Best-Value Overview Jake Smithwick Arizona State University

Best-Value Overview

Jake SmithwickArizona State University

Similarities?• Can you award to someone other than the lowest priced?

• Do you receive proposals?

• Do you receive past performance information or references?

• Do you interview?

• Are you allowed to negotiate with a vendor before award?

What is Best-Value?

• Win-Win

• Client:– Outsource to experts– Higher performance– Less management and resources

• Vendor– Control of project/service– Ability to increase profit by

maximizing their efficiency

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Traditional Model• Client assumes they have expertise• Client makes decisions on what they think they need to be successful• Client prepares minimum standards• Client prepares documents that describe everything they need/require• Client competes vendors, but primary award factor is cost

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Inconsistent performance

Inefficiencies

Lack of performance metrics

Lack of accountability

RESULTS

Best-Value Model• Experts know more about the project/service than the client• Client does their best job at defining what they think they need• Experts act in the clients best interest• Expert can optimize the service by reducing inefficiencies• Think about the project, use past experience, and layout a specific plan• Focus on the key personnel, lessons learned, and risk mitigation

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What the Owner Described

What the Owner Really Needed

What the Consultant Specified

What the Contractors Installed

Factors For Success• Fair (state/follow rules)

• Open

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

• Efficient (minimize efforts)

• Award based on value

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Best Value System

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Best Value System

• Proposal ($)• Schedule• Past Performance• Team Qualifications• Risk Assessment• Value Assessment• Interviews

• Pre-Planning & Clarification

• Award • Weekly Reporting• Post Award Metrics• Final Documentation• Update PPI

High Level Overview Details

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Phase 2 is Most Critical

High Level Overview

Verify EverythingVendors Are ExpertsDetails

What is the Clarification Period? (Proactive vs Reactive)

Minimize All Surprises!!!

What Could Cause a Surprise• Delivering something that doesn’t work• Delivering something that isn’t what the client is expecting• Delivering something that isn’t what the client needed• Requiring the client to do something (that they did not know they had to do)• Requiring things from the client that they cannot provide• Expecting that something will happen as planned• Assuming that things are clear and understandable• Assuming that things will be done/occur as planned• Changes that impact cost• Changes that impact time• Poor satisfaction

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Guide Us / Help Us See & Understand

How Can We Minimize Surprises• Carefully preplan the project in detail

– Coordinate the project/service with all critical parties– Prepare a detailed project plan (work plan, staffing, implementation, etc) – Revisit the sites to do any additional investigating– Prepare a detailed project schedule identifying critical milestones

• Cost Verification– Detailed cost breakdown– Identify why the cost proposal may be significantly different from competitors– Review big-ticket items– Value added options

• Identify all assumptions– Prepare a list of all proposal assumptions

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How Can We Minimize Surprises• Align expectations

– Identify any potential deal breakers– Clearly identify what is included and excluded in the proposal– Client roles and responsibilities– Any contract terms and conditions

• Identify how the vendor will track and document their performance– Performance metrics & Weekly risk reports

• Identify and Mitigate All Risks– Client concerns/risks – Other proposers risks– Previous project risks– Uncontrollable risks

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Phase 2

• Financial Summary• Project Plan• Project Risks/Concerns• Assumptions• Performance Metrics• Contract

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Best Value System

Setting Up The RFP

• Approach– Make it simple!– Don’t do things just because “it has been done that way in the past”

• Structure– Identify your goals, expectations, desired outcomes, requirements– Tell them everything you know about your current conditions– Tell them how you will evaluate them– Tell them your terms and conditions– Use Forms/Attachments (standardize, easier to evaluate, less likely to forget)

RFP

Vendor Proposals• Past Performance Information

• Written Proposal

• Cost/Schedule

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck

Filter 5Pre-Award &Clarification

Project ExecutionRisk Reporting & Close Out Rating

Filter 3Prioritization

(Identify Best Value)

Cont

ract

Aw

ard

Evaluation Criteria - Price / Cost /

Fee- Project

Capability- Risk Assessment- Value Added- Past

Performance Information (PPI)

Short List prior to

Interviews (if necessary)

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

Meeting

Total Evaluation Scores are

determined

Decision Matrix to confirm Selection of

the potential Best Value Proponent

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

Best Value Process

Copyright Arizona State Univ. 2013

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Evaluation Weights20

Phase 1

Past Performance Information

• PPI will be collected on the following Entities:– The Firm– Project Manager (Individual)– Critical Subcontractors

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VendorENTITY

Prepare and Send Survey Questionnaires to Past Clients Step 2

Step 3Collect/Receive Completed Surveys

Prepare Reference ListStep 1

Enter data into Reference ListStep 4

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

Written Proposal• Goal is to minimize work / keep process efficient

• Minimize marketing material or general information

• Only focus on the specific project

• Only look at Risks and Value Added Ideas

Critical Formatting Requirements• In order to minimize any bias, the evaluated

proposal documents MUST NOT contain any names that can be used to identify who Proposer is (such as company names, personnel names, project names, or product names).

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Blind Submittals

Risk Plan

Risk Plan

Value Added

Value Added

Project Capabilit

y

Project Capabilit

y

Simple, concise, support w/ performance metrics

= risk don’t control

= capability to meet requirements

= added scope

Phase 1

Project Capability• Differentiate capability to meet the requirements of this project

• Identify "vision” or “plan” for the alignment of expertise over the duration of the project– Alignment of Resources– Cash flow– Selection of critical subcontractors

• Address cash flow on the project, and how it is integrated into the schedule

• Use either verifiable performance metrics or best value practices with performance measurements

Phase 1

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Bring Value to the Project• VENDOR 1

– RISK: Noise from our demolition may result in student/staff complaints (since we will be doing demo in an in-operational library during finals week).

– SOLUTION: We will work with the user to minimize the impact of noise from demolition.

• VENDOR 2– RISK: Noise from our demolition may result in student/staff complaints (since

we will be doing demo in an in-operational library during finals week). – SOLUTION: To minimize this risk, we have planned to demolition during off

hours and weekends. We will also install rubber sheets on the floors to diminish noise and vibrations. Both solutions can be performed within your budget. We have used a similar approach on 10 projects in the last year, with 0 noise complaints.

Project Capability Submittal Example, cont’d

Capability Claim: Roofing contractor.

Documented Performance:

Our roofing contractor has a PPI score of 9.5 out of 10.

Capability Claim: Our roofing subcontractor has proven long-term performance to eliminate leaks caused by the roofing system, at a very high level of customer satisfaction.

Documented Performance:

During the past 15 years, the roofing contractor has completed 65 roofing projects (similar size and scope to this project). 99% of the projects were completed on-time, and 100% of the roofs do not currently leak. The average age of these roofs is 12 years. The average overall customer satisfaction rating is 9.5 out of 10.

Phase 1

Risk Plan• Prioritize major risk items on this project that the submitter does NOT

control

• Explain how proposer will mitigate, manage, and/or minimize the risk from occurring

• Method of minimizing contract transactions

• The risk should be described in non-technical terms and should contain enough information to understand why the risk is a valid risk. Proposer must also explain how it will avoid or minimize the risks from occurring.

• Solutions must be nontechnical, logical, easily understood, or contain verifiable performance information.

Phase 1

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

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

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

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

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

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

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

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Explaining a Plan• VENDOR 1

– RISK: Since this is a revenue based contract, the greatest risk is that the student population on campus does not grow as expected (which will impact our financial projections).

– SOLUTION: We will implement a plan based on our past expertise to stimulate student growth and enhance our marketing plan to the students (which we have done at several accounts).

• VENDOR 2– RISK: Since this is a revenue based contract, the greatest risk is that

the student population on campus does not grow as expected (which will impact our financial projections).

– SOLUTION: We expect that we can still increase revenues even if the student population does not increase as predicted. At two similar accounts, we increased growth by more than 10% in two years, despite flattening enrollment, through concept and menu updates, increasing convenience (speed of service), convenience store additions, and expanding points of sale.

Value Added Plan• Opportunity to identify any value added options or ideas that may benefit

the Owner

• Respondent should identify:– What the Owner may have excluded or omitted from its scope– How these options or ideas have been successful through verifiable

performance information and/or best value practices

• MUST have a cost impact (and possibly schedule impact)

• Use either verifiable performance metrics or best value practices with performance measurements

• Value add ideas are NOT included in the base cost proposal

Phase 1

Why Value Add Plan?1. Provide ways to keep project at or below budget

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

2. Increase customer satisfaction / performance

Phase 1

Scope is Above Budget

Owner’s Budget ($$)

Owner’s Scope

(-$ value add)

Phase 1

Intent Doesn’t Match Scope

Owner’s Budget ($$)

Owner’s Scope

Owner’s Intent

(+$ value add)

Phase 1

Meeting the intent

• Reroofing this building will not stop all water leaks. The majority of the leaks are caused by cracks in the parapet walls, broken/missing glass, and poor caulking. For an additional $20K and 3 weeks in schedule we can replace and repair all of these items. This approach in 8 similar projects has worked 100% of the time in stopping all leaks.

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Phase 1

Things to Avoid• General Statements:

– Our employees will wear safety equipment (hard hats, vests, etc)– Safety: Our goal is to have no accidents or deaths– We will put a fence around the site to prevent outside access

• Marketing data:– Our company is known worldwide as a leader in… – We will use our long history to…– We will use state-of-the-art process to…

• Technical data:– The system we propose has 200% elongation and 600psi tensile strength – The product will pass the ASTM-568a test.

• Transferring risk back to client:– We will work with the owner to resolve issues…– We will have team meetings / partnering meetings with the owner…

Submittal RequirementsSubmittal Document Maximum Page Length

Project Capability Plan Two (2) pages

Risk Plan Two (2) pages

Value Add Plan Two (2) pages

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Phase 1

• Must NOT contain ANY identifying information

• Respondents are NOT allowed to re-create, re-format, or modify the template (cannot alter font size, font type, font color; add colors, pictures, tables, diagrams, etc)

Proposal Summary• Proposal Format:

– Limited to 6 pages– No names in the proposals

• Key Advantages:– Gives advantage back to high performers– Minimizes bias / Fair environment– Attracts high performers– Minimizes marketing– Focus on the actual project (risks, value, expertise)– Minimizes evaluation efforts (time and expertise)

How The Submittal Process Works

Submittal

Evaluation Members

Proposal Form(1 page)

Non-Evaluated Documents

Proposal Form(1 page)

Evaluated Documents

Average Score

ContractingOfficer

PurchasingOfficer

Evaluation Committee• Will be used to evaluate specific portions of the Proposal

• Evaluators will not be provided with the names of any Proposers, product names, cost, or any additional information

• Evaluators will independently (not as a group or consensus) review and score the items comparatively to one another

• Objective of the scoring is to not make a decision (looking for “dominant” differential)

• Evaluations will be scored on a 1/5/10 scale– “10” = Dominantly higher value than the average (clearly shows differential) – “5” = About average (insufficient information to make a clear decision)– “1” = Dominantly below the average (clearly shows differential)

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Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck





Cont

ract

Aw

ard


Fee- Project



Short List prior to



Meeting


determined




Best Value Process


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Key Personnel Interviews• The Client will conduct interviews with the Project Manager and Site

Superintendent from each of the Shortlisted Offerors.

• No substitutes, proxies, phone interviews, or electronic interviews will be allowed. Individuals who fail to attend the interview on the date/time specified will be given a “1” score.

• Interviews are expected to last approximately 15 minutes per individual.

• No other individuals (from the Offeror’s organization) will be allowed to sit in or participate during the interview session. Interviewees may not bring notes or handouts. The Client will interview individuals separately. Interviewees will be prohibited from making any reference to their proposed financial contributions.

Interview CommentsGoal Is To Minimize Risk

“I have no idea why I am here today”…“My boss called me last night and told me to show up for this interview” - $10 Million Project

“I did not participate at all in preparing our proposal”

“I am not currently employed by this company, but if we win this project, they will then hire me” - $25 Million Service Project

“I have never managed a project of this size/scope” - $30 Million Project

“There is no risk on this project” - Large IT Project

“The greatest risk that I always face, is how to accomplish all of the things that our sales team promised we could do” – Cleanroom Design Project

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Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck





Cont

ract

Aw

ard


Fee- Project



Short List prior to



Meeting


determined




Best Value Process


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Final Prioritization

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NO CRITERIA POINTS FIRM A FIRM B FIRM C BEST FIRM A FIRM B FIRM C

1 Total Financial Contribution 300 1,000,000$ 1,020,000$ 1,050,000$ $ 1,000,000 300 294 286

2 Interview of Onsite General Manager 300 4.2 9.3 6.4 9.3 135 300 206

3 Risk Assessment Plan 150 5.2 8.6 5.1 8.6 91 150 89

4 Value Assessment Plan 100 5.0 9.2 5.0 9.2 54 100 54

5 Team Qualifications 50 5.0 5.0 5.0 5.0 50 50 50

6 PPI – Firm (1-10 Ratings) 25 9.2 9.1 9.3 9.3 25 24 25

7 PPI – Firm (# of Surveys) 25 5 5 5 5.0 25 25 25

8 PPI – General Manager (1-10 Ratings) 25 9.4 9.1 9.5 9.5 25 24 25

9 PPI – General Manager (# of Surveys) 25 3 4 5 5.0 15 20 25

TOTAL POINTS (1,000): 720 988 785

RAW DATA FINAL POINTS

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck





Cont

ract

Aw

ard


Fee- Project



Short List prior to



Meeting


determined




Best Value Process


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Cost Reasonableness

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

Dom

inan

ce C

heck A

lso

Phase 1

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck





Cont

ract

Aw

ard


Fee- Project



Short List prior to



Meeting


determined




Best Value Process


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Phase 2

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Phase 2 is Most Critical

High Level Overview

Verify EverythingVendors Are ExpertsDetails

Impact of Pre-Award (General Services Administration)

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No CRITERIA PRE AWARD (None)

PRE AWARD (<10 Days)

PRE AWARD (>10 Days)

1 Number of projects analyzed 11 4 6

2 Average PA duration (days) 0 7 22

3 Total awarded cost $14,244,385 $1,997,933 $7,996,954

4 Total awarded schedule 1,822 699 674

5 Average Overall Change Order Rate 44% 11% 12%

6 Average Overall Project Delay Rate 92% 93% 25%

• The Pre-Award Period has been shown to: Z̶ Minimize cost increases by 72%Z̶ Minimize project delays by 72%

Example - Software ProjectNO CRITERIA WEIGHT VENDOR B VENDOR C VENDOR E VENDOR G

1 Cost Rating 200 4.2 2.6 5.0 9.0

2 Interview Rating 250 4.0 3.7 8.0 7.0

3 Demo Rating 100 4.2 1.0 10.0 10.0

4 RAVA Plan 250 7.2 3.4 3.4 2.8

5 Work Plan 100 7.0 5.0 6.0 7.2

6 Past Performance Rating 100 5.0 4.2 5.0 5.0

Overall Score 1,000 708 454 763 816

Vendor CodeInstallation &

Integration5-Year Support TOTAL

FIRM A $750,000 $1,250,000 $2,000,000FIRM B $745,028 $1,183,470 $1,928,498FIRM C $369,720 $1,192,135 $1,561,855FIRM D $618,050 $1,098,429 $1,716,479FIRM E $712,600 $1,612,000 $2,324,600FIRM F $732,000 $1,477,500 $2,209,500FIRM G $688,671 $379,872 $1,068,543

Average (Minus Outliers) : $719,575 $1,229,745 $1,895,841

Overview• 11,970 students; 832 staff • 12 member districts

• First project in March 2011

Change Orders54

CharacteristicFacility 1

(Traditional)Facility 2

(Best Value)

Total number of change orders 422 110

Total cost of change orders $1,523,902 $1,448,243

Percent of contingency budget used 8.0% 4.8%

Overall change order rate N/A 5.0%

74% fewer change orders

40% less of the contingency used

Contractor much more proactive

Contractor becomes a leader in the model

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Best Value System

AWARD

Filter 1Proposal

Evaluations

Filter 2Interview

Key Personnel

Filter 4Cost

ReasonablenessCheck





Cont

ract

Aw

ard


Fee- Project



Short List prior to



Meeting


determined




Best Value Process


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Best Value System

Weekly Risk Reporting System• Spreadsheet that documents all risks on the service

• Risk = Anything that may impact cost or schedule. Risks can be caused by the Offeror or the Client

• Report must be submitted on Friday of every week (until service is complete)

• The WRRS does not substitute or eliminate weekly progress reports or any other traditional reporting systems or meetings (that the Offeror may perform or may be required to perform).

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Risk Management by Contractor

DirectorDirector

DirectorProcurement 1

DirectorContractor 1








DirectorPM 2DirectorPM 1

DirectorProcurement 2









DirectorPM 4DirectorPM 3

University of Minnesota• 4th Largest University in U.S. (69,000 students)• 5 major campuses• 3.6 Million Square Feet (classroom and research space)• Founded in 1851• $3 Billion in Revenues (tuition, research, sales, etc)

• Partnered with Capital Planning in 2005 to increase accountability and document performance

Contractor Generated Reports• 161 projects

• Reports submitted once per week via email

• System would then pull the data from each spreadsheet into a master report (“Directors Report”)

• Data can be used to generate a wide variety of information – Individual Projects– External Contractors– External Designers– Client Project Managers– Client Procurement Officers– Other Internal Staff – Selection Process (LB/BV)– Delivery Method (DBB, DB)– Entire organization

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Overall Program

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Report – Top 10 Riskiest Projects

No ProjectRisk

Analysis Factor

Awarded CostAwarded Duration

Overall Change Order Rate

Overall Delay Rate

Percent of Late Reports

PMProcurement

Agent

1 Mayo Remodel Suite 18.4 127,338$ 58 9% 321% 47% Joe Smith Tim Nelson

2 Coffman Union 11.4 1,593,561$ 49 3% 0% 0% Jeff Nickel Kristi Jasper

3 Animal Science Stair Towers 8.8 46,300$ 42 0% 10% 10% Chuck Nelson Tim Nelson

4 WBOB Remodel 7.9 525,000$ 82 1% 96% 37% Amy Perkins Tim Nelson

5 Snyder Bldg Exterior 7.0 178,295$ 254 -4% 81% 22% Joe Smith Tim Nelson

6 Barn Clean Renovations 6.1 366,595$ 217 2% 166% 60% Joe Smith Tim Nelson

7 Steam Plant Break 5.7 48,000$ 106 3% 72% 0% Chuck Nelson Tim Nelson

8 Vet Sciences Third 5.7 187,700$ 51 3% 86% 28% Amy Perkins Tim Nelson

9 PWB Units B-295 5.7 102,140$ 142 0% 42% 29% Joe Smith Tim Nelson

10 PWB Drug Design 5.6 136,900$ 25 5% 37% 33% Jim Roberts Kristi Jasper

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No ContractorTotal

Number of Projects

Total Awarded Cost:

Owner Change Order Rate

Owner Delay Rate

Vendor Change Order Rate

Vendor Delay Rate

Percent of Late

Reports

Vendor Performance

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

10 Contractor 123 2 $ 3,227,182 14.9% 0.0% -0.6% 5.4% 30% 35%11 Contractor 108 2 $ 327,295 0.0% 135.4% 0.0% 0.0% 32% 32%12 Contractor 124 1 $ 69,218 3.5% 0.0% 0.0% 0.0% 31% 31%13 Contractor 125 3 $ 1,150,738 1.9% 7.3% 0.0% 4.2% 26% 30%14 Contractor 109 5 $ 534,095 2.0% 23.2% 0.0% 0.0% 29% 29%15 Contractor 126 1 $ 323,000 3.3% 3.4% 0.0% 6.8% 22% 29%16 Contractor 110 1 $ 308,882 1.2% 24.8% 0.0% 0.0% 27% 27%

Analysis of Contractors

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TEAM 1 (President /

University / Admin)

TEAM 2Academic Health

Center

TEAM 3Provost College

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

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

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

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

Contractor Impacts

Owner Impacts

Satisfaction Ratings

General Overview

Report – End Users / Customers

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Report – Analysis of Risks

Risk CategoryNumber of

RisksImpact to

CostImpact to Schedule

Percent Impact to

Cost

Percent Impact to Schedule

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

Client Requested Delay 3 -$ 224 0% 9%

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

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

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

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

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

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

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

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

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

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

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

Roadmap to Sustainability

2005

2007

2008 - 2012

Industry Support

Other Users Begin

Testing

Early Adopters

(UMN)

Keys to Sustainability• Agency with wide impact• Vendor buy-in• Initial high performance

results• Application of philosophy

Expansion into non-

Construction2013

Contractors become

source of BV2012-2013

Early Adopters

Year 1 PerformancePerformance Criteria Results

Awarded Cost ($M) $3.1M

Completed Projects 8

Overall Vendor Cost Increase 0.4%

Overall Vendor Schedule Increase 0.9%

Lessons Learned• Contractors are very

high performing

• WRR provides project documentation that UMN never had

• NEXT STEP: establish PIPS as procurement model

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Best Value System

• Proposal ($)• Past Performance• Team Qualifications• Risk Assessment• Value Assessment• Interviews

• Pre-Planning & Clarification

• Award • Weekly Reporting• Post Award Metrics• Final Documentation• Update PPI

identify expertise

document expectations

measure against expectations

Questions• Can a project be any worse if you:

– Educate vendors on thinking in your best interest– Try to hire the best vendor– Require the vendor to carefully preplan a project– Require the vendor to document their performance on a weekly basis

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Case Studies

Tri-U Furniture Consortium

Best Value Approach to Commodity Contracts

Background• Consortium to procure furniture:

– Arizona State University (ASU)– Northern Arizona University (NAU)– University of Arizona (UA)

• Goals: standard ordering, better pricing, high performance

• $7M / annually (all project types)

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Buyer Satisfaction Increases

• 33% increase in buyer satisfaction• Less performance deviation at each university• Alignment of expectations• Pre-planning with other trades

Survey ASU NAU UA OverallBaseline43 surveys 72% 64% 74% 70%

Best Value132 surveys 93% 92% 92% 93%

Best Value Structureclients

dealer

ProjectProjectProjectProjectProject

• On-time• On-budget• Client

satisfaction• Expectations

met

Performance Report Documentation

of all projects

Measurement and accountability of key players

Improves coordination between trades

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General Overview Dealer A Dealer B Dealer C Overall

Total Number of Projects 137 624 783 1,544

Total Awarded Cost $ 2,977,029 $ 6,591,214 $ 21,085,727 $ 30,653,970

Average Awarded Cost $ 22,384 $ 11,153 $ 27,172 $ 20,436

Cost Analysis (Projects >= $100K)

Overall Change Order Rate 0.1% 0.0% 0.0% 0.0%

Client 0.0% 0.0% 0.0% 0.0%

Designer 0.0% 0.0% 0.0% 0.0%

Dealer 0.0% 0.0% 0.0% 0.0%

Unforeseen 0.0% 0.0% 0.0% 0.0%

Schedule Analysis (Projects >= $100K)

Overall Schedule Delays 0.0% 3.7% 6.9% 4.6%

Client 0.0% 3.7% 5.5% 3.8%

Designer 0.0% 0.0% 0.0% 0.0%

Dealer 0.0% 0.0% 1.5% 0.8%

Unforeseen 0.0% 0.0% 0.0% 0.0%

Satisfaction Ratings

Overall Client Satisfaction 9.3 9.2 9.1 9.2

Total Number of Surveys 56 29 50 135

State of Hawaii (1998-2002)

• 193 projects • In 2002, an internal audit was performed:

1. Total number of awarded PIPS roofs: 962. 100% would rather use the PIPS process over low-bid process (55 DOE users)3. PIPS average performance rating 9.6 (10 max)4. Projects were 6% under budget5. Projects finished approximately 35% faster (than LB)6. 98% were completed on time7. PIPS contractors were approximately two times more productive8. In last 4 years, there has been no roof leaks9. PIPS was 14% cheaper than low-bid

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City of Peoria (2004-2009)

• Number of Best-Value Procurements: 55

• Estimated Budget: $389 Million– (DB/CMAR/JOC)– (Wastewater, Office Buildings, Fire Station, Parks, Roadway)– (AE Services, Radio, Maintenance, Software)

• Average Number of Proposals per Project: 6

• Number of Completed Projects: 10 ($193 Million)– Overall C/O Rate: 0.5% (compared to 14%)– Overall Delay Rate: 6% (compared to 35%)– Final Results: 93% Satisfaction (compared to 20%)– Final Results: 9.1 Rating (10 max)

– 5 Projects where money returned

ASU Dining

CriteriaYear 1(From

Incumbent)Year 2

(From Year 1)Year 3

(From Year 2)Year 4

(From Year 3)

Sales 14% Increase 11% Increase 24% Increase 13.5% Increase

Commission 23% Increase 6% Increase 20% Increase 22% Increase

ASU Management Requirement Reduced 79% -- -- --

Student Satisfaction 37% Increase 1% Decrease 9% Increase 3% Increase

• 16 year• Four campuses• $1 Billion

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• Award Analysis:– Number of Best-Value Procurements: 161– Awarded Cost: $50.6M (11% below average cost)– Average Number of Proposals: 4– Projects Where Best-Value was also Lowest Cost: 53%– 85% of projects were awarded to vendor with highest / second highest

RAVA Plan (7.3 vs 5.9)

• Performance Information:– Contractor Impacts: 0% Change Orders / 4% Delay– Vendor post project rating: 9.6– Average Contractor Increase in Profit: 5%– UMN PM management requirements: -65%

University of Minnesota

Traditional History of UMN: ― 32% projects on schedule― 32% projects on budget― $17 million in claims

University of Alberta

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Project Value Cost Savings

Schedule Impacts

Satisfaction / Performance

1. Custodial Services (campus-wide)

$18M $2M10%

5.5% performanceImprovement

10 (out of 10)

2. DB Construction (Research Facility)

$30M $8-12M25%

14-18 months 9.7 (out of 10)

3. Design Services (Building Redevelopment)

$4M $500k12%

0% Cost & Schedule CO’s

$190k in Value Added Options

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Key Takeaways• Change in thinking is the most critical (and most difficult)

• Get executive support

• Minimize decision making

• Stick to the process

• Get educated

Comments / Questions

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