Job Order Contracting for General Construction

Pre-Bid Conference

IU Project #: IU 2016 GC JOCTuesday, December 13, 2016 (South Bend)

Northern Region – IU KOKOMO, IU South Bend, IU Northwest

Wednesday, December 14, 2016 (Bloomington)Southern Region – IU Bloomington, IU Southeast

Tuesday, December 20, 2016 (IUPUI)Central Region - IUPUI

Pre-Bid Meeting Agenda

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JOC Overview

JOC Process

JOC Contract Documents

Solicitation Details

Understanding the Construction Task Catalog® (CTC)

Calculating the Bid

Bid Considerations & Review

Contractor Adjustment Factors

Risk of Low Adjustment Factors

Questions

Indiana University’s Job Order Contracting History

Indiana University’s JOC History

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Using Job Order Contracting since 2008

Typically Uses JOC for:

• Facility Repair and Renovation Projects

• Straightforward Work Items

• Replacements in Kind

Has Trained and Dedicated Staff to Manage JOC

Statistics

• Approximately $30 Million in work ordered

• Average Job Order size approximately $89,000

• Includes Supplemental Job Orders

JOC Overview

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Job Order Contracting is an Indefinite Quantity Construction Contract

JOC Introduced in the United States in 1985

• Dept. of Defense, USPS, NASA, etc.

Implemented by states, counties, cities, K-12 schools, universities, housing authorities, etc. since 1990

Hundreds of contracts currently in use

Over $1.4 Billion in construction placed annually through Gordian JOC systems

JOC is an Umbrella Contract

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Process - How is Work Done?

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Joint Scope Meeting (JSM) With the University, Contractor, and Others to define the Detailed Scope of Work

The University Issues Request for Proposal for the Agreed Upon Detailed Scope of Work

Proposal Development • Typical Proposal Due Date will be 2 weeks from RFP

Proposal Review

Issuance of Job Order

Total Time Goal: Average 3-5 weeks

Schedule Joint Scope

Meeting

Joint Scope

Meeting & RFP

Owner reviews the Price

Proposal, list of Subs, schedule…

JOC Overview – Contractor Benefits

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• Good work is rewarded with more work

• Profit is a function of volume

• Volume is driven by performance

• JOC provides a steady flow of work

• Do not have to chase the next project

• Long-term relationship with the University

• Good work is rewarded with more work

• Develop partnership with the University

• Reduced Risk

• Payment for every element of work performed

• Ability to provide input during scope development

Why JOC Works for The Contractors

JOC Overview – Subcontractor Benefits

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• Responsiveness requires local prime presence and use of multiple local subcontractors.

• Wide range of possible projects means variety of subcontractors will be needed to fulfill the contract.

• Simplified procurement process for the University allowing them to procure more work in a shorter period of time. Results in greater number of subcontractor opportunities

• Multiple projects on multiple sites simultaneously.

Why JOC Works for The Subcontractors

JOC Overview

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Why JOC Works for The University

• A Fixed Priced, Fast Track Procurement Process

• Job Orders are Lump Sum

• The Ability to Accomplish a Substantial Number of Individual Projects with a Single Competitively Bid Contract

• On-Call Contractors Ready to Perform a Series of Projects at Different Locations for Competitively Bid Prices

• Contractor Has A Continuing Financial Incentive To Provide• Responsive Services

• Accurate Proposals

• Quality Work on Time

• Timely Close Out

• Future Purchase Orders Tied to Contractor Performance• No Obligation To Award Specific Projects

• The University can Use All Other Methods For Accomplishing Projects

JOC Overview - Efficiency

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Time Savings• Faster Procurement = Weeks Instead of Months

• Based on Owner-Contractor Partnership = Non-Adversarial Relationship

JOC Overview – Cost Savings

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Cost of construction: 3-6%• Contractor offers discount because bidding a large

volume of work, not one small project

• Overhead and profit spread over entire value of contract

Lower procurement and administrative costs: 1-2%• Eliminates the full procurement cycle for each and

every project

Fewer change orders and claims: 1-2%• Joint scoping process eliminates

misunderstandings about Detailed Scope of Work

• Contractor responsible for errors and omissions

Reduction of A/E fee: 3-5%• Currently many small projects are "designed"

primarily for procurement purposes

JOC Overview – Additional Benefits

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The University also Uses JOC to

• Increases use of local businesses• The absence of pre-established quantities inhibits trade staffing by the prime contractor.

• Responsiveness requires the prime to use multiple local subcontractors.

• No bonding requirement for the sub, faster payment, and less red tape, thereby expanding business opportunities for small businesses

• The University reviews and approves all Subcontractors prior to issuing Job Orders to ensure compliance with goals

• All University contracts have subcontractor participation goals

• Increases Transparency • The University Has the Ability to See and Review the Back-Up Pricing Details

• Schedule Flexibility• No Shelf Life for Prices or Job Orders

• Fast procurement cycle is good for end of fiscal year projects

JOC Contract Documents

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• Instructions to Bidders, Bid

Forms, and General Conditions

• The Construction Task Catalog®

• The Technical Specifications

JOC Contract Documents

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Instructions to Bidders, Bid Forms, and General Conditions• Notice to Bidders

• Instructions to Bidders

• Minority and Women’s Business Enterprise

Participation Plan

• General Conditions of the Contract (AIA

Document A201, as amended for JOC)

• Supplemental General Conditions

• JOC Specific Conditions

• Project Site Requirements

• Documents to be Submitted with the Bid

• Exhibits

JOC Contract Documents

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Construction Task Catalog® (CTC)

• Catalog of Pre-Priced Construction Tasks

• Organized by Construction Specifications Institute (CSI)

• Based on Local Labor, Material & Equipment Costs

• The tasks represent the “Scope of Work” for the contract

JOC Contract Documents

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Construction Task Catalog® (CTC)

Typical Task:

JOC Contract Documents

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Technical Specifications

• Specifies Quality of Materials and Workmanship

• Corresponds with Tasks in the Construction Task Catalog®

JOC Process – How is JOC Bid?

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Award Based on Competitive Bid

• Must Bid (3) Adjustment Factors:

• Normal Working Hours

• Other than Normal Working Hours

• Non Pre-priced

• Adjustment Factors Apply to All Tasks in the CTC

• Each Adjustment Factor is Weighted to Create an Award Criteria Figure

• Lowest Award Criteria Figure From a Responsive, Responsible Bidder is

deemed to be the low Bidder

Solicitation Details

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Prior to Bidding the University Cannot:

• Identify or Commit to any Specific Project or Location

• Identify or Commit to any Specific CTC Tasks or Quantities

Contract Specifics Include:• (3) Separate Regions are Being Bid: North, Central, and South

• North – IU Kokomo, IU South Bend, IU Northwest• Central – IUPUI Indianapolis• South – IU Bloomington, IU Southeast

• If Submitting a Bid for More than One Region, Bidders Must Submit a Separate Sealed Bid Package for Each Region.

• Bid Security = $25,000• Minimum Contract Value = $25,000• Base Term for a Period of (1) Year• Maximum Potential Value of the Base Term is $2,000,000• Three Option Terms for a Period of (1) Year Each• Maximum Potential Value of Each Option Term is $2,000,000• Potentially a (4) Year Contract up to or exceeding $8,000,000

Solicitation Details

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Differing Site Conditions or Changes in Scope• Priced from Construction Task Catalog®

• Supplemental Job Order

• No Negotiated Change Orders

Filings and Permits• Fees paid for all Permits reimbursed 100% - No Markup

MBE/WBE/VBE Goals = Mirror IDOA Set Goals

Solicitation Details

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Internet Based Software Provided with Contract

• eGordian® Software Automates the Proposal Process

Understanding the Construction Task Catalog®

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Contractor must review and understand “Using the Construction Task Catalog®”

Rules of the game

Make sure you get paid for all appropriate tasks

Pages 00 – 1 to 00-8 of the CTC

Indiana University

32 16 23 00-0002 4” Cast In Place Concrete Sidewalk SF $5.06 400 $2,024.00

For Quantities 100 to 500, Add SF $2.04 400 $816.00

32 11 16 00-0015 4” Crushed Aggregate Base SF $0.63 400 $252.00

For Quantities Under 1000 SF $0.18 400 $72.00

01 71 13 00-0003 Mobilize Backhoe EA $402.63 1 $402.63

31 23 16 36-0006 Excavation by Backhoe CY $3.75 11 $41.25

For Quantities Under 20 CY, Add CY $3.75 11 $41.25

31 23 16 36-0028 Loading Excess Materials CY $3.42 13.75 $47.03

For Quantities Under 20 CY, Add CY $3.42 13.75 $47.03

01 74 19 00-0029 Hauling to Dump Site CYM $0.51 207 $105.57

01 74 19 00-0021 Landfill Dump Fee CY $15.14 13.75 $208.18 $4,056.93

/400

$10.14

Compare these prices

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Include All Appropriate Tasks:

* Sample only

Understanding the Construction Task Catalog®

Unspecified Services

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Contractor must have permission from the University to use a Unspecified Service Task prior to submission

Three (3) Quotes on vendors’ or subcontractors’ letterhead

Justification for less than three (3) Quotes

Contractor is paid the amount in the following formula:

Methods to Calculate Bid –Adjustment Factors

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Recommended Method

Use Historical Project Data

• Select a Completed Project • You Know Scope and Direct Costs

• Price Project From CTC

• Add on Overhead and Profit

• Calculate the Adjustment Factor

Create a Representative Project

• Create a Scope of Work

• Get Sub Quotes or Estimate Cost

• Price Project From CTC

• Add on Overhead and Profit

• Calculate the Adjustment Factor

Alternative Method

Sample Project -Detailed Scope of Work

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Multifamily Unit Renovation • Doors and Hardware

• Replace 12 interior doors, hinges and hardware

• Doors shall be 3x7, solid core wood doors

• Grade 2 locksets with knobs

• Replace 2 push bar exist devices and door closers on exit doors

• Interior Lighting

• Replace all lay-in troffer fixtures on first and second floors. 48 in total

• Replace 4 exit fixtures

• Replace 12 industrial fixtures in shop area

• Plumbing Fixtures

• Replace 8 bathroom sinks, 8 faucets, and 8 toilets in men’s and women’s bathroom in admin building and shop area

• Replace 4 water fountains

• Replace Boiler

• Demo existing boiler and as much piping and venting to accommodate new boiler. Install a new 1028 mbh oil fired cast iron boiler. Weil-McLain Model 88. No access for packaged boiler. Must field assemble sections. Provide new piping as required.

• Normal Working Hours Apply

Sample Project – Price Proposal

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Sample Project –CTC Price vs. Quotes

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Direct Cost of Work from Quotes

or Estimates

• Replace Boiler $ 48,911.43

• Doors/Hardware $ 9,748.46

• Lighting $ 15,845.00

• Plumbing $ 14,986.76

TOTAL = $ 89,491.65

• Replace Boiler $ 47,500.00

• Doors/Hardware $ 9,250.00

• Lighting $ 16,750.00

• Plumbing $ 12,500.00

TOTAL = $ 89,000.00

Direct Cost of Work from CTC

Sample Project –Putting It All Together

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A. Direct Cost of Work from Quotes $89,000.00

B. Overhead 10%* $ 8,900.00

C. Subtotal (Cost & O/H) $97,900.00

D. Profit 10%* $ 9,790.00

E. Subtotal (Cost & O/H & Profit) $107,690.00

F. Price From CTC $89,491.65

Adjustment Factor (= E / F) = 1.2034

*Sample Only. Contractor to determine O/H & Profit. Prepare this calculation for more than one sample project.

Filling Out the Bid Form

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1 1 5 3 4

1 1 8 5 0

1 1 2 0 0

0 6 9 2 0

0 3 5 5 5

0 1 1 2 0

1 1 5 9 5

Bid Considerations

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Contractors Should Expect To

• Prepare incidental drawings or sketches for some projects• Justify Quantity Calculations

• Explain Detail of Work

• Prepare proposals for some projects that may be canceled

• Margins on CTC tasks vary

• Some projects are more profitable than others

• Maintain a fully functioning office

• Maintain a fully functioning staff

• Hold required licenses

• Meet participation goals

Contractor Adjustment Factors

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Importance of Adjustment Factors

• Determines winning bidder AND

• Used to price individual Job Orders

• Price proposal total becomes the lump sum Job Order amount

Contractor Adjustment Factor

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Annual Price Adjustment

• Applied annually on the JOC’s Bid Due Date

• Based on CCI for the City of Cincinnati published by Engineering News Record

• Calculation• Average CCI for Current Year = The % Increase or Decrease in

Average CCI for Base Year Construction Costs

• Percentage x Original Adjustment Factors = New Adjustment Factors for Next Year

• Normal Working Hours

• Other Than Normal Working Hours

• NPP Adjustment Factors are Fixed for

the Duration of the Contract

Risks of Low Adjustment Factor

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Leads to Arguments in Proposal Review

• Unsupportable Tasks

• Exaggerated Quantities

Leads to Delays in Job Order Development• Takes Longer to Review Proposals

Creates an Adversarial Relationship

• Reduced Volume of Work

• Will Shorten Contract

• Lost Profitability

No Second Chance to Improve Margin

Review / Key Points

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Focus on Total Potential Value of Contract

• Potentially a (4) Year Contract up to or exceeding $8,000,000

Evaluate Construction Task Catalog®

• Analyze Unit Prices

• Know the General Guidelines for Using the CTC

Contractor Performance Drives Volume

• Responsive Service

• Accurate Proposals

• Safe and Clean Project Sites

• High Quality Construction

• On-Time Completion

• On-Time Close Out

Bids

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Sealed bids due: Thursday, January 12, 2017 at 2:00 PM, EST Time

Location

Office of the Vice President for Capital Planning and Facilities

Indiana University

1800 North Range Road

Bloomington, IN 47408

Submittal: The original and one copy of the Bid Form and all other required documents shall be submitted, with all blank spaces appropriately filled in, with prices given in words and numerals, using ink or typewriter, with handwritten ink signature. The written prices shall govern where there is a discrepancy. Any modification shall be initialed.

IF BIDDING MORE THAN ONE REGION, A SEPARATE SEALED BID PACKAGE MUST BE INCLUDED FOR EACH BID.

Bids

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Questions?

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Make Sure you Signed the Pre-bid Sign-In Sheet. ATTENDANCE TO ONE PRE-BID MEETING IS MANDATORY!

All questions concerning this solicitation must be received via email:

1. No later than End of Business Hours on January 5, 2017.

2. Sent to Ricky Pettit – r.pettit@Gordian.com