Presentation on theme: "Best Value PIPS Best Value PIPS PIPS: Perfromance Information Procurement System P erformance B ased S tudies R esearch G roup (PBSRG) www.pbsrg.com PBSRG."— Presentation transcript:
Best Value PIPS Best Value PIPS PIPS: Perfromance Information Procurement System P erformance B ased S tudies R esearch G roup (PBSRG) PBSRG GLOBAL
PIPS: Perfromance Information Procurement System PBSRG : Perfomance Based Studies Research Group Lead by Pof. Dean Kashiwagi, Director Worldwide as a leader in Best-Value Procurement / Project Management /Organizational EfficiencyWorldwide as a leader in Best-Value Procurement / Project Management /Organizational Efficiency –Conducting research since 1994 ($7M+, $600K/YR) –146 Publications –441 Presentations, 6,200 Attendees –530 Procurements –$683M Construction services –$1.4B Non-construction services –50 Different clients (public & private) –98% performance –Decreased risk management functions by 90% –Increase vendor profit by 5%
3 PBSRG recognitions/ Association 2008/ / Corenet Global Innovation of the Year Award Food Services Sports Marketing IT/Network outsourcing Furniture Construction Services 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 Performance Low High Owner selects vendor Negotiates with vendor Vendor performs Measurements dictate outcome PM makes decisions
High Low Performance 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 Performance Maximum
Performance High Low Risk High Low Impact of Minimum Standards Contractor 1 Contractor 2 Contractor 3 Contractor 4 Contractor 1 Contractor 2 Contractor 3 Contractor 4 Performance High Low Risk High Low
Industry performance and capability Highly Trained Medium Trained Vendor X Customers Outsourcing Owner Partnering Owner Price Based (decision making and management) Minimal Experience
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 1Skill 2Skill 3Skill 4
Managers Code The movement of risk..... Dont Mess With It! YES NO YES YOU IDIOT! NO Will it Blow Up In Your Hands? NO Look The Other Way Anyone Else Knows? Youre SCREWED! YES 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
Initial conditions Final conditions Traditional Management Time Laws Risk is deviation from expected measurements D D M&C
Initial conditions Final conditions Best Value System: Assess, monitor, evaluate Time Laws Risk is deviation from expected measurements M MM M
Best Value System PHASE 3: MANAGEMENT BY RISK MINIMIZATION PHASE 1: SELECTION PHASE 2: PRE-PLANNING QUALITY CONTROL Award Best Value moves on
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 1 Past Performance Information Filter 2 Proposal & Risk / Value 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 Award High Low Best 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 Yes No Yes No Yes No Best Value Prioritization Proceed with Alternative Bidder or Re-Run
Filter 1 Past Performance Information Filter 2 Proposal & Risk / Value 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 Award High Low Detailed Selection Process (Over budget) Open price proposals Detailed Cost Breakouts
Identification of Potential Best-Value (over budget) Best-Value is also the lowest price Proceed to Pre Award / Award Yes No Yes No Yes Lowest Price Proceed with next 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 CONTROL Award 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 1 Past Performance Information Filter 2 Current Project Information Filter 4 Identify Potential Best Value Filter 5 Pre-Award Phase (technical concerns) Filter 6 Weekly Report & Post-Rating Time Quality of Vendors Filter 3 Interview Award High Low Remember – PIPS Has Multiple Filters
Filter 1 Past Performance Information Filter 2 Proposal & Risk / Value Plan Filter 4 Clarification Of Award Filter 5 Pre-Construction Phase (Pre-Plan) Filter 6 Weekly Report & Post-Rating Time Quality of Vendors Filter 3 Interview High Low Detailed LB Selection Process Addendum Award Bid NTP
Self Regulating Loop (Six Sigma DMAIC Generated) Actions Minimize data flow Minimize analysis Minimize control Risk Assessment Preplanning, Quality Control Plan Risk Management Measure again 50% Identify value (PPI, RA, Interview, Price$$$) V 50% Interview Key Personnel Past Performance Information M Requirements Efficient Project implementation MR 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 Risks Risks Control Dont Control Control Dont Control Me & Them
Weekly Report Front Page Project Particulars Project name Client PM Procurement agent Start End Date Contract award amount PM Risk Page Date 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 Directors 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 MeetingDecember Prebid Discussion Questions Proposal Due (PPI/RAVA/Price) December 17 th 2008 Shortlist January 5 th 2009 Interviews January 6 th 2009 Identification of Potential Best Value January 6 th 2009 Pre Award Kick Off Meeting January 7 th 2009 Pre Award Meeting January 7 th 2009 Contract Award January 7 th 2009 Award / Notice To Proceed January 8 th 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, markedWorkshop 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 clients 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 vendors 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.