Best Value Approach Overview

Transcription

1 Best Value Approach Overview NEVI RISNET/CROW Dean Kashiwagi, P.E., PhD Director, Professor Performance Based Studies Research Group CIB W117 Coordinator Fulbright Scholar IFMA Fellow Pbsrg.com SKEMA Business School PBSRG GLOBAL

2 1976 (38)

3 1992(22)

4 Simplicity/Dominant Information Parents Myself and my Wife Children Children s Future Families Children s Future Jobs Children's Future Children We Are Supply Chains 30K Foot Level Technical Details w w w. p b s r g. c o m

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7 Family Life Professional Life Social Life Political Life Simplicity/Dominant Information Life Silos 30K Foot Level No Control No Control No Control No Control Gravity Gravity Natural Laws Gravity Gravity Family Behavior Business Social Behavior Behavior Technical Details Political Behavior

8 Change of Paradigm Replace management, direction and control with utilization of expertise [BV approach] Utilize BV expert to make paradigm shift Total transparency will provided by the expert vendor to identify their scope, their management of the risk that they do not control, their progress and their performance Project will be tracked by expert vendor 8

9 $ Amount Awarded (Millions) $14.6M Research, 20 years, tests, 98% Satisfaction PBSRG Grant Awards Started: $180K Total to Date: $14.6M Avg Yearly % Increase: 28% Total % Increase: 584% 1.01M Number of Grants: K 1.04M 950K 1.33M 1.31M 1.08M 1.20M K 290K 460K 330K 480K 430K 370K 560K 650K 570K 700K K 170K 120K Year

10 User Approach to Utilize Expertise Know Nothing Assume that we know nothing Minimize decision making Do not manage, direct and control [MDC] Utilize expertise Make experts identify the future Simple, metrics and risk that expert does not control Know Everything Know everything Decision making MDC Do not utilize expertise Buyer tells expert what the expert will do Technical details 10

11 Decision Making and Direction by Client Natural Laws Unique initial conditions = Natural Laws = Natural Laws Unique final conditions Time (dt) Unique Final Conditions are Set by Initial Conditions [No controlling of event, Minimizing Decision Making]

12 Risk Mitigation by Minimizing DM and Transparency Decision Less Structure No management, direction and control (MDC) Approach (use expertise) Results Transparency Accountability Experience and expertise Detailed pre-planning 12

13 Traditional Risk Model [DM/C] 50% 50% Whose Fault? Decision Making Transparency Risk Accountability 13

14 Get Rid of Decision Making 100% 0% 14

15 Minimize Direction and DM Direction and DM causes risk and confusion BV PIPS is different because there is no use of owner direction and DM Expert vendor creates transparency and a complete plan Cannot override natural laws 15

16 Observation/Logic over 20 years and 1,700 tests Utilization of expertise is the only real way to minimize cost MDC leads to low performance and minimum standards Concept of control of contractors is not effective Utilization of expertise and transparency is the only way to minimize risk Project non-performance is not a technical engineering or construction issue that can be resolved by construction technical expertise Hire based on expertise [system to measure] 16

17 Transparency [No confusion] Simple Less thinking Minimize decision making Everyone understands Non-technical Use language of metrics 17

18 Large and Small Project Satisfaction *Source: Outsourcing Performance Giarte 18

19 De Nederlandsche Bank Report and Giarte Performance Report Results Outsourcing Recommendation Scores for Top 6 Critical Providers in NL (1) Provider 1 79% (2) Provider 2 60% (3) Provider 3 (4) Schuberg Philis (5) Provider 4 73% 73% 100% (6) Provider 5 86% 50% 60% 70% 80% 90% 100%

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21 Best Value PIPS Approach in Oklahoma Steve Hagar Central Purchasing Deputy Director Licensed by ASU Certified BV Expert

22 Longest Sustaining U.S. Effort Performance Criteria Results # of awarded projects 19 # of projects given to lowest bidder 12 # of cancelled projects 6 Estimated $ of BV projects procured $ 137.7M Average Budget $ per project $ 6.2M Estimated $ cost avoidance $ 71.8M Average $ cost avoidance per project $ 3.26M Customer Satisfaction 9.0 # of customer satisfaction surveys 9

23 Case Study #1: BV Performance at ASU 23

24 CL Business Outcomes: Costs Business Outcomes Pre MSA MSA (2010) MSA (2013) MSA Baseline $12.29M $10.81M $11.96M Growth Out of Scope N/A N/A $1.15M Value Add N/A $0.43M/yr $0.98M/yr *see appendix for details Net MSA $12.29M $10.38M $9.83M CenturyLink ASU MSA Annual Review August 2013 PAGE 24

25 CL Business Outcomes: Reliability & Satisfaction Business Outcomes Pre MSA MSA (2010) MSA (2013) # of Major Outages N/K % Uptime Customer Satisfaction (max 4.0) 3.81 (max 4.0) % of Tickets within SLA 94% 97% 97% CenturyLink ASU MSA Annual Review August 2013 PAGE 25

26 Business Outcomes: Technology Business Outcomes % Network supported (Not at end-of-maintenance) % 1Gb- Wired Connections Pre MSA MSA (2010) MSA (2013) 89% 99% 99% 57.0% 71.5% 96.0% % Wireless(n) 9.0% 8.7% 92.6% IT Spending Ratio 6/94 (New vs. Maintenance) 26/74 (New vs. Maintenance) 56/44 (New vs. Maintenance) Includes New Growth Includes Wireless-n CenturyLink ASU MSA Annual Review August 2013 PAGE 26

27 Definition of Experts Minimize cost by seeing into the future Understand people and risk that they cannot control Risk mitigation through transparency Do not cause risk Metrics create transparency

28 Deviations Risk that the vendor does not control Mistakes that the vendor rectifies The expert vendor must identify risk that they cannot control in their risk mitigation plan Unforeseens must be clearly identified and justified 28

29 Plan Detailed schedule from beginning to end Expertise used in areas where there is insufficient information [II] Risk that cannot be controlled [Risk] [II] [Risk] [Risk] Deliverables [metrics] [II] Milestones [metrics] 29

30 Model of the Future: Performance Information Procurement System (details documented in manuals at pbsrg.com and ksm-inc.com) Expertise identified by natural law Expertise is utilized SELECTION CLARIFICATION Execution Identify expertise Dominant Simple Differential (non-technical performance measurements) BV expert s proposal must be acceptable to user Clarification Technical review Detailed project schedule Resource & Man- power schedule Expectation vs. delivered Risk Management using metrics Quality Control Quality Assurance 30

31 System Created to Assist People to See

32 System Created to Increase Value and Performance

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34 Simplification and Natural Laws Helps People Become the Best they can be Tested concept in Kashiwagi family Now testing in ASU honors program Optimizes behavior through simplicity, natural laws and transparency Minimizes negative behavior [depression, drugs, instability, suicide] Creates vision 34

35 Optimize the Environment using Transparency [Simplicity, Metrics, Logic] Expert vendors communicate project requirements using metrics Select vendors using their performance metrics and language of metrics Simplifying communications between vendors and buyers by using expert s metrics Expert minimizes technical communications because they know how to deliver the technical requirements 35

36 BV Approach Creates Transparency Simple Communicate in form of metrics Does not require trust Accountable Forces pre-planning Goes against human nature 36

37 Conclusions Replace MDC with the utilization of expertise Create transparency with metrics Project managers become leaders who align resources in a transparent environment Experts can see into the future and create transparency New language of PM is metrics 37

38 Best Value Approach LinkedIn.com/in/deankashiwagi YouTube.com/user/PBSRG PBSRG.com KSMLeadership.com Jan 12-16, 2015 Tempe, AZ 2015 Best Value Education and Training Inexpensive training at site