Best Value PIPS PIPS: Perfromance Information Procurement System

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Best Value PIPS PIPS Perfromance Information
Procurement System
Performance Based Studies Research Group
(PBSRG) www.pbsrg.com
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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 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

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PBSRG recognitions/ Association
2008/2009
2005 Corenet Global Innovation of the Year Award
Food Services Sports Marketing IT/Network
outsourcing Furniture Construction Services
2006/2008
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Best Value concepts being implemented in Botswana

• University of Botswana
• Botswana Development Corporation
• Bank of Botswana
• US Embassy
• DBES

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Industry Structure
High
II. Value Based
III. Negotiated-Bid
Owner selects vendor Negotiates with
vendor Vendor performs
Best Value (Performance and price
measurements) Quality control
Measurements dictate outcome
Performance
I. Price Based
IV. Unstable Market
Specifications, standards and qualification
based Management Inspection
PM makes decisions
Competition
High
Low
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Problem with Priced Based Systems
Owners The lowest possible quality that I
want
Contractors The highest possible value that you
will get
Maximum
Minimum
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Impact of Minimum Standards
High
Low
Risk
Performance
Contractor 1 Contractor 2 Contractor 3 Contractor
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Low
High
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Industry performance and capability
Vendor X
Customers
Highly Trained
Outsourcing Owner
Partnering Owner
Medium Trained
Minimal Experience
Price Based (decision making and management)
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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.
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As management, control, and direction become more
important..
Management, Direction, and Control
.it becomes less important to be skilled,
accountable, and able to minimize risk
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Managers Code The movement of risk.....
Is It Working?
NO
YES
Dont Mess With It!
Did You Mess With It?
YES
YOU IDIOT!
NO
Anyone Else Knows?
Will it Blow Up In Your Hands?
YES
Youre SCREWED!
YES
Can You Blame Someone Else?
NO
NO
Look The Other Way
NO
Hide It
Yes
NO PROBLEM!
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Event
Initial conditions
Final conditions
Laws
Laws
Time
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Traditional Management
Initial conditions
Final conditions
D
MC
Laws
Laws
Time
D
Risk is deviation from expected measurements
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Best Value SystemAssess, monitor, evaluate
Initial conditions
Final conditions
M
M
Laws
Laws
M
Time
M
Risk is deviation from expected measurements
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Best Value System
PHASE 2 PRE-PLANNING QUALITY CONTROL
PHASE 3 MANAGEMENT BY RISK MINIMIZATION
PHASE 1 SELECTION
Best Value moves on
Award
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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

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Best Value Process
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Identification of Potential Best-Value(Within
budget)
Best-Value is within 5 of next highest ranked
firm
Best-Value can be justified based on other factors
Best-Value is also the lowest price
Best Value Prioritization
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Detailed Selection Process(Over budget)
Filter 6 Weekly Report Post-Rating
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 3 Interview
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
Lowest Price
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Best Value Price Based System
PHASE 3 MANAGEMENT BY RISK MINIMIZATION
PHASE 2 PRE-CONSTRUCTION QUALITY CONTROL
PHASE 1 LOW PRICE SELECTION
Award
NTP
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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

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Remember PIPS Has Multiple Filters
Filter 5 Pre-Award Phase (technical concerns)
Filter 6 Weekly Report Post-Rating
Filter 1 Past Performance Information
Filter 2 Current Project Information
Filter 4 Identify Potential Best Value
Filter 3 Interview
High
Quality of Vendors
Award
Low
Time
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Detailed LB Selection Process
Filter 6 Weekly Report Post-Rating
Filter 1 Past Performance Information
Filter 2 Proposal Risk / Value Plan
Filter 4 Clarification Of Award
Filter 5 Pre-Construction Phase (Pre-Plan)
Filter 3 Interview
High
NTP
Bid
Award
Addendum
Quality of Vendors
Low
Time
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Self Regulating Loop(Six Sigma DMAIC Generated)

• Actions
• Minimize data flow
• Minimize analysis
• Minimize control

Risk Assessment
R
Interview Key Personnel
R
Identify value (PPI, RA, Interview, Price)
V
M
Preplanning, Quality Control Plan Risk Management
R
50
50
M
M
Measure again
M
R
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Management of Risk Before Contract Signing
M

• 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
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Unforeseen Risks
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Leadership Based Structure
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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

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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.

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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

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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.  

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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

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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

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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)

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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 430
  PM, marked Workshop Logistics Organizer.
  Failure will lower your rating.

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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.

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Interview of Key Personnel

• Cost estimate review by the vendors project
  manager and QA.
• 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.

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