1

A Brief Introduction to Job Order Contracting

(JOC)Mike Purdy

Michael E. Purdy Associates(206) 295-1464

mpurdy@mpurdy.com

www.mpurdy.com

2

Alternative Public Works Contracting (RCW 39.10)

General Contractor/Construction Manager Design - Build Job Order Contracting

Effective July 1, 2007 Sunsets June 30, 2013

3

What Public Agencies are Authorized to use Job Order Contracting?

State Department of General Administration University of Washington Washington State University Cities with 70,000 population or more

– Public authorities chartered by the city Counties with 450,000 population or more Port districts with $15M total revenue or more PUDs with $23M energy sales revenue or more All school districts State ferry system

4

What is Job Order Contracting (JOC)

"Job order contract" means a contract in which the contractor agrees to a fixed period, indefinite quantity delivery order contract which provides for the use of negotiated, definitive work orders for public works as defined in RCW 39.04.010.

RCW 39.10.210 (7) Fixed period

– 2 years (with one 1 year optional extension) Indefinite quantity delivery order contract

– Use of unit price book (R.S. Means, etc.) Negotiated, definitive work orders

– "Work order" means an order issued for a definite scope of work to be performed pursuant to a job order contract.

5

What are the Job Order Contracting thresholds?

Work Order Amounts: – $300,000 per work order– 2 work orders in a one year period up to $350,000

Contract Amount: – Maximum per year is $4 million

Contract Time: – Two year contract, renewable for on additional year

Number of Contracts: – No more than 2 JOC contracts at a time

Subcontracting: – 90% of the work must be performed by subcontractors

By contract, not Work Order

6

How does subcontracting work for Job Order Contracting?

Bidding Documents: Used to the extent that they are required for permits and contractor to price

Pre-Pricing Job Walk-Through Meeting: Owner, Contractor, subcontractors, and designer walk the project

Obtaining Prices: Contractor requests bids from subcontractors or negotiates with subcontractors

Contractor Submits Prices: Based on unit price book multiplied by coefficient. Coefficient includes all overhead and profit.

Price Review by Owner: Owner analyzes Contractor’s prices line by line (items and quantities). Negotiation occurs.

7

Advantages: Why do Owners use Job Order Contracting?

1. Faster: Reduces lead time to perform smaller projects2. Less expensive: Reduces owner’s administrative cost

to perform smaller projects and reduces or eliminates designer fees

3. Competitively bid prices: Uses pre-established, competitively bid unit prices and coefficient for all work

4. Fewer change orders and claims because work is negotiated

5. Partnership: Collaborative team relationship and partnership between contractor and owner.

8

Disadvantages: What are the drawbacks of Job Order Contracting?

1. Limited capability: Contractor may not have capability to manage all the work or obtain subcontractors

2. More costly: A negotiated project may be more expensive than bidding each project. No real savings on what actual construction costs are.

3. Price book knowledge: Owner and Contractor must be familiar with how to use unit price book.

4. Negotiation skills: Owner and Contractor must have skills to negotiate reasonable price.

5. Subcontracting: 90% of work must be subcontracted so contractor’s quality of work less important

9

Experience: Mike Purdy has more than 29 years of experience as a manager in public contracting and procurement in Seattle. He is the Contracts Manager for the University of Washington’s Capital Projects Office and is responsible for managing design and construction contracts for more than $1 billion worth of projects at the University. Before joining the UW in 2005, he spent five years at the Seattle Housing Authority where he served as Contracting and Procurement Manager, overseeing all of the contracting and purchasing (construction, design consultants, other consultants, goods, supplies, and services) for the largest residential landlord in the state. Prior to that he worked for the City of Seattle for more than 21 years, where he administered the City’s construction and consultant contracts as the City’s Contracting Manager.

He is also the principal of Michael E. Purdy Associates (www.mpurdy.com), a consultant firm established in 2005 to help public agencies and businesses develop and implement effective contracting strategies, solve complex contracting problems, and obtain tailored training in contract administration. He maintains the popular Public Contracting Blog at http://PublicContracting.blogspot.com.

Education: He has a bachelor’s degree in business and public administration and an MBA, both from the University of Puget Sound, and a master of divinity degree from Fuller Theological Seminary.