Quality Based Selection Perspectives from Both Purchaser and Supplier

1. Quality Based SelectionPerspectives from BothPurchaser and Supplier Presented to: MWWA 2013 Conference by Allen K. Lucas, P.Eng. Utilities Kingston & Steve Grundy Rockwell Automation

2. Qualifications Based Selection Review When faced with the decision of who you want to work on your project how do you choose?

3. Qualifications Based Selection Review The core of Qualifications Based Selection is: Clear Scope & Complete Request For Proposal

4. Qualifications Based Selection Review We all know in the end who is left to clean up after the project is over

5. Quality Based Selection Purchaser & Supplier Perspective • Utilities Kingston has more than 14 Years experience with Qualifications Based Selection for Engineering Services. • Accepted in Corporate Purchasing Policy • Extend the concept for procurement of products. . . Why not?

6. Quality Based Selection Purchaser & Supplier Perspective Ravensview WPCP, Kingston, Ontario Upgrade Budget $116,325,000

7. Quality Based Selection Purchaser & Supplier Perspective

8. Quality Based Selection Purchaser & Supplier Perspective • 18 Pre-Approved Equipment Suppliers + Northern Transformer • Total value $20M • Need to incorporate Life Cycle Costs in some evaluations • Some coordination between suppliers • MCC and PLC package affected a number of others (BAF, back-up power, pumps, overall controls) • Each package developed specific to need by design team, operations and management

9. Quality Based Selection Purchaser & Supplier Perspective The core of ANY Selection Process is: Clear Scope & Complete Request For Proposal

10. Quality Based Selection Purchaser & Supplier Perspective Proposal Evaluation Process

11. Quality Based Selection Purchaser & Supplier Perspective A number of iterations to set clear needs and values specific to equipment/process Balance • Operations • Performance • Maintenance & Safety and • Financial Include review of references, similar projects, conformance & completeness

12. Quality Based Selection Purchaser & Supplier Perspective • Scoring was not as clearly divided for the MCC PLC Packages with respect to the identified categories and appeared more technically based • MCC’s - 6 Components – 5 to 20 pts each – 19.05% • PLC’s - 10 Components – 5 to 20 pts each – 26.98% • Tech Support - 4 Components – 10 - 15 pts ea 15.87% • Capital Cost - 2 Components – 34.92% • Interview – 10 points – 3.17%

13. Quality Based Selection Purchaser & Supplier Perspective • Give the best Proponent the Maximum Score for each item. • Second best gets a lower score, etc.. • Ties are discouraged. • If you choose not to score an item give a 0 to all Proponents.

14. Quality Based Selection Purchaser & Supplier Perspective Individuals review and score the proposals independently. Permitting each reviewer to score across the range of available points for each component was considered a better approach than a percentage based on ranking. The ranking method is seen as better when there are four or more proposals being reviewed.

15. Quality Based Selection Purchaser & Supplier Perspective • Up to 10 points were awarded for adherence to the proposed Terms of Payment • Financial criteria scored using a radial approach, Average price was awarded 50 points Prices higher than average lost 1 point for every percent or fraction above average. Prices lower than average awarded 1 point for every percent or fraction below average.

16. Quality Based Selection Purchaser & Supplier Perspective When considering the Life Cycle Costs, Financial criteria was reviewed collectively due to the preparation of a number of components by multiple individuals. While the process of Quality Based Selection was firmly supported by senior management, there was a need to demonstrate fiscal responsibility to municipal officials and public. The methodology as described above was deemed to achieve this effectively.

17. Quality Based Selection Purchaser & Supplier Perspective

18. Quality Based Selection Purchaser & Supplier Perspective

19. Quality Based Selection Purchaser & Supplier Perspective

20. Rockwell Automation At A Glance Fiscal 2011 Sales$6 billion Employees Over 21,000 World Headquarters Milwaukee, WI USA MarketOver 80 countries Emerging Markets 22% of total sales Trading SymbolROK Leading global provider of industrial power, control and information solutions.

21. Process Integration • Supplied by the Systems Integrator • Includes HMI, PLC’s, Instrumentation • Digital and Analog I/O • Motor Control Centers • Adjustable Speed Drives • SCADA Architecture • Modulating valves • Provides a cohesive solution • Conduct a Complete FAT • Provide network validation • Provide I/O validation • Confirm HMI functionality • Calibrate and Scale all Analog Devices • Confirm Alarming and Diagnostics to all devices

22. Automation and Power Control Dilemma The tie that holds it all together

23. Automation and ControlThe tie that holds it all together • Aging infrastructure • Aging workforce and attrition issues • Increased environmental compliance and reporting requiring more complex control solutions • Limited budgets for training, maintenance, spare parts • Economic constraints are affecting tax base revenue stream • Proliferation of Open Bid/Low Bid selection process has compounded these issues • Many stakeholders make a living on this process • Public Market is the only industry to support this method of procurement There has to be a better way

24. Project Risk Issues Issues with Spec Sect 16000 (Contractor Supplied MCC/Drives) • Gaps • Contractor Purchased/SI Responsible for Design and installation • Delivery not coordinated with SI schedule • No coordination or integration to OEM supplied process skids • Coordination of start up of control systems, drives, MCC’s, Pumps, process equipment • Different purchasing contracts between contractor and SI cause inconsistency with the process integration vendor • Issues • SI not in control of equipment to be installed • Inability to perform complete FAT prior to site installation • Inability to complete installation drawings prior to site installation • No single point of responsibility • Additional meetings to clarify design, I/O, and integration requirements • Additional cost/delays/time to match undocumented field conditions

25. Customer/Supplier Benefits of QBS • Customer • Lower Life Cycle Cost • Less Training Expense • Lower Parts Cost • Price stability • Lower Risk • Minimal use of protocol converters • Unified Control Architecture • Expandable System • Improved Reliability MTTF/MTTR • Customer Support Consistency • Supplier • Lower Risk • Unified Control Architecture • Minimal use of protocol converters • Long term customer relationship • Lower cost of sale • Provide a complete support solution • Deliver the most value our company can provide

26. Quality Based Selection Purchaser & Supplier Perspective Questions & Discussion