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Best Value PIPS PIPS: Perfromance Information Procurement System

PBSRG. GLOBAL. Best Value PIPS PIPS: Perfromance Information Procurement System. P erformance B ased S tudies R esearch G roup (PBSRG) www.pbsrg.com. PIPS: Perfromance Information Procurement System. PBSRG : Perfomance Based Studies Research Group Lead by

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Best Value PIPS PIPS: Perfromance Information Procurement System

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  1. PBSRG GLOBAL Best Value PIPSPIPS: Perfromance Information Procurement System Performance Based Studies Research Group (PBSRG) www.pbsrg.com

  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 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%

  3. PBSRG recognitions/ Association July/Aug/Oct 08 2008/2009 2005 Corenet Global Innovation of the Year Award Food Services Sports Marketing IT/Network outsourcing Furniture Construction Services 2006/2008 3

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

  5. 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 I. Price Based IV. Unstable Market Specifications, standards and qualification based Management & Inspection PM makes decisions Competition Low High

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

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

  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 M Time M Risk is deviation from expected measurements

  15. Best Value System PHASE 2: PRE-PLANNING QUALITY CONTROL PHASE 3: MANAGEMENT BY RISK MINIMIZATION PHASE 1: SELECTION 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. Filter 6 Weekly Report & Post-Rating Filter 1 Past Performance Information Filter 4 Prioritize (Identify Best Value) Filter 5 Pre-Award Phase (Pre-Plan) Filter 2 Proposal & Risk / Value Plan Filter 3 Interview High Quality of Vendors Award Low Time Best Value Process

  18. Proceed with Alternative Bidder or Re-Run No No No Yes Yes Yes Yes Yes Yes Yes Yes Yes Proceed to Pre Award / Award 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

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

  20. Proceed with next highest priced value Yes No No Yes Yes Yes Yes Yes Proceed to Pre Award / Award 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

  21. Best Value Price Based System PHASE 3: MANAGEMENT BY RISK MINIMIZATION PHASE 2: PRE-CONSTRUCTION QUALITY CONTROL PHASE 1: LOW PRICE SELECTION 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 Filter 5 Pre-Award Phase (technical concerns) Filter 6 Weekly Report & Post-Rating Filter 1 Past Performance Information Filter 4 Identify Potential Best Value Filter 2 Current Project Information Filter 3 Interview High Quality of Vendors Award Low Time

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

  25. Actions Minimize data flow Minimize analysis Minimize control = Identify Value V R = Minimize Risk M = Self Measurement Requirements Past Performance Information Efficient Project implementation Self Regulating Loop(Six Sigma DMAIC Generated) R Risk Assessment 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

  26. 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 Management of Risk Before Contract Signing M M M M M

  27. 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 Unforeseen Risks

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

  29. 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 • 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 70% • 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

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