best value pips best value pips pips: perfromance information procurement system p erformance b ased...
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Best Value PIPSBest Value PIPS PIPS: Perfromance Information Procurement
System
PPerformance erformance BBased ased SStudies tudies
RResearch esearch GGroup (PBSRG)roup (PBSRG)
www.pbsrg.com
PBSRGGLOBAL
PIPS: Perfromance Information Procurement System
PBSRG PBSRG : Perfomance Based Studies Research Group Lead by : Perfomance Based Studies Research Group Lead by Pof. Dean Kashiwagi, Director Pof. Dean Kashiwagi, Director • Worldwide as a leader in Best-Value Procurement / Project Worldwide as a leader in Best-Value Procurement / Project
Management /Organizational EfficiencyManagement /Organizational Efficiency– Conducting research since 1994 ($7M+, $600K/YR)Conducting research since 1994 ($7M+, $600K/YR)– 146 Publications146 Publications– 441 Presentations, 6,200 Attendees441 Presentations, 6,200 Attendees– 530 Procurements530 Procurements– $683M Construction services$683M Construction services– $1.4B Non-construction services$1.4B Non-construction services– 50 Different clients (public & private)50 Different clients (public & private)– 98% performance98% performance– Decreased risk management functions by 90%Decreased risk management functions by 90%– Increase vendor profit by 5%Increase vendor profit by 5%
33
PBSRG recognitions/ Association PBSRG recognitions/ Association
2008/2009
2006/2008
2005 CorenetGlobal Innovation of the Year Award
Food ServicesSports MarketingIT/Network outsourcingFurnitureConstructionServices
July/Aug/Oct 08
Best Value concepts being implemented in Botswana
• University of Botswana• Botswana Development Corporation• Bank of Botswana• US Embassy• DBES
Industry Structure
High
I. Price Based
II. Value Based
IV. Unstable Market
III. Negotiated-Bid
Specifications, standards and qualification based
Management & Inspection
Best Value (Performance and price measurements)
Quality control
Competition
Pe
rfo
rman
ce
Low
High
Owner selects vendor
Negotiates with vendor
Vendor performs
Measurements dictate outcome
PM makes decisions
High
Low
Perf
orm
an
ce
Owners
“The lowest possible quality
that I want”
Contractors
“The highest possible value that you will get”
Minimum
Problem with Priced Based Systems
High
Low
Perf
orm
an
ce
Maximum
Perf
orm
an
ce
High
Low
Ris
k
High
Low
Impact of Minimum Standards
Contractor 1Contractor 2Contractor 3Contractor 4
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Perf
orm
an
ce
High
Low
Ris
k
High
Low
Industry performance and capability
Highly Trained
MediumTrained
Vendor XCustomers
OutsourcingOwner
PartneringOwner
PriceBased
(decision making and management)
MinimalExperience
There is something wrong with the delivery of services…..
No one knows how bad the problem really is…..
Entire system is broken….
Requires more management….
Performance/value is decreasing….
Relationships are more important than results….
Management, Direction, and Control
….it becomes less important to be skilled, accountable, and able to minimize risk
As management, control, and direction become more important…..
Skill 1 Skill 2 Skill 3 Skill 4
“Manager’s Code” The movement of risk.....
Don’t Mess With It!
YES NO
YES
YOU IDIOT!
NO
Will it Blow UpIn Your Hands?
NO
Look The Other Way
Anyone ElseKnows? You’re SCREWED!
YESYES
NO
Hide It
Can You Blame Someone Else?
NO
NO PROBLEM!
Yes
Is It Working?
Did You Mess With It?
Initial conditions
Final conditions
Event
Time
Laws Laws
Initial conditions
Final conditions
Traditional Management
Time
Laws Laws
Risk is deviation fromexpected measurements
D
D M&C
Initial conditions
Final conditions
Best Value System:Assess, monitor, evaluate
Time
Laws Laws
Risk is deviation fromexpected measurements
M
M M
M
Best Value System
PHASE 3:
MANAGEMENT BY RISK
MINIMIZATION
PHASE 1:
SELECTION
PHASE 2:
PRE-PLANNING
QUALITY CONTROL A
ward
Best
Valu
e m
oves o
n
Information Environment
• Minimize documentation/information flow• Minimize decision making• Look for dominant information• Minimize work for everyone• Transfer risk to someone who can minimize risk
Filter 1Past
PerformanceInformation
Filter 2Proposal & Risk / Value
Plan
Filter 4Prioritize (Identify
Best Value)
Filter 5Pre-Award
Phase (Pre-Plan)
Filter 6Weekly
Report &Post-
Rating
Time
Qualit
y o
f V
endors
Filter 3Interview
Aw
ard
High
Low
Best Value ProcessBest Value Process
Identification of Potential Best-Value(Within budget)
Best-Value is also the
lowest price
Proceed to Pre Award /
Award
Best-Value is within
5% of next highest
ranked firm
Best-Value can be justified based on
other factors
YesYes
YesYes
YesYes
YesNo
YesNo
YesNo
Best ValuePrioritization
Proceed withAlternative Bidder
or Re-Run
Filter 1Past
PerformanceInformation
Filter 2Proposal & Risk / Value
Plan
Filter 4Prioritize (Identify
Best Value)
Filter 5Pre-Award
Phase (Pre-Plan)
Filter 6Weekly
Report &Post-
Rating
Time
Qualit
y o
f V
endors
Filter 3Interview
Aw
ard
High
Low
Detailed Selection ProcessDetailed Selection Process(Over budget)(Over budget)
Open price proposals
DetailedCost Breakouts
Identification of Potential Best-Value(over budget)
Best-Value is also the
lowest price
Proceed to Pre Award /
AwardYesYes
YesNo
YesNo
YesYes
LowestPrice
Proceed withnext highest priced
value
Dominant information proves that the contractor incurs serious risk in doing the project
Best Value Price Based System
PHASE 3:
MANAGEMENT BY RISK
MINIMIZATION
PHASE 1:
LOW
PRICE
SELECTION
PHASE 2:
PRE-CONSTRUCTION
QUALITY CONTROLAw
ard
NTP
Information Environment Filters are not deployed in LB
• Minimize documentation/information flow• Minimize decision making• Look for dominant information• Minimize work for everyone• Transfer risk to someone who can minimize risk
Filter 1Past
PerformanceInformation
Filter 2Current Project
Information
Filter 4Identify Potential
Best Value
Filter 5Pre-Award
Phase(technical concerns)
Filter 6Weekly
Report &Post-
Rating
Time
Qualit
y o
f V
endors
Filter 3Interview
Aw
ard
High
Low
Remember – PIPS Has Multiple Filters
Filter 1Past
PerformanceInformation
Filter 2Proposal & Risk / Value
Plan
Filter 4Clarification
Of Award
Filter 5Pre-Construction
Phase (Pre-Plan)
Filter 6Weekly
Report &Post-
Rating
Time
Qualit
y o
f V
endors
Filter 3Interview
High
Low
Detailed LB Selection Detailed LB Selection ProcessProcess
Ad
den
du
m
Aw
ard
Bid
NTP
Self Regulating Loop(Six Sigma DMAIC Generated)
Actions• Minimize data flow• Minimize analysis• Minimize control
Risk Assessment
Preplanning, Quality Control PlanRisk Management
Measure again
50%
Identify value (PPI, RA, Interview, Price$$$)V
50%
Interview Key PersonnelPast PerformanceInformation
M
Requirements
Efficient Project implementation
M R
MM
R
R
R
= Minimize Risk
= Self Measurement
= Identify Value
M
R
V
Management of Risk Before Contract Signing
• Requirement based on measurement
• Compete vendors based on value and quantification of risk
• Compile all risks; pick the best visionary
• Technical risk/risk minimization is added to the technical scope, and all risk that is not controllable goes into the risk management plan, and is tracked weekly
M
M
M
MM
Unforeseen Risks
PERFORMANCE SUMMARY• Vendor Performance• Client Performance• Individual Performance• Project Performance
QUALITY ASSURANCE• Checklist of Risks• Sign and Date
QUALITY CONTROL• Risk• Risk Minimization• Schedule
WEEKLY REPORT• Risk• Unforeseen Risks
Leadership Based Structure…
Us
RiskRiskss
RiskRiskss
Control Don’t Control
Control Don’t Control
Me & Them
Weekly Report
Front Page
•Project Particulars•Project name•Client PM•Procurement agent•Start•End•Date•Contract award amount•PM
Risk PageDate•Why risk was not minimized•Solution•Cost and time•Status (weekly update)•Rating of how they responded•Risk rating (cost and time and response rating)•Contractor errors
Schedule / Status
•Schedule•Change orders
Director’s Report
•Contractors•PMs•Subcontractors
Selection Criteria
The delivery of Training/ workshop services will require:• Past performance information on the critical elements.• Scope.• Schedule with major milestones.• Risk assessment value added (RAVA) plan.• Interview of key personnel.
Vendor Selection Criteria
The delivery of Training/ workshop services will require:• Past performance information on the critical elements.• Scope.( as understood by the vendor from RFP)• Schedule with major milestones.• Risk assessment value added (RAVA) plan.• Interview of key personnel.
Evaluation criteria will be weighed according to the following categories (which are
subject to change at any time by the Client).Criteria & Weight(%)• 1. Price 30%• 2 Overall (a-d) Performance 70%
– 2a - Interview30%– 2b - Risk Assessment / Value Plan20%– 2c –Past Performance Information 15%– 2d – Schedule 5%
Cost and Performance
• Prioritization based on cost and performance, 30% and 70%
• Performance Ratings include PPI, RAVA, Interview Score, and Cost
• Financial check, and validate differences from the next highest bids which are over 20%. So if the best value is 20% higher in cost, dominant information must be presented by the vendor.
Dominant Information
• Minimize decision making
• Minimize need for inefficient, idle, chit-chat
• Minimizes discussion time
• Setup an information environment where there is accountability, performance, and efficiency
Impact of dominant information
• Predict the future outcome and minimize risk
• Simplicity instead of complexity
• Allows even “blind” people to see the clearness of reality
• Helps everyone to be more focused
Impact of dominant information
• Minimizes the need for micro-management• Assigns accountability and responsibility• Aligns resources in optimal pattern• Efficiency• Predictability• Minimization of risk (not on time, not on budget, and not
meeting expectation)
Important Dates
• RFP Issued• Prebid Meeting December 10 2008• Prebid Discussion Questions• Proposal Due (PPI/RAVA/Price) December 17th 2008• Shortlist January 5th 2009 • Interviews January 6th 2009 • Identification of Potential Best Value January 6th 2009 • Pre Award Kick Off Meeting January 7th 2009 • Pre Award Meeting January 7th 2009 • Contract Award January 7th 2009• Award / Notice To Proceed January 8th 2009 All proposals/quotations package as per the format in this document should reach
the American Embassy on or before December 17, 2008 by 4:30 PM, marked “Workshop Logistics Organizer”. Failure will lower your rating.
Past Performance information I
• The past performance rating would be made on:• 1. On time.• 2. On budget, no change orders.• 3. Customer satisfaction.• 4. Value of the workshops carried out/organized before .• 5. Did they meet the client’s expectations.• 6. Success of the consultant/vendor • 7. Would the client recommend the Vendor to other clients.• Past performance will be rated in terms of 10 is dominantly
better, 5 is the same, and 1 is not to use for all ratings.
Interview of Key Personnel
• Cost estimate review by the vendor’s project manager and Q&A.
• Level of quality of the workshop materials .• Level of expertise of the facilitators• Ability to be accountable, take charge of the project, and
minimize risk that they do not control, as well as minimize technical risk.
• Schedule.• Vision.
Review Handout
Comments / QuestionsComments / Questions
W W W . P B S R G . C O M