Best Value Business Model
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Who we are: PBSRG Overview
 Established in 1994 to assist clients in improving the quality of construction.
 Research has grown into:
 Information Measurement Theory (IMT): measuring of current conditions to
predict future outcomes
 Clients implementation of Best-Value Performance Information Procurement
System (PIPS)
 Organizational Transformation Models
 New project management model (alignment/leadership instead of
management/influence) PIRMS
 New best value model
 New information environment (minimize access and flow of information)
 Testing of concepts outside of construction
 Risk management by using deductive logic, minimization of decision making
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PBSRG’s Research Results
(Performance Based Studies Research Group)
 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
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Research Clients
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General Dynamics
University of Minnesota
General Services Administration (GSA)
US Solar
Heijmans, Netherlands
Ministry of Transportation, Netherlands
State of Alaska
University of Alberta
State of Oklahoma
State of Idaho
Idaho Transportation Department
State of Oregon
Arizona Parks and Recreation
US Army Medical Command
USAF Logistics Command
University of New Mexico
University of Idaho
EVIT School District
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Arizona State University
US Corps of Engineers
Arizona Public Service (APS)
Salt River Project (SRP)
Rochester Utility
Boise State University
Idaho State
Lewis & Clark
City of Phoenix, AZ
City of Peoria, AZ
City of Roseville, MN
Olmstead County, MN
Fann Environmental
Brunsfield
Fulbright Program /University of Botswana, Africa
US Embassy, Bank of Botswana
RMIT, Melbourne Australia
Aramark, Canon, Qwest, ISP, HP, Chartwells, AP,
Pearson
 Various Contractors and Consultants
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Working Commission 117 & Journal
International Efforts & Partners
5 years
15 tests for infrastructure
Two major GCs
Tongji University
Brunsfield
Complete Supply
Chain
Fulbright Scholar
University of Botswana
RMIT
PIPS tests
Teaching IMT
PBSRG platform
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A little theory of thought…
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Rules of this Discussion
 This is a deductive presentation
 Don’t take anything personal!!!
 Recommend that you minimize decision making (if you don’t know, use the
deductive logic)
 Type A and Type C will be discussed. Neither is better than the other.
Both are required. Both are just as important as the other.
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Information Measurement Theory
 IMT Definition:
 Measurement of information to predict future outcomes
 IMT Objectives:
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



To minimize the need for decision making
To understand why things happen
To be able to predict future conditions
To minimize the need for data
To optimize results
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LAWS
The Number of Laws of Physics
PAST
100% Laws
=
PRESENT
100% Laws
=
FUTURE
100% Laws
Laws are not created…they are discovered
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An Event
Final
conditions
Initial
conditions
Time
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Proposal:
The Event Can Only Happen One Way
Initial
conditions
Final
conditions
Time
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Deductive Logic
 No event has had two outcomes
 All event outcomes can be predicted with “all information” (initial
conditions/laws)
 The more information we have before the event, the easier it becomes to
predict the final outcome.
 The lack of information that an individual has, will never change the final
outcome (it will just prevent that individual from predicting the outcome).
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Things caused by a lack of
information
 Believe in chance
 Expectations
 Believe in control
 Makes decisions
 Directs others
 Influences others
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Cycle of Learning
Perceive
Change
100%
Information
Process
Apply
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Learning Speeds
All Individuals Learn At Different Speeds
Perceive
Change
100%
Information
Process
Apply
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More “perceptive” perceive at
a faster rate, change at a faster
rate, and are more accurate
with their predictions.
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All individuals and organizations
have a level of perception that
allows them to predict “some”
future outcomes.
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“Types” of Individuals
100%
Information
Apply
Process
Change
Perceive
Perception of Information
100%
A
B
C
0%
Time
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Perception of Information
To Understand the “A” and the “C”
Simplify the Rate of Change Model
100%
 A simple model is easy to
A
understand
 Simplicity is when things look very
different
B1
B2
 Eliminate all areas where things
look alike (needs too much decision
making)
 Extremes minimize the decision
making
C
0%
Time
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Simplicity: Who perceives more
information?
Perception of Information
100%
0%
A
C
Time
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Type “A” Individual vs. Type
“C” Individual
 Aligns resources
A
100%
A
 Makes decisions
C
Information Level
 Flows more information
C
 Influences
C
 Wants a favor
C
C
 Doesn’t document
A
 Preplans
C
 Shifts blame to others
C
 Likes to make decisions
C
 Does not prioritize
C
0%
Time
 Uses five words for every one needed
C
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Type “A” Individual vs. Type
“C” Individual
 Aligns resources
A
100%
A
 Very detailed work
C
Information Level
 Proud of technical skills
C
 Is more expensive
C
 Wants consensus
C
C
 Likes doing totally new things
A
 Does things they understand
C
 Requests details
C
 Traditional practices
C
 Thinks other people act differently
C
0%
Time
 Believes experts have risk
C
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Type “A” Entity vs. Type “C”
Entity
100%
A
 Knows who to work with
A
Information Level
 Implements leadership training
C
 Measurement of performance
A
 Uses dominant information
A
 Measures
A
A
 Has a conservative plan
C
 Constantly changes their mind
C
C
 Use relationships
0%
Time
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How to Create a KSM
Left Side (LS) (Type A) vs. Right Side (RS) (Type C)
100%
Information Level
A
LS
LS
+
C
=
RS
RS
0%
Time
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C
No Control
LS
Control
No Information
A
Information
Information Level
Where is Control?
RS
100%
0%
Time
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C
Management
Leadership
No Control
LS
Control
No Information
A
Information
Information Level
Where is Management?
RS
RS
100%
0%
Time
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C
RS
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Decision Making
RS
No Decision Making
Management
Leadership
No Control
LS
Control
Control
No Information
A
Information
Information Level
Decision Making?
RS
100%
0%
Time
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Plot the Following
Characteristics
LS
RS
LS
LS
LS
RS
RS
RS
RS
RS
LS
LS
LS
LS
 Leadership
 Alignment
 Efficiency
 Change the behavior of others
 Believe in chance
 Emotion
 Becomes the expert in the organization
 Technical
 Continuous Improvement
 Freedom
 Believes in range/diversity
 Proactive
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Plot the Following
Characteristics
LS
RS
LS
LS
RS
LS
RS
LS
LS
RS
LS
RS
RS
RS
 Logical
 Overview/Process
 Details
 Focuses “why”
 Focuses “what”
 Measures Performance
 Accountable
 Reactive
 Telescope “in and out”
 “What if”
 Maximize information flow
 Loves meetings
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Plot the Following
Characteristics
LS
RS
LS
LS
RS
RS
LS
RS
RS
RS
RS
RS
RS
LS
LS
 Does not believe in being controlled
 Captain of their own ship
 Can change others
 “Source of Light” or wisdom to influence all
 “Mirror” so others can see themselves
 Can influence anyone
 Believe in randomness
 No control over their destiny
 Feels controlled
 More activity
 Incentives
 Looks inside to improve environment
 Has a more conducive environment to change
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Conclusions
 The environment is the person
 All characteristics can be related to the amount of information
 By using extreme values, deductive logic can be used
 Type A characteristics are related
 To move to a Type A environment, we must minimize Type C
characteristics
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Questions
 Is there anything that happens that is not predictable?
 Does anything happen by chance (was not predictable if all the
information was known)?
 Who is more important to the event, the A or the C?
 Is there a random event that has been identified by science?
 Why do people like complexity?
 Who makes more decisions?
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So What is the Big Picture?
Where are we going with
this?
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Cycle of Learning
Perceive
Change
100%
Information
Process
Apply
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Q: When do we know 50% of what
we will ever know?
0% Information
50% Information?
100% Information
50% Information? 50% Information?
Life Span
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Proposal: When we are almost dead.
100% Information
(what we will know)
0% Information
50% Information
Life Span
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Q: How much do we know about
everything?
0% Information
This Much?
100% Information
This Much?
This Much?
% Known
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Proposal: We don’t know very much
As for me, all I know is that I know nothing.
- Socrates
What we know
0% Information
100% Information
What we don’t know
% of Information
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Q: How do we solve what we don’t
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?
What we know
0% Information
100% Information
What we don’t know
% of Information
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A: Logic can be applied without
knowledge/experience
Logic
0% Information
100% Information
What we don’t know
% of Information
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What is the model?
 Identify the expert with as little effort as possible, using
measurement and differential
 Transfer risk and control to the expert through preplanning
and risk minimization, focusing on risk that are not controlled
 Hire the expert
 Use alignment, planning, & measurement in place of
management, control, and direction
 Create a performance information environment to drive
accountability and change
 Proactive vs. Reactive
 Supply chain (us mentality)
 Logic vs. Experience
 Predictable vs. Chance
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Industry Performance and Capability
Customers
Outsourcing
Owner
Vendor X
Highly
Trained
Partnering
Owner
Price
Based
Medium
Trained
Minimal
Experience
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An Event
Initial
conditions
Final
conditions
Laws
Laws
Time
Risk is deviation from
expected measurements
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Traditional Management
Initial
conditions
D1
Final
conditions
M&C
Laws
Laws
Time
 D1: Client makes decisions on budget, time, and expectation
 D2: Client consultant/professional makes more decisions to
make expectations true
D2
D3
 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
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New PM and RM Model that
Depends on Efficiency
Initial
conditions
D1
Final
conditions
M4
M3
Laws
Laws
Time
 M1: Measured designed option that more accurately
describe the initial conditions replaces D1
 M2: The best value vendor that replaces the
M1
M2
client/professional design M1
 M3: WRR/RMP measures deviation
 M4: Final performance measurement
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Inefficiency vs Efficiency
Can you make the transition?
 Micro-Management
 Performance dictated by technical

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

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

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





information
Specification is only the intent
Quality control by contractor
Vendor has control
Performance measurements
Decrease flow of information
High performance vendors used to
minimize risk
Need less people (efficient)
Accountability
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Performance-Based
Functions
Performance
High
Low
III. Negotiated
II. Performance-Based

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

IV. Unstable Market
Value & Performance
Maximize Profit
Vendor Accountability
Minimized Management & Inspection
Quality Control
Vendor minimizes risk
I. Price-Based

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




Treat as a Commodity
Volume Based
No Accountability
Finger Pointing
Management & Inspection
Minimum Standards
Client minimizes risk
Competition
High
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Best 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:

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
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 make an informed decision
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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
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Inspectors
Users
Contractors / Manufacturers
Contracting
Designer/Engineering
Planning / Programming
Simplicity/Dominant
Information
Silo Buster – Make Things Simple
30K Foot Level
Technical Details
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Best Value System:
PIPS & PIRMS
PHASE 1
Identification
of Potential
Best-Value
PIPS
Performance Information
Procurement System
PHASE 2
PHASE 3
Pre Planning
and
Risk Management
Measurement of
Deviation from the
Expectation
PIRMS
Performance Information
Risk Management System
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BV Process
Filter 1
Filter 2
Past
Performance
Information
Proposal &
RAVA Plan
Filter 3
Filter 4
Interview
Prioritization
Key Personnel
(Identify
Best Value)
Filter 5
Filter 6
Pre-Planning
Phase
Weekly
Report &
Post-Rating
Award
Quality of Vendors
High
Low
Time
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Getting Started:
Developing a BV Requirement
Filter 1
Filter 2
Past
Performance
Information
Proposal &
RAVA Plan
Filter 3
Filter 4
Interview
Prioritization
Key Personnel
(Identify
Best Value)
Filter 5
Filter 6
Pre-Planning
Phase
Weekly
Report &
Post-Rating
Quality of Vendors
High
Award
Setup Phase
Low
Time
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Touching Base….
 Remember, goal of doing something different is to be better
than you are right now
 Which means you have to change….
 And people don’t like to change….
 So before implementing anything new in your organization
let’s think through what we should do…
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Key Factors Before
Implementing PIPS
(Type C), and most individuals in these
organizations are slow to change (Type C).
Therefore, you cannot force the entity to
change overnight.
 Change must be slow.
 Implement BV (or any new system) as a
pilot test.
 Do not educate the entire organization on
the PIRMS process. Keep it under the
radar so everyone feels comfortable.
 The process must create a win-win.
100%
A
Information Level
 Most organizations are slow to change
C
0%
Time
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Critical Factors of Success
 Setup Phase

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

Identify core group
Identify strategic plan / goals
Identify and measure current level of performance
Prepare critical documents / process
 Testing Phase
 Implement BV on pilot projects or groups
 Documentation and Modification Phase
 Analyze implementation
 Make modifications based on proper concepts and principles
 Educate
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The Core Group
 The Core Group is a small group of individuals that will handle all
functions of the Pilot Program. Core group is vital to long-term success.
 Core group must be carefully selected based on proper characteristics
 Core Group might include:





Upper Management (Boss)
Business Analyst
Project Manager
Procurement Officer
Subject Area: IT, Facilities / Engineering, etc.
 Core Group must be heavily educated on concepts. That is they need to
understand the “why” not just the “what”
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Identifying Current Level of
Performance
 A client should identify their current level of performance (to use as a
comparison).
 For example
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





Total size ($)
Performance of incumbent (OT, OB, 1-10)
Original proposal vs actual & current results
Number of projects procured per year
Average change order rate
Average project delay or number of issues
Overall customer satisfaction
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Establish The Strategic
Plan
tegic
Strala
P n
 There are two main categories of activities that may jeopardize the
sustainability of a best-value organizational transformation. These areas
are performance risk and political risk.
 Performance risk is the risk of the vendor not completing the project
within the financial projections, performance requirements, or to the
satisfaction of the user. This risk can be mitigated by implementing the
Best-Value selection process and the weekly risk report.
 Political risk includes resistance from both internal and external parties,
including; business services & procurement personnel, upper
management, project management, and the vendors. Political risk is
more difficult to minimize and will take the greatest amount of effort.
 To minimize political risk, a long-term strategic plan must be established
which outlines how the user will get to where they want to go.
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The Strategic Plan
tegic
Strala
P n
 A strategic plan is essential to the long-term success of a best-value
program.
 The strategic plan must be established before beginning a pilot program
and should be documented in writing.
 By having the strategic plan in writing, all decisions can be minimized by
simply following the outline of the plan.
 The majority of users have not established strategic plans.
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Contents of the Strategic
Plan
 Client must establish goals (short term / long term).
 Potential goals/metrics may include:








Increase vendor performance (OT, OB)
Reduction in change orders
Increase customer satisfaction
Increasing (or maintaining) current level of competition
Reducing the amount of management time
Reducing procurement time
Minimize any litigation
Increase efficiency of project managers
 Education/Implementation strategy (w/ risks & plans)
tegic
Strala
P n
 Schedule
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All Research Must Relate
Back To The Strategic Plan
 No meetings / decisions should be set without establishing the strategic
plan / goals of the research.
 Any decisions that must be made must have an impact to the strategic
plan.
 Meetings to have
 Who to educate
 Pilot projects to select
 Speed of implementation
tegic
Strala
P n
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Duties of Core Group
 Be educated
 Educate others (inside and outside your organization)
 Maintain and enhance the strategic plan
 Ensure there is a maintained weekly report for the whole effort
 Ensure there is a maintained WRR for each project effort as soon as it
starts
 Maintain the directors report
 Maintain an up to date case study at all times
 Be able to show the value of the Best Value effort at all times
 DR, WRR, Case Study, others
 Integrate with other clients and users
 Help ensure the vendors’ success
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RFP Obstacles
 In most cases, BV can be incorporated into any user/client with very little
modification.
 However, experience has shown that the resistance of individuals are the
greatest obstacle to creating change. The most common statements are:
 “This is not the way we normally do it...”
 “I recommended that you change the process to do this...”
 “It makes more sense to do it this way...”
 “I don’t think this is legal...”
 “Let me play devil’s advocate…”
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Should We Issue A
Budget?
 The owner wants the best-available option that meets the
requirements.
 Requirements are:
 Time constraints
 Cost constraints
 Quality
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Minimizing Budget Risk
 “To Share” or “Not to Share” – the Budget
 If “To Share”
 Risk: If cheaper than budgeted – vendors will come up to
the budget
 Risk: If more expensive than budgeted – vendors will come
down and look to change orders for margin
 Advantage: Gives high performers the edge in identifying it
as a risk – offer solutions (differentiation)
 Reality: Still have price competition& cost reasonableness
so budget knowledge only helps high performers and puts
low performers at a disadvantage
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Minimizing Budget Risk
 If “To Not Share”
 Risk: Estimates can be too high, with no offerings of risk
minimization
 Risk: If one very low bidder, can cause confusion in BV
selection
 Advantages: Don’t worry about price gouging (but so few
bidders now days)
 Reality: Helps non-performers be more competitive
 Conclusion
 Greater risk in not giving the budget than giving it
 No real risk in giving the budget – only perceived risk
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Low Performer
 Can a low-performer ever give you
High
Low
Contractor 1
Contractor 2
Contractor 3
 How does a low-performer
Contractor 4
Low
high performance?
 “No, by definition, they are a
low performer.”
High
increase their competitiveness?
 “Since they can’t change their
current level of performance,
they must be the best
at....$$$$”
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Impact of No Budget
Giving out your budget has no impact to a low-performer
High
Low
High
Contractor 1
Contractor 4
Contractor 1
Contractor 2
Contractor 3
Contractor 2
Contractor 3
Contractor 4
Low
High
Low
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PIPS Best Value System
PHASE 1
Identification
of Potential
Best-Value
PHASE 2
PHASE 3
Pre Planning
and
Risk Management
Measurement of
Deviation from the
Expectation
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70
Go to PA 1-3
WWW.PBSRG.COM
71
Award
Filter 1
Filter 2
Past
Current
Performance
Project
Information Information
Filter 3
Interview
Filter 4
Identify
Potential
Best Value
Filter 6
Weekly
Report &
Post-Rating
Filter 5
Pre-Award
Phase
Award
Quality of Vendors
High
Low
Time
WWW.PBSRG.COM
72
Filter 6 – Weekly Risk Report
Filter 1
Filter 2
Past
Current
Performance
Project
Information Information
Filter 3
Interview
Filter 4
Identify
Potential
Best Value
Filter 6
Weekly
Report &
Post-Rating
Filter 5
Pre-Award
Phase
Award
Quality of Vendors
High
Low
Time
WWW.PBSRG.COM
73
Weekly 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
WWW.PBSRG.COM
74
Management by Risk
Minimization
Unforeseen Risks
RISK MANAGEMENT PLAN
• Risk
• Risk Minimization
• Schedule
METRICS
• Time linked
• Financial
• Operational/Client Satisfac.
• Environmental
WEEKLY REPORT
• Risk
• Unforeseen Risks
PERFORMANCE SUMMARY
• Vendor Performance
• Client Performance
• Individual Performance
• Project Performance
WWW.PBSRG.COM
Overview of SHIP Test
Objectives
 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
WWW.PBSRG.COM
76
Deliverables
 Major project deliverables include:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Set and Educate Project core team and
Set BSU Strategic Plan
Capture current level of performance and cost
 Plan providers
 Cost structure
 Program structure and details
 Identify differentials, gaps, and overlaps
Create RFP
Educate Vendors
Run Selection and Interviews
Run Pre-Planning and Risk Management
Award & Transition
Establish and maintain measurement system
WWW.PBSRG.COM
77
Overview
 Create a statewide Student Health Insurance Plan (SHIP) consortium



Boise State University (BSU)
Idaho State University (ISU)
Lewis-Clark State College (LCSC)
 3-Year Contract | $36 Million
 Measurements of Success
1. Reduce internal University program administration costs
2. Maintain or increase Customer Satisfaction (University & Students)
3. Maintain or increase cost-effectiveness of program to students
WWW.PBSRG.COM
Stat
What Should We Include In
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 1
Past
Performance
Information
RFP
Filter 3
Interview
Filter 4
Prioritize
(Identify
Best Value)
Filter 5
Pre-Award
Phase
(Pre-Plan)
Filter 6
Weekly
Report &
Post-Rating
High
Quality of Vendors
RFI
Filter 2
Proposal &
RAVA Plan
Low
Time
WWW.PBSRG.COM
Stat
Selection Criteria & Weights
 Responding contractors were evaluated on:
 Premiums (Student, Spouse, Dependents) (200 Points)
 Interviews (350 Points)





Program Administrator
Claims Administrator
Waiver Administrator
Data Base Manager
Marketing Manager
 Risk Assessment and Value Added (RAVA) plan (250 Points)
 Risk 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 quality
 Scope Plan (50 Points)
 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
 Past Performance Information (150 Points)
 Firm
 Program Administrator
WWW.PBSRG.COM
Stat
Summary of Proposal
Submittal
Filter 1
Past
Performance
Information
Filter 2
Proposal &
RAVA Plan
Filter 3
Interview
Filter 4
Prioritize
(Identify
Best Value)
Filter 5
Pre-Award
Phase
(Pre-Plan)
Filter 6
Weekly
Report &
Post-Rating
Quality of Vendors
High
Proposal Includes:
1)
2)
3)
4)
Cost/Financial Information
RAVA Plan (3)
Scope Plan (2)
PPI
Low
Time
WWW.PBSRG.COM
Stat
81
Coverage/Plan
Characteristics
 Consortium goal was to standardize coverage between all three University's
(to maximum extent possible). However, deviations were made as necessary
(BSU athletic coverage, ISU RX Coverage, Capitated Fee, etc)
 Consortium goal was to increase plan characteristics (to provide better
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
$100,000
$50,000
$50,000
$250,000
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%
$6,000
No MOP
No MOP
$6,000
$400
None
$500
$500*
3 Maximum Benefit (Standard)
4 In-Network Coinsurance
7 Out-Of-Network Max out of Pocket
8 RX Drug Coverage (Max)
WWW.PBSRG.COM
Stat
SHIP Analysis
NO
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
CRITERIA
Cost - Overall Annual Cost to Consortium
Cost - BSU Annual Student Premium (per-student per-year cost):
Cost - BSU Annual Spouse Premium (per-individual per-year cost):
Cost - BSU Annual Dependent Premium (per-individual per-year cost):
Cost - ISU Annual Student Premium (per-student per-year cost):
Cost - ISU Annual Spouse Premium (per-individual per-year cost):
Cost - ISU Annual Dependent Premium (per-individual per-year cost):
Cost - LCSC Annual Student Premium (per-student per-year cost):
Cost - LCSC Annual Spouse Premium (per-individual per-year cost):
Cost - LCSC Annual Dependent Premium (per-individual per-year cost):
Interview Rating - The Program Administrator
Interview Rating - The Claims Administrator
Interview Rating - The Waiver Administrator
Interview Rating - The Data Base Manager
Interview Rating - The Marketing Manager
RAVA Plan Rating
Work Plan Rating
PPI - Firm - Satisfaction with the associated costs of the service
PPI - Firm - Satisfaction with the benefits provided by the service
PPI - Firm - Ability to manage the service / program
PPI - Firm - Ability to document and provide accurate reports
PPI - Firm - Overall customer satisfaction
PPI - Firm - Number of different projects
PPI - Firm - Number of different customer responses
PPI - Administrator - Satisfaction with the associated costs of the service
PPI - Administrator - Satisfaction with the benefits provided by the service
PPI - Administrator - Ability to manage the service / program
PPI - Administrator - Ability to document and provide accurate reports
PPI - Administrator - Overall customer satisfaction
PPI - Administrator - Number of different projects
PPI - Administrator - Number of different customer responses
DETAILED
WEIGHTS
50
38
6
6
38
6
6
38
6
6
175
70
35
35
35
250
50
14
14
14
14
14
14
14
7
7
7
7
7
7
7
FIRM A
FIRM C
FIRM D
FIRM E
FIRM F
$12,237,529
$1,772
$2,200
$1,886
$1,267
$1,660
$1,424
$1,228
$1,626
$1,394
6.7
6.6
5.8
5.2
7.8
7.42
6.67
9.7
9.9
9.9
9.8
10.0
10.0
10.0
9.7
9.9
9.9
9.8
10.0
10
10
$11,051,451
$1,552
$3,992
$2,249
$1,185
$3,048
$1,717
$1,244
$3,200
$1,803
7.7
6.1
7.6
5.0
6.4
6.25
7.17
9.1
9.5
9.8
9.9
9.8
20.0
20.0
10.0
10.0
10.0
10.0
10.0
10
10
$11,437,893
$1,685
$2,865
$2,444
$1,113
$2,827
$1,209
$1,298
$3,300
$1,411
7.1
4.6
5.4
3.9
5.0
7.42
6.33
9.9
10.0
10.0
9.9
9.8
9.0
9.0
9.8
9.9
9.9
9.7
9.7
10
10
$12,928,466
$1,806
$3,066
$2,124
$1,394
$2,937
$2,038
$1,484
$3,066
$2,124
7.4
5.3
6.0
4.6
8.1
5.58
5.50
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10
10
$13,063,235
$1,914
$3,248
$3,616
$1,259
$3,627
$1,551
$1,615
$2,222
$2,310
7.4
8.3
6.0
4.6
8.1
5.17
5.58
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10.0
10
10
WWW.PBSRG.COM
Stat
Analysis of Proposals
Total Score:
NO
CRITERIA
923
916
886
831
840
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
WWW.PBSRG.COM
Stat
Overall Best-Value Results
• Previous Program:
– Student Premiums increased $124/year (past 4 years)
– Spouse & Dependent Premiums increased $126/year
2006-2007
2007-2008
2008-2009
2009-2010
Average
Increase Per
Year ($)
Student
$1,012
$1,182
$1,263
$1,385
$124
11%
Spouse & Dependent
$1,843
$2,022
$2,104
$2,220
$126
6%
School Premiums
Average
Increase Per
Year (%)
 Best-Value Results:
 Student Premium has decreased by 2% (-$26)
 Spouse & Dependent Premium has decreased by 19% (-$519)
 In general, Benefits/Coverage have been increased
WWW.PBSRG.COM
Stat
Case Study: ASU
Food Services Contract
$32 Million Dollars
(Over 10 Years)
No
1
2
3
4
5
6
7
8
9
10
Summary Criteria
RAVA Plan
Transition Milestone Schedule
Interview
Past Performance Information - Survey
Past Performance Information - #/Clients
Past Performance Information - Financial
Financial Rating
Financial Return - Commissions
Capital Investment Plan
Equipment Replacement Reserve
Firm A
(Incumbent)
(1-10)
5.9
(1-10)
5.2
(1-25)
15.8
(1-10)
9.8
Raw #
5.7
(1-10)
7.0
(1-10)
4.0
Raw $
$ 30,254,170
Raw $
$ 14,750,000
Raw $
$ 7,213,342
Finanical Totals $ 52,217,512
Scale
Firm B
$
$
$
$
7.1
7.0
16.8
10.0
3.0
8.7
8.0
60,137,588
20,525,000
4,100,001
84,762,589
WWW.PBSRG.COM
Firm C
$
$
$
$
6.3
6.3
13.5
9.8
4.4
6.9
8.0
64,000,000
12,340,000
8,171,811
84,511,811
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)
FY 06-07
FY 07-08
Difference % Difference
Incumbent New Vendor
$
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%
No Category
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
--
--
WWW.PBSRG.COM
2009 Performance Metrics
No
Catergory
1
2
3
4
5
6
7
8
9
10
11
Mandatory Meal Plan Sales - Meals ($K) (Meal Swipes)
Voluntary Meal Plan Sales - Meals($K) (Meal Swipes)
Retail Sales ($K)
Catering Sales ($K)
Camp/Conference Sales ($K)
All Other Sales (Subcontractors & Sushi) ($K)
TOTAL REVENUE
Commissions on Total Revenue ($K)
Subsidy - DPC, West & Polytechnic ($K)
Commissions Paid to ASU ($K) (Commission less Subsidy)
Commission %
No
1
2
3
Catergory
Number of Mandatory Meal Plans Sold
Number of Voluntary Meal Plans Sold
Customer (Student) Satisfaction Survery (1 - 10 (2x/yr)
YTD Prior
Year
$
$
$
$
$
$
$
$
$
$
8,915.5
294.2
15,408.1
2,329.1
3,030.9
29,977.8
1,902.3
391.7
1,723.3
6.35%
Var Act. vs
PY
YTD Actual
$
$
$
$
$
$
$
$
$
$
8,212.2
404.1
17,320.4
2,526.5
865.2
3,807.2
33,135.6
2,011.3
1,381.6
629.7
6.07%
YTD Prior
Year
YTD Actual
5,361
2,128
7.34
6,159
2,882
7.27
Var Act.
vs PY %
$ (703.3)
-7.9%
$
109.9
37.4%
$ 1,912.3
12.4%
$
197.4
8.5%
$
865.2 #DIV/0!
$
776.2
25.6%
$ 3,157.8
10.5%
$
109.0
5.7%
$
989.9 252.7%
$ (1,093.6) -63.5%
-0.28% -4.35%
Var Act.
Actual vs PY vs PY %
WWW.PBSRG.COM
798
755
-0.07
14.9%
35.5%
-1.0%
Performance Metrics – Combined ASU
FY 2010
Financial Performance Metrics
No
Category
YTD Prior Year ADJUSTED wk 6
Sep
YTD Actual
YTD Budget
Var Act. vs
PY
$ 12,531.2
$
Var Act. vs
PY %
Var Act. vs
Budget
Var Act. Vs
Budget %
$ 6,694.8
84.6% $ 2,078.0
16.6%
264.7
$
(18.1)
-4.6% $
40.7%
1
Mandatory Meal Plan Sales - Meals ($K) (Meal Swipes)
$
7,914.4
$
14,609.2
2
Voluntary Meal Plan Sales - Meals($K) (Meal Swipes)
$
390.5
$
372.4
3
Retail Sales ($K) (Sun $, M&G Vol, M&G Mandatory and Cash
$
&16,756.8
Credit Cards)
$ 17,656.1
$ 22,697.4
$
899.2
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 ($K)
Commissions Paid to ASU ($K) (Commission on Total
Revenue less%Subsidy)
Commission
$
1,202.3
$
604.6
$
1,157.6
$
(597.7)
-49.7% $
(553.0)
-47.8%
125.0% $
292.6
19.3%
10
11
$
803.7 $
6.07%
1,808.5
6.07% $
1,515.9
6.07% $ 1,004.9
107.7
5.4% $ (5,041.3)
-22.2%
Performance Metrics
No
Category
YTD Prior Year YTD Actual
YTD
Budget
Actual vs
PY
Var Act.
Var Act. Var Act. vs
Vs
vs PY %
Budget 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%
WWW.PBSRG.COM
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
WWW.PBSRG.COM
90
90
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
WWW.PBSRG.COM
91
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)
WWW.PBSRG.COM
92
Transitional Plan
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%
WWW.PBSRG.COM
93
Current Construction
Results
 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%
WWW.PBSRG.COM
94
Program Report
ViceDirector
President
DirectorOfficer
1
Procurement
1
PM
PM 11
PM
PM 22
DirectorOfficer
2
Procurement
2
PM
PM 33
PM
PM 44
Contractor 1
Contractor 3
Contractor 9
Contractor 4
Contractor 2
Contractor 6
Contractor 7
Contractor 8
Contractor 3
Contractor 1
Contractor 7
Contractor 9
Contractor 4
Contractor 8
Contractor 2
Contractor 2
WWW.PBSRG.COM
95
Report – Overall Program
WWW.PBSRG.COM
96
Report - Directors
WWW.PBSRG.COM
97
Report - End Users
General Overview
1
2
3
4
Total Number of Projects
Percent of Projects Procured Using PIPS
Total Awarded Cost:
Average Number of Risks per Project
TEAM 1
(President /
University / Admin)
19
79%
$5,359,995
3
TEAM 2
Academic Health
Center
14
86%
$2,821,005
8
TEAM 3
Provost College
7.7%
0.6%
7.2%
63%
68%
41.3%
3.4%
37.8%
36%
50%
41.1%
20.0%
21.1%
80%
80%
8.1%
0.1%
8.0%
95%
79%
19.6%
0.1%
19.6%
93%
79%
14.8%
-0.8%
15.6%
100%
60%
4
3
75%
6.75
7.7
10.7
2
2
100%
10
8.5
8.5
1
1
100%
10
8.0
7.0
5
80%
$2,353,761
12
Owner Impacts
5 Overall Owner Impacts (Time & Cost)
6
Owner Change Order Rate
7
Owner Delay Rate
8
Percent of Projects without Owner Cost Changes
9
Percent of Projects without Owner Delays
Contractor Impacts
10
11
12
13
14
Overall Contractor Impacts (Time & Cost)
Contractor Change Order Rate
Contractor Delay Rate
Percent of Projects without Contractor Cost Changes
Percent of Projects without Contractor Delays
Satisfaction Ratings
15
16
17
18
19
20
Total Number of Completed Projects
Total Number of Client Surveys Returned
Percent of Projects Evaluated by Client
Average PM Post Project Rating of Contractor
Average Client Post Project Rating of Contractor
Average Client Post Project Rating of CPPM
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Report – Internal PM’s
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99
Report - Contractors
No
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Contractor
Contractor 118
Contractor 119
Contractor 120
Contractor 104
Contractor 121
Contractor 105
Contractor 106
Contractor 122
Contractor 107
Contractor 123
Contractor 108
Contractor 124
Contractor 125
Contractor 109
Contractor 126
Contractor 110
Contractor 127
Contractor 128
Contractor 129
Contractor 111
Contractor 112
Contractor 113
Contractor 114
Owner
Change
Order
Rate
721,965
0.3%
220,002
0.7%
269,850
9.4%
459,225
1.6%
241,575
0.0%
1,611,015
0.3%
1,280,362
2.2%
367,650
0.0%
178,440
0.0%
3,227,182 14.9%
327,295
0.0%
69,218
3.5%
1,150,738
1.9%
534,095
2.0%
323,000
3.3%
308,882
1.2%
1,793,355
3.8%
2,956,800
1.3%
1,319,789
2.2%
1,096,707
0.1%
446,100
0.0%
552,815
5.1%
1,841,157 13.0%
Total
Total Awarded
Number of
Cost:
Projects
3
3
1
3
1
8
9
3
1
2
2
1
3
5
1
1
7
4
6
4
1
3
2
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Owner
Delay
Rate
18.1%
10.4%
303.0%
2.7%
21.9%
32.9%
31.1%
79.1%
0.0%
0.0%
135.4%
0.0%
7.3%
23.2%
3.4%
24.8%
13.6%
1.7%
16.2%
0.0%
6.9%
29.4%
215.8%
Vendor
Vendor Percent
Change
Delay
of Late
Order
Rate
Reports
Rate
0.2%
66.8%
53%
0.0%
0.0%
69%
0.0%
18.2%
47%
0.0%
18.8%
37%
2.7%
50.0%
0%
0.0%
16.3%
32%
0.7%
3.2%
35%
0.0%
1.4%
37%
0.6%
11.4%
25%
-0.6%
5.4%
30%
0.0%
0.0%
32%
0.0%
0.0%
31%
0.0%
4.2%
26%
0.0%
0.0%
29%
0.0%
6.8%
22%
0.0%
0.0%
27%
0.0%
0.0%
26%
0.0%
12.2%
11%
0.0%
11.0%
9%
0.0%
9.8%
10%
0.0%
0.0%
15%
0.0%
7.0%
8%
W W0.0%
W . P B S0.0%
RG.COM
13%
Vendor
Performance
120%
69%
65%
56%
53%
49%
39%
38%
37%
35%
32%
31%
30%
29%
29%
27%
26%
23%
21%
19%
15%
15%
100
13%
Report – Yearly Analysis
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101
Report – Top 10 Riskiest
Projects
No
Project
Overall
Awarded Change
Awarded Cost
Duration 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
5
Weaver 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
8
Oak 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
$
1,593,561
254
29%
0%
50%
79%
Matt Stringfellow
Justin Grussing
10 Heller Hall Renovation
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102
Report – Analysis of Risks
Risk Category
1) Client Impacts
Client Scope Change / Decision
Client Requested Delay
2) CPPM Impacts
1,200
Percent
Impact to
Cost
59%
Percent
Impact to
Schedule
46%
976
59%
37%
-
224
0%
9%
$329,425
885
30%
34%
Number of
Risks
Impact to
Cost
Impact to
Schedule
114
$660,369
111
$
3
$
135
660,369
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%
411
2%
16%
3) Contractor Impacts
43
$21,005
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%
19
$102,544
111
9%
4%
311
$ 1,113,343
2,607
4) Unforeseen Impacts
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103
Research 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%
WWW.PBSRG.COM
52%
of risks
due to
errors in
materials
delivered
104
Targeted Business Group
(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
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105