Reduction in procurement time with job-order contracting
Cost of 10 retrofits in San Francisco with job-order contracting, versus four with other methods
In 2008, San Francisco was facing a $500 million budget deficit in its general fund, and the city sought to reduce energy use—quickly. That, however, didn’t seem possible. “We were using the design-bid-build method, and it would take us years to implement projects,” says Christine Vance, who was then heading up the city’s General Fund Energy-Efficiency Program. Ultimately, though, the plan was made possible through a process known as job-order contracting.
The concept is simple if you understand the traditional construction process, which involves putting together a bid specification package, advertising the package, reviewing bids, and awarding the job to one lucky firm. The process is a burden on facility owners, especially those who have small construction jobs, such as replacing the roof on a local high school or retrofitting lighting.
Given the size and scope of San Francisco’s energy-efficiency projects, Vance and her team saw the opportunity to apply job-order contracting and consulted with the experts—The Gordian Group, a South Carolina-based construction procurement data and consulting firm whose founder, Harry Mellon, developed the job-order-contracting methodology.
The company maintains a catalog of more than 260,000 construction tasks—from hanging drywall to installing vinyl flooring, each with an accompanying technical specification—and adjusts the cost of all 260,000 tasks based on local materials, equipment, and labor costs. Customers, such as Vance, then run a procurement process, and general contractors bid with their markup, called an adjustment factor, for work over a set period of time. “Essentially, they say, ‘Over the life of the contract, whatever construction job you ask me to do, I will use the cost information in that catalog multiplied by my adjustment factor, and that will be the fixed price,’” says Scott Smith, vice president of sales and marketing for The Gordian Group, who adds that once a contract is in place, the customer can do as many construction projects as it wants, simply issuing a purchase order against the job-order contract for each one. This process reduces the procurement time by almost 80 percent because the customer doesn’t have to go back through the procurement process. “It’s really dramatic,” Vance says. “Like most public agencies, we often struggled doing design-bid-build projects. This is a perfect model for energy-efficiency projects, which involve repairs and replacements.”The methodology can be used for any number of sustainable retrofit projects, such as those the City of San Francisco needed. “Over the four years I was managing the program, we implemented more than $15 million in retrofits in more than 100 facilities, from simple lighting projects all the way to substantial mechanical-system replacements,” Vance says. “It was going to take us a couple of years to do our American Recovery and Reinvestment Act-funded energy-efficiency project under design-bid-build, but with The Gordian Group and job-order contracting, we went from audit to construction on all 10 facilities within four months, finished lighting in seven months, and finished mechanical in 12. Perhaps most notable is the fact that with our $3.6 million budget, we were able to complete retrofits for all 10 facilities; if we’d been using design-bid-build, we could have only afforded the mechanical projects in four of them.”
The Gordian Group currently is using job-order contracting for sustainable retrofits for major public entities, including the US Postal Service. Between 2009 and 2011, the USPS audited 69 million square feet of its facilities and identified 3 trillion Btus of potential energy reduction that would result in annual energy savings of $188 million. Through job-order contracting, it completed thousands of individual projects, from lighting retrofits to replacement of HVAC controls.
As for Vance, she’s now brought job-order contracting to The Energy Coalition, a nonprofit organization that seeks to bring energy efficiency to public entities in Southern California. “We have 14 lighting and mechanical contractors on board in 12 counties, and systemized procedures for how those teams collaborate with energy engineers to quickly retrofit facilities,” Vance says of the program, which is funded by the California Public Utilities Commission. “Customers get a competitively priced turnkey retrofit solution, and from an industry perspective, the program allows public agencies to go to scale and address issues of not just climate change but upgrading building infrastructure through a regional procurement solution.”