Small Projects via Delivery Order Contracts
Last month Wes Berry explored with us some of the challenges, misconceptions and strategies to complete what some characterize as small projects. While less in dollar value and shorter in duration than many higher profile projects these “small” projects are typically no less risky and in some cases they may be more perilous than their full-sized relatives. If you are a serial building owner, have continuous needs, value convenience, response time, consistency and open book transactions this form of contracting may be a viable solution to keep your customers happy and deliver your small projects.
Delivery Order Contracting (DOC) is a construction project delivery method developed by the U.S. Army Corps of Engineers in the 1980s. It is an indefinite-delivery, indefinite-quantity (IDIQ) arrangement that may also be known by other names such as Job Order Contracting, Task Order Contracting, etc. It is recognized as a well suited delivery method that allows for multiple projects to be completed over the life of one multi-year contract. It works for one trade or relatively small multiple trade projects that may vary in cost but are often in the order of +/- $10k to $2.0m. Depending on the context, the acronym “DOC” may refer to the “agreement”, the Delivery Order Contract or to the “contractor”, the Delivery Order Contractor.
This method may be an ideal choice for serial building Owners who have a designated budget and need to complete a medium to high volume of relatively undefined smaller renovation, repair and construction projects over the course of each year. Such Owners with multiple facilities who have a grasp and are comfortable with delivering their traditional, multi-year, major new construction and renovation projects may find the implementation of DOC to be a nimble and efficient way to respond to ongoing and evolving customer needs and deliver smaller dollar value, less complex but no less critical projects that may not be well defined at all at the outset.
The DOC agreement can be structured with different nuances to fit an Owner’s needs and procurement requirements. Arrangements often include using an industry pre-established price book such as R.S. Means with a percentage markup plus area multiplier or a cost plus type arrangement where the DOC goes to the market for competitive fixed pricing and then applies an agreed to percentage mark-up in an open-book environment. Award is typically made to the responsive low-price proposer. The DOC may or may not self-perform any of the work based on your preference. The DOC is bonded, insured and holds all sub-contracts, not unlike CM at Risk. You may elect to enter into a one-year base contract, with options to extend. While there are typically no guarantees or minimums you and the DOC will likely benefit from a discussion of the anticipated order of value of work per year so that the DOC can properly staff and establish a reasonable mark-up percentage. Continued work is typically based on the quality of response and performance. If structured properly the DOC can become familiar with the Owner’s assets and needs, may even be housed on site with the Owner if logistics allow and may begin to act as an extension of the O&M staff.
A summary of the path of a typical project is represented in the graphic above and flows something like this. The Owner identifies a project often with limited defined scope and issues and RFP to the DOC. A meeting on or off site occurs to discuss the project. The DOC develops a scope, budget and schedule package and reviews it with the Owner in what some call a joint scope meeting. If there is agreement, the DOC releases an RFP to the sub-contracting community, manages the proposal process, accepts and vets the proposals and then prepares a project specific proposal for the Owner. The duration that the project is out for sub-contractor proposals is determined by the Owner and the DOC. The Owner reviews the DOC’s proposal and if acceptable issues an NTP and the DOC manages the construction.
Some of the types of projects that may be well suited for DOC are ADA restroom upgrades, replacing light fixtures, HVAC, plumbing and electrical renovations, office, classroom, lab and warehouse renovations, replacing roofs and waterproofing, replacing windows, painting, flooring and ceiling replacements, replacing doors and hardware, masonry and concrete repairs, building entrance upgrades, landscaping and drainage improvements, parking lots, drives, sidewalks, ramps, fencing, canopies and signage improvements.
Some of the benefits and advantages of DOC are a quick response to customer needs, reduced acquisitions and procurement time, built-in emergency and contingency response capability, typically reduced over all schedule, expanded project delivery foot-print, multiple projects ongoing at one time, reduced backlogs, increased opportunities for participation of local, small and MWBE through working with the DOC, reduced opportunities for change orders, a single-point of contact and management and integrated project delivery.
Depending on the project complexity, a traditional architect or engineer may need to be engaged to complete design documents but often with the input of the DOC those design documents can be stream-lined. The DOC often is able internally to establish and refine scope and create bid packages to sufficiently define the project to be able secure accurate pricing without traditional design documents.
DOC is not typically an ideal choice for new construction due to the concentration of and increased overhead costs. The primary disadvantage of DOC is the learning curve for both owners and contractors implementing JOC for the first time. Some Owners may encounter resistance from the contracting community when DOC may be perceived as reducing the quantity of contract opportunities. This challenge can be addressed through appropriate sub-contractor outreach and education and through the careful structuring of a DOC program to maximize opportunities for small and disadvantaged businesses.
But in an Owner’s world where scope and response time are the driving factors, DOC may be the delivery method of choice for quickly completing a number of smaller projects in a dynamic building environment where the number and urgency projects may decline but do not stop and as soon as one project is complete there are others vying for attention and a position at the front of the line.
about the author:
Jere Smith is an architect and Atlanta native. A graduate of Southern Polytechnic State University and Clemson University, he is currently the Director of Capital Improvements for the Atlanta Public Schools and President of the Georgia Chapter of COAA.