Next Practices in Leadership and Sourcing:

Transcription

1 Next Practices in Leadership and Sourcing: Create Value for the Greater Good Arizona State University Kenneth T. Sullivan, PhD, MBA

2 Next Practices in Leadership and Sourcing Kenneth T. Sullivan, PhD, MBA Arizona State University

3 20 Years 210+ Publications 100+ Funded Partners 1,700+ Projects $6+ Billion Procured

4 Information Technology networking data centers hardware COTS software ERP systems help desk services eprocurement Facility Management maintenance custodial landscaping conveyance security service pest control building systems industrial moving waste management energy management Health Insurance/ Medical Services Manufacturing Business / Municipal / University Services dining multi-media rights fitness equipment online education document management property management audiovisual communications systems emergency response systems laundry material recycling bookstores furniture financial Services Construction/ Design/ Engineering large gc infrastructure municipal laboratory education hospital financial large specialty small gc renovation repair maintenance roofing demolition development supply chain DBB CMAR DB IDIQ JOC Low Bid IPD

5 Strategic Partners & Efforts Canada 13 clients 5 provinces 7+ years Infrastructure 4B+ United States clients 37 states Tongji University Malaysia Complete Supply Chain Fulbright Scholarship- University of Botswana BV tests RMIT Teaching IMT PBSRG platform

6 Just because something is written in a contract does not make it so 6

7 Goals 1. Minimize Cost 2. Minimize Cost by becoming More Efficient 3. Become More Efficient in three ways: Hire people who know what they are doing Preplan before the contract is signed Measure for positive accountability 4. Teach the thinking, concepts, tools, and processes to organizations 7

8 Goals 1. Minimize Cost 2. Minimize Cost by becoming More Efficient 3. Become More Efficient in three ways: Hire people who know what they are doing Preplan before the contract is signed Measure for positive accountability 4. Teach the thinking, concepts, tools, and processes to organizations 8

9 What Percent of RFP s Are 100% Accurate? 9

10 Who Should Know More About Performing/Delivering the Services Required? 10

11 It Is More Important For The Vendor To Know What To Do Than It Is For Client To Know What The Vendor Should Do 11

12 Impact of Minimum Requirements High Low High Low Vendor 1 Vendor 2 Low Vendor 3 Vendor 4 High Low Vendor 1 Vendor 2 Vendor 3 Vendor 4 High

13 Problem with Traditional Approach High Owners The lowest possible quality that I want Vendors The highest possible value that you will get High Maximum Minimum Low Low

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15 Which of these High Low Proponents brings your organization Vendor 1 Vendor 2 Vendor 3 Vendor 4 the most risk? Low High 15

16 What is different Vendor Vendor Client Plan Vendor Vendor Vendor 16

17 What is different Client Plan Vendor Client PM Vendor PM 17

18 A Leader s Objectives Minimize cost, increase efficiency not just transfer risk...but minimize risk Supply Chain mentality Win-Win Vendors maximize their profits by being more efficient Reduce Cost Minimize the need for client management, direction, and decision making Minimize risk of nonperformance High Client Satisf. 18

19 Leader or Manager? Manager = someone you have to work for Leader = someone you want to work for 19

20 Becoming a Client of Choice Vendors want to send their best people to compete on your projects Open, Honest, Fair, Transparent Allow Clarification, Planning, and Coordination Before the Contract is Signed Drive Accountability through Performance measurement 20

21 Best-Value Process 21

22 Best Value Model

23 Leadership-Based Selection Hiring or selecting who will create the plan and execute it The quality of the plan and its execution is directly linked to the individuals creating it and doing the work Quality of Plan = Minimization of Risk & Cost 23

24 Selection Value Based Proposition Selection dictates the maximum capacity to achieve a quality plan Procurement methodologies to identify expertise: Risk and Value focused RFP Process Simple, brief, anonymous evaluation process Evaluation of key project personnel Proven Past Performance Information Ability to identify, prioritize, and minimize risk Interviews of project delivery personnel Focus on specific project needs Minimize marketing information Cost/Financial 24

25 Factors For Success Fair (state/follow rules) Open (no prequalification / open to all with experience) Impartial and Transparent (minimize evaluator bias / share your budget / provide debriefing) Efficient (minimize efforts) 25

26 Request For Proposal (RFP) Contents: Current / Existing conditions Desired outcomes / Objectives Proposal requirements and selection criteria Education describes how the vendor must think (paradigm shift) RFP 26

27 RFP / Solicitation Use existing RFP document and add Best-Value language Does not change contract language Does not change design / specs Always provide your budget Always provide your schedule Have legal review Have an educational meeting 27

28 Should We Issue A Budget? The owner wants the best-available option that meets the requirements. Requirements are: Time constraints Cost constraints Quality 28

29 Best Value Interviews: Identifying Expertise 1. Why were you selected for this project? 2. How many similar projects have you worked on? Individually and as a Team? 3. Describe a similar project you have developed/worked on to the current project. 4. What is different about this project from other projects that you have worked for? 5. Draw out the process for this project by major milestone activities. 1. Identify, prioritize, and how you will minimize the risks of this project. 2. What risks don t you control? How will you minimize those risks? 3. What do you need from the client and when do you need it? 6. How are you going to measure your performance during the project? 7. What value do you bring to the project in terms of differences based on dollars, quality, expertise, or time? If buying a product, demos are done here 29

30 Best Value Model

31 How to Clarify a Plan What is it / Why is it important? Period of time allotted before work begins to the entity doing the work: Present their project/service plan Set a plan for its delivery / clarify that their plan is accurate Identify the risks and issues that could cause the plan to deviate Identify what you don t know and when you will know it and how the plan could change based upon what you discover Set plans to minimize those risks from occurring Address all the concerns and risks of the client

32 How to Clarify a Plan What is it / Why is it important? Period of time allotted before work begins to the entity doing the work: Know how they are being successful and adding value (measurement) What metrics you will use and how you will report them What is the current baseline condition we are comparing against Identify what you need from the client and have a plan for getting it Have completely aligned expectations between all parties so everyone knows what is going to transpire and what they are supposed to do Coordinate the schedule

33 Clarification / Preplanning Period 33

34 Impact of Clarification/Pre-Award (General Services Administration) CRITERIA Traditional RFP ASU-BV Number of projects analyzed Total awarded cost $14,244,385 $9,994,887 Total awarded schedule 1,822 1,373 Percent awarded cost below budget 4.4% 6.0% Average time RFP Release to Contract 68 days 78 days Average BV-Pre-Award duration (days) 0 7 Average Overall Change Order Rate Average Overall Project Delay Rate GSA Satisfaction Rating of Contractor/Job 50% Decrease 38% Decrease 34% Increase 34

35 Impact of Clarification/Pre-Award Duration (General Services Administration) Clarification Duration > 1 week Reduced Change Order Rate Lower Delay Rate Clarification Duration < 1week 33% 69% No Clarification 73% 73% 35

36 Best Value Model

37 Measured Environment Must be simple and dominant Must be for the purposes of positive accountability Transparency and openness Measuring against a plan (or expectation created by the individual/team doing the work) 37

38 Weekly Risk Report System Excel Spreadsheet that is setup by the Client and sent to the vendor once Award/NTP has been issued Vendor must submit the report every week (Friday) until project is complete 38 38

39 Project Management Creating a Measured Environment: Weekly Risk Report Tool for documenting risk that impacts the project Measurement in terms of cost, schedule, and client expectation Director s Report Overall performance summary of multiple projects running simultaneously Performance evaluation Client closeout evaluation of vendor performance Accountability metric updates Past Performance Information 39

40 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 4040

41 Current 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% 41

42 Program Report Vice Director President Procurement Director Officer 1 1 Procurement Director Officer 2 2 PM 1 PM 2 PM 3 PM 4 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 42

43 Report Overall Program 43

44 Directors Report 44

45 Report End Users General Overview TEAM 1 (President / University / Admin) TEAM 2 Academic Health Center TEAM 3 Provost College 1 Total Number of Projects Percent of Projects Procured Using PIPS 79% 86% 80% 3 Total Awarded Cost: $5,359,995 $2,821,005 $2,353,761 4 Average Number of Risks per Project Owner Impacts 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% Contractor Impacts 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% Satisfaction Ratings 15 Total Number of Completed Projects Total Number of Client Surveys Returned Percent of Projects Evaluated by Client 75% 100% 100% 18 Average PM Post Project Rating of Contractor Average Client Post Project Rating of Contractor Average Client Post Project Rating of CPPM

46 Report Internal PM s 46

47 Report Contractors No Contractor Total 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 $ 721, % 18.1% 0.2% 66.8% 53% 120% 2 Contractor $ 220, % 10.4% 0.0% 0.0% 69% 69% 3 Contractor $ 269, % 303.0% 0.0% 18.2% 47% 65% 4 Contractor $ 459, % 2.7% 0.0% 18.8% 37% 56% 5 Contractor $ 241, % 21.9% 2.7% 50.0% 0% 53% 6 Contractor $ 1,611, % 32.9% 0.0% 16.3% 32% 49% 7 Contractor $ 1,280, % 31.1% 0.7% 3.2% 35% 39% 8 Contractor $ 367, % 79.1% 0.0% 1.4% 37% 38% 9 Contractor $ 178, % 0.0% 0.6% 11.4% 25% 37% 10 Contractor $ 3,227, % 0.0% -0.6% 5.4% 30% 35% 11 Contractor $ 327, % 135.4% 0.0% 0.0% 32% 32% 12 Contractor $ 69, % 0.0% 0.0% 0.0% 31% 31% 13 Contractor $ 1,150, % 7.3% 0.0% 4.2% 26% 30% 14 Contractor $ 534, % 23.2% 0.0% 0.0% 29% 29% 15 Contractor $ 323, % 3.4% 0.0% 6.8% 22% 29% 16 Contractor $ 308, % 24.8% 0.0% 0.0% 27% 27% 17 Contractor $ 1,793, % 13.6% 0.0% 0.0% 26% 26% 18 Contractor $ 2,956, % 1.7% 0.0% 12.2% 11% 23% 19 Contractor $ 1,319, % 16.2% 0.0% 11.0% 9% 21% 20 Contractor $ 1,096, % 0.0% 0.0% 9.8% 10% 19% 21 Contractor $ 446, % 6.9% 0.0% 0.0% 15% 15% 22 Contractor $ 552, % 29.4% 0.0% 7.0% 8% 15% 23 Contractor $ 1,841, % 215.8% 0.0% 0.0% 13% 13% 47

48 Report Yearly Analysis 48

49 Report Top 10 Riskiest Projects No Project Awarded Cost Awarded Duration Overall Change Order Rate Overall Delay Rate Percent of Late Reports Risk Analysis Factor PM Director 1 Mayo Remodel Suite A652 $ 269, % 321% 47% 377% Wycliffe Waganda Gary Summerville 2 Barn Clean Renovations $ 269, % 166% 60% 229% Wycliffe Waganda Justin Grussing 3 WBOB Remodel Suite 150 $ 273, % 96% 37% 134% Pete Nickel Gary Summerville 4 Vet Sciences Third Floor $ 96, % 86% 28% 116% Pete Nickel Gary Summerville 5 Weaver Densford College of Pharmacy $ 90, % 25% 80% 107% Pete Nickel Gary Summerville 6 PWB Remodel Suite $ 127, % 23% 64% 104% Steve Bailey Gary Summerville 7 PWB Room 7-158B $ 46, % 0% 100% 100% Pete Nickel Gary Summerville 8 Oak Street Parking Surveillance $ 246, % 0% 100% 100% George Mahowald Justin Grussing 9 Snyder Bldg Exterior Door $ 219, % 81% 22% 100% Wycliffe Waganda Justin Grussing 10 Heller Hall Renovation $ 1,593, % 0% 50% 79% Matt Stringfellow Justin Grussing 49

50 Report Analysis of Risks Risk Category Number of Risks Impact to Cost Impact 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, % 37% Client Requested Delay 3 $ % 9% 2) CPPM Impacts 135 $329, % 34% Design Issue 48 $ 189, % 9% CPPM Issue (Codes / Permits) 36 $ 46, % 7% CPPM Issue (Energy Mgmt) 2 $ 47, % 1% CPPM Issue (Hazardous / Health & Safety) 8 $ 35, % 5% CPPM Issue (NTS) 8 $ 10, % 2% CPPM Issue (Contract / Payment) 11 $ % 5% CPPM Issue (Other) 22 $ % 5% 3) Contractor Impacts 43 $21, % 16% Contractor Issue 11 $ % 4% Contractor Oversight of Design 9 $ 21, % 1% Contractor Issue with Supplier / Sub 23 $ % 10% 4) Unforeseen Impacts 19 $102, % 4% 311 $ 1,113,343 2,607 50

51 Vision Partner with progressive and innovative organizations Move industry towards value-based, preplanning, and measured (accountable) environment Implement and enhance best value concepts, approach, and tools Provide education, research, and assistance 51

52 Comments / Questions W W W. P B S R G. C O M 52

53 Evaluation How-to: Why? Your feedback drives SIG Event content By signing and submitting your evaluation, you are automatically entered into a prize drawing How? Option 1: App 1. Select Schedule 2. Select Schedule by Day 3. Select Day 4. Select Session 5. Scroll to Description 6. Click on the Evaluation link Option 2: Browser 1. Go to 2. Select Session (#GS TUE AM) Complete and submit!

54 General Session Tuesday AM Next Practices in Leadership and Sourcing: Create Value for the Greater Good Arizona State University Performance Based Research Group Contact Jeff Sawyer for More Info at: bit.ly/downloadameliaapp Tweet using: #SIGspring15

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