Guidelines for SuccessfulGuidelines for SuccessfulITS ProcurementITS Procurement
T3 Session T3 Session September 12, 2006September 12, 2006
Presented byPresented byPhil TarnoffPhil Tarnoff
University of MarylandUniversity of Maryland Hosted byHosted by
Mac ListerMac ListerFHWAFHWA
The Problem• Success rate for intelligent
transportation systems life cycle is very low
• Problems can be traced to:– Incorrect contracting approach– Inexperience of the agency– Failure to follow appropriate procedures– Inadequate commitment of project
management and systems engineering resources
System Acquisitions
51%34%
15%
LateOkayCancelled
Source: Standish Group, 2004
Success is Influenced by the Purchaser
• Purchaser’s experience has greater impact on project success than any other factor
• Success rate has increases by more than 25% for purchasers with prior experience
• ITS implementation must be led by experienced staffSource; Patterns of Software Systems Failure and Successes, Jones, Capers, 1996
The Contracting Model
The Contracting Model
• Defines the entire contracting form and process
• Includes four dimensions:– Work Allocation – Responsibilities– Method of Award – Contractor selection– Contract Form – How is work organized– Contract Type – Methods of reimbursement
• Terms and conditions apply to all dimensions
The Contracting Model
Terms and Conditions (payment, cancellation, disputes, etc.)
Procurement
Work Allocation
Method ofAward
ContractForm
ContractType
Low-Bid ContractorSystems ManagerSystems IntegratorDB(OM)Commodity (COTS)Consultant ServicesOutsource ContractorOther Services
Low-BidNegotiatedSole-Source
PhasedTask OrderPurchase Order
Fixed-PriceCost ReimbursableIncentiveTime and Materials
Use of the Contracting Model
• Identifies dimensions to be included in selection process
• Procurement guidelines define the process for choosing appropriate option for each dimension
• Process is simplified by assembling combinations of options – procurement packages
• Project may include multiple contracts and procurement packages
System Procurement Packages (1 of 2)
1) Commodity Supplier– Low-bid selection of prequalified packages– Fixed-price contract– Applicable only for unmodified off-the-shelf
software and hardware 2) Low-Bid Contractor with Design
Consultant (for 100% design)– Low-bid selection– Fixed-price contract– Can use incentives– Can use phased contracts– Useful if the predominant software is off-
the-shelf
System Procurement Packages
(2 of 2)3) Systems Manager
– Negotiated procurement– Fixed-price, cost-plus, or time-&-material contracts– Can use incentives– Can use either phased or task-order contracts– Separate low-bid procurements required for
construction and equipment4) Design-Build Contractor with Design
Consultant (for 30% design)– Best value selection– Fixed-price; cost-plus, or T&M may be acceptable– Can use incentives– Can use phased contracts
Other Procurement Packages
5) Consultant– Negotiated– Fixed-price, cost-plus, or time-&-material contracts– Can use incentives– Can use either phased or task-order contracts
6) Outsourcing either an activity (such as maintenance) or an entire function (such as traveler information)– Low-bid selection may be based on rates– Fixed-price or time-&-material contracts– Can use incentives
Contracting Considerations
Selecting the Best Procurement Approach
Organizational Level•Experience•Resources•Personnel
Project Category•New or replace•Size & complex•Uniqueness
Characteristics Contracting Solutions
System Development Process
System Development Process
Procurement Package
Terms and Conditions
Defining Organizational Level
Characteristic Immature Organization Mature Organization
Personnel ExperiencePart time, personnel have no prior experience
Full time responsibility of experienced personnel
Organizational Experience Never done it before
Experienced with one or more complex projects
Organizational Structure
ITS responsibilities undefined
Single organizational unit responsible for all ITS
Resources No defined ITS budget ITS budget for systems and personnel
Management Support Modest mid-level support
Considered a priority by senior management
Expectations Not defined Included in agency’s planning process
Defining Project Complexity
Characteristic Simple Project Very Complex Project
Newness Off-the-shelf solutions Invention(s) needed
Scope Single function Multi-function system
Interfaces None Both internal & external
Maturity Many similar systems Never been done
Stability Requirements well defined
Not sure what is needed
Institutional Being developed for single agency
Many agencies involved
The Outputs• Systems development process
– Waterfall– Evolutionary– Spiral
• The procurement package• Lists of terms and conditions
Systems Development Processes
• Waterfall – A linear process for well-defined programs, including all the activities of the systems engineering process
• Evolutionary – Development of a project in a series of well defined phases in which the SE process is repeated for each phase
• Spiral – Not certain of what is needed, so project development accompanied by much prototype development and many planning steps
The Decision Process
Summary of the Eight-Step
Procurement Approach(1) Initial decisions(2) Allocate the work (3) Select project category(4) Determine agency level(5) Using organizational levels and
categories, select procurement package(s) for each project
(6) Apply procurement differentiators to make final selection
(7) Make final selection(8) Define contract terms and conditions
Key to a Successful Procurement
• Choice of procurement approach is dependent on project type and agency capabilities.
• “We’ve always done it that way” is not a good rationale.
• The right procurement approach may not guarantee success, but the wrong approach will guarantee failure.
For More Information• http://www.citeconsortium.org Under
highlights, select “Guide to Contracting ITS Projects” to access web-based step-by-step selection process.
• http://www.pcb.its.dot.gov/Catalogs /ITSCurriculum.htm for courses on ITS
procurement, systems engineering and project management