Streamlining Construction Procurement: Benefits of Job Order Contracting

Construction procurement presents a variety of challenges for owners managing contractors. Common issues owners face include a lack of centralized platforms to manage contractors and contracts, inconsistent bidding processes that fail to ensure competitiveness, insufficient transparency on fees paid for work performed, and a lack of tracking or ability to audit.

Beginning in the latter part of the 20^th century, Job Order Contracting (JOC) was first used by the US Army. JOC is an indefinite delivery, indefinite quantity (IDIQ) construction procurement method aimed at simplifying the contracting process. JOC facilitates competitively awarded work order-based contracts that reduce or even eliminate extra steps inherent in traditional procurement processes, saving time and resources. By creating a transparent and competitive environment, JOC enhances procurement and project management efficiency. 

An Arizona State University study found impressive user satisfaction with JOC, revealing 87% of projects completed on time and 91% within budget. Cost savings averaged 24% with a remarkable 75% reduction in procurement time.¹ 

Users of JOC find one of greatest advantage is in the reduction of contracts and solicitations required for construction projects. For example, one contract solicitation can replace 15 to 30 single solicitations.   

Under JOC, work orders for construction projects are governed using a unit price book (UPB) – that helps develop line-item proposals tailored to specific scopes of work. Each line item includes equipment, materials, and labor costs necessary to complete measurable tasks, ensuring that pricing reflects actual conditions and wage rates specific to a client or region. A well-sourced UPB provides:

• Greater efficiency in the proposal development and review process 
• Reduced time starting and completing work orders 
• Greater transparency into proposal costs associated with defined scope of work 
• Reduced opportunity for quantity and price inflation by contractors 
• Overall greater ability to maintain a transparent and auditable JOC program

Implementing a JOC program offers distinct advantages. It creates significant time savings in competitive construction procurement, compressing the timeline between project scope development and notice to proceed from months to as little as a few weeks or days. This up-front competitive bidding and contracting process, completed when awarding master contracts, streamlines project management.

Overcoming Common Challenges: Transparency, Efficiency, and Accountability

JOC provides transparency in contractor pricing. The submitted adjustment factors encompass the contractors’ operational costs, including general conditions, overhead, and profit margins. Consequently, owners gain enhanced insight into the costs associated with each work order. 

While public entities such as federal and local government agencies, K-12 school districts, university systems, and public health care providers are the primary users of JOC, there is potential for private sector application. 

Successful JOC implementation is characterized by clear communication strategies, well-defined roles, and regular performance monitoring. It often begins with establishing accountability through designated roles, such as program administrator and JOC coordinator. Successful contractor management requires comprehensive outreach that emphasizes education, communication, and quality-based procurement practices. Collaborative partnerships fostered through regular team meetings and sessions enhance project outcomes.

• Certification and Contracting
  • Simplifies contractor certification by centralizing client provided information for faster assessment and tracking.
  • Streamlines contract management with easy contract creation and compliance through digitization.
• Work Order Issuance
  • Enables online job order creation, defining scope, location, and specifications seamlessly.
  • Integrates predefined unit prices for instant pricing, avoiding manual calculations.
• Cost Estimation and Approval
  • Automates cost estimation using platform unit prices for consistent pricing.
  • Facilitates real-time approvals and workflow, speeding up the process and reducing delays.
• Work Execution
  • Enhances project scheduling and resource management, ensuring effective task execution.
  • Promotes communication and collaboration among project stakeholders for real-time updates.
• Change Management
  • Tracks supplemental orders easily, documenting scope changes and updates for quick approvals.
  • Sends notifications to stakeholders for improved transparency.
• Final Inspection and Acceptance
  • Allows digital documentation and inspections, eliminating paper records.
  • Provides real-time inspection feedback for efficient job order closures.
• Invoicing and Payment
  • Features automated invoicing based on completed work, reducing errors.
  • Tracks payments in real time, providing detailed financial reports to minimize delays.
• Close-Out and Post-Completion
  • Supports organization of close-out documents for easier project completion.
  • Enables contractor performance evaluations for future project insights.