Presentation on theme: "Best Value PIPS PIPS: Perfromance Information Procurement System"— Presentation transcript:
1 Best Value PIPS PIPS: Perfromance Information Procurement System PBSRGGLOBALPerformance Based StudiesResearch Group (PBSRG)
2 PIPS: Perfromance Information Procurement System PBSRG : Perfomance Based Studies Research Group Lead byPof. Dean Kashiwagi, DirectorWorldwide as a leader in Best-Value Procurement / Project Management /Organizational EfficiencyConducting research since ($7M+, $600K/YR)146 Publications441 Presentations, 6,200 Attendees530 Procurements$683M Construction services$1.4B Non-construction services50 Different clients (public & private)98% performanceDecreased risk management functions by 90%Increase vendor profit by 5%
3 PBSRG recognitions/ Association 2008/20092005 CorenetGlobal Innovation ofthe Year AwardJuly/Aug/Oct 08Food ServicesSports MarketingIT/Network outsourcingFurnitureConstructionServices2006/200833
4 Best Value concepts being implemented in Botswana University of BotswanaBotswana Development CorporationBank of BotswanaUS EmbassyDBES
5 Measurements dictate outcome Industry StructureHighIII. Negotiated-BidII. Value BasedOwner selects vendorNegotiates with vendorVendor performsBest Value (Performance and price measurements)Quality controlMeasurements dictate outcomePerformanceIV. Unstable MarketI. Price BasedSpecifications, standards and qualification basedManagement & InspectionPM makes decisionsLowCompetitionHigh
6 Problem with Priced Based Systems Owners“The lowest possible quality that I want”Contractors“The highest possible value that you will get”HighLowPerformanceHighLowPerformanceMaximumMinimum
8 Industry performance and capability Vendor XCustomersHighlyTrainedOutsourcingOwnerPartneringOwnerMediumTrainedMinimalExperiencePriceBased(decision making andmanagement)
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 ControlSkill 1Skill 2Skill 3Skill 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?NOYESDon’t Mess With It!Did You MessWith It?YESYOU IDIOT!NOAnyone ElseKnows?Will it Blow UpIn Your Hands?YESYou’re SCREWED!YESCan You BlameSomeone Else?NONOLook The Other WayNOHide ItYesNO PROBLEM!
13 Traditional Management Initial conditionsFinal conditionsDM&CLawsLawsTimeDRisk is deviation fromexpected measurements
14 Best Value System: Assess, monitor, evaluate Initial conditionsFinal conditionsMMLawsLawsTimeMMRisk is deviation fromexpected measurements
15 MANAGEMENT BY RISK MINIMIZATION Best Value SystemPHASE 1:SELECTIONPHASE 2:PRE-PLANNINGQUALITY CONTROLPHASE 3:MANAGEMENT BY RISK MINIMIZATIONBest Valuemoves onAward
16 Information Environment Minimize documentation/information flowMinimize decision makingLook for dominant informationMinimize work for everyoneTransfer risk to someone who can minimize risk
17 Proposal & Risk / Value Plan Best Value ProcessFilter 1PastPerformanceInformationFilter 2Proposal & Risk / Value PlanFilter 4Prioritize(IdentifyBest Value)Filter 5Pre-AwardPhase(Pre-Plan)Filter 6Weekly Report &Post-RatingTimeQuality of VendorsFilter 3InterviewAwardHighLow
18 Identification of Potential Best-Value (Within budget) Best-Value is also the lowest priceBest-Value is within 5% of next highest ranked firmBest-Value can be justified based on other factorsProceed toPre Award /AwardYesBest ValuePrioritizationYesYesNoYesYesNoProceed withAlternative Bidderor Re-RunYesNo
19 Detailed Selection Process (Over budget) Filter 6Weekly Report &Post-RatingFilter 1PastPerformanceInformationFilter 2Proposal & Risk / Value PlanFilter 3InterviewFilter 4Prioritize(IdentifyBest Value)Filter 5Pre-AwardPhase(Pre-Plan)HighDetailedCostBreakoutsQuality of VendorsAwardOpen price proposalsLowTime
20 Identification of Potential Best-Value (over budget) Dominant information proves that the contractor incurs serious risk in doing the projectBest-Value is also the lowest priceProceed toPre Award /AwardYesLowestPriceYesNoYesNoYesProceed withnext highest pricedvalue
21 Best Value Price Based System PHASE 1:LOWPRICESELECTIONPHASE 2:PRE-CONSTRUCTIONQUALITY CONTROLPHASE 3:MANAGEMENT BY RISK MINIMIZATIONAwardNTP
22 Information Environment Filters are not deployed in LB Minimize documentation/information flowMinimize decision makingLook for dominant informationMinimize work for everyoneTransfer risk to someone who can minimize risk
23 Remember – PIPS Has Multiple Filters Pre-AwardPhase(technicalconcerns)Filter 6Weekly Report &Post-RatingFilter 1PastPerformanceInformationFilter 2Current Project InformationFilter 3InterviewFilter 4IdentifyPotentialBest ValueHighQuality of VendorsAwardThe 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 vendorsThe first filter is the process is Past Performance Information (click)LowTime
24 Detailed LB Selection Process Filter 6Weekly Report &Post-RatingFilter 1PastPerformanceInformationFilter 2Proposal & Risk / Value PlanFilter 3InterviewFilter 4ClarificationOf AwardFilter 5Pre-ConstructionPhase(Pre-Plan)HighBidAwardNTPQuality of VendorsAddendumLowTime
26 Management of Risk Before Contract Signing Requirement based on measurementCompete vendors based on value and quantification of riskCompile all risks; pick the best visionaryTechnical 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 weeklyMMMM
27 Unforeseen RisksQUALITY CONTROLRiskRisk MinimizationScheduleWEEKLY REPORTRiskUnforeseen RisksQUALITY ASSURANCEChecklist of RisksSign and DatePERFORMANCE SUMMARYVendor PerformanceClient PerformanceIndividual PerformanceProject Performance
28 Leadership Based Structure… UsRisksControlDon’t ControlMe & Them
29 Weekly Report Risk Page Front Page Schedule / Status Director’s Report Project ParticularsProject nameClient PMProcurement agentStartEndDateContract awardamountPMRisk PageDateWhy risk was notminimizedSolutionCost and timeStatus (weeklyupdate)Rating of howthey respondedRisk rating (cost andtime and responserating)Contractor errorsSchedule / StatusScheduleChange ordersDirector’s ReportContractorsPMsSubcontractors
30 Selection CriteriaThe 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 aresubject 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 PerformancePrioritization based on cost and performance, 30% and 70%Performance Ratings include PPI, RAVA, Interview Score, and CostFinancial 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-chatMinimizes discussion timeSetup an information environment where there is accountability, performance, and efficiency
34 Impact of dominant information Predict the future outcome and minimize riskSimplicity instead of complexityAllows even “blind” people to see the clearness of realityHelps everyone to be more focused
35 Impact of dominant information Minimizes the need for micro-managementAssigns accountability and responsibilityAligns resources in optimal patternEfficiencyPredictabilityMinimization of risk (not on time, not on budget, and not meeting expectation)
36 Important Dates RFP Issued Prebid Meeting December 10 2008 Prebid Discussion QuestionsProposal Due (PPI/RAVA/Price) December 17th 2008Shortlist January 5th 2009Interviews January 6th 2009Identification of Potential Best Value January 6th 2009Pre Award Kick Off Meeting January 7th 2009Pre Award Meeting January 7th 2009Contract Award January 7th 2009Award / Notice To Proceed January 8th 2009All 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/vendor7. 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 facilitatorsAbility to be accountable, take charge of the project, and minimize risk that they do not control, as well as minimize technical risk.Schedule.Vision.