This presentation is for

Educational purposes only.

The RFP will contain final instructions.

 The
Best-Value Business Model

Kristen Hurtado
Arizona State University
May 2015
20 Years | 210+ Publications | 550+ Presentations
2,000+ Projects | $4.6 Billion Procured
Current Canadian Efforts
– University of Alberta
– University of Ottawa
– University of Manitoba
– Wilfrid Laurier University
– Queen’s University
– University of Waterloo
– Western University
– Dalhousie University
– Simon Fraser University
– City of Spruce Grove
– Alberta Infrastructure
– Workers Comp (NS)
Information Facility
Management
Technology Health Insurance/
networking help desk services
maintenance
landscaping
custodial
conveyance
Medical Services
data centers eProcurement security service pest control
building systems
hardware
industrial moving
COTS software waste management
ERP systems energy management
Manufacturing

Business / Municipal / Construction / Design /

University Services Engineering
dining material recycling
multi-media rights bookstores large gc small gc DBB
fitness equipment furniture infrastructure renovation CMAR
online education municipal repair DB
document management laboratory maintenance IDIQ
property management education roofing JOC
audiovisual hospital demolition Low Bid
communications systems financial development IPD
emergency response systems large specialty supply chain
laundry
University of Manitoba
“I would use the Best-Value Model again, in a
heartbeat! The evaluation process promoted my
overall objectives of transparency, fairness, and no
bias, which made me feel comfortable. This is an
effective process with proven results!”
– Andrea Edmunds, Director, Ancillary Services
(University of Manitoba)

“The best value process was straightforward,

attracted the best suppliers, and proved to be fair and
equitable for everyone involved.  And the clarification
phase provided an opportunity for alignment of goals
so that there were no surprises down the line.” 
– AVP’s Office(University of Manitoba)
Why Are We Looking For Alternates?
Industry Performance

• IT Performance (The Standish Group, Chaos Reports):

– 28% of projects are successful
– 26% of projects completely failed or cancelled
– 202% average cost overrun
– 111% average schedule overrun

• Construction Performance (ENR/CIB survey results):

– 50% of project that were completed late
– 35% of projects that were over-budget
– 50% of clients would hire the same construction firm
again
– 70% of clients were satisfied
 What is the most important
factor for a successful project?
Key Personnel
What Percent of RFP’s Are 100% Accurate?
Expertise

How the How the How the How the What the
customer Project Analyst Business customer
explained it Leader designed it Consultant really
understood it described it needed
 
13

The Traditional Approach To Hiring

An Expert
OBJECTIVE: Hire a brain surgeon to perform surgery on a loved one

TRADITIONAL APPROACH:
• First Step = Hire the cheapest surgeon

• Second Step = “Negotiate” their proposal:

– Ask that surgeon to find ways to lower their price some more
– Request that the surgeon completes the surgery faster
– Request that they follow your instructions on performing brain surgery
– Identify what tools they are allowed to use
– Direct them on which nurses/doctors they can use
– Hire other individuals to tell the surgeon how to do the surgery?

• Third Step = Act completely surprised when the surgery is not successful!
Assumption: Vendors are Not a
Commodity

…but how do we
know who to
select?
What is Best-Value?
• Win-Win

• Client:
• Outsource to experts
• Higher performance
• Less management and resources

• Vendor
• Control of project/service
• Ability to increase profit by maximizing their efficiency
Reasons For Success?

Fair
Open
Honest
Transparent
Expertise

FACTS:
• Owners are not experts (they have an idea of what they want)
• RFP’s are rarely 100% accurate
• Experts should know more about the service than the owner
• Experts should know what the Owners need (even if the Owner didn’t describe it)
• We are looking for an expert to provide us with their vision and expertise
Which would you purchase?

18
Which would you purchase?

19
What Is Dominant Information?
• In Which Scenario…
• Will evaluators all agree?
• Is faster to make a decision? SCENARIO 1 SCENARIO 2
• Is easier to make a decision?
• Is easier to justify?
• Requires more technical details?
• Will lowest price be more of a factor?
Best Value System

1 2 3
SELECTION CLARIFICATION MANAGEMENT
& METRICS
Best Value System
High Level Overview Details

•
1 2 3
SELECTION

Proposal ($)
CLARIFICATION

• Clarification •
MANAGEMENT
& METRICS

Award
• Past Performance • Pre-Planning • Weekly Reporting
• Risk Assessment • Post Award Metrics
• Value Assessment • Final Documentation
• Interviews • Update PPI
• Client Demonstration
Best Value System
1
1 2 3
SELECTION CLARIFICATION MANAGEMENT
& METRICS

PHASE 1 - SELECTION 23
Proposal Package
(Attachments)
• Attachment A – Proposal Cover Sheet
• Attachment B – Proposal Form
1
• Attachment C – Project Plan
• Attachment D – Risk Assessment Plan
• Attachment E – Value Assessment Plan
• Attachment F – Reference List
• Attachment G – Survey Questionnaires
• Attachment H – Past Performance Information Scores
• Attachment I – Cost Proposal Form

PHASE 1 - SELECTION 24
Criteria and Weights
No
1 Interviews
Criteria Weights
250
1
2 Cost 250
3 Risk Assessment Plan 200
4 Value Assessment Plan 100
5 Past Performance Information (Firm, PM, TL, Solution) 50
6 Client Demonstrations 150
Total Points: 1,000 Points

PHASE 1 - SELECTION
Written Approach
• Goal is to minimize work / keep process efficient
1
• Minimize marketing material or general information

• Only focus on the specific project

• Only look at Risks and Value Added Ideas

PHASE 1 - SELECTION
Critical Formatting Requirements
• In order to minimize any bias, the evaluated
proposal documents MUST NOT contain any
1
names that can be used to identify who
Proposer is (such as company names,
personnel names, project names, or product
names).

• Fair | Non-Biased | Impartial

PHASE 1 - SELECTION
Risk Assessment Plan
• Identify and prioritize all major risks (applicable to this project) that may
impact a successful delivery of the project.
1
• Risk = not completing on time, not finished within budget, generating change
orders, or sources of dissatisfaction to the owner.

• The risk should be described in non-technical terms and should contain

enough information to understand why the risk is a valid risk. Proposer must
also explain how it will avoid or minimize the risks from occurring.

• Solutions must be nontechnical, logical, easily understood, or contain

verifiable performance information.

PHASE 1 - SELECTION
Risk Assessment Example
Controllable Risk
RISK:
1
Noise from our demolition may result in student/staff complaints (since we will be doing
demo in an in-operational library during finals week).

• VENDOR 1
• SOLUTION: Partnering is a key to success on any project. We will work with the
user to develop the best strategies that can be implemented to minimize the
impact of noise from demolition.

• VENDOR 2

• SOLUTION: To minimize this risk, we have planned to demolition during off hours
and weekends. We will also install rubber sheets on the floors to diminish noise
and vibrations.

PHASE 1 - SELECTION
Example: Risk Assessment
Controllable Risk
• VENDOR 1
1
• RISK: This project requires a significant amount of concrete. The cost of
concrete has been rapidly escalating over the past year.
• SOLUTION: The owner can be assured all risks associated with concrete
escalations will be eliminated because we offer the benefit of an
experienced project team that includes the most detailed, prequalified
and extensive list of subcontractors and suppliers, from around the
world.

• VENDOR 2
• RISK: The cost of concrete has been rising drastically over the past year.
Since this project requires a substantial amount of concrete, cost is a risk.
• SOLUTION: To minimize this risk, we have secured and signed a contract
with a local concrete manufacturer to prevent any increase in cost during
the duration of this project.
PHASE 1 - SELECTION
Risk Assessment Example
Controllable Risk
RISK:
1
Scheduling and execution of project tasks
• Vendor 1
o To minimize this risk, we will have a project manager that is
actively engaged on a daily basis who understands what the
dependencies are and can clearly define them to mitigate
any potential delays.

• Vendor 2
o A Project Manager will be used to manage the schedule and
keep the various parties on task.

PHASE 1 - SELECTION
Risk Assessment Example
Controllable Risk

RISK:
1
A poor roofing system can result in roof leaks, which may inconvenience building
occupants, increase complaints, increase maintenance, damage building contents,
and be a source of mold issues.

Vendor A Solution:
• To minimize this risk, our proposed roofing system has been installed on over 400
roofs and has had an average roof age of 18 years, in which 99% of the roofs don’t
leak and 100% of the end clients are satisfied.

Vendor B Solution:
• To minimize this risk, we are proposing a thermally-welded roofing system that has
a tensile strength of 2,130 PSI, elongation of 300%, tear strength of 312lbs, has
been tested for 10,000, and has a cold brittleness of -30°C.

PHASE 1 - SELECTION
Risk Assessment Example
Non-Controllable Risk
• VENDOR 1
1
• RISK: The local water company must have the water turned on by June in order for
us to water the newly installed recreational fields (or the grass will die).

• SOLUTION: We will coordinate and plan our schedule with the water company as
soon as the award is made to make sure that we get water to the site to irrigate
the fields.

• VENDOR 2
• RISK: The local water company must have the water turned on by June in order for
us to water the newly installed fields (or the grass will die). On past projects, the
water company has failed to meet the schedule 90% of the time.

• SOLUTION: To minimize this risk, we will coordinate our schedule with the water
company as soon as we are awarded the project. If they fail to meet our schedule,
we can connect temporary waterlines to the nearby fire hydrants, or we can also
rent water trucks to irrigate the fields.
PHASE 1 - SELECTION
Value Assessment Plan
• Opportunity to identify any value added options or ideas that may benefit
the Owner and Agency.
1
• This may include ideas or suggestions on alternatives in implantation
strategies, timelines, project scope, equipment, goals, financing, etc.

• All value added ideas must be logical and/or based on verifiable performance
metrics.

• Value added ideas must NOT be included in the cost proposal. Prior to
award, the Owner will determine if the value added items will be accepted or
rejected.

PHASE 1 - SELECTION
Example: Value Added Items
1

• Reroofing this building will not stop all water leaks. The majority of the leaks
are caused by cracks in the parapet walls, broken/missing glass, and poor
caulking. We can repair/replace all of these issues to minimize all water
leaks, for a minimal impact to time/funding.

PHASE 1 - SELECTION
Example: Value Added Items
• You can save 20% in your cost if you substitute the T-3
lighting system for the T-2. The T-3 lights are newer
1
state-of-the-art systems that are known industry wide
as the best systems.

PHASE 1 - SELECTION
Critical Formatting Requirements
• Proposal is limited to
1
• 2 Pages = Assessment of Risks (1 page Controllable & 1 Non-
Controllable)
• 1 Page = Assessment of Value Added Ideas

PHASE 1 - SELECTION
Past Performance Information
• PPI will be collected on the following Entities:
• The Firm
1
• Project Manager (Individual)
• Technical Lead (Individual)
• Solution/System

Step 1
Prepare Reference List
Step 2
Prepare and Send Survey Questionnaires to Past Clients
Step 3
ENTITY
Vendor Collect/Receive Completed Surveys
Step 4
Enter data into Reference List
Step 5
Package all material (Reference List and Surveys) and Submit

PHASE 1 - SELECTION
Survey Questionnaire
1
• For each Entity, Offeror must prepare,
send out, and collect survey
questionnaires to each client
individual listed on the Reference List.

• 5 references maximum (each)

• Entities can use same references if

they were on the same project and
each entity is listed on the survey
questionnaire

PHASE 1 - SELECTION
Survey Questionnaire
1

PHASE 1 - SELECTION
How The Submittal
Process Works
Average
Score
1
Non-Evaluated
Proposal Form
Documents
(1 page)
Purchasing
Contracting
Officer
Officer
Evaluated
Submittal Proposal Form
Documents
(1 page)

Evaluation Members

PHASE 1 - SELECTION
Key Personnel Interviews
• The Client may interview the following individuals:
• Project Manager (overall contact / involved on the project every day)
1
• Technical Lead

• All individuals must be available on the dates specified in the RFP. If a team
member is not present for the interview, they will receive a 1 rating.

• No substitutes, proxies, phone, or electronic interviews will be allowed.

• Goals:
• Meet the critical personnel that are being assigned to the project
• Identify if personnel have experience and have thought about this
project
• Identify if the personnel can think ahead and minimize potential risks

PHASE 1 - SELECTION
Interview Format
• The client will actually “interview” each individual. This is not a “presentation”.
1
• No other individual from the Offeror’s organization may attend

• Individuals will be interviewed separately

• The individuals cannot bring any notes or handouts.

• Interview times will be approximately 30 minutes per individual

• A standard set of questions will be asked to each individual. The client has the option to
clarify any responses.

• Questions will be non-technical

• Evaluators will rate/score the interviews comparatively to one another on a 1-5-10 scale

PHASE 1 - SELECTION
Type of Questions?
• Interview questions should be non-technical.
• Technical details will be addressed later in the process.
1
• Key characteristics:
• Responds quickly and concisely?
• Make the service seem very simple and straightforward?
• Take control and minimize the work of the client
• Quickly identify risks and how the risks should be minimized?
• Understand the major concerns of the client?
• Explain what makes themselves different from other individuals?
• Identify how to add more value to the project?
• Accept responsibility and accountability for the success of the project?
• Clearly explain what they are going to do and how they will measure their
performance?

PHASE 1 - SELECTION
Interview Comments
Goal Is To Minimize Risk
“I have no idea why I am here today”…“My boss called me last night and told
me to show up for this interview” - $10 Million Project
1
“I did not participate at all in preparing our proposal” - $3 Million Project
“You do understand that I didn’t write the RA plan. The RA plan was prepared
by our admin support staff.”
“I was just assigned to this project. I don’t know if our schedule is realistic.”
“I am not currently employed by this company, but if we win this project, they
will then hire me” - $25 Million Service Project
“I have never managed a project of this size/scope” - $30 Million Project
“There is no risk on this project” - $5 Million IT Project
“The greatest risk that I always face, is how to accomplish all of the things that
our sales team promised we could do” – $5 Million Cleanroom Design
PHASE 1 - SELECTION
Client Demonstrations
• The Offeror must identify at least one (1) past or current end user that is
1
currently using a solution/system that is similar to the solution/system being
proposed on this project.

• The past or current client will be asked to demonstrate basic solution or

system functionality.

• This is not a “presentation.”

 
• Goals
• The Client Demonstration should NOT be a detailed or technical review
of the system (but a very high level)
• Verify that a client is using the proposed system/solution
• Client to show basic system functions
PHASE 1 - SELECTION
Client Demonstration Logistics
• Client demonstration times will be approximately 1 hour per vendor
1
• Offeror will establish an online, real-time demonstration at the end client’s
site (via WebEx, GoToMeeting, Adobe Connect, etc.). The evaluation
committee will log on to view the end client demonstration.

• Evaluators will rate/score the client demonstrations comparatively to one

another on a 1-5-10 scale.

PHASE 1 - SELECTION
Final Prioritization
 
No

1 Cost
 
Criteria
 

250
 
Weights  

  $
Firm A

1,500,000.00 $
Firm B

1,200,000.00 $
RAW DATA
Firm C

2,000,000.00 $
Firm D

1,800,000.00 $
Firm E
   
 

1,700,000.00  
BEST
$
1,200,000
 
Firm
  A Firm B C

  200 250
1
PRIORITIZED DATA
Firm Firm Firm

150
D E
167 176
2 Risk Assessment Plan 200   1.0 10.0 1.0 1.0 5.0   10   20 200 20 20 100
3 Value Assessment Plan 100   5.0 10.0 1.0 1.0 5.0   10   50 100 10 10 50
4 PPI – Firm (1-10 Scores) 6   8.0 10.0 9.0 9.0 8.0   10.0   5.0 6.3 5.6 5.6 5.0
5 PPI – FIrm (# of Surveys) 6   5 5 5 5 5   5   6 6 6 6 6
6 PPI
– Project Manager (1-10
6   10.0 10.0 9.0 9.0 9.0   10   6.3 6.3 5.6 5.6 5.6
Scores)
7 PPI – Project Manager (# of
Surveys) 6   5 3 5 5 5   5   6 4 6 6 6

8 PPI
– Technical Lead (1-10
Scores) 6   9 9 9 9 9   9   6 6 6 6 6

9 PPI
– Technical Lead (# of
Surveys) 6   5 5 5 5 5   5   6 6 6 6 6

10 PPI – Solution/System (1-10 6   9 10 9 9 9   10   6 6 6 6 6

Scores)
11 PPI – Solution/System (# of
Surveys) 6   3 5 3 3 4   5   4 6 4 4 5
12 Interviews 250   5 10 5 5 5   10   125 250 125 125 125
13 Client Demonstrations 150   5 10 5 5 5   10   75 150 75 75 75
    1000                   516 998 426 442 573

PHASE 1 - SELECTION
Phase 2 - Clarification
2
1 2 3
SELECTION CLARIFICATION MANAGEMENT
& METRICS

PHASE 2 – CLARIFICATION
What is the Clarification Period?
(Proactive vs Reactive)
2

Minimize All Surprises!!!

PHASE 2 – CLARIFICATION
What Could Cause a Surprise
• Delivering something that doesn’t work
2
• Delivering something that isn’t what the client is expecting
• Delivering something that isn’t what the client needed
• Requiring the client to do something (that they did not know they had to do)
• Requiring things from the client that they cannot provide
• Expecting that something will happen as planned
• Assuming that things are clear and understandable
• Assuming that things will be done/occur as planned
• Changes that impact cost
• Changes that impact time
• Poor satisfaction

PHASE 2 – CLARIFICATION
How Can We Minimize Surprises
• Carefully preplan the project in detail
• Coordinate the project/service with all critical parties
2
• Prepare a detailed project plan (work plan, staffing, implementation, etc)
• Revisit the sites to do any additional investigating
• Prepare a detailed project schedule identifying critical milestones

• Cost Verification
• Detailed cost breakdown
• Identify why the cost proposal may be significantly different from competitors
• Review big-ticket items
• Value added options

• Identify all assumptions

• Prepare a list of all proposal assumptions
PHASE 2 – CLARIFICATION
How Can We Minimize Surprises
• Align expectations
• Identify any potential deal breakers
2
• Clearly identify what is included and excluded in the proposal
• Client roles and responsibilities
• Any contract terms and conditions

• Identify how the vendor will track and document their performance
• Performance metrics & Weekly risk reports

• Identify and Mitigate All Risks

• Client concerns/risks
• Other proposers risks
• Previous project risks
• Uncontrollable risks
PHASE 2 – CLARIFICATION
Phase 2 - Clarification
2
1 2 3
SELECTION

•
CLARIFICATION

Financial Summary
MANAGEMENT
& METRICS

• Project Plan
• Assumptions
• Project Risks/Concerns
• Performance Metrics
• Contract Terms

PHASE 2 – CLARIFICATION
Best Value System
3
1 2 3
SELECTION CLARIFICATION MANAGEMENT
& METRICS

AWARD
PHASE 3 – AWARD / MANAGEMENT / METRICS
Weekly Risk Reporting System
• Spreadsheet that documents all risks on the service
3
• Risk = Anything that may impact cost or schedule. Risks can be caused by the
Offeror or the Client

• Report must be submitted on Friday of every week (until contract is

complete)

• The WRRS does not substitute or eliminate weekly progress reports or any
other traditional reporting systems or meetings (that the Offeror may
perform or may be required to perform).

PHASE 3 – AWARD / MANAGEMENT / METRICS

Best Value System
High Level Overview Details

•
1 2 3
SELECTION

Proposal ($)
CLARIFICATION

• Clarification •
MANAGEMENT
& METRICS

Award
• Past Performance • Pre-Planning • Weekly Reporting
• Risk Assessment • Post Award Metrics
• Value Assessment • Final Documentation
• Interviews • Update PPI
• Client Demonstrations
Lessons Learned
Vendor Struggles / Challenges
• Difficult to measure or document in “dominant” manners
• Challenging to know who their best people are
• Difficult to assign their best people to the project (assigned to other projects)
• Difficult to know who best subs/suppliers were (partnered with lowest cost)
• Challenging to educate team
• Best people did not prepare proposal (too busy)
• Personnel that attended interviews had no clue about project
• Difficult to have team part of the proposal process
• Challenging to understand that this isn’t a traditional procurement
• Difficult to pre-plan during proposal (waited to see if they would get award
first)
• Focus on trying to get the award (instead of just proposing the best option)
Advice
• Measure your firm, people, critical partners
• Identify your highest performing team
• Educate the team
• Assign them to the project
• Have them get together in a room and think about the project (end to start)
• Have them prepare your plan
• Identify the things you don’t know (ask the client)
• Identify the major risks (control and don’t control)
• Identify your assumptions
• Prepare/Submit your plan
• Be prepared to clarify your plan during pre-award (do not wait until then to
think about your plan)
Schedule
No Activity Date
1 Project Announcement 05/01/15
2 RFP Release 05/14/15
3 Pre-Proposal Conference 05/20/15
4 Deadline to Submit Questions/Inquiries 06/05/15
5 Proposal Due Date (2:00 PM Winnipeg Time) 06/16/15
6 Invite Shortlist 06/18/15
7 Interviews 06/24/15
8 Client Demonstrations 06/25/15
9 Clarification Period 07/06/15 - 08/07/15
10 Board Recommendation/Approval 09/25/2015
11 Anticipated Date of Award 09/30/15
COMMENTS / QUESTIONS