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Value Based Project Delivery: Best Value Business Model Kenneth T. Sullivan, PhD, MBA Arizona State University
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Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Jul 15, 2020

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Page 1: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Value Based Project Delivery:Best Value Business Model

Kenneth T. Sullivan, PhD, MBA Arizona State University

Page 2: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Goals1. Minimize Cost

2. Minimize Cost by becoming More Efficient

3. Become More Efficient in three ways:

– Hire people who know what they are doing

– Preplan before the contract is signed

– Measure for positive accountability

4. Teach the thinking, concepts, tools, and processes to organizations

2

Page 3: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Goals (typical - Owner)

• Be able to get what you paid for and be able to prove it – Demonstrate VALUE!

• Enhance preplanning and performance measurement techniques

• Add “Best Value” as another tool in your toolbox

• Have higher levels of accountability / breakdown organizational silos

• Become a “Client of Choice”

3

Proj

ect

Org

aniz

atio

nal

Page 4: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

20 Years | 250+ Publications | 100+ Funded Partners

2000+ Projects | $6+ Billion Procured

Page 5: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

InformationTechnologynetworkingdata centershardwareCOTS softwareERP systems

help desk serviceseProcurement

FacilityManagementmaintenancelandscapingsecurity servicebuilding systemsindustrial movingwaste managementenergy management

custodialconveyancepest control

Health Insurance/Medical Services

Manufacturing

Business/Municipal /University Servicesdiningmulti-media rightsfitness equipmentonline educationdocument managementproperty managementaudiovisualcommunications systemsemergency response systemslaundry

material recyclingbookstoresfurniturefinancial services

Construction/Design/Engineeringlarge gcinfrastructuremunicipallaboratoryeducationhospitalfinanciallarge specialty

small gcrenovationrepairmaintenanceroofingdemolitiondevelopmentsupply chain

DBBCMARDBIDIQJOCLow BidIPD

Page 6: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Strategic Partners & Efforts

Fulbright Scholarship-University of BotswanaBV tests

RMITTeaching IMTPBSRG platform

Tongji University

7+ yearsInfra/IT/Equip€4B+

MalaysiaComplete Supply Chain

United States -70+ clients37 states

Canada13 clients5 provinces

Page 7: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What Percent of RFP’s Are 100% Accurate?

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Page 8: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Who Should Know More About

Performing/Delivering the Services Required?

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Page 9: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

It Is More Important For The Vendor To Know What To Do Than It Is For Client To Know What The Vendor Should Do

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Page 10: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Vendor 1

Vendor 2

Vendor 3

Vendor 4

High

Low High

Low High

Low High

Low

Impact of Minimum Requirements

Vendor 1Vendor 2Vendor 3Vendor 4

Page 11: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

High

Low

Owners“The lowest possible quality

that I want”

Vendors “The highest possible value

that you will get”

Minimum

Problem with Traditional Approach

High

Low

Maximum

Page 12: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor
Page 13: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Which of these Proponents brings the client organization the most risk?

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Vendor 1

Vendor 2

Vendor 3

Vendor 4

High

Low High

Low

Page 14: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What we have seen…

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Client

Vendor

Vendor

Vendor

Vendor

Vendor

Page 15: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What we have seen…

15

Client

Vendor

Vendor

Vendor

Vendor

Vendor

Page 16: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What we have seen…

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ClientVendor

Page 17: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What we have seen…

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Client Vendor

Client PM Vendor PM

Page 18: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

“The Greatest Risk that I always face, is how to

accomplish all of the things that our sales team promised

we could do.”

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Page 19: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What is different…

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Client

Vendor

Vendor

Vendor

Vendor

Vendor

P/P/P

Page 20: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

What is different…

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Client Vendor

Client PM Vendor PM

Plan

Page 21: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

A Leader’s Objectives

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Minimize cost, increase efficiency

“not just transfer risk...but minimize

risk”

Supply Chain mentality“Win-Win”

Minimize risk of non-

performance “High Client

Satisf.”Minimize the need for client management, direction, and

decision making

Vendors maximize their profits by being more efficient

Reduce Cost

Page 22: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Becoming a Client of Choice• Vendors want to send their best people to

compete on your projects

• Open, Honest, Fair, Transparent

• Allow Clarification, Planning, and Coordination Before the Contract is Signed

• Drive Accountability through Performance measurement

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Page 23: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Best-Value Model

Page 24: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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[Insert Name Here] Model

Page 25: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Best Value Model

Page 26: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Best Value Model

Page 27: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Value-Based Selection• Hiring or selecting who will create the plan and

execute it

• The quality of the plan and its execution is directly linked to the individuals creating it and doing the work– Quality of Plan = Minimization of Risk & Cost

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Page 28: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria- Price / Cost / Fee- Project Capability- Risk Assessment- Value Added- Past Performance

Information (PPI)

Short List prior to

Interviews (if necessary)

Pre Award Activities- Training- Kickoff Meeting- Plan & Clarify- Summary Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

Project Execution- Weekly Risk Report- Director Report- Performance Meas.- Close Out Ratings

Best Value Process

Copyright Arizona State Univ. 2013

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Page 29: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Selection – Value Based PropositionSelection dictates the maximum capacity to achieve a quality plan

Procurement methodologies to identify expertise:• Risk and Value focused RFP Process• Simple, brief, anonymous evaluation process• Evaluation of key project personnel

– Proven Past Performance Information– Ability to identify, prioritize, and minimize risk– Interviews of project delivery personnel– Focus on specific project needs– Minimize marketing information

• Cost/Financial

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Page 30: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Factors For Success

• Fair (state/follow rules)

• Open (no “prequalification” / open to all with experience)

• Impartial and Transparent (minimize evaluator bias / share your budget / provide debriefing)

• Efficient (minimize efforts)

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Page 31: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Request For Proposal (RFP)

• Contents:– Current / Existing conditions– Desired outcomes / Objectives– Proposal requirements and selection criteria

• Education describes how the vendor must think (paradigm shift)

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RFP

Page 32: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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RFP / Solicitation• Use existing RFP document and add Best-Value language

• Does not change contract language

• Does not change design / specs

• Always provide your budget

• Always provide your schedule

• Have legal review

• Have an educational meeting

Page 33: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

RFP Intent

Defensive Document

VS

Enabler of Value Creation

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Page 34: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Should We Issue the Budget?• The owner wants the best-available option that meets

the requirements.

• Requirements are:– Time constraints– Cost constraints– Expectations - Needs/Req/Quality

Page 35: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Should We Issue the Budget?• Yes

Page 36: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria- Price / Cost / Fee- Project Capability- Risk Assessment- Value Added- Past Performance

Information (PPI)

Short List prior to

Interviews (if necessary)

Pre Award Activities- Training- Kickoff Meeting- Plan & Clarify- Summary Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

Project Execution- Weekly Risk Report- Director Report- Performance Meas.- Close Out Ratings

Best Value Process

Copyright Arizona State Univ. 2013

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Page 37: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

3 Written SubmittalsBlind Evaluations: standard templates, no modifications, and no names.

Risk Assessment

= risks you don’t control

2 pages each, 6 pages in total

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Page 38: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Project Capability

Page 39: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Project Capability Template

Page 40: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

• Plan 1– We will use our 20 years of experience in working with mechanical

systems to minimize the risk of the heating and cooling system design.

• Plan 2– We have identified the design of the heat/cooling system as a risk. It has

not been used before in the area. Will ensure that the system performance and installation is verified in the pre-award period.

– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1)

– Mechanical contractor identified modifications to the design to improve output and sustainability of the system with the following impacts (mechanical system cost minimized by 15% - see VA#1)

– Mechanical system will be provided by one manufacturer, and will be commissioned by the manufacturer, contractor, and general contractor, who will take full responsibility of commissioning the system

Example of SolutionsRisk: Design of Heating/Cooling SystemType: Project Capability

Page 41: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

• Plan 1– We will work with the user to minimize the impact of noise from

demolition.

• Plan 2– We have planned to demolition during off hours and weekends. This

will have a slight impact on our cost (less than 1%), but the impact to customer satisfaction justifies this.

– We will also install rubber sheets on the floors to diminish noise and vibrations.

– Both solutions can be performed within your budget. – Both solutions have been used on multiple previous projects w/ high

levels of customer satisfaction (9.4/10).

Example of SolutionsRisk: Noise from DemolitionType: Project Capability

Page 42: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Risk Assessment

Risk Assessment

= risks you don’t control

Page 43: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Risk Assessment Template

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Typical Risk Assessment Template

Page 44: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Example of Solutions Risk: Loss of Radio Flagship in Major MarketType: Risk Assessment• Plan 1

– We will work very hard to maintain excellent affiliate relationships. If we lose a radio station (e.g. it changes its format) we will move quickly to replace the lost station. If we cannot quickly replace a flagship station, we can be very creative and could even consider purchasing all local inventory from a new flagship station.

• Plan 2– In the past 10 yrs, on over 50 accounts, 7 radio stations format changes

have occurred. The following solution is optimal.– We own and will maintain two radio contracts covering the area, where

signals can be switched if required. The flagship station will be the station with the stronger signal and greater coverage.

– If a station is lost we will have a equal replacement within 2 months. If within two months a replacement is not contracted we will purchase inventory from another station or discount the cost of an inventory purchase and add it to our payments to the client.

Page 45: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

• Plan 1– Coordination with [water company] is critical. We will

coordinate and plan with [water company] as soon as the award is made to make sure that we get water to the site to irrigate the fields.

• Plan 2– We will coordinate and schedule the water with [water

company]. However, based on past experience there is a high risk they will not meet the schedule (the water company does not meet schedule over 90% of the time).

– We will have temporary waterlines setup and ready to connect to the nearby fire hydrant to irrigate until [water company] is ready.

– We will also have water trucks on-site if there is problems with connecting the lines.

Example of Solutions Risk: Getting water to the siteType: Risk Assessment

Page 46: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

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Value Added

Page 47: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Value Add Plan1. Provide ways to keep project at or below budget

– Modifications to requirements to meet budget– Specific cost ($) savings– Supported by metrics (high performance)

2. Increase customer satisfaction

3. Increase performance

Page 48: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Value Added Template

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Typical Value Added Template

Page 49: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Example: Value Added Items• Idea: Purchase “Concurrent Licenses” instead of “Named Licenses”

• Why: In a “Named Licensing” model, you must purchase a license for every user and only that particular user can access the software. If that named user is in meetings, on vacation, or not using the system, the license cannot be utilized. In a “Concurrent Licensing” model, the system loans out the licenses to users as they log in. If a user is inactive, the server releases the license and allocates the license to the next user.

• Expected Benefit: The advantage of the concurrent licenses is that the Agency will not have to purchase licenses that are not being used, which can result in approximately 20%-30% savings in cost.

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Page 50: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Past Performance Information• PPI will be collected on the critical Entities:

– Firm/Key Firms– Project Manager (Individual)/Team Leader(s)– Key Subs or Suppliers and Other Key Individuals

• Each Entity must prepare and submit a list of references, customer surveys, and Past Performance Information Scores

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VendorENTITY

Prepare and Send Survey Questionnaires to Past Clients Step 2

Step 3Collect/Receive Completed Surveys

Prepare Reference ListStep 1

Enter data into Reference ListStep 4

Package all material (Reference List and Surveys) and SubmitStep 5

Page 51: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Financial Proposal/Bid Cost• Dependent on

project type

Page 52: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Financial Proposal (VGS)• Vendor generated

solution

Page 53: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria- Price / Cost / Fee- Project Capability- Risk Assessment- Value Added- Past Performance

Information (PPI)

Short List prior to

Interviews (if necessary)

Pre Award Activities- Training- Kickoff Meeting- Plan & Clarify- Summary Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

Project Execution- Weekly Risk Report- Director Report- Performance Meas.- Close Out Ratings

Best Value Process

Copyright Arizona State Univ. 2013

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Page 54: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria- Price / Cost / Fee- Project Capability- Risk Assessment- Value Added- Past Performance

Information (PPI)

Short List prior to

Interviews (if necessary)

Pre Award Activities- Training- Kickoff Meeting- Plan & Clarify- Summary Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

Project Execution- Weekly Risk Report- Director Report- Performance Meas.- Close Out Ratings

Best Value Process

Copyright Arizona State Univ. 2013

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Page 55: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Best Value Interviews:Identifying Expertise

1. Why were you selected for this project?

2. How many similar projects have you worked on? Individually and as a Team?

3. Describe a similar project you have developed/worked on to the current project.

4. What is different about this project from other projects that you have worked for?

5. Draw out the process for this project by major milestone activities.1. Identify, prioritize, and how you will minimize the risks of this project.2. What risks don’t you control? How will you minimize those risks?3. What do you need from the client and when do you need it?

6. How are you going to measure your performance during the project?

7. What value do you bring to the project in terms of differences based on dollars, quality, expertise, or time?

• If buying a product, demos are done here

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Page 56: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Selection Model

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Page 57: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Selection Case Study

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Page 58: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria- Price / Cost / Fee- Project Capability- Risk Assessment- Value Added- Past Performance

Information (PPI)

Short List prior to

Interviews (if necessary)

Pre Award Activities- Training- Kickoff Meeting- Plan & Clarify- Summary Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

Project Execution- Weekly Risk Report- Director Report- Performance Meas.- Close Out Ratings

Best Value Process

Copyright Arizona State Univ. 2013

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Page 59: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Best Value Model

Page 60: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

How to Clarify a PlanWhat is it / Why is it important?

• Period of time allotted before work begins to the entity doing the work:

– Present their project/service plan

– Set a plan for its delivery / clarify that their plan 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

Page 61: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

How to Clarify a Plan What is it / Why is it important?• Period of time allotted before work begins to the entity doing the work:

– 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

– Coordinate the schedule

Page 62: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Clarification / Preplanning PeriodSt

art

Very High Level

Cost Verification

Included in Proposal

Excluded from Proposal

Major Assumptions

Major Client Risks/Concerns

High Level

Project Work Plan

Client Risks/Concerns

PA Schedule

Uncontrollable Risks

Response to all risks

Roles and Responsibilities

Value Added Ideas

Coordination

Review Functionality

Technical Level

Performance Reports / Metrics

Additional Documentation

Technical Details

Project Schedule

High level demos

PA Document

End

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Clarification / Preplanning Period

Page 64: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Impact of Clarification/Pre-Award (General Services Administration)

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No CRITERIA Traditional RFP ASU-BV

1 Number of projects analyzed 11 10

2 Total awarded cost $14,244,385 $9,994,887

3 Total awarded schedule 1,822 1,373

4 Percent awarded cost below budget 4.4% 6.0%

5 Average time RFP Release to Contract 68 days 78 days

6 Average BV-PA duration (days) 0 7

7 Average Overall Change Order Rate 50% Decrease8 Average Overall Project Delay Rate 38% Decrease9 GSA Satisfaction Rating of Contractor/Job 34% Increase

For within BV projects, also tested “<1 week” PA vs “>1 week” PA̶ Longer PA had 33% lower change order rate (73% reduced overall)̶ Longer PA had 69% lower delay rate (73% reduced overall)

Page 65: Value Based Project Delivery - Amazon S3...– We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor

Clarification & Preplanning Case Study

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Best Value Model

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Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria- Price / Cost / Fee- Project Capability- Risk Assessment- Value Added- Past Performance

Information (PPI)

Short List prior to

Interviews (if necessary)

Pre Award Activities- Training- Kickoff Meeting- Plan & Clarify- Summary Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

Project Execution- Weekly Risk Report- Director Report- Performance Meas.- Close Out Ratings

Best Value Process

Copyright Arizona State Univ. 2013

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Measured Environment• Must be simple and dominant

• Must be for the purposes of positive accountability

• Transparency and openness

• Measuring against a plan (or expectation created by the individual/team doing the work)

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Weekly Risk Report System• Excel Spreadsheet that is setup by the Client and sent to the vendor

once Award/NTP has been issued

• Vendor must submit the report every week (Friday) until project is complete

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Unforeseen Risks

PERFORMANCE SUMMARY• Vendor Performance• Client Performance• Individual Performance• Project Performance

PROJECT PLAN• Risk• Risk Minimization• Schedule

WEEKLY REPORT• Risk• Unforeseen Risks

METRICS• Time linked• Financial• Operational/Client Satisfac.• Environmental

Measurement of Deviation from the ExpectationManagement by Risk Minimization

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Project ManagementCreating a Measured Environment:

• Weekly Risk Report– Tool for documenting risk that impacts the project– Measurement in terms of cost, schedule, and client expectation

• Director’s Report– Overall performance summary of multiple projects running

simultaneously

• Performance evaluation– Client closeout evaluation of vendor performance– Accountability metric updates Past Performance Information

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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

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• 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%

Current Results

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PM 1 PM 2 PM 3 PM 4

Procurement Officer 1 Procurement Officer 2

Director

Contractor 1

Contractor 2

Contractor 3

Contractor 4

Contractor 3

Contractor 6

Contractor 1

Contractor 8

Contractor 9

Contractor 7

Contractor 7

Contractor 2

Contractor 4

Contractor 8

Contractor 9

Contractor 2

Program Report

Director 1 Director 2

PM 1 PM 2 PM 3 PM 4

Vice President

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Report – Overall Program

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Directors Report

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TEAM 1 (President /

University / Admin)

TEAM 2Academic Health

Center

TEAM 3Provost College

1 Total Number of Projects 19 14 52 Percent of Projects Procured Using PIPS 79% 86% 80%3 Total Awarded Cost: $5,359,995 $2,821,005 $2,353,7614 Average Number of Risks per Project 3 8 12

5 Overall Owner Impacts (Time & Cost) 7.7% 41.3% 41.1%6 Owner Change Order Rate 0.6% 3.4% 20.0%7 Owner Delay Rate 7.2% 37.8% 21.1%8 Percent of Projects without Owner Cost Changes 63% 36% 80%9 Percent of Projects without Owner Delays 68% 50% 80%

10 Overall Contractor Impacts (Time & Cost) 8.1% 19.6% 14.8%11 Contractor Change Order Rate 0.1% 0.1% -0.8%12 Contractor Delay Rate 8.0% 19.6% 15.6%13 Percent of Projects without Contractor Cost Changes 95% 93% 100%14 Percent of Projects without Contractor Delays 79% 79% 60%

15 Total Number of Completed Projects 4 2 116 Total Number of Client Surveys Returned 3 2 117 Percent of Projects Evaluated by Client 75% 100% 100%18 Average PM Post Project Rating of Contractor 6.75 10 1019 Average Client Post Project Rating of Contractor 7.7 8.5 8.020 Average Client Post Project Rating of CPPM 10.7 8.5 7.0

Contractor Impacts

Owner Impacts

Satisfaction Ratings

General Overview

Report – End Users

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Report – Internal PM’s

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No ContractorTotal

Number of Projects

Total Awarded Cost:

Owner Change Order Rate

Owner Delay Rate

Vendor Change Order Rate

Vendor Delay Rate

Percent of Late Reports

Vendor Performance

1 Contractor 118 3 $ 721,965 0.3% 18.1% 0.2% 66.8% 53% 120%2 Contractor 119 3 $ 220,002 0.7% 10.4% 0.0% 0.0% 69% 69%3 Contractor 120 1 $ 269,850 9.4% 303.0% 0.0% 18.2% 47% 65%4 Contractor 104 3 $ 459,225 1.6% 2.7% 0.0% 18.8% 37% 56%5 Contractor 121 1 $ 241,575 0.0% 21.9% 2.7% 50.0% 0% 53%6 Contractor 105 8 $ 1,611,015 0.3% 32.9% 0.0% 16.3% 32% 49%7 Contractor 106 9 $ 1,280,362 2.2% 31.1% 0.7% 3.2% 35% 39%8 Contractor 122 3 $ 367,650 0.0% 79.1% 0.0% 1.4% 37% 38%9 Contractor 107 1 $ 178,440 0.0% 0.0% 0.6% 11.4% 25% 37%

10 Contractor 123 2 $ 3,227,182 14.9% 0.0% -0.6% 5.4% 30% 35%11 Contractor 108 2 $ 327,295 0.0% 135.4% 0.0% 0.0% 32% 32%12 Contractor 124 1 $ 69,218 3.5% 0.0% 0.0% 0.0% 31% 31%13 Contractor 125 3 $ 1,150,738 1.9% 7.3% 0.0% 4.2% 26% 30%14 Contractor 109 5 $ 534,095 2.0% 23.2% 0.0% 0.0% 29% 29%15 Contractor 126 1 $ 323,000 3.3% 3.4% 0.0% 6.8% 22% 29%16 Contractor 110 1 $ 308,882 1.2% 24.8% 0.0% 0.0% 27% 27%17 Contractor 127 7 $ 1,793,355 3.8% 13.6% 0.0% 0.0% 26% 26%18 Contractor 128 4 $ 2,956,800 1.3% 1.7% 0.0% 12.2% 11% 23%19 Contractor 129 6 $ 1,319,789 2.2% 16.2% 0.0% 11.0% 9% 21%20 Contractor 111 4 $ 1,096,707 0.1% 0.0% 0.0% 9.8% 10% 19%21 Contractor 112 1 $ 446,100 0.0% 6.9% 0.0% 0.0% 15% 15%22 Contractor 113 3 $ 552,815 5.1% 29.4% 0.0% 7.0% 8% 15%23 Contractor 114 2 $ 1,841,157 13.0% 215.8% 0.0% 0.0% 13% 13%

Report – Vendors

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Report – Yearly Analysis

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Report – Top 10 Riskiest Projects

No Project Awarded CostAwarded Duration

Overall Change Order Rate

Overall Delay Rate

Percent of Late Reports

Risk Analysis Factor

PM Director

1 Mayo Remodel Suite A652 $ 269,850 66 9% 321% 47% 377% Wycliffe Waganda Gary Summerville

2 Barn Clean Renovations $ 269,000 80 2% 166% 60% 229% Wycliffe Waganda Justin Grussing

3 WBOB Remodel Suite 150 $ 273,100 99 1% 96% 37% 134% Pete Nickel Gary Summerville

4 Vet Sciences Third Floor $ 96,930 49 3% 86% 28% 116% Pete Nickel Gary Summerville

5Weaver Densford College of Pharmacy

$ 90,862 28 2% 25% 80% 107% Pete Nickel Gary Summerville

6 PWB Remodel Suite 6-240 $ 127,338 82 17% 23% 64% 104% Steve Bailey Gary Summerville

7 PWB Room 7-158B $ 46,504 30 0% 0% 100% 100% Pete Nickel Gary Summerville

8Oak Street Parking Surveillance

$ 246,802 74 0% 0% 100% 100% George Mahowald Justin Grussing

9 Snyder Bldg Exterior Door $ 219,000 121 -4% 81% 22% 100% Wycliffe Waganda Justin Grussing

10 Heller Hall Renovation $ 1,593,561 254 29% 0% 50% 79% Matt Stringfellow Justin Grussing

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Report – Analysis of Risks

Risk CategoryNumber of

RisksImpact to

CostImpact to Schedule

Percent Impact to

Cost

Percent Impact to Schedule

1) Client Impacts 114 $660,369 1,200 59% 46%Client Scope Change / Decision 111 660,369$ 976 59% 37%

Client Requested Delay 3 -$ 224 0% 9%

2) CPPM Impacts 135 $329,425 885 30% 34%Design Issue 48 189,876$ 230 17% 9%

CPPM Issue (Codes / Permits) 36 46,140$ 170 4% 7%

CPPM Issue (Energy Mgmt) 2 47,533$ 30 4% 1%

CPPM Issue (Hazardous / Health & Safety) 8 35,407$ 118 3% 5%

CPPM Issue (NTS) 8 10,018$ 64 1% 2%

CPPM Issue (Contract / Payment) 11 -$ 132 0% 5%

CPPM Issue (Other) 22 451$ 141 0% 5%

3) Contractor Impacts 43 $21,005 411 2% 16%Contractor Issue 11 -$ 101 0% 4%

Contractor Oversight of Design 9 21,005$ 38 2% 1%

Contractor Issue with Supplier / Sub 23 -$ 272 0% 10%

4) Unforeseen Impacts 19 $102,544 111 9% 4%311 1,113,343$ 2,607

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Measurement Case Study

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Risk Encounters by Stakeholders

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High-Performing PM’s vs. Traditional PM’s

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Num

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Project Schedule

PM 1 (RM Score 4.2)

PM 2 (RM Score 3.9)

PM 8 (RM Score 2.9)

PM 9 (RM Score 2.5)

Original Completion Date

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Vision• Partner with progressive and innovative

organizations and people

• Move industry towards value-based, preplanning, and measured (accountable) environment

• Implement and enhance best value concepts, approach, and tools

• Provide education, research, and assistance

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Comments / Questions

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