Transcript Slide 1
Value Based Contracting
By: Ted Garrison
1 (C) 2013 - New Construction Strategies
Why Value Based Contracting?
2 The construction industry is the only significant industry that hasn’t increased productivity during the last 50 years!
Construction Industry Institute
(C) 2013 - New Construction Strategies
The Research
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1995 USA Construction and Building Sub committee Report
1995 OASIG UK Study
1997 KPMC Canada Study
1999 Singapore Construction 21 Report
2001 Australian Build and Construction Industries Supply Chain Project
2002 Canadian Construction Research Board Report
(C) 2013 - New Construction Strategies
Edwards Deming
4
“Price has no meaning without a measure of the quality being purchased.”
(C) 2013 - New Construction Strategies
What’s the Potential?
5 Reduce total project cost by 30% Reduce design/ construction time by 50% Reduce operating expense by 50%
(C) 2013 - New Construction Strategies
What Is Value Based Contracting?
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It’s a process where people collaborate with people and groups outside of each others formal control and inspire each other to work toward common goals – despite differences in their convictions, cultural values, and operational norms.
(C) 2013 - New Construction Strategies
What Is Collaboration?
7 Coordination Cooperation Capability Development
(C) 2013 - New Construction Strategies
Connection
Initial conditions
Avoid Subjective Decisions!
Event - Project Final conditions Time
• • • • •
The
more
info we have before the event, the easier it is to predict the final outcome The
less
info we have before the event, the harder it is to predict the final outcome However, the lack of info will never change the final outcome
Probability occurs when people don’t understand
Must think proactively – not reactively
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How Do You Select Your Team?
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Subtitle Introduction bullet point list
It’s a balanced approach
•
Past Performance
•
Leadership
•
Risk Analysis (Reliability)
•
Value Assessment
•
Price
(C) 2013 - New Construction Strategies
PIPS Filters
Time Filter 1
Education & Past Performance Information
Filter 2
Bid Proposal & Risk Assessment Plan (C) 2013 - New Construction Strategies
Filter 3
Interview 10
Filter 4
Prioritize
Filter 5
Pre Award Period
Filter 6
Weekly Report Post Rating
98%
Does It Work?
11 98% of PBSRG’s projects had high quality, finished on time, on-budget with no contractor generated change orders!
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Conclusion
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Buyers would be best served by developing a long-term relationship based on loyalty and trust with a single team of contractors working together to reduce costs and improve quality.
(C) 2013 - New Construction Strategies
What Are Your Thoughts or Questions?
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(C) 2013 - New Construction Strategies