Best Value Business Model Kenneth T. Sullivan PhD, MBA Performance Based Studies Research Group School of Sustainable Engineering and the Built Environment Ira A. Fulton Schools of Engineering Arizona State University www.pbsrg.com

Who we are: PBSRG Overview Established in 1994 by Dr. Dean Kashiwagi and Dr. Bill Badger Research effort entails: Information Measurement Theory (IMT): measuring of current conditions to predict future outcomes Clients’ implementation of Best-Value Business Philosophy to improve the efficiency of their organizations and projects/services Organizational Transformation Models Performance Information Procurement System (PIPS) Contracting & Project management model (alignment/leadership instead of management/influence) - PIRMS Performance Information Environment (minimize access and flow of information) for accountability Risk management by using deductive logic, minimization of decision making

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

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

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

What makes our research message unusual….. Simplistic Uses logic Efficiency: less decision making, less management, and better results (best value and high profits) It is more important for the vendor who does the work to know what to do than it is for client’s representative to know what the vendor should do Measurement

Industry Structure Performance Competition Vendor minimizes risk High III. Negotiated-Bid II. Value Based Qualified vendors invited Owner selects vendor Negotiates with vendor Vendor performs Best Value (Performance and price measurements) Quality control Vendor minimizes risk Performance IV. Unstable Market I. Price-Based/Traditional Specifications, standards and qualification based Management & Inspection Client minimizes risk Low High Competition

Impact of Minimums & Expectations High Low High Low Vendor 1 Vendor 2 Risk Risk Performance Performance Vendor 1 Vendor 2 Vendor 3 Vendor 4 Vendor 3 Vendor 4 Low High Low High

Perception Problems with Traditional Systems Owners “The lowest possible quality that I want” Vendors “The highest possible value that you will get” High Low Performance High Low Performance Maximum Minimum

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

Project Management Model Initial conditions Final conditions M3 C1 M2 Laws Laws Time C1: Client Expectations based decisions and various factors – may or may not be “realistic” M1: Measured vendor plan that more accurately describe the initial conditions replaces C1 – converts to a predictive contract M2: RMP/WRR measures deviation & performance to plan M3: Final performance measurement M1

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 vendor Vendor has control Performance measurements Decrease flow of information High performance vendors used to minimize risk Need less people (efficient) Accountability

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

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 optimize their environment 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.

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

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 17

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

What are we trying to accomplish from a procurement perspective? Question: If Purchasing wants to buy a “green circle”, in which scenario is hiring the right “green circle” easiest to justify? Scenario 1 Scenario 2

BV Process Filter 1 Filter 2 Filter 3 Filter 4 Filter 5 Filter 6 Past Performance Information Filter 2 Current Capability Filter 3 Interview Key Personnel Filter 4 Prioritization (Identify Best Value) Filter 5 Cost Reasonableness Filter 6 Pre-Planning & Risk Min 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) Measurement of Risk & Performance During the Contract Low Time

Evaluation Criteria Past Performance Information Scope Plan Technical Risk Plan Risk Assessment & Value Added Plan (RAVA) Transition Schedule Financials/Cost Interviews

Assessment: based on actuals

Identifying the Potential Best-Value Prioritization Yes Yes No Proceed to highest ranked proposal within budget Best-Value is within budget Yes Yes No Best-Value is the lowest price Best-Value is within [10%] of next highest ranked firm Yes Yes No Best-Value can be justified based on other factors Yes Yes No Proceed to Pre-Award Go with Alternate Proposal or Cancel

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

Project Management Model Initial conditions Final conditions M3 C1 M2 Laws Laws Time C1: Client Expectations based decisions and various factors – may or may not be “realistic” M1: Measured vendor plan that more accurately describe the initial conditions replaces C1 – converts to a predictive contract M2: RMP/WRR measures deviation & performance to plan M3: Final performance measurement M1

Buyer Controls Vendor Through Contract Traditional Risk Model V B C Buyer Controls Vendor Through Contract

Best Value Risk Model V B C Vendor Manages/Minimizes Risk With Contract - Contract is predictive

Pre Award Period What is it / Why is it important Period of time allotted to potential best value vendor (aka the Expert) to: Think about and preplan the project Set a plan for its delivery / clarify that your proposal is accurate Identify the risks and issues that could cause the plan to deviate Identify what you don’t know and when you will know it and how the plan could change based upon what you discover Set plans to minimize those risks from occurring Address all the concerns and risks of the client The pre award phase is a period of time allotted to the potential best-valued vendor before an award is made. (CLICK) This period of time is crucial for the vendor because it provides them with an opportunity to accomplish several tasks: First, it provides the vendor with an opportunity to preplan the entire project in detail Secondly, it allows the vendor time to minimize all potential surprises (which is also in the best interest of the client as well) Thirdly, it provides the vendor with an opportunity to clarify if their proposal is accurate or not. During this phase, the CPPM Project Manager will provide the potential best value vendor with a list of all the risks that were identified by the other vendors. No solutions are provided (only risks). The vendor must respond to each risk with their plan to mitigate the risk. And the last thing that the pre award phase allows the vendor to do, is place the client at risk for items that are outside of the vendors control (CLICK) The pre award period has three major steps. First, there is a 1-hr kick-off meeting where the vendor will be introduced to the client and the clients team. A short tutorial will also be played for all parties discussing the PA Phase The next step is the actual pre-planning phase. This is where the vendor will spend a majority of their time in coordination and ironing out any issues The final step is the PA Meeting. This is a 1-hr meeting to summarize the vendors Quality Control plan. 28 28

Pre Award Period What is it / Why is it important Period of time allotted to potential best value vendor (aka the Expert) to: Know how they are being successful and adding value (measurement) What metrics you will use and how you will report them What is the current baseline condition we are comparing against Identify what you need from the client and have a plan for getting it Have completely aligned expectations between all parties so everyone knows what is going to transpire and what they are supposed to do The pre award phase is a period of time allotted to the potential best-valued vendor before an award is made. (CLICK) This period of time is crucial for the vendor because it provides them with an opportunity to accomplish several tasks: First, it provides the vendor with an opportunity to preplan the entire project in detail Secondly, it allows the vendor time to minimize all potential surprises (which is also in the best interest of the client as well) Thirdly, it provides the vendor with an opportunity to clarify if their proposal is accurate or not. During this phase, the CPPM Project Manager will provide the potential best value vendor with a list of all the risks that were identified by the other vendors. No solutions are provided (only risks). The vendor must respond to each risk with their plan to mitigate the risk. And the last thing that the pre award phase allows the vendor to do, is place the client at risk for items that are outside of the vendors control (CLICK) The pre award period has three major steps. First, there is a 1-hr kick-off meeting where the vendor will be introduced to the client and the clients team. A short tutorial will also be played for all parties discussing the PA Phase The next step is the actual pre-planning phase. This is where the vendor will spend a majority of their time in coordination and ironing out any issues The final step is the PA Meeting. This is a 1-hr meeting to summarize the vendors Quality Control plan. 29 29

BV Process Non-Detailed Non-Detailed Non-Detailed Non-Detailed Filter 1 Past Performance Information Filter 2 Current Capability Filter 3 Interview Key Personnel Filter 4 Prioritization (Identify Best Value) Filter 5 Cost Reasonableness Filter 6 Pre-Planning & Risk Min High Non-Detailed Non-Detailed Non-Detailed Non-Detailed Non-Detailed Detailed 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) Measurement of Risk & Performance During the Contract Low Time

Pre Award Document (Risk Management Plan) Scope & Project/Effort Plan Clear and Detailed Project Scope (what is and what is not included) – Set Baseline Expectation Cost or Financial Model Milestone schedule (linked to performance benchmarks) Risk Minimization Plan Uncontrolled Risks List A list of Risks Proposer does not control with plans to minimize Identified Risks List A list of all previously identified risks (by other bidders, user, and client) with plans to minimize Client Action Item List Weekly Risk Report Set Up Performance Metrics Other: Agreed to Value Adding Options, Original RAVA Plan, Interview Minutes, etc… The quality control Plan is a document that will be submitted at the end of the Pre award phase. The QC Plan should contain several items: (CLICK) As we have just discussed, the QC Plan should contain a list of all the risks that the vendor does not control, with a plan to minimize the risks (CLICK) The QC Plan should contain a detailed project schedule of the actual project being procured. The schedule must identify all critical milestones and any other critical activities. If there are any critical dates where a decision is required from the client, it must also be included in the schedule. (CLICK) The QC Plan should also list all risks that were identified by all the other vendors in the risk assessment plans, any risks identified by the client, and must have a plan to minimize each risk. (CLICK) And finally, the QC Plan should contain a list of actions or tasks that the vendor requires from the client.

Award Filter 1 Filter 2 Filter 3 Filter 4 Filter 5 Filter 6 Past Performance Information Filter 2 Current Capability Filter 3 Interview Key Personnel Filter 4 Prioritization (Identify Best Value) Filter 5 Cost Reasonableness Filter 6 Pre-Planning & Risk Min 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) Measurement of Risk & Performance During the Contract Low Time

Measurement Filter 1 Filter 2 Filter 3 Filter 4 Filter 5 Filter 6 Past Performance Information Filter 2 Current Capability Filter 3 Interview Key Personnel Filter 4 Prioritization (Identify Best Value) Filter 5 Cost Reasonableness Filter 6 Pre-Planning & Risk Min 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) Measurement of Risk & Performance During the Contract Low Time

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 34

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

Importance of Measurement Measurement is critical Measurement = accountability Accountability = improved performance, change Measurement allows definition of value (expertise) An expert is someone without risk Measurement is a mirror

Potential Vision Educate on IMT and Best Value methodology, tool, etc. Transfer and educate a new tool for procurement Transfer and educate techniques for preplanning and contracting Create a measured environment Measure projects and vendors Measure the university, organizations, groups, people, etc. Measurement = accountability = higher performance Integrated into network of similar partners all trying to become better Become educators and leaders of your area

How will you know when you have been successful Potential Goals Educated and certified Educating others Measured projects and services Risk Performance Comparison to baseline conditions Preplanning and risk management plans Creation of a leadership environment alignment Less client effort required Fewer lawyers needed Better vendors

Stones vs Bricks

Stones vs Bricks Best value is a leadership based model Leadership uses measurement and alignment of supply chain participants to optimize efficiency, minimize risk, and reduce costs Traditional approach Micro-management, direction, control, multiple layers of inspection Dependence upon the contract to ensure performance Best Value Approach Leadership, alignment, preplanning, and a supply chain perspective Uses of expertise, measurement, and accountability to optimize performance within the client’s constraints

The Event Initial conditions Final conditions Time 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

Cycle of Learning Perceive 100% Information Change Process Apply

Processing Speeds All Individuals Process At Different Speeds Perceive 100% Information Change Process Apply

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

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

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

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

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

Case Studies

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

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

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

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

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

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 55 55

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

SHIP Analysis State of Idaho

Analysis of Proposals State of Idaho

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

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

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% 61 61

2009 Performance Metrics

Performance Metrics – Combined ASU FY 2010

Overview of ASU Network The ASU Network consisted of:  64,000 Students and 12,000 Faculty 4 Different Campuses Estimated Cost: $11.1M Number of employees: 18 Full-time employees 8 Students 3 Contract technicians Main Technical Competencies: Core Infrastructure Design & Engineering Edge (Field) Technicians Project Management & Coordination Documentation Network Information/Operations Technology Solutions (network monitoring/measurement)

Technology Options

Final ASU IT Networking Contract ASU Maintenance Annual Cost Qwest Maintenance Total Annual Qwest Savings Total Qwest Annual Value Added and Savings $13,981,934 $12,500,000 1,481,934 2,756,934 ASU IT Networking previously performed in-house ASU IT Network Details 76,000 Students and Faculty 5 yr. Contract 4 Different Campuses ASU chose “As-Is” option

Vendor Created Information Environment Old Operational Structure New Operational Structure Complicated Management Structure Single Management Structure “Seamless Organization” No measurement Fully measured No accountability Qwest responsible for entire operation Requires more labor 26% less labor

Dominant Information Dominant Performance Indicators Overall cost of network Top of the line networking Network Sustainability/Accessibility Customer Satisfaction Documentation of Deviations to financials

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 69 69

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

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)

Transitional Plan

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%

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

Report – Overall Program

Report - Directors

Report - End Users

Report – Internal PM’s

Report - Contractors

Report – Yearly Analysis

Report – Top 10 Riskiest Projects

Report – Analysis of Risks

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

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

Best Value Vendor Characteristics Preplans and Minimizes Risk on Each Initiative Has a plan and knows the risks to the plan Is transparent Communicates clearly Asks good questions, knows what they don’t know Measures Performance and drives accountability Uses Dominant Information to Differentiate themselves/show value added Educates the Client and helps the client be a better client Educates themselves and has a continually enhanced vision Holds themselves and the client accountable Their plan is aligned so that when they win, the client automatically wins

Best Value Client Characteristics Ensures their needs and concerns are known by the vendor Ensures the vendor has a plan that addresses each need/concern/risk Is a facilitator to the vendors development of the plan(s) Enforces the best value structure Weekly risk reporting is being done Each risk is given a client satisfaction rating Measurements by vendor are being done Do not be pulled into making decisions you do not need to make Educates themselves and the vendor Avoids reversion Transfers risk and control Holds the vendor and themselves accountable Ensures the plan is aligned so they win and the vendor wins

Master of Science Degree Program: Facilities Asset and Project Management Masters program: Available on-line and in-person (site visits) Based on IMT, Leadership, and Best Value Completely integrated with your job/organization Thesis becomes documentation of best value implementation at your organization 30 Credits – Only 7 Classes and a Thesis Classes in IMT, Best Value, and PIRMS Classes in Leadership and FM, and PM (value based) Classes in Research Methods and Data Analysis

Comments / Questions W W W . P B S R G . C O M 88