Pre-Proposal Education

1. Pre-Proposal Education Architect Selection for Office Building Annex Oklahoma Bureau of Narcotics October 12, 2010 Oklahoma Department of Central Services Construction and Properties Division

2. Introductions Oklahoma Bureau of Narcotics Dept. of Central Services Construction and Properties • Bill Harrell, Project Manager 405/521-2145 Bill.Harrell@dcs.state.ok.us • Jerry Harris, Project Manager • 405/521-2885 • jharris@obn.state.ok.us

3. Agenda • Project Review • Resources and Requirements • Best Value Education • Selection Process & Submittal Requirements • Questions and Answers

4. Project Review • New Office Annex Building at Existing OBN Facility • Approximately 11,000 Square Feet • Approximately $1.5M • Complete by Spring 2012 (or earlier) • Complementary to existing building • Functional relationship to existing building

5. Resources & Requirements • CAP Form M100BV: Consultant Selection Process – Best Value • Art in Public Places http://arts.ok.gov/resources/pubart.html • High Performance Building Standard CAP POO5: Building Certification Program - Guidelines for Implementation (on web) • Building Codes adopted by State Fire Marshal

6. Resources & Requirements • CAP Rules: OAC 580:20 Construction Contracting, additional codes, etc. • Obtain Building Permit from State Fire Marshal prior to releasing for bids • Develop final program, budget and schedule • Weekly reporting • Construction Bidding will also use PIPS (Best Value)

7. Resources & Requirements • CAP IDIQ Contracts – services available • Land Surveying • Geotechnical Testing • Commissioning Services • Can be purchased by Owner • Must be budgeted by Consultant • Printing – project reviews – cost borne by Consultant • Bid Documents: CAP Electronic Plan Room

8. Resources & Requirements Project Team Owner Architect Contractor Traditional Relationship DCS/Construction and Properties Division

9. Resources & Requirements End User Client/User: State Agency Project Team (as envisioned By State Law) Central Procurement Contract Owner: CAP Architect Contractor Contractual Responsibilities Central Procurement Model “Outsourcing” DCS/Construction and Properties Division

10. Resources & Requirements Project Team (common perception) Owner Agency Architect Contractor Confusion Model DCS/Construction and Properties Division

11. Resources & Requirements Project Team (reality) Owner Agency Architect Contractor Communication Model Official/Legal Communication Contractual Communication Vital Communication DCS/Construction and Properties Division

12. Resources & Requirements Project Team Roles Agency Establishes the Requirement Contracts for services on behalf of Agency to fulfill the Requirement Owner Consultant Designs a solution that meets the Requirement Contractor Builds the solution that meets the Requirement Clearly, most important element is “The Requirement” DCS/Construction and Properties Division

13. Resources & Requirements Project Team Responsibilities Agency Communicate the Requirement, Compare results to Requirement Owner Manage schedule, budget, contract performance Translates Requirement into technical intent documents; Specific construction administration duties Consultant Translates the Technical intent into the physical, technical solution; performs “at risk” Contractor Neither the Agency nor the Owner have responsibility for technical decisions. DCS/Construction and Properties Division

14. Best Value Education A&E Services for Office Building Annex Oklahoma Bureau of Narcotics October 12, 2010 Oklahoma Department of Central Services Construction and Properties Division

15. Performance Based Studies Research Group OBN Annex Pre-Proposal Education www.pbsrg.com

16. State of Oklahoma’s Strategic Plan/Vision • Compete based on value • Transfer risk and control to vendor • Minimize client decision making, directives, and control • Vendor writes majority of the contract • Vendor manages contract • Measurement, measurement, measurement

17. Risk Minimization • Set the Project up to Succeed • State the Requirement, let the Consultant deliver the solution • Select High Performance Consultants and Contractors • Mitigate Risk through Pre-Planning • When threats do occur, follow roadmap (rather than rely on conflict)

18. State Consultant Expectations • Proactive and Accountable • Consultant has control • Focus on risk in the seams • Risk – Plans to minimize risk – impact – customer satisfaction • Performance measurement – uses dominate information • Projected vs. Actual • Performance information/risk identification disengages the bureaucracy • Win-Win • Consultant’s success is just as important as State’s success • Goal alignment • “Vendor writes their own Contract” • Vendor has control • Set forth work plan, measurements, risk management as Contract Attachment • If we have to go to the contract then everyone has already lost • Should never have to go the contract

19. 700Procurements $808Million 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 implementation in 2009 98% Customer satisfaction, 90% of PM/RM transactions minimized Increased vendor profits and decreased cost PBSRG(Performance Based Studies Research Group)

20. Information Measurement Theory An Event… Initial conditions Final conditions Laws Laws Time An Event is more predictablewhen you have more information up front

21. What happens without information? Initial conditions Laws Time Outcome?

22. Without information, still only happens one way Initial conditions Outcome Laws Time

23. Event A Which event outcome is the easiest to predict? Event B Event C Time

24. How does this relate to procurement? Selecting the Vendor Project Complete Construction Project Information about the Bidders Predicted “Good” Outcome Time Spend more time upfront, before award is made PIPS will assists us in gathering the information

25. Industry Structure High III. Negotiated-Bid II. Value Based Owner selects vendor Negotiates with vendor Vendor performs Best Value (Performance and price measurements) Quality control Vendor minimizes risk Performance I. Price Based IV. Unstable Market Specifications, standards and qualification based Management & Inspection Client minimizes risk Competition Low High

26. High High Performance Performance Low Low Problem with Priced Based Systems Owners “The lowest possible quality that I want” Contractors “The highest possible value that you will get” Maximum Minimum

27. High Low Contractor 1 Contractor 2 Risk Performance Contractor 3 Contractor 4 Low High Impact of Minimum Standards High Low Risk Performance Contractor 1 Contractor 2 Contractor 3 Contractor 4 Low High

28. Industry performance and capability Vendor X Customers Highly Trained Outsourcing Owner Partnering Owner Medium Trained Minimal Experience Price Based

29. Traditional Management Initial conditions Final conditions D Management & Control Laws Laws Time D Risk is deviation from expected measurements

30. Measured options that accurately describe the initial conditions The best value measured option identifies what, how, and will measure the deviations The measured solution replaces the buyer’s guess New Project Management and Risk Management model that depends on efficiency Initial conditions Final conditions D M Laws Laws M Time M

31. Delivery of Services Control, manage, direct, and inspect Increase the flow of information Inefficient, ineffective Maximizes technical issues Me & Them Us Initial conditions Initial conditions Final Conditions Final Conditions Don’t Control Don’t Control Control Control Risks Risks Laws Laws Laws Laws Time Time Status Quo: High Risk X M New PM Model: Low Risk • Transfer control to the contractor • Preplanning • Quality Control • Measure • Minimize flow of information • Minimizes technical issues M M M M

32. C V B Buyer Controls Vendor Through Contract

33. C V B Vendor Manages/Minimizes Risk With Contract

34. What is Dominant Information • It is simple • It is accurate • There is minimized information • It stands out • It minimizes everyone’s decision making • It is easy to get, print out, someone has it very handy • It predicts the future outcome • It makes it clear among many parties

35. This is Too Much Information! How will you differentiate yourself?

36. Roof material is high performing: Tensile strength is 800 PSI Elongation is 300% Tear strength is 400 lbs Xenon testing: 10,000 hrs Roof material has been installed and is performing: 65 Customer Responses Average Roof Age: 25 years Percent Not Leaking: 99% Customer Satisfaction: 9.8 Dominant vs Non-Dominant Non Dominant Dominant

37. Dominant Information is Not Technical “And that's what verbose and hyper technical writing does - it wastes our time… As the legal jargon spreads across investor communications like weeds in a garden, increasingly the investors just stop reading it” - Christopher Cox (Former California Republican Congressman)

38. Price Based (Management) Qualifications Technical Specifications Interview Detailed Financial No linkage Best Value (Leadership) Past Performance Risk Assessment (don’t control) / Value Added Interview Financials (simplified) Linkage into PP/QC and Risk Minimization Price Based Selection vs Best Value Selection

39. How do we know who is an expert? • Use deductive logic instead of experience/decision making • 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 • Ensure key personnel can “see” • Preplanning and risk minimization by contractor

40. Selection Process and Submittal Requirements A&E Services for Office Building Annex Oklahoma Bureau of Narcotics October 12, 2010 Oklahoma Department of Central Services Construction and Properties Division

41. Best Value SystemPerformance Information Procurement System (PIPS)PM model, Risk Management model PHASE 2: PRE-PLANNING QUALITY CONTROL PHASE 3: MANAGEMENT BY RISK MINIMIZATION PHASE 1: SELECTION

42. Past Performance Information (PPI)

43. Performance Information Procurement System (PIPS)State of Oklahoma Consultant Selection Filter 6 Weekly Report & Post-Rating Filter 1 Past Performance Information Filter 4 Prioritize (Identify Best Value) Filter 5 Pre-Award Phase (Pre-Plan) Filter 2 Technical Proposal & RAVA Plan Filter 3 Interviews High Quality of Vendors Award Low Time

44. Past Performance Information • Critical Components: • Vendor • Lead Design Engineer • Project Manager • Minimum of 3 surveys for each • 1 Survey can count for all critical components if it has their name on the survey. • Vendor is responsible for the collecting the survey • The State only wants the best past performance surveys

45. Past Performance Surveys/ Past Performance Sheet Email/Fax Survey Call To Verify Compiles Information Design Firm Design Firm compiles and sends surveys and past performance sheet back to State Mail survey back to Design Firm State of Oklahoma Past Client

46. Final Rating After the project is complete, the client will evaluate the project. The Final Rating will be heavily impacted by: Change orders Project delays Poor quality Owner surprises Complaints Ability to submit accurate and timely weekly reports In Best-Value Procurement, the vendors goal is to get a high rating in order to stay competitive. 46

47. 50% Modification 47

48. Survey Questionnaire

49. Technical Risk Submittal

50. Performance Information Procurement System (PIPS)State of Oklahoma Consultant Selection Filter 6 Weekly Report & Post-Rating Filter 1 Past Performance Information Filter 4 Prioritize (Identify Best Value) Filter 5 Pre-Award Phase (Pre-Plan) Filter 2 Technical Proposal & RAVA Plan Filter 3 Interviews High Quality of Vendors Award Low Time Scored Blind