1. Best Value PIPS PIPS: Perfromance Information Procurement System
PBSRG
GLOBAL
Performance Based Studies
Research Group (PBSRG)

2. 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 Efficiency
Conducting research since ($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
2008/2009
2005 Corenet
Global Innovation of
the Year Award
July/Aug/Oct 08
Food Services
Sports Marketing
IT/Network outsourcing
Furniture
Construction
Services
2006/2008 3 3

4. Best Value concepts being implemented in Botswana
University of Botswana
Botswana Development Corporation
Bank of Botswana
US Embassy
DBES

5. Measurements dictate outcome
Industry Structure
High
III. Negotiated-Bid
II. Value Based
Owner selects vendor
Negotiates with vendor
Vendor performs
Best Value (Performance and price measurements)
Quality control
Measurements dictate outcome
Performance
IV. Unstable Market
I. Price Based
Specifications, standards and qualification based
Management & Inspection
PM makes decisions
Low
Competition
High

6. Problem with Priced Based Systems
Owners
“The lowest possible quality that I want”
Contractors
“The highest possible value that you will get”
High
Low
Performance
High
Low
Performance
Maximum
Minimum

7. Impact of Minimum Standards
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Performance
High
Low
Risk
High
Low
Risk
Performance
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Low
High

8. Industry performance and capability
Vendor X
Customers
Highly
Trained
Outsourcing
Owner
Partnering
Owner
Medium
Trained
Minimal
Experience
Price
Based
(decision making and
management)

9. 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….

10. As management, control, and direction become more important…..
Management, Direction, and Control
Skill 1
Skill 2
Skill 3
Skill 4
….it becomes less important to be skilled, accountable, and able to minimize risk

11. “Manager’s Code” The movement of risk.....
Is It Working? NO
YES
Don’t Mess With It!
Did You Mess
With It?
YES
YOU IDIOT! NO
Anyone Else
Knows?
Will it Blow Up
In Your Hands?
YES
You’re SCREWED!
YES
Can You Blame
Someone Else? NO NO
Look The Other Way NO
Hide It
Yes
NO PROBLEM!

12. Event
Initial conditions
Final conditions
Laws
Laws
Time

13. Traditional Management
Initial conditions
Final conditions D
M&C
Laws
Laws
Time D
Risk is deviation from
expected measurements

14. Best Value System: Assess, monitor, evaluate
Initial conditions
Final conditions M M
Laws
Laws
Time M M
Risk is deviation from
expected measurements

15. MANAGEMENT BY RISK MINIMIZATION
Best Value System
PHASE 1:
SELECTION
PHASE 2:
PRE-PLANNING
QUALITY CONTROL
PHASE 3:
MANAGEMENT BY RISK MINIMIZATION
Best Value
moves on
Award

16. 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

17. Proposal & Risk / Value Plan
Best Value Process
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

18. Identification of Potential Best-Value (Within budget)
Best-Value is also the lowest price
Best-Value is within 5% of next highest ranked firm
Best-Value can be justified based on other factors
Proceed to
Pre Award /
Award
Yes
Best Value
Prioritization
Yes
Yes No
Yes
Yes No
Proceed with
Alternative Bidder
or Re-Run
Yes No

19. Detailed Selection Process (Over budget)
Filter 6
Weekly Report &
Post-Rating
Filter 1
Past
Performance
Information
Filter 2
Proposal & Risk / Value Plan
Filter 3
Interview
Filter 4
Prioritize
(Identify
Best Value)
Filter 5
Pre-Award
Phase
(Pre-Plan)
High
Detailed
Cost
Breakouts
Quality of Vendors
Award
Open price proposals
Low
Time

20. Identification of Potential Best-Value (over budget)
Dominant information proves that the contractor incurs serious risk in doing the project
Best-Value is also the lowest price
Proceed to
Pre Award /
Award
Yes
Lowest
Price
Yes No
Yes No
Yes
Proceed with
next highest priced
value

21. Best Value Price Based System
PHASE 1:
LOW
PRICE
SELECTION
PHASE 2:
PRE-CONSTRUCTION
QUALITY CONTROL
PHASE 3:
MANAGEMENT BY RISK MINIMIZATION
Award
NTP

22. 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

23. Remember – PIPS Has Multiple Filters
Pre-Award
Phase
(technical
concerns)
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
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

24. Detailed LB Selection Process
Filter 6
Weekly Report &
Post-Rating
Filter 1
Past
Performance
Information
Filter 2
Proposal & Risk / Value Plan
Filter 3
Interview
Filter 4
Clarification
Of Award
Filter 5
Pre-Construction
Phase
(Pre-Plan)
High
Bid
Award
NTP
Quality of Vendors
Addendum
Low
Time

25. Self Regulating Loop (Six Sigma DMAIC Generated)
Actions
Minimize data flow
Minimize analysis
Minimize control
Requirements R
Risk Assessment
Past Performance
Information R
Interview Key Personnel
Identify value (PPI, RA, Interview, Price$$$) M V R
Preplanning, Quality Control Plan
Risk Management
50%
Efficient
Project implementation
= Minimize Risk
= Self Measurement
= Identify Value M R V
50% M M
Measure again M R

26. 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 M

27. Unforeseen Risks
QUALITY CONTROL
Risk
Risk Minimization
Schedule
WEEKLY REPORT
Risk
Unforeseen Risks
QUALITY ASSURANCE
Checklist of Risks
Sign and Date
PERFORMANCE SUMMARY
Vendor Performance
Client Performance
Individual Performance
Project Performance

28. Leadership Based Structure…Us
Risks
Control
Don’t Control
Me & Them

29. Weekly Report Risk Page Front Page Schedule / Status Director’s Report
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
Director’s Report
Contractors
PMs
Subcontractors

30. 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.

31. 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 %
2a - Interview30%
2b - Risk Assessment / Value Plan20%
2c –Past Performance Information 15%
2d – Schedule 5%

32. 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.  

33. 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

34. 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

35. 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)

36. 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.

37. 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.

38. 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.

39. Review Handout

40. Comments / Questions
W W W . P B S R G . C O M