estimate from the UPB. • Summarize the estimate and apply coefficient. • Apply city cost index. • Apply applicable bond, permit & taxes. Fully Understanding JOC

20. Step 4 (Continued): Estimate Preparation Quantity CSI # Unit Cost w/OH & P Apply City Cost Index RS Means Index # Apply Coefficient Tax Bonds Total Cost Estimate Preparation

21. Step 5: Plan the Job (Prepare a schedule) Plan the Work... Work the Plan… Fully Understanding JOC

22. Step 6: The Actual Construction Step 7: Updates Step 8: Final Inspection Step 9: Close Out Step 10: Warranty Issues No Surprises! The easy stuff! Who will fix? Fully Understanding JOC

23. You make the call! - The owner has several small jobs in mind for repair and/or construction and doesn’t think JOC contract would be viable - The owner decides to Bid the items separately. - Did the owner make the right decision? Fully Understanding JOC

24. And the answer! It depends! Did the owner get the best value among the competing alternatives…let me explain… Fully Understanding JOC

25. JOC Benefits of JOC Lisa Bentley, Centennial

26. Top Five Reasons JOC is a Method of Choice for Many Reason #1: Immediate access to negotiated contract, expected level of service Reason #2: Reduces Lead Time/Defined Schedule Reason #3: Quality/Efficiencies Reason #4: Extension of staff Reason #5: Cost/Budget advantages “Is it the cheapest method? Not always. Is it the most cost effective and efficient method? Many times!” Benefits of JOC

27. Reason #1: Immediate Access • Prenegotiated JOC contracts with qualified vendors, whether your own or through a cooperative can be used immediately • When comparing already awarded JOCs, the devil is in the details!!! • .90 coefficient award of one JOC may actually cost more than another .90 coefficient award! • What’s included (travel?), what’s not included (overhead & profit on certain items)? • You may retain the same awarded contractor(s) for the same amount time as a traditional Bid or RFP (up to five years from time of award under Arizona Statute) • BUT, must ensure scope and type of work was what was contracted for just like other procurement actions Benefits of JOC

28. Reason #2: Schedule • Allows for faster response to customer needs • Reduces disruptions to on-going operations through flexible scheduling • Eliminates the need for multiple project solicitations • Provides quick response to changing market conditions Benefits of JOC

29. 60 Days 120 Days 180 Days Standard bid timeline using A/E 185 days to contract JOC timeline using A/E 116 days to contract JOC timeline w/o A/E design 35 days to contract Schedule *Study from Spring Branch, TX Benefits of JOC

30. Reason #3: Quality • Proven general contractors ensure top quality performance • Team environment encourages quality collaboration • High quality work ensures repeat business and develops relationships Benefits of JOC

31. Reason #4: Extension of staff • Predictability of project results • Alternate delivery methods such as JOC, CM@Risk allow for this • Costs, schedule, safety, and quality • Dependability • Collaborative approach • Reduced risk • Increases MBE/WBE and small business participation Benefits of JOC

32. Reason #5: Cost Effective/Best Value • Dramatically decreases up-front design, procurement and administrative costs • Maximizes the dollars for in-place construction • Provides an extension of the owner’s staff • Reduces backlog of maintenance, repair and renovations • Provides a complete proposal before the P.O. is written • Allows scope and budget alterations with defined costs • Reduces or eliminates claims, litigation and change orders Benefits of JOC

33. Good JOC contracts & JOC contractors virtually eliminate vendor caused “Change Orders” Benefits of JOC

34. JOC Decision Tree Mark Kinsey, Mohave

35. JOC: Another tool in your facilities toolbox so that facilities, purchasing, etc., folks can use their Time & $ more wisely Three Job Orders (Two are JOC candidates) JOC Candidate Job Order JOC Candidate Job Order Data/Prelim Analysis Discuss w/JOC Vendor Data/Prelim Analysis Discuss w/JOC Vendor In house labor/mgmt? Existing JOC? New Bid? My own JOC? What is best value (consider time, manpower, etc.)? If I decided to do in house, my own Bid, or my own JOC, consider opportunity cost? In deciding between JOC contracts, did I compare “apples to apples” on coefficients? Decision Tree

36. Cost: $165,000 Time to Complete: 21 calendar days Change Orders: None Replaced existing water piping with new fire and water loop throughout entire campus Is this something I could have done with in-house labor/mgmt Would that have been Best Value? JOC Capabilities

37. Cost: $96,000 Time: 4 weeks Change Orders: None Restroom Renovation JOC Capabilities

38. Cost: $593,000 Time: 56 calendar days Change Orders: None Removed and replaced a high school track and related concrete curbs JOC Capabilities

39. Cost: $43,000 Time: 53 calendar days Change Orders: None Roof & structural repairs like those shown in this photo. JOC Capabilities

40. And finally, • Ensure the project is funded or that funding is readily available • Owner’s representative must understand JOC • Not simply another price quote for the work • Not a free estimating service • Owner still has a lot involvement in the job • Allow adequate time for the process • Contractor invests a lot of front end effort • Owner can expect excellent execution of the work • JOC eliminates most change orders • Ensure that all owner & contractor stakeholders have had sufficient input into the job • Ensure owner & contractor consensus on scope, schedule and cost • Owner & contractor must each holdup its end of the bargain • Successful JOC is a non-adversarial relationship Did I get the Best Value? (doesn’t matter what method used) Barriers to a Successful JOC

41. What is the mystery of JOC? Some things to keep in mind… “The mystery is that JOC is not a mystery (and other alternate delivery methods) for those who have the time and resources to commit to understanding it.” “JOC is another tool in your procurement tool bag for getting the work done in your agency. It has great flexibility and ability to achieve your organization goals if managed properly.” “A properly negotiated JOC contract can be a life saver…” “Not all JOC coefficients are the same…the devil is in the details…” “Can I do the job in-house, sure! But, at the cost of something else not getting done…” “Can I procure my own JOC contract, sure! Am I truly getting the best value on my contract? Do I have the ability/staff to manage the contract.” Barriers to a Successful JOC

42. This concludes our education and training session on Job Order Contracting: “Taking the Mystery Out of JOC” Are there any questions? Thank you for your attendance today… Please complete the survey provided. Thank you. Question and Answer Time

43. Presenters Mark Kinsey Mohave Educational Services Cooperative PH: 602-277-4290 E-mail: markk@mesc.org Charlie Bowers Parsons-3DI PH: 602-999-1130 E-mail: charlie.bowers@parsons.com Lisa Bentley Centennial Contractors PH: 623-764-0397 E-mail: lbentley@cce-inc.com Note: Please feel free to contact any of the presenters directly with any questions regarding JOC. Presenters