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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
2
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
3
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
4
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
Process - How is Work Done?
6
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
7
• 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
8
• 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
9
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
10
Time Savings• Faster Procurement = Weeks Instead of Months
• Based on Owner-Contractor Partnership = Non-Adversarial Relationship
JOC Overview – Cost Savings
11
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
12
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
13
• Instructions to Bidders, Bid
Forms, and General Conditions
• The Construction Task Catalog®
• The Technical Specifications
JOC Contract Documents
14
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
15
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
17
Technical Specifications
• Specifies Quality of Materials and Workmanship
• Corresponds with Tasks in the Construction Task Catalog®
JOC Process – How is JOC Bid?
18
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
19
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
20
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
21
Internet Based Software Provided with Contract
• eGordian® Software Automates the Proposal Process
Understanding the Construction Task Catalog®
22
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
23
Include All Appropriate Tasks:
* Sample only
Understanding the Construction Task Catalog®
Unspecified Services
24
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
25
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
26
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 –CTC Price vs. Quotes
28
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
29
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.
Bid Considerations
31
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
32
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
33
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
34
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
35
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
36
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.
Questions?
38
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 – [email protected]