Job Order Contracting Performance and Industry Analysis

Abstract

The construction industry has had difficulty in delivering projects efficiently, in a timely manner and within budget. Approximately 2.5% of all global projects are delivered on time and on budget. Over the past 24 years, research has been conducted at Arizona State University to identify the source of project inefficiencies. As a result of 1800+ tests, researchers have concluded that a primary cause in project performance (time, cost and customer satisfaction) is the traditional owner-vendor relationship in which the owner uses a design, and build (DBB) approach. The industry has come up with other approaches such as design-build (DB) and construction management @ risk (CMAR) in hopes of decreasing the delivery time and lowering the project cost. However, in the latest industry study done comparing the different approaches, there are still no significant conclusions about which process is the most efficient. Deductive logic identifies that the contractor typically has more expertise than the owner does. Research shows that low bid and MDC could increase project costs and time up to 30%. Job Order Contracting (JOC) is a delivery system focused on minimizing the owner's repeated design and procurements and MDC on projects, by enabling a greater utilization of vendor expertise. This report examines the perspective of 47 owners and 13 contractors who have collectively delivered over $5 billion of construction services in JOC projects. The results of this survey effort suggest that JOC users are highly satisfied with its overall performance and are seeing better project outcomes and cost savings compared to more traditional methodologies.