1. Best Value Business Model

2. Who we are: PBSRG Overview
Established in 1994 to assist clients in improving the quality of construction.
Research has grown into:
Information Measurement Theory (IMT): measuring of current conditions to predict future outcomes
Clients implementation of Best-Value Performance Information Procurement System (PIPS)
Organizational Transformation Models
New project management model (alignment/leadership instead of management/influence) PIRMS
New best value model
New information environment (minimize access and flow of information)
Testing of concepts outside of construction
Risk management by using deductive logic, minimization of decision making

3. PBSRG’s Research Results (Performance Based Studies Research Group)
Worldwide as a leader in Best-Value Systems
Conducting research since 1994
168 Publications
800+ Projects
$4.6 Billion Services & Construction
5% Increase in Vendor profit
98% On-time, On-Budget, Customer satisfaction
PMI, NIGP, IFMA, IPMA
Tests in Netherlands, Botswana/Africa, Malaysia
ASU – investments of over $100M due to BV

4. Research Clients General Dynamics University of Minnesota
General Services Administration (GSA)
US Solar
Heijmans, Netherlands
Ministry of Transportation, Netherlands
State of Alaska
University of Alberta
State of Oklahoma
State of Idaho
Idaho Transportation Department
State of Oregon
Arizona Parks and Recreation
US Army Medical Command
USAF Logistics Command
University of New Mexico
University of Idaho
EVIT School District
Arizona State University
US Corps of Engineers
Arizona Public Service (APS)
Salt River Project (SRP)
Rochester Utility
Boise State University
Idaho State
Lewis & Clark
City of Phoenix, AZ
City of Peoria, AZ
City of Roseville, MN
Olmstead County, MN
Fann Environmental
Brunsfield
Fulbright Program /University of Botswana, Africa
US Embassy, Bank of Botswana
RMIT, Melbourne Australia
Aramark, Canon, Qwest, ISP, HP, Chartwells, AP, Pearson
Various Contractors and Consultants

5. Working Commission 117 & Journal International Efforts & Partners
5 years
15 tests for infrastructure
Two major GCs
Fulbright Scholar
University of Botswana
PIPS tests
RMIT
Teaching IMT
PBSRG platform
Tongji University
Brunsfield
Complete Supply Chain

6. A little theory of thought…

7. Rules of this Discussion
This is a deductive presentation
Don’t take anything personal!!!
Recommend that you minimize decision making (if you don’t know, use the deductive logic)
Type A and Type C will be discussed. Neither is better than the other. Both are required. Both are just as important as the other.

8. Information Measurement Theory
IMT Definition:
Measurement of information to predict future outcomes
IMT Objectives:
To minimize the need for decision making
To understand why things happen
To be able to predict future conditions
To minimize the need for data
To optimize results

9. LAWS The Number of Laws of Physics= =
100% Laws
PAST
100% Laws
PRESENT
100% Laws
FUTURE
Laws are not created…they are discovered

10. An Event Final conditions Initial conditions Time
One of the most important IMT concepts to understand is the theory of an Event.
This diagram shows that for any event, you have initial conditions (Click), time during which the event occurs (click), and final conditions (click)
The more information we have before an event begins (click), the easier it becomes for us to predict the final outcome
The less information we have before the event begins (click), the harder it becomes for us to predict the future outcome

11. Proposal: The Event Can Only Happen One Way
Initial conditions
Final conditions
Time
One of the most important IMT concepts to understand is the theory of an Event.
This diagram shows that for any event, you have initial conditions (Click), time during which the event occurs (click), and final conditions (click)
The more information we have before an event begins (click), the easier it becomes for us to predict the final outcome
The less information we have before the event begins (click), the harder it becomes for us to predict the future outcome

12. Deductive Logic No event has had two outcomes
All event outcomes can be predicted with “all information” (initial conditions/laws)
The more information we have before the event, the easier it becomes to predict the final outcome.
The lack of information that an individual has, will never change the final outcome (it will just prevent that individual from predicting the outcome).

13. Things caused by a lack of information
Believe in chance
Expectations
Believe in control
Makes decisions
Directs others
Influences others

14. Cycle of Learning
Perceive
100%
Information
Change
Process
Apply

15. Learning Speeds All Individuals Learn At Different Speeds
Perceive
100%
Information
Change
Process
Apply

16. More “perceptive” perceive at
a faster rate, change at a faster
rate, and are more accurate
with their predictions.

17. All individuals and organizations have a level of perception that allows them to predict “some” future outcomes.

18. “Types” of Individuals
100% A
Perceive B
100%
Information
Change
Process
Perception of Information C
Apply 0%
Time

19. To Understand the “A” and the “C” Simplify the Rate of Change Model
100%
A simple model is easy to understand
Simplicity is when things look very different
Eliminate all areas where things look alike (needs too much decision making)
Extremes minimize the decision making A B1
Perception of Information B2 C 0%
Time

20. Simplicity: Who perceives more information?
100% A
Perception of Information C 0%
Time

21. Type “A” Individual vs. Type “C” Individual
Aligns resources
Makes decisions
Flows more information
Influences
Wants a favor
Doesn’t document
Preplans
Shifts blame to others
Likes to make decisions
Does not prioritize
Uses five words for every one needed
100% A C C C C
Information Level C A C C C C 0% C
Time

22. Type “A” Individual vs. Type “C” Individual
Aligns resources
Very detailed work
Proud of technical skills
Is more expensive
Wants consensus
Likes doing totally new things
Does things they understand
Requests details
Traditional practices
Thinks other people act differently
Believes experts have risk
100% A C C C C
Information Level C A C C C C 0% C
Time 22 22

23. Type “A” Entity vs. Type “C” Entity
100% A
Knows who to work with
Implements leadership training
Measurement of performance
Uses dominant information
Measures
Has a conservative plan
Constantly changes their mind
Use relationships A C A A
Information Level A A C C C 0%
Time

24. How to Create a KSM Left Side (LS) (Type A) vs
How to Create a KSM Left Side (LS) (Type A) vs. Right Side (RS) (Type C)
100% LS RS RS LS A + =
Information Level C 0%
Time

25. Where is Control? A C LS RS Information Level Time 100% Information
No Control
Information Level
Control
No Information C 0%
Time

26. Where is Management? A C LS RS RS Information Level Time 100%
No Control
Leadership
Information Level
Control
Management
No Information C 0%
Time

27. Decision Making? A C LS RS RS RS Information Level Time 100%
No Control
Leadership
No Decision Making
Information Level
Decision Making
Control
Control
Management
No Information C 0%
Time

28. Plot the Following CharacteristicsLS RS
Leadership
Alignment
Efficiency
Change the behavior of others
Believe in chance
Emotion
Becomes the expert in the organization
Technical
Continuous Improvement
Freedom
Believes in range/diversity
Proactive LS RS

29. Plot the Following CharacteristicsLS RS
Logical
Overview/Process
Details
Focuses “why”
Focuses “what”
Measures Performance
Accountable
Reactive
Telescope “in and out”
“What if”
Maximize information flow
Loves meetings LS RS

30. Plot the Following CharacteristicsLS RS
Does not believe in being controlled
Captain of their own ship
Can change others
“Source of Light” or wisdom to influence all
“Mirror” so others can see themselves
Can influence anyone
Believe in randomness
No control over their destiny
Feels controlled
More activity
Incentives
Looks inside to improve environment
Has a more conducive environment to change LS RS

31. Conclusions The environment is the person
All characteristics can be related to the amount of information
By using extreme values, deductive logic can be used
Type A characteristics are related
To move to a Type A environment, we must minimize Type C characteristics

32. Questions Is there anything that happens that is not predictable?
Does anything happen by chance (was not predictable if all the information was known)?
Who is more important to the event, the A or the C?
Is there a random event that has been identified by science?
Why do people like complexity?
Who makes more decisions?

33. So What is the Big Picture? Where are we going with this?

34. Cycle of Learning
Perceive
100%
Information
Change
Process
Apply

35. Q: When do we know 50% of what we will ever know?
0% Information
100% Information
50% Information?
50% Information?
50% Information?
Life Span

36. Proposal: When we are almost dead.
100% Information
(what we will know)
0% Information
50% Information
Life Span

37. Q: How much do we know about everything?
0% Information
100% Information
This Much?
This Much?
This Much?
% Known

38. Proposal: We don’t know very much
As for me, all I know is that I know nothing.
- Socrates
0% Information
100% Information
What we don’t know
What we know
% of Information

39. Q: How do we solve what we don’t know? (aka Risk)
Do we use what we know to solve what we don’t know? OR
Do we use logic to solve what we don’t know?
0% Information
100% Information
What we don’t know
What we know
% of Information

40. A: Logic can be applied without knowledge/experience
0% Information
100% Information
What we don’t know
Logic
% of Information

41. What is the model?
Identify the expert with as little effort as possible, using measurement and differential
Transfer risk and control to the expert through preplanning and risk minimization, focusing on risk that are not controlled
Hire the expert
Use alignment, planning, & measurement in place of management, control, and direction
Create a performance information environment to drive accountability and change
Proactive vs. Reactive
Supply chain (us mentality)
Logic vs. Experience
Predictable vs. Chance

42. Industry Performance and Capability
Customers
Vendor X
Outsourcing
Owner
Highly
Trained
Partnering
Owner
Medium
Trained
Minimal
Experience
Price
Based

43. An Event Initial conditions Final conditions Time
Laws
Laws
Time
Risk is deviation from
expected measurements

44. Traditional Management
Initial conditions
Final conditions D1
M&C
Laws
Laws
Time
D1: Client makes decisions on budget, time, and expectation
D2: Client consultant/professional makes more decisions to make expectations true
D3: Vendors attempt to use the lowest possible price to minimize the risk caused by the decision making of client & consultant/professional
M&C: The client attempts to force vendor to make expectations happen D2 D3

45. New PM and RM Model that Depends on Efficiency
Initial conditions
Final conditions M4 D1 M3
Laws
Laws
Time
M1: Measured designed option that more accurately describe the initial conditions replaces D1
M2: The best value vendor that replaces the client/professional design M1
M3: WRR/RMP measures deviation
M4: Final performance measurement M1 M2

46. Inefficiency vs Efficiency
Can you make the transition?
Micro-Management
Performance dictated by technical information
Specification is the requirement
Inspection by client
Client’s professional is the expert and has control
No performance measurements
Increase flow of information
Relationships (partnering, deals, give and take) used to solve issues
Need more people (inefficient)
No accountability
Leadership
Performance dictated by performance information
Specification is only the intent
Quality control by contractor
Vendor has control
Performance measurements
Decrease flow of information
High performance vendors used to minimize risk
Need less people (efficient)
Accountability

47. Performance-Based Functions
High
III. Negotiated
II. Performance-Based
Value & Performance
Maximize Profit
Vendor Accountability
Minimized Management & Inspection
Quality Control
Vendor minimizes risk
Performance
IV. Unstable Market
I. Price-Based
Treat as a Commodity
Volume Based
No Accountability
Finger Pointing
Management & Inspection
Minimum Standards
Client minimizes risk
Competition
Low
High

48. Best Value Overview
Complete business model for organizations & projects
A best value selection and management tool (developed and tested over 16 years)
It can be applied to any type of system, organization, structure, procurement, project, or need
Best Value is not just a procurement method. It is a selection and management tool that can be applied in:
Business Services (IT, dining, consultants, equipment, doc mgmt, insurance, etc.)
Facility Services (maintenance, roofing, janitorial, landscaping, supplies, etc.)
Design, bid, build (DBB), Design build (DB), Construction manager at risk (CMAR)
A/E & Design, Job Order Contracting (JOC), Indefinite Delivery Indefinite Quantity
BV is not a computer software package, but rather a combination of IMT principles that allows a client to make an informed decision
PIPS is a best value selection tool that can be applied to any type of procurement
PIPS is not a procurement method, but rather a selection tool that can be applied in any procurement method, such as:
Design, bid, build (DBB)
Design build (DB)
Construction manager at risk (CMAR)
or other types
It is important to understand that PIPS is not a computer software package, but rather, it is a combination of IMT principles that allows a client to make an informed decision based on information.

49. What does the Best Value Model do?
Makes things simple (measurement, dominant information)
Minimizes the fuel of bureaucracy (decision making, non-dominant information, management, control, and direction)
Creates transparency
Allows organizations/vendors to be highly efficient and successful
Proposes that to accurately identify what “is” and then to have a plan to efficiently meet the needs will minimize risk

50. Silo Buster – Make Things Simple
30K Foot Level
Simplicity/Dominant
Information
Planning / Programming
Designer/Engineering
Contracting
Contractors / Manufacturers
Users
Inspectors
Technical Details

51. Best Value System: PIPS & PIRMS
PHASE 1
PHASE 2
PHASE 3
Measurement of
Deviation from the
Expectation
Pre Planning
and
Risk Management
Identification
of Potential
Best-Value
PIPS
PIRMS
Performance Information
Procurement System
Performance Information
Risk Management System 51

52. Interview Key Personnel
BV Process
Filter 1
Past
Performance
Information
Filter 2
Proposal & RAVA Plan
Filter 3
Interview Key Personnel
Filter 4
Prioritization
(Identify
Best Value)
Filter 5
Pre-Planning
Phase
Filter 6
Weekly Report &
Post-Rating
High
Quality of Vendors
Award
The process can be explained in the following diagram. This diagram illustrates the different steps that are involved in assisting a client in identifying the potential best-valued contractor. As we go through the process, the lower performers will drop out, and we should be left with the higher performing vendors
The first filter is the process is Past Performance Information (click)
Low
Time

53. Getting Started: Developing a BV Requirement
Filter 1
Past
Performance
Information
Filter 2
Proposal & RAVA Plan
Filter 3
Interview Key Personnel
Filter 4
Prioritization
(Identify
Best Value)
Filter 5
Pre-Planning
Phase
Filter 6
Weekly Report &
Post-Rating
High
Setup Phase
Quality of Vendors
Award
The process can be explained in the following diagram. This diagram illustrates the different steps that are involved in assisting a client in identifying the potential best-valued contractor. As we go through the process, the lower performers will drop out, and we should be left with the higher performing vendors
The first filter is the process is Past Performance Information (click)
Low
Time

54. Touching Base….
Remember, goal of doing something different is to be better than you are right now
Which means you have to change….
And people don’t like to change….
So before implementing anything new in your organization let’s think through what we should do…

55. Key Factors Before Implementing PIPS
Most organizations are slow to change (Type C), and most individuals in these organizations are slow to change (Type C). Therefore, you cannot force the entity to change overnight.
Change must be slow.
Implement BV (or any new system) as a pilot test.
Do not educate the entire organization on the PIRMS process. Keep it under the radar so everyone feels comfortable.
The process must create a win-win.
100% A
Information Level C 0%
Time

56. Critical Factors of Success
Setup Phase
Identify core group
Identify strategic plan / goals
Identify and measure current level of performance
Prepare critical documents / process
Testing Phase
Implement BV on pilot projects or groups
Documentation and Modification Phase
Analyze implementation
Make modifications based on proper concepts and principles
Educate

57. The Core Group
The Core Group is a small group of individuals that will handle all functions of the Pilot Program. Core group is vital to long-term success.
Core group must be carefully selected based on proper characteristics
Core Group might include:
Upper Management (Boss)
Business Analyst
Project Manager
Procurement Officer
Subject Area: IT, Facilities / Engineering, etc.
Core Group must be heavily educated on concepts. That is they need to understand the “why” not just the “what”

58. Identifying Current Level of Performance
A client should identify their current level of performance (to use as a comparison).
For example
Total size ($)
Performance of incumbent (OT, OB, 1-10)
Original proposal vs actual & current results
Number of projects procured per year
Average change order rate
Average project delay or number of issues
Overall customer satisfaction

59. Establish The Strategic Plan
There are two main categories of activities that may jeopardize the sustainability of a best-value organizational transformation. These areas are performance risk and political risk.
Performance risk is the risk of the vendor not completing the project within the financial projections, performance requirements, or to the satisfaction of the user. This risk can be mitigated by implementing the Best-Value selection process and the weekly risk report.
Political risk includes resistance from both internal and external parties, including; business services & procurement personnel, upper management, project management, and the vendors. Political risk is more difficult to minimize and will take the greatest amount of effort.
To minimize political risk, a long-term strategic plan must be established which outlines how the user will get to where they want to go.

60. The Strategic Plan
A strategic plan is essential to the long-term success of a best-value program.
The strategic plan must be established before beginning a pilot program and should be documented in writing.
By having the strategic plan in writing, all decisions can be minimized by simply following the outline of the plan.
The majority of users have not established strategic plans.

61. Contents of the Strategic Plan
Client must establish goals (short term / long term).
Potential goals/metrics may include:
Increase vendor performance (OT, OB)
Reduction in change orders
Increase customer satisfaction
Increasing (or maintaining) current level of competition
Reducing the amount of management time
Reducing procurement time
Minimize any litigation
Increase efficiency of project managers
Education/Implementation strategy (w/ risks & plans)
Schedule

62. All Research Must Relate Back To The Strategic Plan
No meetings / decisions should be set without establishing the strategic plan / goals of the research.
Any decisions that must be made must have an impact to the strategic plan.
Meetings to have
Who to educate
Pilot projects to select
Speed of implementation

63. Duties of Core Group Be educated
Educate others (inside and outside your organization)
Maintain and enhance the strategic plan
Ensure there is a maintained weekly report for the whole effort
Ensure there is a maintained WRR for each project effort as soon as it starts
Maintain the directors report
Maintain an up to date case study at all times
Be able to show the value of the Best Value effort at all times
DR, WRR, Case Study, others
Integrate with other clients and users
Help ensure the vendors’ success

64. RFP Obstacles
In most cases, BV can be incorporated into any user/client with very little modification.
However, experience has shown that the resistance of individuals are the greatest obstacle to creating change. The most common statements are:
“This is not the way we normally do it...”
“I recommended that you change the process to do this...”
“It makes more sense to do it this way...”
“I don’t think this is legal...”
“Let me play devil’s advocate…”

65. Should We Issue A Budget?
The owner wants the best-available option that meets the requirements.
Requirements are:
Time constraints
Cost constraints
Quality

66. Minimizing Budget Risk
“To Share” or “Not to Share” – the Budget
If “To Share”
Risk: If cheaper than budgeted – vendors will come up to the budget
Risk: If more expensive than budgeted – vendors will come down and look to change orders for margin
Advantage: Gives high performers the edge in identifying it as a risk – offer solutions (differentiation)
Reality: Still have price competition& cost reasonableness so budget knowledge only helps high performers and puts low performers at a disadvantage

67. Minimizing Budget Risk
If “To Not Share”
Risk: Estimates can be too high, with no offerings of risk minimization
Risk: If one very low bidder, can cause confusion in BV selection
Advantages: Don’t worry about price gouging (but so few bidders now days)
Reality: Helps non-performers be more competitive
Conclusion
Greater risk in not giving the budget than giving it
No real risk in giving the budget – only perceived risk

68. Low Performer Can a low-performer ever give you high performance?
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Performance
High
Low
Risk
Can a low-performer ever give you high performance?
“No, by definition, they are a low performer.”
How does a low-performer increase their competitiveness?
“Since they can’t change their current level of performance, they must be the best at....$$$$”

69. Giving out your budget has no impact to a low-performer
Impact of No Budget
Giving out your budget has no impact to a low-performer
High
Low
High
Contractor 1
Contractor 4
Contractor 1
Contractor 2
Contractor 2
Contractor 3
Risk
Performance
Price
Contractor 3
Contractor 4
Low
High
Low

70. PIPS Best Value System PHASE 1 PHASE 2 PHASE 3 Measurement of
Deviation from the
Expectation
Pre Planning
and
Risk Management
Identification
of Potential
Best-Value

71. Go to PA 1-3

72. Current Project Information
Award
Filter 6
Weekly Report &
Post-Rating
Filter 1
Past
Performance
Information
Filter 2
Current Project Information
Filter 3
Interview
Filter 4
Identify
Potential
Best Value
Filter 5
Pre-Award
Phase
High
Quality of Vendors
Award
Low
Time

73. Filter 6 – Weekly Risk Report
Weekly Report &
Post-Rating
Filter 1
Past
Performance
Information
Filter 2
Current Project Information
Filter 3
Interview
Filter 4
Identify
Potential
Best Value
Filter 5
Pre-Award
Phase
High
Quality of Vendors
Award
Low
Time

74. Weekly Reporting System
Excel Spreadsheet that tracks only unforeseen risks on a project
Client will setup and send to vendor once Award/NTP issued
Vendor must submit the report every week (Friday).
The final project rating will be impacted by the accuracy and timely submittal of the WRS 74

75. Management by Risk Minimization
Unforeseen Risks
RISK MANAGEMENT PLAN
Risk
Risk Minimization
Schedule
WEEKLY REPORT
Risk
Unforeseen Risks
METRICS
Time linked
Financial
Operational/Client Satisfac.
Environmental
PERFORMANCE SUMMARY
Vendor Performance
Client Performance
Individual Performance
Project Performance

76. Overview of SHIP Test Objectives
Establish contract with SHIP provider for college students in Idaho
BSU Objectives:
Maximize value (performance and cost) of SHIP
Have an environment of risk minimization and performance measurement
Minimize client effort in selection and management
Minimize decision making
Education of PIPS
Measurement of differential
BSU would like to create a “consortium” of universities/colleges in Idaho for a single SHIP contract

77. Deliverables Major project deliverables include:
Set and Educate Project core team and
Set BSU Strategic Plan
Capture current level of performance and cost
Plan providers
Cost structure
Program structure and details
Identify differentials, gaps, and overlaps
Create RFP
Educate Vendors
Run Selection and Interviews
Run Pre-Planning and Risk Management
Award & Transition
Establish and maintain measurement system

78. Overview
Create a statewide Student Health Insurance Plan (SHIP) consortium
Boise State University (BSU)
Idaho State University (ISU)
Lewis-Clark State College (LCSC)
3-Year Contract | $36 Million
Measurements of Success
Reduce internal University program administration costs
Maintain or increase Customer Satisfaction (University & Students)
Maintain or increase cost-effectiveness of program to students
State of Idaho

79. What Should We Include In RFP?
Request For Information (RFI)
General request to vendors
Ask vendors what information they need to see in the RFP to create and provide an accurate proposal
Has no contractual implications, just providing information to the client
RFI
RFP
State of Idaho

80. Selection Criteria & Weights
Responding contractors were evaluated on:
Premiums (Student, Spouse, Dependents) (200 Points)
Interviews (350 Points)
Program Administrator
Claims Administrator
Waiver Administrator
Data Base Manager
Marketing Manager
Risk Assessment and Value Added (RAVA) plan (250 Points)
Risk Assessment – ability to identify and minimize potential risk unique to this project
Value Added Option – ability to add value to the project in terms of time, money or quality
Scope Plan (50 Points)
Concise synopsis of the work that will be performed (major tasks, steps, or work packages).
Vendors impression of how they will achieve the objectives of the consortium
Past Performance Information (150 Points)
Firm
State of Idaho

81. Summary of Proposal Submittal
Filter 6
Weekly Report &
Post-Rating
Filter 1
Past
Performance
Information
Filter 2
Proposal & RAVA Plan
Filter 3
Interview
Filter 4
Prioritize
(Identify
Best Value)
Filter 5
Pre-Award
Phase
(Pre-Plan)
High
Proposal Includes:
Cost/Financial Information
RAVA Plan (3)
Scope Plan (2)
PPI
Quality of Vendors
The process can be explained in the following diagram. This diagram illustrates the different steps that are involved in assisting a client in identifying the potential best-valued contractor. As we go through the process, the lower performers will drop out, and we should be left with the higher performing vendors
The first filter is the process is Past Performance Information (click)
Low
Time
State of Idaho 81 81

82. Coverage/Plan Characteristics
Consortium goal was to standardize coverage between all three University's (to maximum extent possible). However, deviations were made as necessary (BSU athletic coverage, ISU RX Coverage, Capitated Fee, etc)
Consortium goal was to increase plan characteristics (to provide better coverage for students)
State of Idaho

83. SHIP Analysis
State of Idaho

84. Analysis of Proposals
State of Idaho

85. Overall Best-Value Results
Previous Program:
Student Premiums increased $124/year (past 4 years)
Spouse & Dependent Premiums increased $126/year
Best-Value Results:
Student Premium has decreased by 2% (-$26)
Spouse & Dependent Premium has decreased by 19% (-$519)
In general, Benefits/Coverage have been increased
State of Idaho

86. Case Study: ASU Food Services Contract
$32 Million Dollars (Over 10 Years)

87. After 1 Year: Monitoring Based on Measurements
Increase sale of food by 14%
Increased cash to ASU by 23%
Minimized management cost by 80%
Increased customer satisfaction by 37%
Increased capital investment by 100% 87 87

88. 2009 Performance Metrics

89. Performance Metrics – Combined ASU
FY 2010

90. U of MN Objectives
The UMN has a goal to be recognized as a top research institution in the world
In 2005, CPPM partnered with the PBSRG (ASU) to implement the PIPS Best Value Process
CPPM’s Objectives of the Best-Value Program are to:
Contract to high performers
Respond faster to customer needs
Increase performance (on time, on budget, high quality)
Increase efficiency of procurement (spend taxpayers money more efficient)
Create a fair and open process for all vendors 90 90

91. CPPM Strategic Plan
First organization to establish and follow a Strategic Plan
Ultimate Goal: CPPM take over entire program and is successful in implementing and sustaining the program.
Year 1 – Pilot Testing
Year 2 – Evaluation and Continued Testing
Year 3 – Expansion
Year 4 – Expansion
Year 5 – Infusion & Transition
Year 6 – Transition

92. CPPM Strategic Plan Year 1 Year 2 Year 3 Year 4
Identify and educate core group
Identify qualified vendors
Implement best-value
Analyze pilot projects
Year 2
Continue testing best-value
Evaluate core group and refine
Expand test to different trades (General Construction)
Educate more internal CPPM staff
Implement a weekly project tracking system
Refine list of qualified vendors
Educate and debrief qualified vendors on initial project results
Year 3
Allow other CPPM personnel to test
Automated online Directors Report
Monitor all CPPM projects (LB & BV)
Expand testing (A/E Services)
Identify performance of UMN PM’s, Procurement, other critical areas, etc.
Train CPPM on all BV components
Year 4
CPPM acquire and perform all best-value functions (educate and train)
PBSRG assist on areas of weakness
CPPM handle analysis and tracking of all weekly reports
Implement best-value on a larger scale
Educate other UMN groups (Energy, Zones, Permitting, Codes, ect)

93. Transitional Plan

94. Current Construction Results
Award Analysis:
Number of Best-Value Procurements: 161
Awarded Cost: $50.6M (11% below average cost)
Average Number of Proposals: 4
Projects Where Best-Value was also Lowest Cost: 53%
85% of projects were awarded to vendor with highest / second highest RAVA Plan (7.3 vs 5.9)
Performance Information:
Contractor Impacts: 0% Change Orders / 4% Delay
Vendor post project rating: 9.6
Average Contractor Increase in Profit: 5%

95. Program Report Vice President Director Director 1
Procurement Officer 1
Director 2
Procurement Officer 2
PM 1
PM 1
PM 2
PM 2
PM 3
PM 3
PM 4
PM 4
Contractor 1
Contractor 3
Contractor 9
Contractor 4
Contractor 2
Contractor 6
Contractor 7
Contractor 8
Contractor 3
Contractor 1
Contractor 7
Contractor 9
Contractor 4
Contractor 8
Contractor 2
Contractor 2

96. Report – Overall Program

97. Report - Directors

98. Report - End Users

99. Report – Internal PM’s

100. Report - Contractors

101. Report – Yearly Analysis

102. Report – Top 10 Riskiest Projects

103. Report – Analysis of Risks

104. Research from Contractor Delays
Contractor Risks %
Delivery of Materials Delayed
28%
Installation errors
26%
Incorrect material ordered or delivered
11%
Alteration of installation needed 9%
Manufacture didn't have sufficient materials
Misunderstanding of Construction Documents 6%
Door Frames incorrect size 4%
Soil compaction 2%
52%
of risks due to errors in materials delivered

105. Targeted Business Group (Minority & Disadvantaged)
Out of 63 qualified contractors, 18 are TGB (29%)
Out of 161 PIPS Projects, 26 were awarded to TGB Contractors (16%)
Awards were based on best-value, which shows that there are high performing TGB vendors in the MN community