Overview
In This Case Study You Will Learn:
- Downsides to traditional maintenance contracts include minimal control over workflow and difficulty incorporating unplanned work.
- In Job Order Contracting, a Construction Task Catalog (CTC) is developed that is comprised of individual tasks, which include materials and labor required to complete each task.
- One advantage of Job Order Contracting has been contractors are paid as job orders are completed which results in an incentive for them to complete work as quickly as possible.
Background
In the Winter of 2018, the New Jersey Department of Transportation’s (NJDOT) Division of Mobility Engineering advertised and bid two of the nation’s first ITS Job Order Contracts (ITS JOCs) as pilots to remedy some of the issues and complications caused by traditional ITS Maintenance contracts. Traditional ITS Maintenance contracts required contractors to bid on a statewide contract consisting of specific pay items and specific quantities. The contractor with the lowest overall bid was awarded the contract. Those pay items and their respective quantities were created by either planning months in advance resulting inoperable systems for an extended period of time as well as the Department’s ITS maintenance staff anticipating which types of ITS facilities would fail during the duration of the upcoming maintenance contract.
Some unfortunate side effects to this traditional approach to maintenance contracts include a minimal control over workflow and difficulty incorporating unplanned work.
Traditional contracts give contractors the ability to control workflow through their means and methods to complete a project. Under these types of contracts NJDOT could only request work be completed in a certain order and could only control a contractor’s workflow through the substantial and final completion dates of a contract. If an emergency arose, contractors could technically push off this emergency work until it was convenient for them to complete.
A second consequence occurred when unplanned work would cause the quantities of some pay items to go beyond the planned contract quantities. This would cause change orders to be executed to internally shift funding amongst pay items. The impact was that the replacement of planned facilities ended up being postponed until the next maintenance contract as well as a causing a delay to a contract’s substantial completion date.
TSMO Planning, Strategies, and Deployment
In order to remedy these issues, NJDOT’s Division of Mobility Engineering began developing the nation’s first ever ITS Maintenance Job Order Contracts (ITS JOCs) in the summer of 2014. The development of ITS JOCs would involve dividing the traditional statewide maintenance contracts into a northern and a southern regional contract based upon ITS Maintenance’s North and South Regions. These regional contracts would be bid separately and would be comprised of separate Special Provisions and Construction Task Catalogs (CTC).
In Job Order Contracting, a Construction Task Catalog (CTC) is developed that is comprised of individual tasks. Each task includes the materials and labor required to complete each task. The tasks were pre-priced through vendor research by The Gordian Group. Additionally, previous maintenance contracts’ unit price bid histories were reviewed. Since the CTC was approaching the bidding of the items differently, the Department’s Special Provisions, which are supplemental specifications for construction projects, also needed some changes. Once the CTCs and Special Provisions were completed by The Gordian Group, they were reviewed by ITS Maintenance personnel to ensure that appropriate items were included in the catalogs. These documents were also reviewed and approved by the FHWA’s NJ Division Office to comply with federal authorization requirements to permit the use of $2.5 million dollars of federal participation for each ITS JOC.
Communications Planning and Execution
Once the CTCs for each respective ITS Maintenance region was finalized and the projects authorized, a pre-bid meeting was held to educate contractors about the new type of contract. Participants at the pre-bid meeting included contractors, sub-contractors, vendors, engineers from Mobility Engineering, managers from the Division of Procurement, and The Gordian Group’s development team. The meeting consisted of presentations by NJDOT and The Gordian Group followed by a Question & Answer session to assist contractors in understanding how JOCs operate, explain what the contractors may want to consider when bidding, and to answer any questions they had. Immediately after the meeting, the questions and answers posed at the meeting were posted to NJDOT’s bidding website to aid contractors in their bidding of the contracts.
Unlike a traditional maintenance contract where contractors would bid on pay items and their quantities individually, the JOC bidding process required contractors to submit bids on the CTC using adjustment factors for Normal Working Hours and Other Than Normal Working Hours. These two adjustment factors were described in the Special Provisions and allowed contractors to bid on the CTC for work that would be done during a typical workweek using the Normal Working Hours adjustment factor. For work done at night or over the weekend, the Other than Normal Working Hours adjustment factor would be utilized. These adjustment factors were applied to the contract totals of $2.5 Million in percentages of 75% and 25% respectively. Similar to traditional maintenance contracts, the contractor with the lowest overall bid, i.e. lowest adjustment factors, was awarded the contract.
Outcome, Benefits, and Learnings
Benefits of the ITS JOCs observed to date include a greater control over workflow, a reduction in need for a predetermination of work, a more efficient use of funding, as well as a more competitive bidding process.
Under the JOC structure, NJDOT is able to better manage workflow through the creation of multiple Job Orders. The CTCs are comprised of individual tasks, which are combined into job orders to address specific needs in the field. Over the life of a contract, multiple job orders are created which may be unique in scope but are also unique in their schedules.
During the development of a job order, contractors and NJDOT engineers agree to the work to be completed under a job order but also agree to a schedule for the job order. The format of the contract allows liquated damages to be enforced based upon a job order’s schedule rather than only being enforceable after substantial completion of a contract. In addition to this benefit, contractors are paid as job orders are completed which results in an incentive for them to complete work as quickly as possible.
A reduction in the need of predetermined work is also achieved through a JOCs CTC and the job orders created from it. Since the JOCs are limited to a set amount of funding rather than a limited set of pay items and quantities, job orders consist of specific tasks that can be assigned to address actual needs. This structure not only eliminates the need for ITS Maintenance staff to predetermine pay items and their quantities before a contract is bid but also allows ITS Maintenance to create job orders for unplanned work in the event of an unanticipated failed facility.
An additional advantage to the JOC methodology is the more efficient use of assigned funds. While there may be five components in a traditional pay item, there are scenarios where only two components are required, but the contractor is paid as if all five were needed. The assignment of individual tasks allows NJDOT to reduce costs by only paying for work items that are actually needed.
Indications of a more competitive bidding process has also been identified through the use of JOCs. The pre-priced tasks within the CTC forces contractors to incorporate those prices into their bids regardless of any deals they may be able get through vendors. During bidding of the ITS Maintenance 2015 Contract, a contractor’s bid was found to be 30% higher than the lowest bidder but under bidding of the Job Order Contract ITS Maintenance 2017 North this same contractor’s bid was within 4% of the lowest bid indicating an increase in their ability to compete.