Mastering Your Facility: The Revolutionary Facilities Model of the Future

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Mastering Your Facility The Revolutionary
Facilities Model of the Future
Dean T. KashiwagiArizona State University
Performance Based Studies Research
Group www.pbsrg.com
March 2008
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Which squares are the same color?Is your
situation different from others?Or are all
structures the same?
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Who do the clients professionals feel more
comfortable working with?
High Performing Contractor
Selection Process
Client
Low Performing Contractor
Technical Relationship
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Who do the clients professionals feel more
comfortable working with?
High Performing Person
Selection Process
Client
Low Performing Person
Technical Relationship
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Inefficient Leadership Model Influence

• Focus on changing people
• Followers are the constraint
• Requires lots of resources
• Relieves management from accountability

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No-Influence Leadership Model

• Alignment
• Requires Understanding
• Leader/manager is the constraint
• Focus is on changing the system
• Efficient

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Alignment
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1
2
1
3
3
4
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Horizontal and vertical distance Order
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Alignment

• Dominant measurement
• Minimizing direction and control
• Planning
• People who do the work know that they are
  providing best value
• True competition
• Best value for the people

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Which are correct principles

• Process oriented
• Outsourcing
• Minimized management
• Quality control of risk they do not control
• Structure vs person
• Accountability at the lowest level
• Dominant measurements

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What is different

• Minimize contract management/administration up to
  90
• Increase performance to 98 (on time, on budget
  with no contractor generated cost change orders,
  meet quality expectations)
• Pay no more, but contractors/vendors increase
  profits by 5
• Use logic instead of experience
• Decision making is minimized to easy decisions
  (indisputable or irrefutable)

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Me vs Us
Risks
Risks
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Structure that aligns and minimizes management

• Measurement
• Preplanning
• Risk minimization
• Actuals instead of minimums (price based vs best
  value)
• Run facilities on what we know
• Transfer of risk and control
• Simplify accountability

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Current Research Clients

• US Army Medical Command
• USAF Logistics Command
• US Corps of Engineers
• City of Peoria, AZ, City of Miami Beach, FL, City
  of Sitka, Alaska, City County of HNL
• NY/NJ Port Authority
• Denver Hospital
• Georgia Tech University, Florida International
  University, Central Connecticut University,
  Glasgow Caledonian University, Salford University
  (Research)

• General Dynamics
• United Airlines
• University of Minnesota
• Entergy, Southern US
• Schering Plough
• Neogard
• TREMCO
• Heijmans, Netherlands
• Ministry of Transportation, Netherlands
• Arizona State University, University of New
  Mexico
• State of Washington, Missouri, Wyoming, Arizona
  Parks and Recreation

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Worldwide as a leader in Best-Value Procurement
/Construction Performance Research and
Documentation

• Conducting research since 1994
• 146 Publications
• 441 Presentations, 6,200 Attendees
• 530 Procurements
• 683 Construction services
• 451Non-construction services
• 50 Different clients (public private)
• 98 Customer satisfaction
• Decreased management functions by 90
• Increase vendor profit by 5

2008/2009
2005 Corenet Global Innovation of the Year Award
Food Services Sports Marketing IT/Network
outsourcing Furniture
2006/2008
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Industry Structure
High
II. Value Based (actuals)
III. Negotiated-Bid
Owner selects vendor Negotiates with
vendor Vendor performs
Best Value (Performance and price
measurements) Quality control
Contractor minimizes risk
Performance
I. Price Based (minimums)
IV. Unstable Market
Specifications, standards and qualification
based Management Inspection
Client minimizes risk
Competition
High
Low
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Impact of Minimum Standards
High
Low
Risk
Performance
Contractor 1 Contractor 2 Contractor 3 Contractor
4
Low
High
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Industry performance and capability
Vendor X
Customers
Highly Trained
Outsourcing Owner
Partnering Owner
Medium Trained
Minimal Experience
Price Based
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There is something wrong with the delivery of
services..
No one knows how bad the problem really is..
Entire system is broken. Requires more
management. Performance is decreasing. Relatio
nships are more important than results. Skill
levels are decreasing.
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As management, control, and direction become more
important..
Management
.it becomes less important to be skilled,
accountable, and able to minimize risk
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Managers Code The movement of risk.....
Is It Working?
NO
YES
Dont Mess With It!
Did You Mess With It?
YES
YOU IDIOT!
NO
Anyone Else Knows?
Will it Blow Up In Your Hands?
YES
Youre SCREWED!
YES
Can You Blame Someone Else?
NO
NO
Look The Other Way
NO
Hide It
Yes
NO PROBLEM!
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Procurement Event
Initial conditions
Final conditions
Laws
Laws
Time
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Best Value PIPS
Initial conditions
Final conditions
Laws
Laws
Time
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Minimize liability instead of making decisions

• Admit that you dont know the best way, details,
  risks
• Ask those who come, how they know they know
• Ask them to go from beginning to the end of the
  project and identify and minimize the risk they
  do not control
• Make the best value due preplanning and risk
  minimization in detail

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Best Value SystemPerformance Information
Procurement System (PIPS)
PHASE 2 PRE-PLANNING QUALITY CONTROL
PHASE 3 MANAGEMENT BY RISK MINIMIZATION
PHASE 1 SELECTION
Best Value also known as sealed competitive bid
in State of Texas
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Self Regulating Loop(Six Sigma DMAIC Generated)

• Actions
• Minimize data flow
• Minimize analysis
• Minimize control

Risk Assessment
R
Interview Key Personnel
R
Identify value (PPI, RA, Interview, )
V
M
Preplanning, Quality Control Plan
R
50
50
M
M
Measure again
M
R
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Performance Information Procurement System (PIPS)
Filter 6 Weekly Report Post-Rating
Filter 1 Past Performance Information
Filter 2 Proposal Risk / Value Plan
Filter 4 Prioritize (Identify Best Value)
Filter 5 Pre-Award Phase (Pre-Plan)
Filter 3 Interview
High
Quality of Vendors
Award
Low
Time
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Me vs Us
Risks
Risks
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Unforeseen Risks
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Risk Management by Contractor
Director
Director
Procurement Officer 1
Procurement Officer 2
Procurement Officer 1
Procurement Officer 2
PM 1
PM 2
PM 3
PM 4
PM 1
PM 2
PM 3
PM 4
Contractor 1
Contractor 5
Contractor 9
Contractor 13
Contractor 2
Contractor 6
Contractor 10
Contractor 14
Contractor 3
Contractor 7
Contractor 11
Contractor 15
Contractor 8
Contractor 12
Contractor 16
Contractor 4
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Division Overview
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Current Project Performance
CONTRACTOR OVERVIEW 1 2 3 4 5 6 7
Total Awarded Budget 4,381,204 15,034,914 53,153,957 49,489,199 71,054,084 6,096,004 65,560,371
Current Cost 4,549,758 15,241,904 53,786,252 68,305,600 74,198,483 9,463,565 65,662,454
               
OVERVIEW OF PROJECTS              
Total Number of Projects 6 14 37 14 36 10 22
Projects On Time 33 57 62 50 44 40 55
of Jobs Delayed 4 6 14 7 20 6 10
Projects On Budget 0 71 78 36 44 60 77
of Jobs Over Awarded Budget 6 4 8 9 20 4 5
               
AVERAGE PROJECT              
of Risks per Job 2.33 0.93 0.62 2.50 1.67 1.10 1.14
Owner Generated Risks 1.83 0.86 0.51 2.00 1 1 1
Number of overdue risks 0.00 0.29 0.14 2.64 0.31 3.10 0.32
Over Awarded Budget 3.85 1.38 1.19 38.02 4.43 55.24 0.16
over budget due to owner 2.19 1.38 1.09 38.02 3.23 54.59 0.15
of Days Delayed 156.83 37.93 50.89 48.29 109.97 23.20 72.23
of days delayed due to owner 96.83 37.21 47.00 43.29 80.11 16.50 71.55
Owner Rating 8.39 8.54 8.32 8.50 9.01 9.99 9.67
Risk Number 4.51 3.80 3.55 3.36 3.15 1.97 1.69
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Completed Projects Performance
CONTRACTOR OVERVIEW Contractor 4 Contractor 1 Contractor 2 Contractor 3 Contractor 6 Contractor 7
Total Awarded Budget 7,191,078.93 4,672,873.60 5,475,669.15 26,608,997.61 5,602,517.30 433,960.00
Current Cost 7,191,078.93 4,732,480.35 5,924,569.83 26,608,997.61 5,699,381.30 433,960.00
OVERVIEW OF PROJECTS            
Total Number of Projects 5 9 19 15 4 1
Projects On Time 80 11 58 87 75 100
of Jobs Delayed 1 8 8 2 1 0
Projects On Budget 100 44 53 100 50 100
of Jobs Over Awarded Budget 0 5 9 0 2 0
AVERAGE PROJECT            
of Risks per Job 1.20 1.33 4.05 1.67 7.25 0.00
Owner Generated Risks 1.20 1.11 2.11 1.47 3 0
Number of overdue risks 0.00 0.00 0.11 0.00 3.00 0.00
Over Awarded Budget 0.00 1.64 16.81 0.00 1.65 0.00
over budget due to owner 0.00 1.64 15.62 0.00 1.30 0.00
of Days Delayed 22.40 101.67 25.95 12.20 3.75 0.00
of days delayed due to owner 22.40 99.56 18.79 12.20 3.75 0.00
Owner Rating 9.00 10.00 9.74 9.87 10.00 10.00
Risk Number 3.12 1.64 1.62 1.19 1.02 1.00
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UMN Pilot Program Analysis

• Number of Best-Value Procurements 45 (GC, Mech,
  Elec, Roof)
• Allocated Funds 10.8M
• Awarded Cost 10.0M (-7.4)
• Average Number of Proposals 3
• Projects Where Best-Value was also Lowest Cost
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• Completed Projects 18
• Cost Increases 5.4 (Client) / 0.4 (Unforseen)
• Schedule Increases 49.6 (Client) / 0.8
  (Unforseen)
• 16 projects had no contractor cost increases
• UMN Project Managers management decrease 90
• Average customer satisfaction 100

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Entergy Test Results

• 100K investment (75K education/25K license)
• 7 projects, 3 completed
• 83 low price
• First two projects 8M budget, regular bidders
  bid 6.7M on two projects
• BV contractor attracted by system bids 3.2M
  (saves Entergy 3.7M, on time on budget, and met
  Entergy expectations.
• Cushman Wakefield PMs transferred off of both
  projects (leaving no PM support on both projects)
• Non-performer allowed to participate, performs
  well
• Used on traditional delivery another project,
  does not perform
• Conclusions best value saved funding, minimized
  need for PM, and assisted non-performing
  contractor to perform

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Tremcos Past Performance InformationDetailed
Results
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Tremcos Past Performance InformationSummary
Results
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ASU (largest university in US)

• Procurement office is transforming into best
  value operation
• Food services (10 year, 400M), sports marketing,
  furniture, and IT/networking
• Transfer contract administration to contractors
  as well as risk and control
• Results are beyond the wildest expectations

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Keys to Selection

• Non-Technical
• Risk focus
• Compare actuals instead of minimums
• Data and binding information
• No dining program
• No marketing
• Change
• Release of details and control
• 40 page RFP (compared to 800 page for similar
  service)
• Intent not requirements
• Instead of one year to select and write
  contract, it took 40 days
• Process logic minimizes the need for contract
  experience

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NM Projects

• 40M Light Lab at Kirtland AFB
• University of NM food services

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Response to unforseen conditions Moved dining
operations in 7 days to new facility Proactive,
with no direction from university No financial
impact to university
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Detailed LB Selection Process
Filter 6 Weekly Report Post-Rating
Filter 1 Past Performance Information
Filter 2 Proposal Risk / Value Plan
Filter 4 Clarification Of Award
Filter 5 Pre-Construction Phase (Pre-Plan)
Filter 3 Interview
High
NTP
Bid
Award
Addendum
Quality of Vendors
Low
Time
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Questions??????
The more you hear this, the clearer it gets Run
a testeven if it isnt totally right Attend the
annual conference (4 days in detail, meet other
users and vendors) Attend session at NIGP at
Charlotte, NC Every time you get an opportunity,
listen again Get on the update news list Order
your own manual at pbsrg.com