Gotham JA Miele, Sr, PE

Water conservation cleans Long Island Sound, RL Swanson, DJ Tonjes

Marine vessels serving New York City, W Goyzueta, J Chen, K Byrnes, R Ferro

Line stops avoid bypass in pumping station, F Gallo

Pilot biological nutrient removal, B Bodniewicz, K Mahoney

Enhanced beach protection — 2000, FJ Oliveri, F Loncar, M Ellis

Telemetering in New York, S Rozelman, S Aziz

Job order contracting, MP Quinn, P Schrayer

Operational benefits of celebrating Water Week, RE Adamski, H Einsohn, M Keating, A Lamarche, B Olivieri

CSO signage: expanded notification, S Rozelman, P Lutz, F Loncar

Brooklyn student wins water prize

Executive director's message, P Cerro-Reehil

People and places


  Summer 2001 — Vol. 31, No. 2

Job order contracting

by Michael P. Quinn, PE and Paul Schreyer


NYCDEP, like other municipal agencies, has an ongoing need for straightforward, relatively minor capital construction projects. Examples are the replacement of equipment, piping, valves, lighting, handrails, gratings, and other common components essential to a typical water pollution control plant. Preparing traditional bid packages, complete with plans and specifications, and going through the standard bid process for each such project can be costly and time consuming. The Department, however, has implemented a new procurement system that will change all that.

The new system has the following attractive features:

  • Dramatically decreases the time required to have the contractor begin working.
  • Maintains the quality of workmanship, materials and equipment that the Department demands.
  • Furnishes the benefits of competitively bid prices.

This new procurement system is known as Job Order Contracting. To design and implement the system, the Department retained the services of The Gordian Group, Inc., a national consulting firm that invented the job order contracting process.

Contract documents

A Job Order Contract consists of three documents:


 

First   is a construction task catalog which contains over seventy thousand work tasks with corresponding pre-set unit prices. For example, a square foot of grating, a lineal foot of PVC coated conduit, and a variety of explosion proof lights. The unit prices are for the installed item and include the direct cost of labor, material, and equipment. All unit prices are developed using local prevailing wage rates and local quotes for material and equipment. The unit prices for some tasks are adjusted by quantity. The tasks included in the construction task catalog are specifically tailored for the exact type of work that the Department intends to accomplish.
 

Second   is a set of performance-based technical specifications that dictate the quality of workmanship and materials for the individual work tasks.
 

Third   is a document that contains contractual information and consists of the information for bidders, bid forms, and general conditions. It also contains the procedures for ordering work, payments, insurance requirements, and other details of the contract.

Guidance to prospective bidders

Because of the nature of the work to be done, the Department could not, during the bidding process, tell the contractors the exact work that would be performed. Also because of the nature of the contract, no commitments were made with regard to specific tasks or quantities to be ordered from the catalog. The Department was able to give contractors two facts:

  • The contract had a definitive term—2 years with one option period
  • The value of the contract, measured in dollars of work ordered, was a range from a minimum of $50,000 to a maximum, depending on the trade, of $1 to $4 million.

Competitive bidding process

Following two pre-bid conferences at which the contract was explained in detail, the contractors were asked to bid two adjustment factors to be applied to all the pre-set unit prices.


 

The first adjustment factor   is for work performed during normal working hours.
 

The second   is for work performed outside normal working hours.

The adjustment factors include the contractor's indirect costs such as overhead, profit, insurance, and bonds. The contracts are awarded to the lowest responsible responsive bidders. The lowest price was determined by weighting each of the two adjustment factors equally and adding them together. Using this procedure, NYCDEP advertised and bid eight separate contracts two each for general construction, electric, plumbing, and HVAC.

Job order development process

Once the contracts were awarded and registered, the Department started ordering work in accordance with the following procedure.

  1. When a project is identified, the Department
  2. engineer develops a scope of work that defines what has to be performed and what materials have to be used.

  3. The contractor and engineer then visit the site
  4. and jointly review the scope of work. The contractor is encouraged to ask questions about the work, site access, construction duration, specified equipment, and so forth.

  5. The Engineer then finalizes the scope of work
  6. document and sends it to the contractor. The level of detail and design included in the scope of work is a function of the difficulty of the particular project.

  7. The contractor divides the scope of work into
  8. individual construction tasks (for example, demolish existing roofing material, clean deck, install new built up roof, reset coping stones) and prepares a pricing proposal using the unit prices contained in the construction task catalog. The price to be paid for each task is the unit price multiplied by the quantity and then multiplied by the appropriate competitively bid adjustment factor. Prices are never negotiated. The price to be paid for the total project is the sum of the price for the individual tasks.

  9. As part of the proposal the contractor also
  10. develops a schedule, drawings if required, a list of proposed subcontractors, and MBE/WBE compliance documents.

  11. The Department then reviews the proposal package.
  12. If accepted, a job order is issued for the
  13. project. Although the price is arrived at using the unit prices, the resulting job order is issued for a lump sum. The contractor must complete the scope of work for the lump sum price.

  14. Once the work begins, the Engineer inspects the
  15. work, approves payments and closes out the project in accordance with the procedure it develops.

This process generally takes less than 30 days. Straightforward projects can be started within a week.

Incentive for contractor's continued performance

The possibility of receiving upcoming job orders gives the contractor a continuing financial incentive to provide high quality work on schedule. Each job order represents only a small portion of the total dollar value of the contract. The Department is only obligated to order the minimum $50,000 value of the contract, and that amount is often reached after issuing the first one or two job orders.

If the contractor meets the Department's expectations, the contractor will be asked to perform the next job. If the contractor delivers, the contractor will end up with a steady stream of ongoing projects. The structure of the contract distinguishes Job Order Contracting as a true performance based contracting process. It is in the contractor's best interest to provide the maximum volume of work. The Department has tied future work to current performance. Therefore, the contractor is motivated to provide the highest quality work in the most responsive manner.


The Job Order Contracting program has become a valuable tool to accomplish capital construction projects involving the replacement, in kind, of ordinary items—piping, valves, lighting, handrails, grating, and other components essential to a typical plant. The Department believes that the Job Order Contracting process will reduce by 6 months the time traditional contracts now take in the procurement process. Job Order Contracting will make the Department more efficient, more responsive to our internal clients—the Water Pollution Control Plants—and save valuable time and money.
____________
Michael P. Quinn, PE is Chief of the Division of Engineering in the Bureau of Wastewater Treatment, NYCDEP. Paul Schreyer is Director of The Gordian Group.

   
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