1 best value business model kenneth t. sullivan phd, mba performance based studies research group...

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Best Value Business ModelBest Value Business Model

Kenneth T. Sullivan Kenneth T. Sullivan PhD, MBAPhD, MBA

Performance Based Studies Research GroupPerformance Based Studies Research GroupSchool of Sustainable Engineering and the Built EnvironmentSchool of Sustainable Engineering and the Built Environment

Ira A. Fulton Schools of EngineeringIra A. Fulton Schools of EngineeringArizona State UniversityArizona State University

www.pbsrg.com

http://www.cibworld.nl/website/

W W W . P B S R G . C O M 2

Who we are: PBSRG OverviewWho 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

W W W . P B S R G . C O M

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

PBSRG’s Research Results(Performance Based Studies Research Group)


Research ClientsResearch 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 & JournalWorking Commission 117 & JournalInternational Efforts & PartnersInternational Efforts & Partners

5 years15 tests for infrastructureTwo major GCs

Fulbright ScholarUniversity of BotswanaPIPS tests RMIT

Teaching IMTPBSRG platform

Tongji University

BrunsfieldComplete Supply Chain


What makes our research message What makes our research message unusual…..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 StructureIndustry StructureHigh

High

I. Price-Based/Traditional

II. Value Based

IV. Unstable Market

III. Negotiated-Bid

Specifications, standards and qualification based

Management & Inspection

Best Value (Performance and price measurements)

Quality control

Competition

Pe

rfo

rman

ce

Low

Qualified vendors invited

Owner selects vendor

Negotiates with vendor

Vendor performs Vendor minimizes risk

Client minimizes risk


Vendor 1

Vendor 2

Vendor 3

Vendor 4

Perf

orm

an

ce

High

Low

Ris

k

High

Low

Perf

orm

an

ce

High

Low

Ris

k

High

Low

Impact of Minimums & Impact of Minimums & ExpectationsExpectations

Vendor 1Vendor 2Vendor 3Vendor 4


High

Low

Perf

orm

an

ce

Owners

“The lowest possible quality

that I want”

Vendors

“The highest possible value that you will get”

Minimum

Perception Problems with Perception Problems with Traditional SystemsTraditional Systems

High

Low

Perf

orm

an

ce

Maximum

W W W . P B S R G . C O M 10


Initial conditions

Final conditions

Traditional Management

Time

Laws Laws

D2

D1 M&C

D3

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


Initial conditions

Final conditions

Project Management Model

Time

Laws Laws

M1

C1 M2

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

M3

W W W . P B S R G . C O M 13

Inefficiency vs EfficiencyInefficiency vs Efficiency

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

Can you make the transition?

W W W . P B S R G . C O M 14

Performance-Based Performance-Based FunctionsFunctions

I. Price-Based

II. Performance-Based

IV. Unstable Market

III. Negotiated

Competition

Pe

rfo

rman

ce

Low High

High

Treat as a Commodity Volume Based No Accountability Finger Pointing Management & Inspection Minimum Standards Client minimizes risk

Value & Performance Maximize Profit Vendor Accountability Minimized Management & Inspection Quality Control Vendor minimizes risk

W W W . P B S R G . C O M 15

Best Value OverviewBest 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


What does the Best Value Model do?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

16

W W W . P B S R G . C O M 17

Best Value System: Best Value System: PIPS & PIRMSPIPS & PIRMS

Identification of PotentialBest-Value

Pre Planningand

Risk Management

Measurement ofDeviation from the

Expectation

PHASE 1PHASE 1 PHASE 2PHASE 2 PHASE 3PHASE 3

17

PIPS PIRMSPerformance Information

Procurement SystemPerformance Information Risk Management System

W W W . P B S R G . C O M 18

What is the model?What is the model?Identify the expert with as little effort as possible, using

measurement and differentialTransfer risk and control to the expert through preplanning

and risk minimization, focusing on risk that are not controlledHire the expertUse alignment, planning, & measurement in place of

management, control, and directionCreate a performance information environment to drive

accountability and changeProactive vs. Reactive Supply chain (us mentality)Logic vs. ExperiencePredictable vs. Chance


What are we trying to What are we trying to accomplish from a procurement accomplish from a procurement perspective?perspective?

Scenario 1 Scenario 2

Question:

If Purchasing wants to buy a “green circle”, in which scenario is hiring the right “green circle” easiest to justify?

W W W . P B S R G . C O M 20

Filter 1Past

PerformanceInformation

Filter 2Current

Capability

Filter 4Prioritization

(Identify Best Value)

Filter 5Cost

Reasonableness

Filter 6Pre-

Planning & Risk Min

Time

Qua

lity

of V

endo

rs

Filter 3Interview

Key Personnel

Awar

d

High

Low

BV ProcessBV Process

Measurement of Risk & Performance During the Contract


Evaluation CriteriaEvaluation Criteria

Past Performance Information

Scope Plan

Technical Risk Plan

Risk Assessment & Value Added Plan (RAVA)

Transition Schedule

Financials/Cost

Interviews


VendorNo Summary Criteria Out of A B C1 RAVA Plan 10 5.91 7.09 6.312 Transition Milestone Schedule 10 5.17 6.96 6.333 Interview 25 15.77 16.78 13.534 Past Performance Information - Survey 10 9.80 9.99 9.825 Past Performance Information - #/Clients Raw # 5.67 3.00 4.426 Past Performance Information - Financial 10 7.02 8.67 6.907 Financial Rating 10 4.00 8.00 8.008 Financial Return - Commissions Raw $ 30,254,170$ 60,137,588$ 64,000,000$ 9 Capital Investment Plan Raw $ 14,750,000$ 20,525,000$ 12,340,000$

10 Equipment Replacement Reserve Raw $ 7,213,342$ 4,100,001$ 8,171,811$ Finanical Totals 52,217,512$ 84,762,589$ 84,511,811$

VendorNo Summary Criteria Weight/Out of A B C1 RAVA Plan 28 16.55 19.85 17.672 Transition Milestone Schedule 2 1.03 1.39 1.273 Interview 25 15.77 16.78 13.534 Past Performance Information - Survey 9 8.82 8.99 8.845 Past Performance Information - #/Clients 1 1.00 0.53 0.786 Past Performance Information - Financial 15 10.53 13.01 10.357 Financial Rating 5 2.00 4.00 4.008 Financial Return - Commissions 7 3.31 6.58 7.009 Capital Investment Plan 6 4.31 6.00 3.61

10 Equipment Replacement Reserve 2 1.77 1.00 2.00100 65.09 78.13 69.04

Assessment: based on actuals

W W W . P B S R G . C O M 23

Identifying the Potential Identifying the Potential Best-ValueBest-Value

Best-Value is the lowest priceBest-Value is within [10%] of next highest ranked firm Best-Value can be justified based on other factors

Best-Value is within budget

YesNo

YesYes

Best ValuePrioritizationBest Value

Prioritization

YesNo

Go with AlternateProposal or Cancel

Proceed toPre-Award

YesYes

YesYes

YesYes YesNo

YesNo Proceed to highest ranked proposal within budget

W W W . P B S R G . C O M 24

Best Value SystemBest Value System

Identification of PotentialBest-Value

Pre Planningand

Risk Management

Measurement ofDeviation from the

Expectation

PHASE 1PHASE 1 PHASE 2PHASE 2 PHASE 3PHASE 3


Initial conditions

Final conditions

Project Management Model

Time

Laws Laws

M1

C1 M2

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

M3


V BC

Buyer Controls Vendor Through Contract

Traditional Risk Model


V BC

Vendor Manages/Minimizes Risk With Contract- Contract is predictive

Best Value Risk Model

W W W . P B S R G . C O M 2828

Pre Award PeriodPre Award PeriodWhat is it / Why is it importantWhat 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

W W W . P B S R G . C O M 2929

Pre Award PeriodPre Award PeriodWhat is it / Why is it importantWhat 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

W W W . P B S R G . C O M 30

Filter 1Past


Filter 2Current

Capability



Filter 5Cost

Reasonableness

Filter 6Pre-

Planning & Risk Min

Time

Qua

lity

of V

endo

rs

Filter 3Interview

Key Personnel

Awar

d

High

Low

BV ProcessBV Process


No

n-D

eta

iled

No

n-D

eta

iled

No

n-D

eta

iled

No

n-D

eta

iled

De

taile

d

No

n-D

eta

iled

W W W . P B S R G . C O M 31

Pre Award DocumentPre Award Document(Risk Management Plan)(Risk Management Plan)

1. Scope & Project/Effort Plan Clear and Detailed Project Scope (what is and what is not included) –

Set Baseline Expectation2. Cost or Financial Model3. Milestone schedule (linked to performance benchmarks)4. 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 minimize5. Client Action Item List6. Weekly Risk Report Set Up7. Performance Metrics8. Other: Agreed to Value Adding Options, Original RAVA Plan, Interview

Minutes, etc…

W W W . P B S R G . C O M 32

Filter 1Past


Filter 2Current

Capability



Filter 5Cost

Reasonableness

Filter 6Pre-

Planning & Risk Min

Time

Qua

lity

of V

endo

rs

Filter 3Interview

Key Personnel

Awar

d

High

Low

AwardAward


W W W . P B S R G . C O M 33

Filter 1Past


Filter 2Current

Capability



Filter 5Cost

Reasonableness

Filter 6Pre-

Planning & Risk Min

Time

Qua

lity

of V

endo

rs

Filter 3Interview

Key Personnel

Awar

d

High

Low

MeasurementMeasurement


W W W . P B S R G . C O M 34

Weekly Reporting SystemWeekly 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

W W W . P B S R G . C O M35

Unforeseen Risks

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

RISK MANAGEMENT PLAN• Risk• Risk Minimization• Schedule

WEEKLY REPORT• Risk• Unforeseen Risks

Management by Risk Management by Risk MinimizationMinimization

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


Importance of Importance of MeasurementMeasurementMeasurement is critical

Measurement = accountability

Accountability = improved performance, change

Measurement allows definition of value (expertise)

An expert is someone without risk

Measurement is a mirror

36


Potential VisionPotential 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

37


How will you know when How will you know when you have been successfulyou 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

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Stones vs BricksStones vs Bricks

39


Stones vs BricksStones 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

40


Initial conditions

Final conditions

The Event

Time

Laws Laws

D2

D1 M&C

D3

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

W W W . P B S R G . C O M 42

Perceive

Process

Apply

Change

Cycle of LearningCycle of Learning

100%Information

W W W . P B S R G . C O M 43

Perceive

Process

Apply

Change

Processing SpeedsProcessing SpeedsAll Individuals Process At Different SpeedsAll Individuals Process At Different Speeds

100%Information

W W W . P B S R G . C O M 44

Q: How much do we know about Q: How much do we know about everything?everything?

0% Information 100% Information

% Known

This Much? This Much?This Much?

W W W . P B S R G . C O M 45

Proposal: We don’t know very muchProposal: We don’t know very much


% of Information

What we don’t know

Wh

at w

e k

now

As for me, all I know is that I know nothing.

- Socrates

W W W . P B S R G . C O M 46

Q: How do we solve what we don’t Q: How do we solve what we don’t know? (aka Risk)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?


% of Information


Wh

at w

e k

now

W W W . P B S R G . C O M 47

A: Logic can be applied without A: Logic can be applied without knowledge/experienceknowledge/experience


% of Information


Log

ic

W W W . P B S R G . C O M 48

What is the model?What is the model?Identify the expert with as little effort as possible, using

measurement and differentialTransfer risk and control to the expert through preplanning

and risk minimization, focusing on risk that are not controlledHire the expertUse alignment, planning, & measurement in place of

management, control, and directionCreate a performance information environment to drive

accountability and changeProactive vs. Reactive Supply chain (us mentality)Logic vs. ExperiencePredictable vs. Chance


Case StudiesCase Studies

49


Overview of SHIP Test Overview of SHIP Test ObjectivesObjectives 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

50


DeliverablesDeliverables Major project deliverables include:

1. Set and Educate Project core team and2. Set BSU Strategic Plan3. Capture current level of performance and cost

Plan providers Cost structure Program structure and details Identify differentials, gaps, and overlaps

4. Create RFP5. Educate Vendors6. Run Selection and Interviews7. Run Pre-Planning and Risk Management8. Award & Transition9. Establish and maintain measurement system

51

W W W . P B S R G . C O M State of Idah

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OverviewOverview Create a statewide Student Health Insurance Plan (SHIP) consortium Create a statewide Student Health Insurance Plan (SHIP) consortium

Boise State University (BSU)Boise State University (BSU) Idaho State University (ISU)Idaho State University (ISU) Lewis-Clark State College (LCSC)Lewis-Clark State College (LCSC)

3-Year Contract | $36 Million3-Year Contract | $36 Million

Measurements of SuccessMeasurements of Success1.1. Reduce internal University program administration costsReduce internal University program administration costs2.2. Maintain or increase Customer Satisfaction (University & Students)Maintain or increase Customer Satisfaction (University & Students)3.3. Maintain or increase cost-effectiveness of program to studentsMaintain or increase cost-effectiveness of program to students


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What Should We Include In What Should We Include In RFP?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

Filter 1Past


Filter 2Proposal & RAVA Plan

Filter 4Prioritize (Identify

Best Value)

Filter 5Pre-Award

Phase (Pre-Plan)

Filter 6Weekly

Report &Post-Rating

Time

Qua

lity

of V

endo

rs

Filter 3Interview

High

Low

RFI RFP


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Selection Criteria & WeightsSelection Criteria & Weights Responding contractors were evaluated on:Responding contractors were evaluated on:

Premiums (Student, Spouse, Dependents) Premiums (Student, Spouse, Dependents) (200 Points)(200 Points)

Interviews Interviews (350 Points)(350 Points) Program Administrator Program Administrator Claims Administrator Claims Administrator Waiver Administrator Waiver Administrator Data Base Manager Data Base Manager Marketing Manager Marketing Manager

Risk Assessment and Value Added (RAVA) plan Risk Assessment and Value Added (RAVA) plan (250 Points)(250 Points) Risk Assessment – ability to identify and minimize potential risk unique to this projectRisk 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 qualityValue Added Option – ability to add value to the project in terms of time, money or quality

Scope Plan Scope Plan (50 Points)(50 Points) Concise synopsis of the work that will be performed (major tasks, steps, or work packages). 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 Vendors impression of how they will achieve the objectives of the consortium

Past Performance Information Past Performance Information (150 Points)(150 Points) FirmFirm Program AdministratorProgram Administrator


o

55

Filter 1Past


Filter 2Proposal & RAVA Plan

Filter 4Prioritize (Identify

Best Value)

Filter 5Pre-Award

Phase (Pre-Plan)

Filter 6Weekly

Report &Post-

Rating

Time

Qualit

y o

f V

endors

Filter 3Interview

High

Low

Summary of Proposal Summary of Proposal SubmittalSubmittal

Proposal Includes:1) Cost/Financial Information2) RAVA Plan (3)3) Scope Plan (2)4) PPI


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Coverage/Plan Coverage/Plan CharacteristicsCharacteristics

Consortium goal was to standardize coverage between all three University's Consortium goal was to standardize coverage between all three University's (to maximum extent possible). However, deviations were made as necessary (to maximum extent possible). However, deviations were made as necessary (BSU athletic coverage, ISU RX Coverage, Capitated Fee, etc)(BSU athletic coverage, ISU RX Coverage, Capitated Fee, etc)

Consortium goal was to increase plan characteristics (to provide better Consortium goal was to increase plan characteristics (to provide better coverage for students)coverage for students)

NO CRITERIA BSU ISU LCSC CONSORTIUM

1 Deductible Per Academic Year (In-Network) $250 $250 $250 $250

2 Deductible Per Academic Year (Out-Of-Network) $500 $250 $250 $500

3 Maximum Benefit (Standard) $100,000 $50,000 $50,000 $250,000

4 In-Network Coinsurance 80% 80% 80% 80%

5 In-Network Max out of Pocket $4,000 No MOP No MOP $4,000

6 Out-Of-Network Coinsurance 50% 60% 80% 60%

7 Out-Of-Network Max out of Pocket $6,000 No MOP No MOP $6,000

8 RX Drug Coverage (Max) $400 None $500 $500*


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SHIP AnalysisSHIP AnalysisNO CRITERIA

DETAILED WEIGHTS

FIRM A FIRM C FIRM D FIRM E FIRM F

1 Cost - Overall Annual Cost to Consortium 50 $12,237,529 $11,051,451 $11,437,893 $12,928,466 $13,063,2352 Cost - BSU Annual Student Premium (per-student per-year cost): 38 $1,772 $1,552 $1,685 $1,806 $1,9143 Cost - BSU Annual Spouse Premium (per-individual per-year cost): 6 $2,200 $3,992 $2,865 $3,066 $3,2484 Cost - BSU Annual Dependent Premium (per-individual per-year cost): 6 $1,886 $2,249 $2,444 $2,124 $3,6165 Cost - ISU Annual Student Premium (per-student per-year cost): 38 $1,267 $1,185 $1,113 $1,394 $1,2596 Cost - ISU Annual Spouse Premium (per-individual per-year cost): 6 $1,660 $3,048 $2,827 $2,937 $3,6277 Cost - ISU Annual Dependent Premium (per-individual per-year cost): 6 $1,424 $1,717 $1,209 $2,038 $1,5518 Cost - LCSC Annual Student Premium (per-student per-year cost): 38 $1,228 $1,244 $1,298 $1,484 $1,6159 Cost - LCSC Annual Spouse Premium (per-individual per-year cost): 6 $1,626 $3,200 $3,300 $3,066 $2,222

10 Cost - LCSC Annual Dependent Premium (per-individual per-year cost): 6 $1,394 $1,803 $1,411 $2,124 $2,31011 Interview Rating - The Program Administrator 175 6.7 7.7 7.1 7.4 7.412 Interview Rating - The Claims Administrator 70 6.6 6.1 4.6 5.3 8.313 Interview Rating - The Waiver Administrator 35 5.8 7.6 5.4 6.0 6.014 Interview Rating - The Data Base Manager 35 5.2 5.0 3.9 4.6 4.615 Interview Rating - The Marketing Manager 35 7.8 6.4 5.0 8.1 8.117 RAVA Plan Rating 250 7.42 6.25 7.42 5.58 5.1718 Work Plan Rating 50 6.67 7.17 6.33 5.50 5.5819 PPI - Firm - Satisfaction with the associated costs of the service 14 9.7 9.1 9.9 10.0 10.020 PPI - Firm - Satisfaction with the benefits provided by the service 14 9.9 9.5 10.0 10.0 10.021 PPI - Firm - Ability to manage the service / program 14 9.9 9.8 10.0 10.0 10.022 PPI - Firm - Ability to document and provide accurate reports 14 9.8 9.9 9.9 10.0 10.023 PPI - Firm - Overall customer satisfaction 14 10.0 9.8 9.8 10.0 10.024 PPI - Firm - Number of different projects 14 10.0 20.0 9.0 10.0 10.025 PPI - Firm - Number of different customer responses 14 10.0 20.0 9.0 10.0 10.026 PPI - Administrator - Satisfaction with the associated costs of the service 7 9.7 10.0 9.8 10.0 10.027 PPI - Administrator - Satisfaction with the benefits provided by the service 7 9.9 10.0 9.9 10.0 10.028 PPI - Administrator - Ability to manage the service / program 7 9.9 10.0 9.9 10.0 10.029 PPI - Administrator - Ability to document and provide accurate reports 7 9.8 10.0 9.7 10.0 10.030 PPI - Administrator - Overall customer satisfaction 7 10.0 10.0 9.7 10.0 10.031 PPI - Administrator - Number of different projects 7 10 10 10 10 1032 PPI - Administrator - Number of different customer responses 7 10 10 10 10 10


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Analysis of ProposalsAnalysis of Proposals

Total Score: 923 916 886 831 840

NO CRITERIA FIRM A FIRM C FIRM D FIRM E FIRM F

1 Cost - Average Student Premium $1,422 $1,327 $1,365 $1,561 $1,596

2 Cost - Average Spouse & Dependent Premium $1,698 $2,668 $2,343 $2,559 $2,762

3 Average Interview Rating 6.4 6.6 5.2 6.3 6.9

4 RAVA Plan Rating 7.4 6.3 7.4 5.6 5.2

5 Work Plan Rating 6.7 7.2 6.3 5.5 5.6

6 PPI - 1-10 Rating 9.9 9.7 9.9 10.0 10.0

7 PPI - Number of projects and clients 10 17 9 10 10


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Overall Best-Value ResultsOverall Best-Value Results

Best-Value Results:Best-Value Results: Student Premium has Student Premium has decreaseddecreased by by 2%2% (-$26) (-$26) Spouse & Dependent Premium has Spouse & Dependent Premium has decreaseddecreased by by 19%19% (-$519) (-$519) In general, Benefits/Coverage have been increasedIn general, Benefits/Coverage have been increased

School Premiums 2006-2007 2007-2008 2008-2009 2009-2010Average

Increase Per Year ($)

Average Increase Per

Year (%)Student $1,012 $1,182 $1,263 $1,385 $124 11%

Spouse & Dependent $1,843 $2,022 $2,104 $2,220 $126 6%

• Previous Program:Previous Program:– Student Premiums increased $124/year (past 4 years)Student Premiums increased $124/year (past 4 years)– Spouse & Dependent Premiums increased $126/yearSpouse & Dependent Premiums increased $126/year


Case Study: ASUFood Services Contract

No Summary Criteria ScaleFirm A

(Incumbent)Firm B Firm C

1 RAVA Plan (1-10) 5.9 7.1 6.32 Transition Milestone Schedule (1-10) 5.2 7.0 6.33 Interview (1-25) 15.8 16.8 13.54 Past Performance Information - Survey (1-10) 9.8 10.0 9.85 Past Performance Information - #/Clients Raw # 5.7 3.0 4.46 Past Performance Information - Financial (1-10) 7.0 8.7 6.97 Financial Rating (1-10) 4.0 8.0 8.08 Financial Return - Commissions Raw $ 30,254,170$ 60,137,588$ 64,000,000$ 9 Capital Investment Plan Raw $ 14,750,000$ 20,525,000$ 12,340,000$

10 Equipment Replacement Reserve Raw $ 7,213,342$ 4,100,001$ 8,171,811$ 52,217,512$ 84,762,589$ 84,511,811$ Finanical Totals

No Summary Criteria ScaleFirm A

(Incumbent)Firm B Firm C

1 RAVA Plan (1-10) 5.9 7.1 6.32 Transition Milestone Schedule (1-10) 5.2 7.0 6.33 Interview (1-25) 15.8 16.8 13.54 Past Performance Information - Survey (1-10) 9.8 10.0 9.85 Past Performance Information - #/Clients Raw # 5.7 3.0 4.46 Past Performance Information - Financial (1-10) 7.0 8.7 6.97 Financial Rating (1-10) 4.0 8.0 8.08 Financial Return - Commissions Raw $ 30,254,170$ 60,137,588$ 64,000,000$ 9 Capital Investment Plan Raw $ 14,750,000$ 20,525,000$ 12,340,000$

10 Equipment Replacement Reserve Raw $ 7,213,342$ 4,100,001$ 8,171,811$ 52,217,512$ 84,762,589$ 84,511,811$ Finanical Totals

$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%

1 Total Revenue ($M) 27.02$ 30.83$ 3.81$ 14%

2 Total Return & Commissions ($M) 2.17$ 2.67$ 0.50$ 23%

3 Captial Investment Contract ($M) 14.75$ 30.83$ 18.08$ 109%

4 Captial Investment 2006 vs. 2007 ($M) 0.26$ 5.70$ 5.44$ 2092%

5 ASU Administration (# of People) 7 1.5 -5.5 -79%

6 Customer (Student) Satisfaction (1-10) 5.2 7.1 1.9 37%

7 Myster Shopper Satisfaction N/A 9.6 -- --

CategoryNoFY 06-07

IncumbentFY 07-08

New VendorDifference % Difference


2009 Performance Metrics2009 Performance MetricsNo Catergory

YTD Prior Year YTD Actual

Var Act. vs PY

Var Act. vs PY %

1 Mandatory Meal Plan Sales - Meals ($K) (Meal Swipes) 8,915.5$ 8,212.2$ (703.3)$ -7.9%2 Voluntary Meal Plan Sales - Meals($K) (Meal Swipes) 294.2$ 404.1$ 109.9$ 37.4%3 Retail Sales ($K) 15,408.1$ 17,320.4$ 1,912.3$ 12.4%4 Catering Sales ($K) 2,329.1$ 2,526.5$ 197.4$ 8.5%5 Camp/Conference Sales ($K) -$ 865.2$ 865.2$ #DIV/0!6 All Other Sales (Subcontractors & Sushi) ($K) 3,030.9$ 3,807.2$ 776.2$ 25.6%7 TOTAL REVENUE 29,977.8$ 33,135.6$ 3,157.8$ 10.5%8 Commissions on Total Revenue ($K) 1,902.3$ 2,011.3$ 109.0$ 5.7%9 Subsidy - DPC, West & Polytechnic ($K) 391.7$ 1,381.6$ 989.9$ 252.7%

10 Commissions Paid to ASU ($K) (Commission less Subsidy) 1,723.3$ 629.7$ (1,093.6)$ -63.5%11 Commission % 6.35% 6.07% -0.28% -4.35%

No CatergoryYTD Prior

Year YTD Actual Actual vs PYVar Act. vs PY %

1 Number of Mandatory Meal Plans Sold 5,361 6,159 798 14.9%2 Number of Voluntary Meal Plans Sold 2,128 2,882 755 35.5%3 Customer (Student) Satisfaction Survery (1 - 10 (2x/yr) 7.34 7.27 -0.07 -1.0%


Performance Metrics – Combined ASU

FY 2010

No Category

YTD Prior Year - ADJUSTED wk 6

Sep YTD Actual YTD BudgetVar Act. vs

PYVar Act. vs

PY %Var Act. vs

BudgetVar Act. Vs Budget %

1 Mandatory Meal Plan Sales - Meals ($K) (Meal Swipes) 7,914.4$ 14,609.2$ 12,531.2$ 6,694.8$ 84.6% 2,078.0$ 16.6%

2 Voluntary Meal Plan Sales - Meals($K) (Meal Swipes) 390.5$ 372.4$ 264.7$ (18.1)$ -4.6% 107.7$ 40.7%

3 Retail Sales ($K) (Sun $, M&G Vol, M&G Mandatory and Cash & Credit Cards)16,756.8$ 17,656.1$ 22,697.4$ 899.2$ 5.4% (5,041.3)$ -22.2%

4 Catering Sales ($K) 2,475.5$ 2,502.0$ 2,733.4$ 26.5$ 1.1% (231.4)$ -8.5%

5 Camp/Conference Sales ($K) 865.2$ 822.1$ 648.9$ (43.1)$ -5.0% 173.2$ 26.7%

6 All Other Sales (Subcontractors & Sushi) ($K) 3,703.3$ 3,793.8$ 5,169.6$ 90.5$ 2.4% (1,375.8)$ -26.6%

7 TOTAL REVENUE 32,105.7$ 39,755.5$ 44,045.1$ 7,649.8$ 23.8% (4,289.6)$ -9.7%

8 Commissions on Total Revenue ($K) 2,011.2$ 2,413.2$ 2,673.5$ 402.0$ 20.0% (260.4)$ -9.7%

9 Subsidy - DPC, West & Polytechnic ($K) 1,202.3$ 604.6$ 1,157.6$ (597.7)$ -49.7% (553.0)$ -47.8%

10Commissions Paid to ASU ($K) (Commission on Total Revenue less Subsidy) 803.7$ 1,808.5$ 1,515.9$ 1,004.9$ 125.0% 292.6$ 19.3%11 Commission % 6.07% 6.07% 6.07%

No Category YTD Prior Year YTD ActualYTD

BudgetActual vs

PYVar Act. vs PY %

Var Act. vs Budget

Var Act. Vs

Budget %

1 Number of Mandatory Meal Plans Sold 6,133 7,573 7,843 1,455 23.6% -229 -2.9%

2 Number of Voluntary Meal Plans Sold 2,882 4,056 2,215 1,174 40.7% 1841 83.1%

Financial Performance Metrics

Performance Metrics


Overview of ASU NetworkOverview of ASU NetworkThe 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

As I s

$12M

+15,000 Ports

7%

Gig Speed Capability of LAN Devices

Capital Equipment I nvestment

VoIP Implementation w/ new voicemail

system

Additional Services Offered-

PM, HPC, Border & Data Center Mgmt

Commissions to ASU

Call Center Application Upgrade &

Maintenance

University Benchmarking

Wiring Upgrades

I nitial Cabling Audit

I nvestment I n New Technologies

100%

Standard Offering

+15,000 Ports

150

$17M

35% Over 5 Years

100%

100%

Option Set #1

+20,000 Ports

$26M

50% Over 5 Years

50%

50%

$350K

100%

Option Set #2

+25,000 Ports

$31M

80% Over 5 Years

80%

80%

$750K

100%

Value Add #3

100% in 18-24 Months

$35.7M

Up to $300K

100%

100%

100%

100%

+30,000 Ports (100% )

$1.375M

Enhanced Value Add #3

100% in 18-24 Months

$35.7M

100%

Up to $300K

100%

100%

100%

+30,000 Ports (100% )

$1.375M

100%


Final ASU IT Networking Final ASU IT Networking ContractContract

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

ASU MaintenanceAnnual Cost

Qwest MaintenanceAnnual Cost

Total Annual QwestSavings

Total Qwest AnnualValue Added and Savings

$13,981,934 $12,500,000 1,481,934 2,756,934


Vendor Created Information Vendor Created Information EnvironmentEnvironment

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 InformationDominant Information

Dominant Performance Indicators Overall cost of network Top of the line networking Network Sustainability/Accessibility Customer Satisfaction

Documentation of Deviations to financials

Dominant MeasurementsASU

Current Qwest

Value Add

Overall Cost of NetworkAnnual IT Spend Ratio (new vs maintenance) 17/83 48/52

Top-of-the-line Networking% Converged 7% 100%% Mobility 2% 100%% Equipment not out-of-date 58% 95%

Network Sustainability/Accessibility% Equipment not needing replacement (Not at end-of-maintenance) 88% 100%

Customer SatisfactionSpeed/Quickness Available (Wired / Wireless):% 1Gb - Wired Connections 59% 98%% of 300Mb - Wireless Connections 8% 32%

Dev. Cap, Exp. Maint. FOE Costs Total

Year 1 Exp. 4,100,000$ 1,652,000$ 6,818,000$ 12,570,000$

Ex. Risk X 100,000$ 100,000$ -$ -$ 100,000$

Ex. Risk X 100,000$ 100,000$ (25,000)$ -$ 75,000$

Ex. Risk X 50,000$ -$ 50,000$ -$ 50,000$

Ex. Risk X 25,000$ 25,000$ -$ -$ 25,000$

New Year 1 275,000$ 4,325,000$ 1,677,000$ 6,818,000$ 12,820,000$

W W W . P B S R G . C O M 6969

U of MN ObjectivesU 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

W W W . P B S R G . C O M 70

CPPM Strategic Plan 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

W W W . P B S R G . C O M 71

CPPM Strategic Plan CPPM Strategic Plan Year 1 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)

W W W . P B S R G . C O M 72

No Activity Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

1 Education / Training / Debriefing 0% 0% 25% 50% 75% 100%

2 Data Collection (PPI) on Vendors 0% 0% 0% 0% 0% 0%

3 Proposal Analysis / Review / Rating 0% 25% 75% 75% 100% 100%

4 Modeling / Identification of Best-Value 0% 0% 0% 25% 50% 100%

5 Weekly Risk Reporting System 0% 0% 25% 25% 75% 100%

6 Directors Reporting 0% 0% 0% 0% 0% 100%

7 Documentation and Analysis 0% 0% 0% 25% 50% 75%

8 Modification / Evolution / Updating 0% 0% 0% 0% 0% 0%

Transitional PlanTransitional Plan

W W W . P B S R G . C O M 73

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 Construction Current Construction ResultsResults

W W W . P B S R G . C O M 74

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 ReportProgram Report

Director 1 Director 2

PM 1 PM 2 PM 3 PM 4

Vice President

W W W . P B S R G . C O M 75

Report – Overall ProgramReport – Overall Program

W W W . P B S R G . C O M 76

Report - DirectorsReport - Directors

W W W . P B S R G . C O M 77

Report - End UsersReport - End Users 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

W W W . P B S R G . C O M 78

Report – Internal PM’sReport – Internal PM’s

W W W . P B S R G . C O M 79

Report - ContractorsReport - Contractors

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%24 Contractor 130 4 $ 795,791 0.8% 0.0% 0.0% 0.0% 12% 12%25 Contractor 101 4 $ 322,400 0.0% 0.0% 0.0% 0.0% 8% 8%26 Contractor 115 3 $ 753,660 10.9% 54.7% 0.0% 0.0% 7% 7%27 Contractor 102 1 $ 14,150 0.0% 0.0% 0.0% 0.0% 0% 0%28 Contractor 116 1 $ 109,710 0.0% 0.0% 0.0% 0.0% 0% 0%

W W W . P B S R G . C O M 80

Report – Yearly AnalysisReport – Yearly Analysis

W W W . P B S R G . C O M 81

Report – Top 10 Riskiest Report – Top 10 Riskiest ProjectsProjects

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

W W W . P B S R G . C O M 82

Report – Analysis of RisksReport – 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


Research from Contractor DelaysResearch 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 9%

Misunderstanding of Construction Documents 6%

Door Frames incorrect size 4%

Soil compaction 2%

83

52% of risks due to errors in materials delivered

W W W . P B S R G . C O M 84

Targeted Business GroupTargeted Business Group(Minority & Disadvantaged)(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 CharacteristicsBest 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

85


Best Value Client CharacteristicsBest 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

86

W W W . P B S R G . C O M 87

Master of Science Degree Program:Master of Science Degree Program:Facilities Asset and Project ManagementFacilities 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

W W W . P B S R G . C O M 88

Comments / QuestionsComments / Questions


W W W . P B S R G . C O M 89

1 best value business model kenneth t. sullivan phd, mba performance based studies research group...

Documents

vendor vendor

p b s r

risk slide

vendor profit

client client s professional

performance measurements

measurement slide

client s representative