Booz Allen Hamilton Inc. Performance Criteria For Professional Services Service Acquisition Center of Excellence Opening Ceremony Mike Cameron November 18, 2004

2 Booz Allen Hamilton Inc. A Short Story Long ago, a traveler came upon three men working beside the road. He asked the men “What are you doing?” The first man answered “I am shaping this rock.” The second man replied “I am building a wall.” The third man said “I am building a cathedral.”

3 Booz Allen Hamilton Inc. How Does This Story Relate to PBSA?  The first man described an activity—shaping a rock  The second man described a process—building a wall  The third man described an outcome—building a cathedral Traditional service procurements are like the first two men—describing activities and processes. Performance-Based Service Acquisitions are like the third man— defining a result in a way that reveals the purpose of the effort.

4 Booz Allen Hamilton Inc. The Burning Issue!  Legislation requires PBSA for service procurements—including professional services  Many agencies—and industry—are struggling to understand how to use PBSA for professional services  It’s not a small problem—professional services accounted for 34% of service procurements in 2003

5 Booz Allen Hamilton Inc. “You Can’t Define Performance Criteria For The Kind Of Help I Need.”  Existing examples typically illustrate PBSA for “commercial” services  There is little, or no, guidance widely available that addresses professional service acquisition  Without examples or guidance, many managers don’t know how to define performance criteria for professional services

6 Booz Allen Hamilton Inc. Defining Performance—The Performance Work Statement  The Performance Work Statement (PWS) provides  Performance Requirements—unambiguous statements that describe specific, measurable results that must be provided  Performance Standards—statements that define the acceptable quality of the delivered product or service  Performance Measurements—statements that describe how performance will be measured  The PWS focuses on results and avoids describing how the work will be performed  The Performance Work Statement must answer Two Simple Questions: 1.“What problem am I trying to solve?” 2.“How will I know when I’ve solved it?”

7 Booz Allen Hamilton Inc. PBSA Does Work For Professional Services!  Professional services are fundamentally different from commercial services  Understanding those differences is the key to writing performance criteria that are meaningful and measurable

8 Booz Allen Hamilton Inc. Commercial versus Professional Services  Commercial services are:  A commodity in the marketplace  Have adequate competition to set a market price  Differentiated mainly by price  Repetitive by nature  Insensitive to context  Professional services are:  Usually highly customized  Often fill a niche in the market  Differentiated on factors other than price  Non-repetitive  Determined by context

9 Booz Allen Hamilton Inc. Repetition and Context  The key differences between commercial and professional services are repetition and context  Repetitive services are those for which one instance of the service is fundamentally the same as any other  Repetition allows frequent observation and determination of cause and effect  When a service is sensitive to context, the outcome of the service will vary according to specific customer needs

10 Booz Allen Hamilton Inc. Two Examples of Repetition and Context  Commercial Services— Facilities Maintenance  The results of the services— painting, repairs, and cleaning—are the same each time they are provided  The primary function of the facility makes little difference to the delivered service  Experiences gained from one project are directly applicable to another project  Professional Services— Strategic Planning  The specific form of the services will vary according to the need of the customer  The result of the service will differ according to the unique situation of the customer  Experiences gained from one project provide insight into other projects, but are not directly applicable

11 Booz Allen Hamilton Inc. Back to the Two Questions  “What problem am I trying to solve?”  If you can answer this question, then you can identify the performance requirements… Performance requirements define the results that must be produced in order to achieve the desired solution.

12 Booz Allen Hamilton Inc. Back to the Two Questions  “How will I know when I’ve solved it?”  If you can answer this second question, then you can identify the performance standards… Performance standards define the quality levels that must be achieved, or the conditions that must be satisfied, to make the results acceptable.

13 Booz Allen Hamilton Inc. A Simple Example  Objective Statement: You have been tasked to create a customer service portal for your agency and need decision support to select an appropriate technology solution.  The exercise is to  Decide what results are necessary to accomplish your objective  Decide what conditions will make the results acceptable

14 Booz Allen Hamilton Inc. A Simple Example—Analysis of the Problem  Question #1: “What problem(s) am I trying to solve?”  Answer: The measurable, specific results must be provided in order to satisfy the objective(s) of the program 1.Complete a comparative evaluation of available commercial technology products and capabilities 2.Recommend a product/capability based on relevance to the current project

15 Booz Allen Hamilton Inc. An Example—Analysis of the Problem  Question #2: “How will I know when I’ve solved it?”  Answer: When I can identify the quality of service, or the delivery conditions that must be met, to make the results acceptable 1.Complete a comparative evaluation… 1.The evaluation shall identify the top five products and vendors, based on market share. 2.The evaluation criteria for the analysis shall include all program objectives, program constraints, and constraints, and technical requirements 3.The evaluation shall provide a detailed mapping of each product/capability against the evaluation criteria

16 Booz Allen Hamilton Inc. An Example—Analysis of the Problem  Question #2: “How will I know when I’ve solved it?”  Answer: When I can identify the quality of service, or the delivery conditions that must be met, to make the results acceptable 2.Recommend a solution… 1.The recommendation shall provide a rationale for the selected product/capability 2.The recommendation shall provide a lifecycle cost summary

17 Booz Allen Hamilton Inc. How Well Did Our example Illustrate the Discussion?  In this sample problem, the specific services required were  Non-repetitive…this job will only be performed once  Context sensitive…similar services provided to a different client will produce different performance criteria  We have avoided any discussion of how the work will be performed, focusing instead on how well the work must be accomplished  Our performance criteria answered The Two Questions

18 Booz Allen Hamilton Inc. Tips For Implementing PBSA for Professional Services 1.Decide that it can be done 2.Translate objectives into a set of necessary results 3.Identify the criteria that make the results acceptable 4.Make the definition of performance criteria as simple and straightforward as possible 5.Don’t be afraid of making mistakes…you will. But you will also learn from them 6.Remember, the simplest solution is usually the best one