Best Value Whisperer

Transcription

1 Best Value Whisperer PBSRG GLOBAL Performance Based Studies Research Group 1

2 Dutch Effort 2

3 Man who brought Kashiwagi to the Netherlands George Ang, Rijksgebouwendienst (Dutch Government Building Agency), 2004

4 PBSRG Best Value Research (Performance Based Studies Research Group) 1992-present, $12M research Projects $4.4 Billion Services & Construction Best value for the lowest price 5% Increase in Vendor profit Minimize up to 90% of transactions 98% Customer satisfaction and LT 1% vendor deviations Finland, Netherlands, Canada, Malaysia, and Africa ASU investments of over $100M over 10 years due to BV 2011, Arizona w w w. p State b s r g. University, c o m PBSRG

5 Early Visionary Marc Gillissen, Heijmans, 2005

6 Dutch Visionaries Rijkswaterstaat Carlita Vis Wiebe Witteveen Scenter/Delft University Sicco Santema Jeroen van de Rijt w w w. p b s r g. c o 2011, Arizona m State

7 Priority Road Investment Programme Ambition from Camiel Eurlings, Minister of Infrastructure and the Environment: 30 starts of work of road widenings and rush hour lanes and 10 openings for road users before june 2011 Start september 2008 May 2011: 30 shovel hits the ground 10 cutting the tape 7

8 Evaluation of market approach Acceleration achieved! 6 contracts awarded, each in 5 months Tender phase reduced by 50% Costs 60% lower Vendors: 50% to 75% lower costs Rijkswaterstaat: estimated reduction by half, development costs for the contract excluded May 2011: On average 1 year earlier completion date per project The costs to tender are significantly lower than traditional D&C 8

9 Dutch Efforts Approx. 50 general presentations Approx 2000 attendees 1st and 2nd Dutch book 4 papers published NEVI education and certification

10 2012 Dutch Sourcing Award (DSA) 10

11 Third largest procurement organization in the world 6,000 members Licensed by ASU Educate and certify procurement agents in BV PIPS A+, A, B+, B

12 Deductive Logic and Reasoning Minimizing Data Analysis PBSRG GLOBAL Performance Based Studies Research Group 12

13 BVP: Source Documents pbsrg.com IMT IMT/KSM Industry structure Measurements Observation; deductive logic Best Value Standard Case studies Protests Use of Performance Information Changes over time (history of lessons learned) Cheat Sheets 2011, Arizona w w w. p State b s r g. University, c o m PBSRG

14 Laws Natural Laws Past = Present = Future 100% Laws 100% Laws 100% Laws Laws are not created they are discovered

15 Final Conditions Are Set By Initial Conditions Initial conditions Laws Time Final conditions Laws (Control, impact, and influence)

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17 Dog Whisperer 17

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20 Be Influenced Vs. Cannot be Influenced More likely to believe in chance More likely to think that they are being controlled by others More likely to attempt to controls others More likely to not adequately preplan due to perception of too many variations More likely to blames others if something goes wrong

21 External Influence vs. No External Influence No Influence Influence Accountability Logic Controls SELF Preplanning Leadership Level Headed Minimizes decision making Efficiency Chance Cam be controlled by others Attempts to control others Blames others Maximizes decision making Management Expectations

22 1935 (77)

23 1955 (57)

24 (40)

25 1976 (36)

26 1992(19)

27 1994 (17)

28 Children s Future Jobs Children's Future Children We Are Supply Chains 30K Foot Level Simplicity/Dominant Information Parents Myself and my Wife Children Children s Future Families Technical Details

29 Movement to No Influence Model Replace direction and control with education/dominant information Use mentoring instead of directing Accept others for who they are, and not what we expected them to become Monitoring and not regulating Environment prevents catastrophic incidents

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32 Additions in

33 Most Difficult Task Change my actions Change my way of thinking Take on accountability to make things better Change myself, not others Observe more, talk less Lift my head up and see things in a global perspective Think of the impact of changes on others 33

34 Malaysia Effort 34

35 Dato Gan and Brunsfield Visionary developer/vendor in Malaysia Minimize cost by cutting risk Increase profits by increasing quality and value Honesty and integrity in supply chain Added value: 10X Green, water, sustainable Contract with PBSRG to use BV PIPS to double production in the next 3 years Wants to raise the quality of life in Malaysia Make Brunsfield the best place to work at

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39 Supply Chain Issue 30K Foot Level Simplicity/Dominant Information Planning / Programming Designer Contracting Vendors / Manufacturers Users Inspectors Technical Details

40 Best Value Procurement process Accountability Transparency Vendor is the offeror Win-win Planning More expertise Higher pay Buyer is acceptor of the offer Higher profits Lower project costs Predictability Not Contract driven Vendor generates scope Vendor has no risk Vendor has financial responsibility for risk Common sense 40

41 Background 20 year development Constantly improving process Dutch tests Malaysia tests Theoretically and practical: different paradigm Major tests: US Army Medical Command; University of Minnesota; State of Idaho; State of Oklahoma 41

42 Paradigm Shift: How difficult is this?

43 Case Study Meeting yesterday Pre-award period for engineering/planning 2.5 year contract Four weeks Client gave vendor all their risks Client wants vendor to mitigate risk to client that goes beyond specific project Client wants detailed means and methods and meeting with stakeholders in five regions Client wanted vendor to check on validity of their data 43

44 Concepts which were not being applied Control to the vendor Vendor did not know how to lead, plan, assign and coordinate Did not have detailed project schedule Did not understand risk Did not understand accountability Did not understand reality 44

45 Problems Vendor needs a knowledgeable consultant who understands IMT, BV PIPS and can implement in different environments Client s PM sometimes do not listen to their visionary Client s visionary needs vendor to step forward with their visionary Too much waste between client and vendor s personnel due to adversarial thinking 45

46 What Is the Best Value Approach? Supply chain vs. silo approach Using common sense Understanding reality Optimizing value, performance and cost Minimizing transactions Increasing professionalism, expertise, and creativity Minimizing the use of control and direction to minimize risk and improve performance 46

47 State of Oklahoma Best Value Projects Performance Oklahoma Best Value Project Information # of Best-Value Procurements 20 Estimated Value of Best-Value Procurements $100,000,000 Protest Success Rate (# of protest won / # of protests) 3/3 # of Different Services 13 % Where Identified Best-Value was Lowest Cost 71% Project Performance # of Completed Projects 8 Average Customer Satisfaction 9.5 (out of 10) Cost Savings $15M % On-time 100% % On-budget 100%

48 Industry Structure High Performa ance Low III. Negotiated-Bid Minimized competition Long term Relationship based Vendor selected based on performance IV. Unstable Market II. Value Based Buyer selects based on price and performance Vendor uses schedule, risk management, and quality control to track deviations Buyer practices quality assurance Contractor minimizes risk I. Price Based Wrong person talking Management, direction, and control No transparency Perceived Competition Client minimizes risk High

49 What is causing all the confusion? Owners The lowest possible quality that I want Vendors The highest possible value that you will get High High Maximum Minimum Low Low

50 Best Value vs. Low Bid (Technical expertise required) High Contractor 1 Low High Low Contractor 2 Low Contractor 3 Contractor 4 High Low Contractor 1 Contractor 2 Contractor 3 Contractor 4 High

51 Paradigm Shift: contractors should have minimal technical risk and minimize risk that they do not control Me vs. Them Client, user, designer, and inspector etc.. Us Client, user, designer, and inspector etc.. Risks Risks Inexperienced contractor Experienced contractor Technical Requirement Don t Control Control Don t Control

52 Business Model (Sustainable and Cost Less) Customers Outsourcing Owner Partnering Owner Price Based (M,D,C) Vendor X Medium Trained Highly Trained Visionary Minimal Experience Blind

53 Change of Paradigm Lower cost through efficiency Higher profits More value to expertise Transparency to stop waste Stop using control and direction Win/win Minimize communications Put contracts away Simplify by using logic and common sense Minimize decision making High Performan nce Low III. Negotiated-Bid Minimized competition Long term Relationship based Vendor selected based on performance IV. Unstable Market Perceived Competition II. Value Based Efficient Profit Generation Accountability Planning High pay, low project cost High quality Expert contractor minimizes risk I. Price Based Non-transparent Relationship Pass more information Transactions Blame others Client minimizes risk High risk High

54 Performance Information Procurement System Vendor is an Expert Vendor is an Expert SELECTION CLARIFICATION/ PRE-AWARD MANAGEMENT BY RISK MINIMIZATION Dominant Simple Differential (non-technical performance measurements) BV proposal must be acceptable to user Clarification Technical review Detailed technical schedule Risk Management Quality Control Quality Assurance 54

55 Use of Dominant Information Example Project Requirement New laboratory construction Intensive mechanical systems, clean room environment Fast track project University campus

56 Project Capability Submittal Claim: best project manager in company, does only clean room projects, best in the Midwest area Verifiable performance metrics: 1.last 10 years 2.20 clean room projects 3.scope $50M 4.customer satisfaction cost deviation.1% 6.time deviation 1%

57 Third largest procurement organization in the world 6,000 members Licensed by ASU Educate and certify procurement agents in BV PIPS A+, A, B+, B

58 NEVI Official licensed Dutch representative for BV PIPS Education and certification Source of all materials including IMT and PIPS manuals Certification B, B+, A, A+ (Board Members trained annually at Tempe, AZ) 58

59 NEVI BVP Board Sicco Santema Jeroen van de Rijt Carlita Vis Guido Koreman Anneke van Abeelen Jannie Koster

60 Keep it Simple CON 565 IMT CON 567 Advanced Procurement Pbsrg.com