Originally published in Interiors & Sources

05/31/2013

Shifting the Paradigm in Project Management

Forget the low bidder; focus on finding experts

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THE PROBLEM WITH LOW BIDDERS
By communicating requirements in terms of minimums, clients direct vendors to transform the minimum into a maximum, creating an adversarial win-lose environment, Kashiwagi says. “Once you set the minimum expectation, that’s probably all you’ll get,” says Ray Jensen, retired associate vice president of business services at Arizona State University.
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The Movement
This FM model doesn’t just sound good in theory – it’s producing results in practice too. Implementing the system was easy for Charles Serikawa, assistant director of facilities management at the University of Hawaii, because it was a similar approach that he took as a former engineer and general contractor.

“My view is that quality and service are foremost, and cost is secondary. FMs need to understand and believe that the low-bid process will not give the best bang for the buck,” he explains. “You should mimic what a person does when buying a big ticket item like a car, TV, or appliance. People go for quality and endurance in lieu of cost and do research before buying. When you interview various contractors, you can determine if the contractor understands the scope of work and can perform the job on time and within budget.”

The State of Hawaii’s Department of Accounting and General Services implemented the process to increase performance of their outsourced projects without spending more money. The initial pilot program was set up for roofing and painting projects, but soon expanded to mechanical, electrical, and renovation. All projects were completed on time and within budget, generating great success for the state. The University of Hawaii began implementing the model too.

“The method promoted a partnering win-win between owner and contractor,” says Serikawa. “I could pretty much predict the final results of project and was very confident in it.”

The University of Alberta (U of A) partnered with PBSRG to implement these concepts in construction, design and engineering, IT, and travel management services.

“We saved 14 to 18 months in schedule and $8 to 12 million on the design-build part of the project compared to traditional processes that would have resulted in change orders,” says Hugh Warren, executive director of operations and maintenance at the university. “The model also saved $500,000 on upfront costs on the custodial contract, and an extra $400,000 the following year on implementation. It even allowed us to internally reassign three full-time equivalents.”

The process has been used extensively at ASU. Some of the areas where it has produced the greatest success include food service and IT.

“We’re taking weeks to do things that took months and a couple of months to do things that would have taken up to a year,” explains Jensen.

With a little vision and planning, these successes can be realized at your facility.

“The FM of the future will be more proactive, add value, and become an executive level position in the organization,” Kashiwagi explains. “Instead of managing technical functions, he’ll be managing systems and processes.”

Case Study #1:

University of Alberta


The U of A partnered with PBSRG to become a measured organization, increase preplanning and risk minimization, procure and contract with high performing vendors, and increase accountability throughout contract lifetime. The business model was piloted on services, construction, and design and engineering, and it eventually widened to IT, travel management services, and a construction management program for all small construction projects on campus. The Best Value model has been used on nine projects totaling $210 million. The project manager’s average satisfaction with the vendors used was 9.9/10.

Case Study #2:

State of Hawaii and University of Hawaii


The state’s Department of Accounting General Services wanted to increase performance of their outsourced projects without spending more. It piloted PBSRG’s PIPS process on roofing and painting projects and expanded to mechanical, electrical, and renovation projects. The model was then implemented at the university. Together the two entities have performed 235 projects totaling $63.6 million using the Best Value model. All projects were completed on time and within budget, with a 0% contractor change order rate.

Case Study #3:

Arizona State University


ASU utilized the PIPS process on an $800 million procurement for campus-wide food service. There has been an 80% reduction in the client’s management requirements on dining services. Based on the success, the university used the program on recreational equipment services, IT, and design and construction.

  

Chris Curtland christopher.curtland@buildings.com is assistant editor of BUILDINGS.

Dean Kashiwagi, Ph.D., PE, is a Fulbright Scholar, professor at Arizona State University’s School of Sustainable Engineering and the Built Environment, and director of the Performance Based Studies Research Group. He has developed theories to maximize value in project management.


RESOURCES

  • Information Measurement Theory and Best Value Standard are annual manuals available at pbsrg.com.
  • A list of seminars happening around the world can be found at PBSRG’s website and are often free.
  • Classes, research papers, and videos are also offered online.
  • Several presentations on best business practices in FM can be found at IFMA’s website, ifma.org.

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