Job Order Contracting – Public Sector Efficient Construction Project Delivery

Properly budgeted and well managed facilities* are critical to the delivery of public sector services, including Governing, Defense, Education, Healthcare, Life/Safety, and Transportation.

Despite this widely known fact, effective and transparent LEAN business practices are rarely leveraged to optimize the use billions of dollars needed annually for renovation, repair, and maintenance construction projects.

JOB ORDER CONTRACTING – JOC, is an efficient construction project delivery method for renovation, repair, and maintenance of built structures.  It enables real property owners to shorten project timelines, improve owner-contractor relationships, and execute more construction project on-time and on-budget…. to the satisfaction of all parties involved.

At a time when everyone is being called upon to “do more with less”, JOC is should be a component of  facility renovation, operations, and maintenance strategies.

JOC is a LEAN best management practice and involves the consistent deployment processes and workflows, early and ongoing communication, standardized information, performance metrics, supporting technology, and continuous improvement.

JOC is a form of indefinite delivery indefinite quantity – IDIQ  construction delivery contract/method that uses a Unit Price Book – UPB, to encourage the communication and understanding of construction projects for both  owners and awarded contractors.  JOC contracts typically range in size from $2-$3M to $300+M and span 3-5 years.

The predominant method of JOC deployment is a contract developed, offered, awarded, and managed directly by a skilled real property owner.  Alternatively, COOPs, and outsourcing have also become available for JOC program implementation.  As in any strategic decision, however, the JOC deployment method selected should consider the current and future requirements and goals of the owner as well as those of their awarded construction service provider(s).

While JOC is currently in use by the Federal Government, State, County, and Local Governments, Education, Transportation, and Healthcare, it represents a very small fraction of  total amount of renovation, repair, and maintenance work executed.

The primary obstacles to the more widespread use of JOC and associated   productivity gains are classic: education, awareness, and resistance to change.

JOC requires “above average” capabilities on the part owners and contractors  alike.  General knowledge of construction practices, line item construction cost estimating, excellent written and verbal communication capabilities, the ability to work collaboratively with disparate professions, and strong computer-based analysis and work skills are representative of skills needed for successful JOC program implementation.

Supporting technology that embeds core JOC processes drives collaboration, tracks milestones, and enables easy information access and reuse is very important.  The traditional reliance upon spreadsheets or silos of disparate data format are not well suited for JOC.

While JOC is being successfully leveraged by a small group of innovative owners and contractors, acceptance of this and other LEAN construction methods must be accelerated in order to improve productivity across the entire construction and facility management sector.

*including vertical and horizontal built infrastructure

job order contracting

Efficient Construction Project Delivery

Worldwide Need for Construction Collaboration

If you have any experience with construction it becomes very clear, very fast,  that early and ongoing communication among skilled, capable, and trustworthy participants, all of whom working collaboratively toward mutually beneficial goals, is the ONLY path to success.

Studies have proven that collaborative construction delivery methods and a focus upon value provide a higher return on investment.

The most recent report is the NATIONAL CONSTRUCTION AND CONTRACTS LAW SURVEY, 2015, NBS.  The third in a series of this type of report notes

“the central themes remain  consistent: the need for collaboration, the damaging effect of disputes and the often adversarial character of construction. “

Unfortunately the UK suffers the same issues as in the United States and collaboration remains the exception versus the  norm.

“It is disappointing to see that the number of disputes remains at comparable levels, and that, as a whole, the industry is much more likely to see the number of disputes increasing rather than decreasing”
Unfortunately the UK is relying upon BIM to resolve its construction productivity issues and associated lack of collaborative project delivery.  BIM , however, is not the solution if the focus and/or requirement is associated with 3D visualization.
The construction delivery method affects the outcome of any renovation, repair, or new construction project.  It alone sets the tone, assigns responsibilities and deliverables, determines levels of risk, and establishes timelines among other items.
Thus focus MUST be upon collaborative construction delivery methods, versus BIM or maintaining the ‘status quo.’
Examples of proven collaborative construction delivery methods include Integrated Project Delivery – IPD, for major new construction, and Job Order Contracting – JOC, for renovation, repair, and minor new construction.   These methods enable a higher percentage of projects to be completer on-time and on-budget to the satisfactions of ALL parties involved – Real Property Owners, Contractors, AEs, Building Users, and Oversight Groups.
Key characteristics of collaborative construction delivery include the following:
  • Collaboration and Transparency among all participants
  • Early and Ongoing Communication
  • Standardized, Common Information for Costs, Materials, Equipment, Processes (i.e. MasterFormat, Uniformat, Omniclass)
  • Shared Risk/Reward
  • Qualifications  or Best Value Selection
  • Focus upon Total Costs vs. First Costs
  • Ongoing Monitoring and Continuous Improvement
  • Technology Supporting LEAN Best Management Practices

Role of supporting technology:

  • Lower cost implementation of proven business practices/processes
  • Consistent deployment
  • Enhanced productivity
  • Ability to store and reuse information
  • Quantitative metrics and transparency
  • Contract/Project/Document Management
  • Enables Collaboration

Role of Training/Education

  • Common Goals Among Stakeholders – Senior management, oversight groups, AE’s, Contractors, planners, Trades, building users, and community
  •  Mitigation of pervasive and harmful “silo” mentality
  • Consistent deployment

Benefits and Metrics/KPIs

  •  %/# Projects on-time
  • %/#  Project on-budget
  •  %/# Projects completed
  • Average project timeline
  • %/#/$ Change orders
  • Average procurement time
  • %/# and value of legal disputes

Overall, the benefits of IPD, JOC, etc. are: shorter procurement times, fewer change orders, virtual elimination of legal disputes, and more projects completed on-time and on-budget.

Benefits for Owners:

  • Fast and timely delivery of projects.
  • Consolidation of procurement creates lower overhead cost and procurement cost
  • Contractor and owner efficiencies in prosecution of the work.
  • Development of a partner relationship based on work performance.
  • Virtual elimination of legal disputes, claims and change orders.
  • Standard pricing and specification utilizing a published unit price book (UPB), resulting in efficient and effective estimating, design, and fixed price construction.

Benefits for Contractors/AEs:

  • Better and longer lasting relationships with owners
  • More predictable revenue stream
  • Reduced risk
  • Reasonable profit
“It is no surprise that some fairly radical rethinking of contractual structures and obligations is going to be necessary….
“Collaboration is culture, it requires greater commitment and a different mind-set. It is not something that is defined by procedures
or rules, it is a skill set.”
The lack of awareness and education with respect to collaborative construction delivery methods  remains staggering, and is not being addressed.  This fact is best demonstrated by the responses to the following survey question.  Note that commercial and public owners, contractors, etc. were involved in the surveys.
Staggering Lack of Education
Owners are virtually singularly responsible for low productivity and waste in the construction sector.
Many/most owners don’t have the proper skills and/or incentive to improve productivity with respect to the renovation, repair, and construction of the built environment.

Job Order Contracting – The Legal Side

This is an example of Job Order Contracting from a legal perspective and that of a school district in Texas.   This is NOT intended as ANY form of legal advice or counsel, but simply to share information relative to efficient construction project delivery methods. (source:


Magnolia ISD 170906


“Job order contracting” is a procurement method used for maintenance, repair, alteration, renovation, remediation, or minor construction of a facility when the work is of a recurring nature but the delivery times, type, and quantities of work required are indefinite. Gov’t Code 2269.401

This policy applies only to a facility that is a building, the design and construction of which is governed by accepted building codes, or a structure or land, whether improved or unimproved, that is associated with a building.

This policy does not apply to: 1. A highway, road, street, bridge, utility, water supply project, water plant, wastewater plant, water and wastewater distribution or conveyance facility, wharf, dock, airport runway or taxiway, drainage project, or related type of project associated with civil engineering construction; or 2. A building or structure that is incidental to a project that is primarily a civil engineering construction project. Gov’t Code 2269.402

If the District uses the job order contracts method as described in this policy, it must comply with the applicable legal requirements in this policy as well as other applicable legal requirements [see CV(LEGAL)], which include the following steps:


2. Giving PUBLIC NOTICE of the project;


4. MAKING EVALUATIONS PUBLIC after the contract is awarded; and

5. Providing for INSPECTION, VERIFICATION, AND TESTING necessary for acceptance of the facility by the District. Education Code 44.031(g); Gov’t Code 2269.052, .055, .056(a), (c), .058

Note: Terms in all capital letters, above, point to margin notes in the referenced policy.

The District may award job order contracts for maintenance, repair, alteration, renovation, remediation, or minor construction of a facility if the work is of a recurring nature but the delivery times are indefinite and indefinite quantities and orders are awarded substantially on the basis of predescribed and prepriced tasks.

The District  shall establish the maximum aggregate contract price when it advertises the proposal. The Board shall approve each job, task, or purchase order that exceeds $500,000. Gov’t Code 2269.403

The District may establish contractual unit prices for a job order contract by:

1. Specifying one or more published construction unit price books and the applicable divisions or line items; or

2. Providing a list of work items and requiring the offerors to propose one or more coefficients or multipliers to be applied to the price book or prepriced work items as the price proposal. Gov’t Code 2269.404

The District may use the competitive sealed proposal method under Government Code Chapter 2269, Subchapter D for job order contracts. [See CVB] The District shall advertise for, receive, and publicly open sealed proposals for job order contracts. The District may require offerors to submit additional information in addition to rates, including experience, past performance, and proposed personnel and methodology. Gov’t Code 2269.405

If a job order contract or an order issued under the contract requires architectural or engineering services that constitute the practice of architecture within the meaning of Occupations Code Chapter 1051 or the practice of engineering within the meaning of Occupations Code Chapter 1001, the District shall select or designate an architect or engineer to prepare the construction documents for the project. This requirement does not apply to a job order contract or an order issued under the contract for industrialized buildings or relocatable educational facilities subject to and approved under Occupations Code Chapter 1202 if the contractor employs the services of an architect or engineer who approves the documents for the project. Gov’t Code 2269.408

The District may award job order contracts to one or more job order contractors in connection with each solicitation of proposals. Gov’t Code 2269.406

An order for a job or project under a job order contract must be signed by the District’s representative and the contractor. The order may be:

1. A fixed-price, lump-sum contract based substantially on contractual unit pricing applied to estimated quantities; or

2. A unit price order based on the quantities and line items delivered. Gov’t Code 2269.410

The base term for a job order contract may not exceed two years. The District may renew the contract annually for not more than three additional years. Gov’t Code 2269.409

A job order contract may be used to accomplish work only for the district that awards the contract unless:

1. The solicitation for the job order contract and the contract specifically provide for use by other persons; or

2. The District enters into an interlocal agreement that provides otherwise. Gov’t Code 2269.407

The contractor shall provide payment and performance bonds, if required by law, based on the amount or estimated amount of any order. Gov’t Code 2269.411 [See CV for more information on payment and performance bonds]


job order contracting

Spreadsheets, JOC, SABER, and IDIQ Don’t Mix

construction cost estimating software

Line item cost estimating requires significant experience and capabilities spanning multiple domains; Process, Skills, and Technology.

The on-time and on-budget delivery of the numerous renovation, repair, maintenance, and minor new construction projects facing real property owners and their awarded contractors also requires the ability to work collaboratively with full transparency.  Thus, JOC, SABER, and other collaborative construction delivery methods have evolved to support detailed construction cost estimating and associated contract, project, and document management.

Ongoing education and training as well as supporting technology are equally important to enable low-cost and consistent deployment, program monitoring, and continuous improvement.  The exclusive use of spreadsheets and/or simple cost calculators are counterproductive in the drive for greater economic and environmental efficiencies.  Current and future real world requirements demand timeliness, productivity, and transparency.

A leading technology is e4Clicks Project Estimator.  Well over 85% of the United States Air Force as well as USACE Regions, and other DOD and non-DOD Federal Organizations (DOE, DOI, FAA, GSA, NIST, VA…), State/County/Local Governments, Educational Institutions, and Transportation Agencies (Airports/Mass Transit), leverage 4Clicks’ software, support, and training.


The Problem with Facility Benchmarking – Past performance does not necessarily predict potential results

I find the current trend toward benchmarking to be disturbing.

Proponents seem to believe that the process is key to facility management. This is quite simply, not true.   Real property owners must focus upon strategy and collaborative LEAN best management practices.

Benchmarking information certainly has its place.   Is should not, however, be the cornerstone of a facility management strategy.

Benchmarking, at its very best, simply tells you how your organization compares to peer groups, with respect to facility management, functional and physical conditions, life-cycle costing, and/or total cost of ownership.  As most real property owners have little cost visibility or accurate and timely data facilities information, the value of benchmarking data is limited.  How can owners that do not practice LEAN best management practices to optimize reinvestment or investment capital into existing or new structures, be considered a valuable source of actionable information?

Until Owners improve their capability and awareness of collaborative LEAN business management practices such as integrated construction delivery and total cost of ownership management, our built environment will continue down its path of waste and degradation.

life-cycle facility management

job order contracting

Detailed Line Item Unit Cost Construction Estimating, Public Sector, & Unit Price Books – UPB – UPG

” Definition: detailed cost estimate: “a forecast of construction cost prepared on the basis of a detailed analysis of materials and labor for all items of work.”  – 13th edition of the Architect’s Handbook of Professional Practice

A detailed unit cost line item construction cost estimate involves a  review and understanding of the scope of work of the associated project including all possible factors and risks.

Materials, labor, and equipment as well as associated costs are provided in highest level of granularity.

Anticipated productivity is also a key element.  The latter can be affected by multiple variables such as labor composition and availability, weather, site access, materials availability, etc.

Owners – Detailed unit price line time estimates are required by public agencies for most  IDIQ construction projects.  If the project exceeds are specified dollar threshold, the an independent owner estimate must also be created (also call an independent government estimate – IGE).  Line item estimates are also used to create and validate construction budgets.

Contractors – Detailed unit price line estimates are used to bid jobs and also done by general contractors and construction managers to validate bids from sub contractors.  They are also associated with progress reporting and invoicing.

Required Skills – Field experience at construction sites is extremely important as it is perhaps the only way to gain a true appreciation of risk factors and other variables that can impact a construction project.  In addition, the ability to review and interpret construction drawings, work with cost estimating formulas and technologies, communicate information to disparate disciplines and audiences, and attention to detail are all additional requirements.

Process Tasks  – Processes associated with creating a line item construction cost estimate include the following:

  • Definition of services to be provided
  • Estimate preparation
  • Validation of contents and assumptions
  • Estimate reconciliation (if multiple estimates are required for a project)
  • Documenting and associated presentation of the estimate

Defining the scope of services in itself requires several considerations such as identifying inclusions and exclusions, defining the basis to be used for pricing (construction cost databases and/or unit price books – UPB, unit price guides, subcontractor quotes), presentation of line items as bare costs or inclusive of overhead and profit,  classification system to be used, i.e. CSI MasterFormat, Uniformat II, WBS, etc, and format of the estimate (summary level, detailed level, price vs. non pre-priced items, associated formulas, source of each line item).

Collaboration among construction project participants and/or stakeholder is critical to assuring a proper definition of the scope of services, and thus mandatory if the estimate is to reflect the expectations of the owners, design, contractor, etc.  As one might expect, achieving the best possible outcome for the estimate and the overall construction project is dependent upon the processes involved in gathering accurate information in a timely manner and to employ the actions and philosophies associate with continuous improvement and LEAN best management practices.

The following is a graphic noting some of the items that may be considered in the creation of a construction cost estimate.

unit price book - upb

Multiple construction delivery methods require line item construction cost estimates.  Job Order Contracting – JOC, for example, requires the use of line item unit price book – UPB and/or unit price guide – UPB.   Unit prices books are typically updated annually and quarterly price adjustments may also be applied by specified processes and factors.

job order contracting


job order contracting unit price book

Veterans Administration – Facilities Management – Audit of Business Practices

The VA needs to improve its management of its real property portfolio.

Like many large real property owners, the VA/VHA would benefit by engaging in global oversight and local implementation of LEAN construction delivery methods.

LEAN construction delivery implementation would provide cost transparency, shorter construction project timelines, a higher percentage of funds spent on actual construction vs. procurement/red tape, higher quality, and greater over facility use satisfaction.

Unfortunately audits by the Office of the Inspector General indicate that the VA’s decentralization, lack of management, and poor business practices are likely the cause of billions of dollars of liability while also creating significant patient safety issues.


This audit assessed how effectively the Veterans Health Administration’s (VHA’s) Non-Recurring Maintenance (NRM) program addressed VHA’s most significant maintenance needs in its medical facilities. The NRM program’s purpose is to maintain a safe and efficient medical facility infrastructure…. the NRM program as its primary means of addressing its facility maintenance backlog, which represents their most significant infrastructure needs. In addition, VHA uses NRM funding for Clinical Service Initiatives (CSI), green energy projects, infrastructure improvements, and sustainment. NRM program expenditures have risen from about $824 million in FY 2008 to approximately $1.8 billion in FY 2013. NRM projects valued at over $1 million require approval from VA’s Strategic Capital Investment Plan (SCIP) Board. Veterans Integrated Service Networks (VISNs) approve NRM projects below $1 million.

– Audit of the Non-Recurring Maintenance Program, OFFICE OF INSPECTOR GENERAL


VHA needs to increase the effectiveness of its NRM program.  However, VHA did not have an adequate process to track how much of the over $1.8 billion NRM funds medical facilities spent to address its nearly $10.7 billion identified facility maintenance backlog.

… inadequately assessed risks to patient safety and underestimated repair costs by $12.3 billion.

… 74 of the 150 NRM construction projects reviewed were not completed within 1 year of their initial planned completion date.

….VHA did not have an adequate process to track their NRM project expenses and adequately monitor expected results.

… did not assess patient safety risks, and provide reasonable cost estimates for identified maintenance.

… VHA has not been able to adequately identify how it is using NRM funds to achieve program goals or ensure projects are prioritized to correct significant maintenance deficiencies, including serious patient safety issues.

… VHA cannot ensure that their annual NRM budget requests are accurate or that they are taking timely corrective actions on NRM projects that miss project milestones.

– Audit of the Non-Recurring Maintenance Program, OFFICE OF INSPECTOR GENERAL

Tools for improving the timeliness, quality, and cost transparency of the VA’s numerous renovation, repair, and sustainment construction projects have been available for decades.   The most notable being  education, training, and software to support Job Order Contracting.  Unfortunately the VA has yet to require its network of regions (VISNs) to adopt this these tools, and instead primarily relies upon ‘ad hoc’ process and spreadsheets.