Symposium Presentation (for Acquisition Research Program)Symposium PresentationNaval Postgraduate School Acquisition Research ProgramApproved for public release; distribution is unlimited

Kashiwagi, Jacob

Symposium Presentation (for Acquisition Research Program)Symposium PresentationApproved for public release; distribution is unlimited.Naval Postgraduate School Acquisition Research Progra

Calhoun, Institutional Archive of the Naval Postgraduate School

Calhoun: The NPS Institutional ArchiveReports and Technical Reports All Technical Reports Collection2010-05-13PM Model of the Future SourceSelection, Risk Management, Contract AdministrationJacob Kashiwagihttp://hdl.handle.net/10945/335671PM Model of the FutureSource Selection, Risk Management, Contract AdministrationJacob KashiwagiProgram Manager, Performance Base Studies Research Group Arizona State University• 700 Procurements• $808 Million Construction services• $1.7 Billion Non-construction services• $1.3B Euro ($2B) construction test ongoing in the Netherlands• Africa/Southeast Asia/Australia • ASU procurement - $100M cash savings over 10 years• GSA Heartland Region implementation in 2009• 98% Customer satisfaction, 90% of PM/RM transactions minimized• Increased vendor profits and decreased costPBSRG(Performance Based Studies Research Group)Industry StructureHighI. Price BasedII. Value BasedIV. Unstable MarketIII. Negotiated-BidSpecifications, standards and qualification basedManagement & InspectionBest Value (Performance and price measurements)Quality controlCompetitionPerformanceLowHighOwner selects vendorNegotiates with vendorVendor performsContractor minimizes riskClient minimizes riskIndustry performance and capabilityHighly TrainedMediumTrainedVendor XCustomersOutsourcingOwnerPartneringOwnerPriceBasedMinimalExperienceMajor Points• Inefficient to manage and direct the expert• An expert should be able to make things simple and easy to understand• Most risk on projects/services comes from the misperception of the client• Vendors are working off of a demand and supply modelBest Value SystemPerformance Information Procurement System (PIPS)PM model, Risk Management modelPHASE 3:MANAGEMENT BY RISK MINIMIZATIONPHASE 1:SELECTIONPHASE 2:PRE-PLANNINGQUALITY CONTROLV BCBuyer Controls Vendor Through ContractV BCVendor Manages/Minimizes Risk With ContractPrinciples of Logic and Common Sense• Efficiency (less work and better results)• Performance measurement (system generated measurements)• Transfer of risk and accountability (to vendors who preplan and have expertise)• Minimize transactions (up to 90% of our effort, allowing us to measure and analyze)PM 2 PM 3 PM 4Procurement Officer 1 Procurement Officer 2DirectorContractor 5Contractor 6Contractor 7Contractor 8Contractor 9Contractor 10Contractor 11Contractor 12Contractor 13Contractor 14Contractor 15Contractor 16Facility DirectorF 2 F 3 F 4Organization CommanderCOE Procurement Office1COE Procurement Office1COE Procurement Office1QAQAQAQAPM 1Contractor 1Contractor 2Contractor 3Contractor 4F 1Project IntegratorProject IntegratorProject IntegratorsHospital UsersFacility  DirectorUS Army MEDCOM BureaucracyPM 1 PM 2 PM 3 PM 4Procurement Officer 1 Procurement Officer 2DirectorContractor 1Contractor 2Contractor 3Contractor 4Contractor 5Contractor 6Contractor 7Contractor 8Contractor 9Contractor 10Contractor 11Contractor 12Contractor 13Contractor 14Contractor 15Contractor 16Regional Director Regional DirectorHospital 1 Hospital 2 Hospital 3 Hospital  4ir t rSimplification MEDCOM   ON-GOING OVERVIEWDIVISION OVERVIEW 1/15/2010Original projects budget $711,572,485.02Current estimated cost $740,069,776.77Estimated cost over budget $28,497,291.75% estimated cost over budget 4.00%PROJECT OVERVIEWTotal number of projects 265% projects on time 57%# of jobs delayed 114% projects on budget 66%# of jobs over awarded budget 90AVERAGE PROJECT% over Awarded Budget 4.00%% over budget due to owner 2.86%% over budget due to contractor 0.00%% over budget due to unforeseen 1.14%% Delayed 18.27%% Delayed due to owner 12.83%% Delayed due to contractor 1.22%% Delayed due to unforeseen 4.22%TOP TEN LISTTOP 10 RISK RANKING PROJECTS   1/15/2010No. Project Location Risk # Contractor # Weeks on Top 10 NTP of Project1 Addition to Third Floor Woman's Health Care Suite Ft. Lewis, WA (MAMC) 42.63 CON A 56 10/18/20072 Bathroom Conversions, Bldg 9200 Ft Benning, GA 35.10 CON A 14 9/19/20083 WP/Rpl Surgical Supply Cartlifts Ft. Stewart, GA (WACH) 14.23 CON A 8 9/30/20084 Renew Health Clinic, Building 990 Yuma Proving Grounds, AZ 13.53 CON A 9 9/11/20075 Misc. Medical Repair Projects '08 Ft. Bragg, NC (WAMC) 13.10 CON I 2 9/29/20086 Rep,Reconf for TBI Program Schofield Barracks, HI 12.73 CON A 40 10/7/20087 Convert Constant Volume to VAV Forest Glenn, MD (WRAIR) 11.46 CON D 6 10/29/20068 Replace Elevators Ft. Belvoir, VA (DACH) 10.46 CON E 8 5/2/20089 Repair Budge Dental Clinic Ft. Sam Houston, TX (BAMC) 10.34 CON D 2 9/30/200710 Expand Patient Administration Division Ft. Lewis, WA (MAMC) 9.12 CON A 5 10/15/2009Modifications and RisksOn-Going Projects: Regional Performance LinesREGION OVERVIEW CHPPM PRMC AMEDD SRMC WRMC MRMC NRMC AFIP AverageTotal Number of Projects 3 28 7 49 38 26 27 1 22Total Awarded Budget $27,782,738 $ 44,409,340 $ 18,452,757 $148,750,286 $133,683,925 $ 60,138,879 $118,356,664 $9,754,941 $70,166,191 Current Cost $27,910,447 $    47,054,360 $ 20,198,239 $155,289,910 $139,654,057 $ 63,259,537 $121,621,485 $9,823,830 $73,101,483 PROJECT INFORMATION CHPPM PRMC AMEDD SRMC WRMC MRMC NRMC AFIP Average% Projects On Time 100% 64% 57% 53% 34% 31% 22% 0% 45%% Projects On Budget 67% 61% 86% 47% 53% 46% 33% 0% 49%% Delayed 0.00% 22.50% 13.70% 15.80% 21.50% 37.90% 32.80% 0.06% 18%% Over Budget 0.46% 5.96% 9.46% 4.40% 4.47% 5.19% 2.76% 0.71% 4%Average Risk Number 1.01 2.14 1.52 1.92 4.33 2.77 3.05 1.07 2.2GENERAL INFORMATION CHPPM PRMC AMEDD SRMC WRMC MRMC NRMC AFIP Average# of QA's 1 14 5 17 14 8 14 1 9# of Projects per QA 3.0 2.0 1.4 2.9 2.7 3.3 1.9 1.0 2# of Facilities 1 2 4 9 8 9 10 1 6Accurate Weekly Risk Reports 66% 60% 50% 60% 45% 37% 50% 0% 46%Risk Management Plans 100% 68% 66% 77% 60% 55% 59% 100% 73%Average Risk Resolving Time (days) 0.77 12.2 25.3 19.4 23.3 19 22 1.5 15Projects with risk # more than 7 0 1 0 3 9 2 2 0 2CONTRACTOR PERFORMANCE LINESCONTRACTOR OVERVIEW      CON A CON B CON C CON D CON E CON HTotal Awarded Budget $  311,698,895 $  68,513,436 $  52,432,079 $  208,010,504 $  80,506,795 $  1,200,377 Current Cost $  322,159,798 $  71,286,239 $  54,026,603 $  215,332,223 $  86,837,793 $  1,315,698 Over Budget $    10,460,903 $    2,772,803 $    1,594,523 $       7,321,719 $    6,330,998 $     115,321 PROJECT OVERVIEWTotal Number of Projects 146 15 7 58 35 2% Projects On Time 66% 40% 29% 55% 29% 50%# of Jobs Delayed 49 9 5 26 25 1% Projects On Budget 75% 60% 14% 59% 51% 50%# of Jobs Over Awarded Budget 37 6 6 24 17 1AVERAGE PROJECT# of Risks per Job 1.01 3.60 3.71 1.31 2.23 1.00Number of overdue risks 1 0 2 1 1 0% Over Awarded Budget 3.36% 4.05% 3.04% 3.52% 7.86% 9.61%% over budget due to Contractor 0.04% 0.53% 0.01% 0.00% -0.42% 0.00%% over budget due to Unforeseen 0.87% 0.54% 1.98% 0.19% 1.18% 0.00%# of Days Delayed 60 135 351 72 145 105# days delayed due to Contractor 4 41 4 0 16 31# days delayed due to Unforeseen 10 55 61 4 58 0Risk Number 2.83 2.37 2.76 2.35 2.16 1.74% Projects missing 1% 6% 0% 0% 0% 0%% Projects with no RMP 32% 43% 0% 0% 0% 50%FACILITY PERFORMANCE LINESFACILITIES OVERVIEW         1/15/2010 FACILITY A FACILITY B FACILITY C FACILITY DTotal Awarded Budget $      36,551,271 $           6,980,380 $        4,312,272 $           9,824,793 Current Cost $      36,678,980 $           6,980,380 $        4,312,272 $         10,543,804 Over Budget $           127,709 $                           - $                   - $               719,011 PROJECT OVERVIEWTotal Number of Projects 4 3 3 4% Projects On Time 100% 100% 100% 25%# of Jobs Delayed 0 0 0 3% Projects On Budget 75% 100% 100% 25%# of Jobs Over Awarded Budget 1 0 0 3AVERAGE PROJECT# of Risks per Job 0.25 0.00 0.00 2.75Owner Generated Risks 0.25 0.00 0.00 1.25Number of overdue risks 0 0 0 1% Over Awarded Budget 0.35% 0.00% 0.00% 7.32%% over budget due to Owner 0.35% 0.00% 0.00% 5.27%% over budget due to Contractor 0.00% 0.00% 0.00% 0.00%% over budget due to Unforeseen 0.00% 0.00% 0.00% 2.05%# of Days Delayed 0 0 0 110# of days delayed due to Owner 0 0 0 19# days delayed due to Contractor 0 0 0 29# days delayed due to Unforeseen 0 0 0 62Owner Rating 10.00 10.00 10.00 9.13Risk Number 1.01 1.00 1.00 2.48VendorNo Summary Criteria Out of Incumbent B C1 RAVA Plan 10 5.91 7.09 6.312 Transition Milestone Schedule 10 5.17 6.96 6.333 Interview 25 15.77 16.78 13.534 Past Performance Information - Survey 10 9.80 9.99 9.825 Past Performance Information - #/Clients Raw # 5.67 3.00 4.426 Past Performance Information - Financial 10 7.02 8.67 6.907 Financial Rating 10 4.00 8.00 8.008 Financial Return - Commissions Raw $ 30,254,170$    60,137,588$    64,000,000$    9 Capital Investment Plan Raw $ 14,750,000$    20,525,000$    12,340,000$    10 Equipment Replacement Reserve Raw $ 7,213,342$     4,100,001$     8,171,811$     Finanical Totals 52,217,512$    84,762,589$    84,511,811$    VendorNo Summary Criteria Weight/Out of Incumbent Best Value C1 RAVA Plan 28 16.55 19.85 17.672 Transition Milestone Schedule 2 1.03 1.39 1.273 Interview 25 15.77 16.78 13.534 Past Performance Information - Survey 9 8.82 8.99 8.845 Past Performance Information - #/Clients 1 1.00 0.53 0.786 Past Performance Information - Financial 15 10.53 13.01 10.357 Financial Rating 5 2.00 4.00 4.008 Financial Return - Commissions 7 3.31 6.58 7.009 Capital Investment Plan 6 4.31 6.00 3.6110 Equipment Replacement Reserve 2 1.77 1.00 2.00100 65.09 78.13 69.04Arizona State University Food Services Contract$32M more over ten yearsAfter 1 Year: Monitoring/Evaluation based on measurements• Increase sale of food by 14%• Increased cash to ASU by 23%• Minimized management cost by 80%• Increased customer satisfaction by 37%• Increased capital investment by 100%No Category1 Total Revenue ($M) 27.02$      30.83$            3.81$        14%2 Total Return & Commissions ($M) 2.17$        2.67$              0.50$        23%3 Captial Investment Contract ($M) 14.75$      30.83$            18.08$      109%4 Captial Investment 2006 vs. 2007 ($M) 0.26$        5.70$              5.44$        2092%5 ASU Administration (# of People) 7 1.5 -5.5 -79%6 Customer (Student) Satisfaction (1-10) 5.2 7.1 1.9 37%7 Myster Shopper Satisfaction N/A 9.6 -- --FY 06-07 IncumbentFY 07-08 New Vendor Difference % DifferenceFinal ASU IT Networking Contract• ASU IT Networking previously performed in-house• ASU IT Network Details– 76,000 Students and Faculty– 5 yr. Contract– 4 Different Campuses ASU MaintenanceAnnual CostQwest MaintenanceAnnual CostTotal Annual QwestSavingsTotal Qwest AnnualValue Added and Savings$13,981,934 $12,500,000 1,481,934 2,756,934Dominant Information• Dominant Performance Indicators– Overall cost of network– Top of the line networking– Network Sustainability/Accessibility– Customer Satisfaction• Documentation of Deviations to financialsDominant MeasurementsASU Current Qwest     Value Add Overall Cost of NetworkAnnual IT Spend Ratio (new vs maintenance) 17/83 48/52Top-of-the-line Networking% Converged 7% 100%% Mobility 2% 100%% Equipment not out-of-date 58% 95%Network Sustainability/Accessibility% Equipment not needing replacement (Not at end-of-maintenance) 88% 100%Customer SatisfactionSpeed/Quickness Available (Wired / Wireless):% 1Gb - Wired Connections 59% 98%% of 300Mb - Wireless Connections 8% 32%Dev. Cap, Exp. Maint. FOE Costs TotalYear 1 Exp. 4,100,000$  1,652,000$ 6,818,000$  12,570,000$ Ex. Risk X 100,000$  100,000$     -$             -$              100,000$       Ex. Risk X 100,000$  100,000$     (25,000)$     -$              75,000$         Ex. Risk X 50,000$    -$              50,000$       -$              50,000$         Ex. Risk X 25,000$    25,000$       -$             -$              25,000$         New Year 1 275,000$  4,325,000$  1,677,000$ 6,818,000$  12,820,000$ GSA Region 6: Five Year Plan• Year 1:– Set-up core team structure– Design-Build IDIQ Contract– Education when needed– 2 Test projects• Year 1 Revised:– 7 Test projects– 16 projects with Weekly Risk Reports• Start Small… Grow SlowWhy is GSA Heartland Region Effort so Significant?• GSA is known as the biggest buyer of non-military services in the U.S.• First time the application is being run with procurement and project management champions• Best combination of PM/Procurement action officers in 16 years of testing• Organization who has already been developing measurements of performance and who is attempting to utilize the measurements• Visionary leadership with visionary action officers• Biggest potential impact on industry practices of any of testingorganizations GSA Weekly Risk Report DataNo Criteria Unit PIPS Traditional1 Total Number of Projects # 4 82 Total Awarded Cost $ $       1,970,792 $       9,396,738 3 Average Awarded Cost $ $          492,698 $       1,879,348 4 Average Procurement Time Days 65 98 Contractor Reaction to PIPS• Two contractors are educating their people• Changing their procedures to be proactive and identify value for the client• Educating others on the benefits of being visionaryContractor Perceptions on Best Value

PM Model of the Future Source Selection, Risk Management, Contract Administration

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PM Model of the Future Source Selection, Risk Management, Contract Administration

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