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1 Best Value Business Model www.pbsrg.com. W W W. P B S R G. C O M 2 Who we are: PBSRG Overview Established in 1994 to assist clients in improving the.

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Presentation on theme: "1 Best Value Business Model www.pbsrg.com. W W W. P B S R G. C O M 2 Who we are: PBSRG Overview Established in 1994 to assist clients in improving the."— Presentation transcript:

1 1 Best Value Business Model

2 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M Worldwide as a leader in Best-Value Systems Conducting research since 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 PBSRGs Research Results (Performance Based Studies Research Group)

4 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M A little theory of thought… 6

7 W W W. P B S R G. C O M 7 Rules of this Discussion This is a deductive presentation Dont take anything personal!!! Recommend that you minimize decision making (if you dont 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 9 LAWS The Number of Laws of Physics = = Laws are not created…they are discovered 100% Laws PAST 100% Laws PRESENT 100% Laws FUTURE

10 W W W. P B S R G. C O M 10 Initial conditions Final conditions An Event Time

11 W W W. P B S R G. C O M 11 Initial conditions Final conditions Proposal: The Event Can Only Happen One Way Time

12 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M Things caused by a lack of information Believe in chance Expectations Believe in control Makes decisions Directs others Influences others

14 W W W. P B S R G. C O M 14 Perceive Process Apply Change Cycle of Learning 100% Information

15 W W W. P B S R G. C O M 15 Perceive Process Apply Change Learning Speeds All Individuals Learn At Different Speeds 100% Information

16 W W W. P B S R G. C O M 16 More perceptive perceive at a faster rate, change at a faster rate, and are more accurate with their predictions.

17 W W W. P B S R G. C O M 17 All individuals and organizations have a level of perception that allows them to predict some future outcomes.

18 W W W. P B S R G. C O M 18 Types of Individuals Perceive Process Apply Change 100%Information Perception of Information Time A C 0% 100% B

19 W W W. P B S R G. C O M To Understand the A and the C Simplify the Rate of Change Model 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 Perception of Information Time A C 0% 100% B1 B2

20 W W W. P B S R G. C O M 20 Perception of Information Time A Simplicity: Who perceives more information? C 0% 100%

21 W W W. P B S R G. C O M 21 Time Information Level 0% 100% A C Type A Individual vs. Type C Individual Aligns resources Aligns resources Makes decisions Makes decisions Flows more information Flows more information Influences Influences Wants a favor Wants a favor Doesnt document Doesnt document Preplans Preplans Shifts blame to others Shifts blame to others Likes to make decisions Likes to make decisions Does not prioritize Does not prioritize Uses five words for every one needed Uses five words for every one needed C A C C C C C C C C A

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

23 W W W. P B S R G. C O M 23 Time Information Level 0% 100% A C Type A Entity vs. Type C Entity Knows who to work with Knows who to work with Implements leadership training Implements leadership training Measurement of performance Measurement of performance Uses dominant information Uses dominant information Measures Measures Has a conservative plan Has a conservative plan Constantly changes their mind Constantly changes their mind Use relationships Use relationships C A C C A A A A

24 W W W. P B S R G. C O M 24 RSLS Time Information Level 0% 100% A C How to Create a KSM Left Side (LS) (Type A) vs. Right Side (RS) (Type C) += RS LS

25 W W W. P B S R G. C O M 25 Time Information Level 0% 100% A C Where is Control? No Information Information LSRS No Control Control

26 W W W. P B S R G. C O M 26 Time Information Level 0% 100% A C Where is Management? No Information Information No Control Control LSRS Leadership Management

27 W W W. P B S R G. C O M 27 Time Information Level 0% 100% A C Decision Making? No Information Information No Control Control LSRS Leadership Management RS No Decision Making RS Decision Making Control

28 W W W. P B S R G. C O M 28 Plot the Following Characteristics 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 LS LS RS RS RS RS RS LS LS LS LS LS RS

29 W W W. P B S R G. C O M 29 Plot the Following Characteristics LS 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 LS RS LS RS LS LS RS LS RS RS RS

30 W W W. P B S R G. C O M 30 Plot the Following Characteristics LS 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 LS RS RS LS RS RS RS RS RS RS LS LS

31 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M So What is the Big Picture? Where are we going with this? 33

34 W W W. P B S R G. C O M 34 Perceive Process Apply Change Cycle of Learning 100% Information

35 W W W. P B S R G. C O M 35 Q: When do we know 50% of what we will ever know? 0% Information100% Information Life Span 50% Information?

36 W W W. P B S R G. C O M 36 Proposal: When we are almost dead. 0% Information 100% Information (what we will know) 50% Information Life Span

37 W W W. P B S R G. C O M 37 Q: How much do we know about everything? 0% Information100% Information % Known This Much?

38 W W W. P B S R G. C O M 38 Proposal: We dont know very much 0% Information100% Information % of Information What we dont know What we know As for me, all I know is that I know nothing. - Socrates

39 W W W. P B S R G. C O M 39 Q: How do we solve what we dont know? (aka Risk) Do we use what we know to solve what we dont know? OR Do we use logic to solve what we dont know? 0% Information100% Information % of Information What we dont know What we know

40 W W W. P B S R G. C O M 40 A: Logic can be applied without knowledge/experience 0% Information100% Information % of Information What we dont know Logic

41 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 42 Industry Performance and Capability Highly Trained Medium Trained Vendor X Customers Outsourcing Owner Partnering Owner Price Based Minimal Experience

43 W W W. P B S R G. C O M Initial conditions Final conditions An Event Time Laws Risk is deviation from expected measurements

44 W W W. P B S R G. C O M Initial conditions Final conditions Traditional Management Time Laws D2 D1M&C D3 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

45 W W W. P B S R G. C O M Initial conditions Final conditions New PM and RM Model that Depends on Efficiency Time Laws M1 D1M3 M2 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 M4

46 W W W. P B S R G. C O M 46 Inefficiency vs Efficiency 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 Can you make the transition?

47 W W W. P B S R G. C O M 47 Performance-Based Functions I. Price-Based II. Performance-Based IV. Unstable Market III. Negotiated Competition Performance LowHigh Treat as a Commodity Volume Based No Accountability Finger Pointing Management & Inspection Minimum Standards Client minimizes risk Value & Performance Maximize Profit Vendor Accountability Minimized Management & Inspection Quality Control Vendor minimizes risk

48 W W W. P B S R G. C O M 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

49 W W W. P B S R G. C O M 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 49

50 W W W. P B S R G. C O M 50 Silo Buster – Make Things Simple Planning / Programming Designer/EngineeringContracting Contractors / Manufacturers UsersInspectors Simplicity/Dominant Information Technical Details 30K Foot Level

51 W W W. P B S R G. C O M 51 Best Value System: PIPS & PIRMS Identification of Potential Best-Value Pre Planning and Risk Management Measurement of Deviation from the Expectation PHASE 1 PHASE 2 PHASE 3 51 PIPS PIRMS Performance Information Procurement System Performance Information Risk Management System

52 W W W. P B S R G. C O M 52 Filter 1 Past Performance Information Filter 2 Proposal & RAVA Plan Filter 4 Prioritization (Identify Best Value) Filter 5 Pre-Planning Phase Filter 6 Weekly Report & Post-Rating Time Quality of Vendors Filter 3 Interview Key Personnel Award High Low BV Process

53 W W W. P B S R G. C O M 53 Filter 1 Past Performance Information Filter 2 Proposal & RAVA Plan Filter 4 Prioritization (Identify Best Value) Filter 5 Pre-Planning Phase Filter 6 Weekly Report & Post-Rating Time Quality of Vendors Filter 3 Interview Key Personnel Award High Low Getting Started: Developing a BV Requirement Setup Phase

54 W W W. P B S R G. C O M 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 dont like to change…. So before implementing anything new in your organization lets think through what we should do… 54

55 W W W. P B S R G. C O M 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. Time Information Level 0% 100% A C

56 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 63

64 W W W. P B S R G. C O M 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 dont think this is legal... Let me play devils advocate…

65 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 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: Dont 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 W W W. P B S R G. C O M 68 Low Performer 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 cant change their current level of performance, they must be the best at....$$$$ Contractor 1 Contractor 2 Contractor 3 Contractor 4 Performance High Low Risk High Low

69 W W W. P B S R G. C O M 69 Impact of No Budget Contractor 1 Contractor 2 Contractor 3 Contractor 4 Performance High Low Risk High Low Contractor 1 Contractor 2 Contractor 3 Price High Low Contractor 4 Giving out your budget has no impact to a low-performer

70 W W W. P B S R G. C O M 70 PIPS Best Value System Identification of Potential Best-Value Pre Planning and Risk Management Measurement of Deviation from the Expectation PHASE 1 PHASE 2 PHASE 3

71 W W W. P B S R G. C O M Go to PA

72 W W W. P B S R G. C O M 72 Filter 1 Past Performance Information Filter 2 Current Project Information Filter 4 Identify Potential Best Value Filter 5 Pre-Award Phase Filter 6 Weekly Report & Post-Rating Time Quality of Vendors Filter 3 Interview Award High Low Award

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

74 W W W. P B S R G. C O M 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

75 W W W. P B S R G. C O M 75 Unforeseen Risks PERFORMANCE SUMMARY Vendor Performance Client Performance Individual Performance Project Performance RISK MANAGEMENT PLAN Risk Risk Minimization Schedule WEEKLY REPORT Risk Unforeseen Risks Management by Risk Minimization METRICS Time linked Financial Operational/Client Satisfac. Environmental

76 W W W. P B S R G. C O M 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 76

77 W W W. P B S R G. C O M Deliverables Major project deliverables include: 1.Set and Educate Project core team and 2.Set BSU Strategic Plan 3.Capture current level of performance and cost Plan providers Cost structure Program structure and details Identify differentials, gaps, and overlaps 4.Create RFP 5.Educate Vendors 6.Run Selection and Interviews 7.Run Pre-Planning and Risk Management 8.Award & Transition 9.Establish and maintain measurement system 77

78 W W W. P B S R G. C O M Stat e of Idah o Overview Create a statewide Student Health Insurance Plan (SHIP) consortium Create a statewide Student Health Insurance Plan (SHIP) consortium Boise State University (BSU) Boise State University (BSU) Idaho State University (ISU) Idaho State University (ISU) Lewis-Clark State College (LCSC) Lewis-Clark State College (LCSC) 3-Year Contract | $36 Million 3-Year Contract | $36 Million Measurements of Success Measurements of Success 1.Reduce internal University program administration costs 2.Maintain or increase Customer Satisfaction (University & Students) 3.Maintain or increase cost-effectiveness of program to students

79 W W W. P B S R G. C O M Stat e of Idah o 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 RFIRFP

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

81 W W W. P B S R G. C O M Stat e of Idah o 81 Filter 1 Past Performance Information Filter 2 Proposal & RAVA Plan Filter 4 Prioritize (Identify Best Value) Filter 5 Pre-Award Phase (Pre-Plan) Filter 6 Weekly Report & Post-Rating Time Quality of Vendors Filter 3 Interview High Low Summary of Proposal Submittal Proposal Includes: 1)Cost/Financial Information 2)RAVA Plan (3) 3)Scope Plan (2) 4)PPI

82 W W W. P B S R G. C O M Stat e of Idah o 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 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) Consortium goal was to increase plan characteristics (to provide better coverage for students)

83 W W W. P B S R G. C O M Stat e of Idah o SHIP Analysis

84 W W W. P B S R G. C O M Stat e of Idah o Analysis of Proposals

85 W W W. P B S R G. C O M Stat e of Idah o Overall Best-Value Results Best-Value Results: Best-Value Results: Student Premium has decreased by 2% (-$26) Student Premium has decreased by 2% (-$26) Spouse & Dependent Premium has decreased by 19% (-$519) Spouse & Dependent Premium has decreased by 19% (-$519) In general, Benefits/Coverage have been increased In general, Benefits/Coverage have been increased Previous Program:Previous Program: –Student Premiums increased $124/year (past 4 years) –Spouse & Dependent Premiums increased $126/year

86 W W W. P B S R G. C O M Case Study: ASU Food Services Contract $32 Million Dollars (Over 10 Years)

87 W W W. P B S R G. C O M 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%

88 W W W. P B S R G. C O M 2009 Performance Metrics

89 W W W. P B S R G. C O M Performance Metrics – Combined ASU FY 2010

90 W W W. P B S R G. C O M 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 CPPMs 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

91 W W W. P B S R G. C O M 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 W W W. P B S R G. C O M 92 CPPM Strategic Plan Year 1 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 PMs, 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 W W W. P B S R G. C O M 93 Transitional Plan

94 W W W. P B S R G. C O M 94 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% Current Construction Results

95 W W W. P B S R G. C O M 95 PM 1PM 2PM 3PM 4 Procurement Officer 1Procurement Officer 2 Director Contractor 1 Contractor 2 Contractor 3 Contractor 4 Contractor 3 Contractor 6 Contractor 1 Contractor 8 Contractor 9 Contractor 7 Contractor 2 Contractor 4 Contractor 8 Contractor 9 Contractor 2 Program Report Director 1Director 2 PM 1PM 2PM 3PM 4 Vice President

96 W W W. P B S R G. C O M 96 Report – Overall Program

97 W W W. P B S R G. C O M 97 Report - Directors

98 W W W. P B S R G. C O M 98 Report - End Users

99 W W W. P B S R G. C O M 99 Report – Internal PMs

100 W W W. P B S R G. C O M 100 Report - Contractors

101 W W W. P B S R G. C O M 101 Report – Yearly Analysis

102 W W W. P B S R G. C O M 102 Report – Top 10 Riskiest Projects

103 W W W. P B S R G. C O M 103 Report – Analysis of Risks

104 W W W. P B S R G. C O M Research from Contractor Delays Contractor Risks% Delivery of Materials Delayed28% Installation errors26% Incorrect material ordered or delivered11% Alteration of installation needed9% Manufacture didn't have sufficient materials9% Misunderstanding of Construction Documents6% Door Frames incorrect size4% Soil compaction2% % of risks due to errors in materials delivered

105 W W W. P B S R G. C O M 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


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