Why Use JOC?
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Increased Responsiveness
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In JOC, work can start between 75-85% faster than traditional contracting methods. Since the contractor is already
under contract and on-call, you avoid the entire traditional procurement time. Studies have shown that for small projects
(less than $20,000) the average procurement time using the traditional system was as much as 233 days compared to 42 days
for JOC, for a savings of 82%. For medium sized projects the time required in the traditional system was 193 days, while
in JOC the average was 52 days, a savings of 75%.
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Lower Costs
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JOC can save between 8-15% in total costs over traditional contracting methods. These cost savings occur from reduced
design costs, lower procurement costs, lower direct cost of construction costs, decreased overhead costs, and reduced
post award costs.
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- Design Costs
Most projects that are suitable for JOC but bid through the traditional design-bid-build process, require A/E
services for the sole purpose of preparing a set of bid documents. The JOC type of work is generally straightforward,
simple and many times involves replacements in kind. The cost of putting together a traditional bid package is 6-8%
of the cost of construction. These costs can be eliminated or at least substantially reduced in JOC because all that
is required is a Detailed Scope of Work which is always substantially less than a full set of bid documents. The
Technical Specifications are already prepared. And even though some projects require architectural or engineering
involvement, documenting the design in JOC is less formal and much less costly. Savings of 1-3%.
- Procurement Costs
Each project bid through the traditional bid process usually follows these steps: (1) once prepared, the bid
documents are approved by procurement and/or legal; (2) bid documents are copied and readied for distribution;
(3) the advertisement is written, approved and submitted to one or more publications; (4) pre-bid meetings are
held; (5) written questions are received from potential bidders and analyzed; (6) addenda are prepared, approved,
and distributed to the potential bidders; (7) bids are collected and publicly opened; (8) the apparent winner is
determined; (9) bonds, insurance and other documents are received from the apparent winner and reviewed by various
departments; (10) the contract is distributed for signature; (11) sent for registration; and (12) a notice to
proceed is issued. The cost of these steps is typically 1-2% of the cost of construction. In JOC, only the master
JOC contract follows this process. Thereafter, hundreds of Job Orders can be issued from the master JOC contract.
The lengthy bid process is avoided, along with its procurement costs of 1-2%.
- Direct Cost of Construction (4-6% less in JOC)
- Volume Discount. Job Order Contracting combines many small projects into one master contract. The contractor
will provide a volume discount because it is bidding on a $3,000,000 contract, not a $75,000 project.
- Reduced Scope. JOC projects can be started quickly. For projects involving a worsening condition such as a
leaking roof or a failed drainage structure, starting work fast can substantially reduce the scope of work. Less
work means less cost.
- No Contingencies. The intent in JOC is to pay the contractors for the work they perform. Risks are reduced in
the way the Detailed Scopes of Work are written and because the contractor actively participates in the Joint Scope
Meeting where the site is inspected and questions about the work can be obtained. As a result, contractors do not
include contingencies in their bids.
- Overhead Costs
The JOC contractor doesn’t have to compete for each JOC project. It doesn’t have to spend time and money preparing bids
for projects that it may not win. These savings will be passed on to the owner in the form of a lower bid. The contractor
can also spread its overhead over more projects further reducing costs by 1–2%.
- Post Award Claims
There are less change orders and virtually no claims in JOC. The contractor actively participates in the Joint Scope Meeting
and developing the Detailed Scope of Work. Any issues or problems are discussed openly and resolved. If a question arises
during the Proposal development process, the contractor is free to contact the owner and get answers. In addition, the
contractor takes responsibility for errors and omissions in the Proposal so it has an incentive to reduce them. This
non-adversarial relationship eliminates the underlying cause of most claims and changes. And since JOC is a series of
individual Job Orders, it is against the contractor’s best interest to submit claims. Savings from reduced post award claims is 1-2%.
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JOC produces higher quality construction
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Since the structure of JOC is a series of individual Job Orders, the contractor has an ongoing financial incentive to provide
a quality project. If the contractor fails to maintain the desired level of service and quality, the owner can elect to give
future projects to other JOC contractors or to complete the projects using traditional contracts.
The “contractual motivation” under JOC is the complete reverse of the traditional system where the contractor has been
awarded a one time, fixed priced contract. With the traditional system the contractor is motivated to make as much money
as possible off that one opportunity. The contractor typically does so by cutting corners and submitting frivolous requests
for claims and change orders. This sort of behavior doesn’t happen in JOC since it would convince the facility owner not to give
the contractor future Job Orders.
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Enhanced opportunities for minority businesses
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JOC has been designed to enhance the participation of local, minority and female businesses. Since no commitment is made to
the JOC contractor regarding specific projects or the exact types of work that will be required, the contractor cannot develop
an in-house work force to do all the work and is forced to maximize the use of subcontractors. This increases the opportunities
for the contractor to use local, minority and female businesses. Over the past 5 years, 40% of all JOC work has been subcontracted
to businesses in these categories.
In addition, minority businesses strongly support JOC because they are able to receive large amounts of work without the official
red tape normally associated with bidding. They also support JOC because it does not tie up their bonding capacity. They get the work
fast and get paid fast. JOC has enabled many minority firms to do government work for the first time.
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Incorporate multiple funding sources
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Under JOC, the obligation document is the individual Job Order and not the basic contract. Therefore, individual Job Orders can be paid
from different funding sources. This capability is not available with any other form of competitively bid, firm fixed priced construction
contract.
JOC provides the facility owner with a single, highly flexible and responsive tool for accomplishing a majority of its annual construction
and repair projects regardless of the source of the funds.
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