Guidelines for Successful ITS Procurement T3 Session September 12, 2006 Presented by Phil Tarnoff University of Maryland Hosted by Mac Lister FHWA

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Guidelines for SuccessfulITS ProcurementT3
Session September 12, 2006 Presented byPhil
TarnoffUniversity of Maryland Hosted by Mac
ListerFHWA
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The Problem

• Success rate for intelligent transportation
  systems life cycle is very low
• Problems can be traced to
• Incorrect contracting approach
• Inexperience of the agency
• Failure to follow appropriate procedures
• Inadequate commitment of project management and
  systems engineering resources

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System Acquisitions
Late
Okay
15
Cancelled
51
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Source Standish Group, 2004
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Success is Influenced by the Purchaser

• Purchasers experience has greater impact on
  project success than any other factor
• Success rate has increases by more than 25 for
  purchasers with prior experience
• ITS implementation must be led by experienced
  staff

Source Patterns of Software Systems Failure
and Successes, Jones, Capers, 1996
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The Contracting Model
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The Contracting Model

• Defines the entire contracting form and process
• Includes four dimensions
• Work Allocation Responsibilities
• Method of Award Contractor selection
• Contract Form How is work organized
• Contract Type Methods of reimbursement
• Terms and conditions apply to all dimensions

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The Contracting Model
Procurement
Contract Form
Work Allocation
Method of Award
Contract Type
Low-Bid Contractor Systems Manager Systems
Integrator DB(OM) Commodity (COTS) Consultant
Services Outsource Contractor Other Services
Low-Bid Negotiated Sole-Source
Phased Task Order Purchase Order
Fixed-Price Cost Reimbursable Incentive Time and
Materials
Terms and Conditions (payment, cancellation,
disputes, etc.)
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Use of the Contracting Model

• Identifies dimensions to be included in selection
  process
• Procurement guidelines define the process for
  choosing appropriate option for each dimension
• Process is simplified by assembling combinations
  of options procurement packages
• Project may include multiple contracts and
  procurement packages

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System Procurement Packages (1 of 2)

• Commodity Supplier
• Low-bid selection of prequalified packages
• Fixed-price contract
• Applicable only for unmodified off-the-shelf
  software and hardware
• Low-Bid Contractor with Design Consultant (for
  100 design)
• Low-bid selection
• Fixed-price contract
• Can use incentives
• Can use phased contracts
• Useful if the predominant software is
  off-the-shelf

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System Procurement Packages (2 of 2)

• Systems Manager
• Negotiated procurement
• Fixed-price, cost-plus, or time--material
  contracts
• Can use incentives
• Can use either phased or task-order contracts
• Separate low-bid procurements required for
  construction and equipment
• Design-Build Contractor with Design Consultant
  (for 30 design)
• Best value selection
• Fixed-price cost-plus, or TM may be acceptable
• Can use incentives
• Can use phased contracts

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Other Procurement Packages

• Consultant
• Negotiated
• Fixed-price, cost-plus, or time--material
  contracts
• Can use incentives
• Can use either phased or task-order contracts
• Outsourcing either an activity (such as
  maintenance) or an entire function (such as
  traveler information)
• Low-bid selection may be based on rates
• Fixed-price or time--material contracts
• Can use incentives

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Contracting Considerations
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Selecting the Best Procurement Approach
Characteristics
Contracting Solutions
Organizational Level

• Experience
• Resources
• Personnel

System Development Process
System Development Process
Procurement Package
Terms and Conditions
Project Category

• New or replace
• Size complex
• Uniqueness

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Defining Organizational Level
Characteristic Immature Organization Mature Organization
Personnel Experience Part time, personnel have no prior experience Full time responsibility of experienced personnel
Organizational Experience Never done it before Experienced with one or more complex projects
Organizational Structure ITS responsibilities undefined Single organizational unit responsible for all ITS
Resources No defined ITS budget ITS budget for systems and personnel
Management Support Modest mid-level support Considered a priority by senior management
Expectations Not defined Included in agencys planning process
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Defining Project Complexity
Characteristic Simple Project Very Complex Project
Newness Off-the-shelf solutions Invention(s) needed
Scope Single function Multi-function system
Interfaces None Both internal external
Maturity Many similar systems Never been done
Stability Requirements well defined Not sure what is needed
Institutional Being developed for single agency Many agencies involved
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The Outputs

• Systems development process
• Waterfall
• Evolutionary
• Spiral
• The procurement package
• Lists of terms and conditions

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Systems Development Processes

• Waterfall A linear process for well-defined
  programs, including all the activities of the
  systems engineering process
• Evolutionary Development of a project in a
  series of well defined phases in which the SE
  process is repeated for each phase
• Spiral Not certain of what is needed, so
  project development accompanied by much prototype
  development and many planning steps

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The Decision Process
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Summary of the Eight-StepProcurement Approach

• (1) Initial decisions
• (2) Allocate the work
• (3) Select project category
• (4) Determine agency level
• (5) Using organizational levels and categories,
  select procurement package(s) for each
  project
• (6) Apply procurement differentiators to make
  final selection
• (7) Make final selection
• (8) Define contract terms and conditions

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Key to a Successful Procurement

• Choice of procurement approach is dependent on
  project type and agency capabilities.
• Weve always done it that way is not a good
  rationale.
• The right procurement approach may not guarantee
  success, but the wrong approach will guarantee
  failure.

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For More Information

• http//www.citeconsortium.org Under highlights,
  select Guide to Contracting ITS Projects to
  access web-based step-by-step selection process.
• http//www.pcb.its.dot.gov/Catalogs
• /ITSCurriculum.htm for courses on ITS
  procurement, systems engineering and project
  management

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Contacts

• Phil Tarnoff
• Tarnoff_at_eng.umd.edu
• Mac Lister
• Mac.lister_at_fhwa.dot.gov