Risk & Value Submittals Project Capability Risk Assessment Value Added

2 BV Model Has Multiple Filters No single step will complete minimize all risk. Process has several steps that act as filters. Filters do not limit competition, but make it difficult for non-performers to be competitive. Looking for dominant information – not solving all your project problems during proposal evaluations

Filter 1 Proposal Evaluations Filter 2 Interview Key Personnel Filter 4 Cost Reasonableness Check Filter 5 Pre-Award & Clarification Project Execution Risk Reporting & Close Out Rating Filter 3 Prioritization (Identify Best Value) Contract Award Evaluation Criteria - Price / Cost / Fee - Project Capability - Risk Assessment - Value Added - Past Performance Information (PPI) Short List prior to Interviews (if necessary) Pre Award Activities - Training - Kickoff Meeting - Planning & Clarifying - Summary Meeting Total Evaluation Scores are determined Logic check to confirm Selection of the potential Best Value Proponent Project Execution - Weekly Risk Report - Director Report - Performance Meas. - Close Out Ratings Value-Based Project Delivery Copyright Arizona State Univ

4 Best Value Review Our objective is to award based on value and not solely based on the lowest price. We are assuming that the project/service is NOT a commodity (not entirely price based). In order to justify not awarding to the lowest price, the vendors must be able to prove their value. Vendors must prove their expertise and must differentiate themselves from the competitors

5 Risk & Value Plan Objectives The Project Plans provide an opportunity for the vendor to differentiate themselves from their competitors (to prove they are not a commodity). The Plans provides the vendor with an opportunity to prove their level of expertise. Experienced Vendor Time Inexperienced Vendor Time

6 Vision and Expertise Project Uses information & logic to increase vision Risk Must be minimized from the beginning Every vendor has “Vision” Highly Experienced Can See End to Beginning

7 Remember…It is the Vendors Responsibility to Provide “Dominant Information”

3 Written Submittals Value Added = additional expertise beyond requirements Value Added = additional expertise beyond requirements Blind Evaluations: standard templates, no modifications, and no names. Risk Assessment = key risks (you don’t control) Risk Assessment = key risks (you don’t control) Project Capability = capability to meet Requirements (technical plan) Project Capability = capability to meet Requirements (technical plan) 2 pages each = 6 pages in total

Submittal Requirements In order to minimize any bias, the Submittals must NOT contain any names that can be used to identify who the proponent is (such as proponent name, personnel names, project names, etc). Template are provided and must be used. Proponents are NOT allowed to re- create, re-format, or modify the templates. The plans should not contain marketing material. Each Submittal must NOT exceed 2 pages. Recommended Evaluation Procedures Blind Independent Comparative

Proposal Package RFP should contain all attachment forms to be filled out and submitted by vendors All attachments must be provided online in MS Word format Do not allow/encourage vendors to re-create forms (do not post as PDF’s) 10

11 Project Capability Value Added = additional expertise beyond requirements Value Added = additional expertise beyond requirements Risk Assessment = key risks (you don’t control) Risk Assessment = key risks (you don’t control) Project Capability = capability to meet Requirements (technical plan) Project Capability = capability to meet Requirements (technical plan)

12 Project Capability Differentiate capability to meet the requirements of this project Identify "vision” or “plan” for the alignment of expertise over the duration of the project – Alignment of Resources, Cash flow, Selection of critical subcontractors Prioritize the major technical risks (controllable risk) that exist within the service, its delivery, and the client expectation and how those risks are minimized through the proponent’s expertise. – Explain why the risk is a risk – How it is minimized with the proponent’s expertise – Should be a risk that is specific to the current project – For high score solution should contain performance information & best value practices Preferred: Use either verifiable performance metrics or best value practices with performance measurements No names, two pages, no marketing, part of final contract

13 Project Capability Template

Plan 1 – We will use our 20 years of experience in working with mechanical systems to minimize the risk of the heating and cooling system design. Plan 2 – We have identified the design of the heat/cooling system as a risk. It has not been used before in the area. Will ensure that the system performance and installation is verified in the pre-award period. – We have bid using best rated mechanical contractor in the area (rated at 9.8 out of 10.0, next best rated 9.1) – Mechanical contractor identified modifications to the design to improve output and sustainability of the system with the following impacts (mechanical system cost minimized by 15% - see VA#1) – Mechanical system will be provided by one manufacturer, and will be commissioned by the manufacturer, contractor, and general contractor, who will take full responsibility of commissioning the system Example of Solutions Risk: Design of Heating/Cooling System Type: Project Capability

Plan 1 – We will work with the user to minimize the impact of noise from demolition. Plan 2 – We have planned to demolition during off hours and weekends. This will have a slight impact on our cost (less than 1%), but the impact to customer satisfaction justifies this. – We will also install rubber sheets on the floors to diminish noise and vibrations. – Both solutions can be performed within your budget. – Both solutions have been used on multiple previous projects w/ high levels of customer satisfaction (9.4/10). Example of Solutions Risk: Noise from Demolition Type: Project Capability

16 Plan 1 – The owner can be assured all risks associated with underground tunnel systems will be eliminated because we offer the most qualified team of project professionals with a high level of experience in handling similar systems. Plan 2 – We will: conduct a detailed pre- and post-construction survey and assessment on existing neighbouring buildings; maintain a photographic survey of key markers; and provide final record to the Owner. – Our structural eng. team proposes using tangent or secant pile shoring and conventional underpinning methods to stabilize and protect existing foundation to reduce and minimize vibration and disturbances during construction excavation activities. – Our architectural team is experienced with similar buildings and will provide renderings during preliminary submissions to illustrate how new construction will fit amongst the current buildings. Example of Solutions Risk: Existing Underground Tunnels Type: Project Capability MARKETING INFORMATION

Project Manager Experience – The proposed Project Manager and Pre-Construction Manager have put in place $87.4M in design-build construction projects in the past five years. – The team’s schedule deviation is (-1.5%), their contractor generated change order rate is 0%, and their overall customer satisfaction rating is 98%. Roofing Subcontractor – We have selected a roofing contractor who surveyed 8 past clients on completed jobs worth $750,000 and received a customer satisfaction rating of 10 out of Example of Solutions Risk: Documented Performance Type: Project Capability

18 Risk Assessment Value Added = additional expertise beyond requirements Value Added = additional expertise beyond requirements Project Capability = capability to meet Requirements (technical plan) Project Capability = capability to meet Requirements (technical plan) Risk Assessment = key risks (you don’t control) Risk Assessment = key risks (you don’t control)

19 Risk Assessment Identify major project risks (and prioritize) Risks that have not yet been minimized before the start of the project (i.e. risks that the Proponent does not control) – Explain why the risk is a risk – May cause cost increases, transition delays, change orders, or cause dissatisfaction to the client – Should be non-technical – Should be a risk specific to the current project Identify solution to avoid / minimize the risk Risks should be unique & applicable to this project Non-technical explanation Must explain how risk is avoided or minimized from occurring For high score solution should contain performance information & best value practices

Risk Assessment Plan Identify and prioritize all major risks (that the Proposer sees that are unique and applicable to this project) that may impact a successful delivery of the project. 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. 20

Risk Assessment Template 21

Plan 1 – Coordination with [water company] is critical. We will coordinate and plan with [water company] as soon as the award is made to make sure that we get water to the site to irrigate the fields. Plan 2 – We will coordinate and schedule the water with [water company]. However, based on past experience there is a high risk they will not meet the schedule (the water company does not meet schedule over 90% of the time). – We will have temporary waterlines setup and ready to connect to the nearby fire hydrant to irrigate until [water company] is ready. – We will also have water trucks on-site if there is problems with connecting the lines. Example of Solutions Risk: Getting water to the site Type: Risk Assessment

Example of Solutions Risk: Loss of Radio Flagship in Major Market Type: Risk Assessment Plan 1 – We will work very hard to maintain excellent affiliate relationships. If we lose a radio station (e.g. it changes its format) we will move quickly to replace the lost station. If we cannot quickly replace a flagship station, we can be very creative and could even consider purchasing all local inventory from a new flagship station. Plan 2 – In the past 10 yrs, on over 50 accounts, 7 radio stations format changes have occurred. The following solution is optimal. – We own and will maintain two radio contracts covering the area, where signals can be switched if required. The flagship station will be the station with the stronger signal and greater coverage. – If a station is lost we will have a equal replacement within 2 months. If within two months a replacement is not contracted we will purchase inventory from another station or discount the cost of an inventory purchase and add it to our payments to the client.

Plan 1 – The owner can be assured that the budget is not a risk due to our 20+ years of expertise in delivering similar buildings and our experienced project team is prepared to ensure the budget it met. Plan 2 – The Owner’s budget is not able to accommodate the building program per the statement of requirements. – We have identified multiple value added options that enable us to meet the budget and still deliver the required number of beds (in order to maximize owner revenue streams) Removal of underground parkade (note: impact to owner revenue) Reduction in level of finishes (specific wall panels vs. dry wall) Design efficiency opportunities: Adjust net to gross ratios in targeted areas of building program (hallways, common spaces). Reduction in building footprint results in significant material savings. 24 Example of Solutions Risk: Owner’s Budget (DB Residence Hall) Type: Risk Assessment

Plan 1: We will work closely with the Owner to minimize all risks associated with program development. Our team can be very innovative in developing alternative design solutions for different building needs Plan 2: The work will commence with a “Core and Shell” approach to the building Recommend a planning approach that works with a space “budget” at this point. The adjacencies and specific room requirements can be developed at the “tenant fit-up” stage of the project. Will obtain an understanding of all user and breakdown of space at least one month prior to the first visioning session. Should the time line require fast decisions, the team may require that the planners responsible for the chosen occupants provide their “best judgment” to the design team and refine that data as the process continues. The Design Architect will serve as the primary line of communication in such a situation. 25 Example of Solutions Risk: Program Development Example of Solutions Risk: Program Development Type: Risk the Consultant DOES NOT control

Risk Assessment Example RISK: Major risk items typically associated with transit implementations revolve around change management and business process impact. New technology implementations create change for the users. Change often causes issues with technology adoption. Requirements and scope creep also creates challenges. Systems may have thought a certain technology or component was incorporated in the RFP and/or needs assessment process that is not included in the actual scope of work or contract. Communication is also an area that can be a challenge. SOLUTION: A clearly defined scope of work and communication of the scope at the beginning of the project minimizes scope creep. If there is a discrepancy, scope or requirements can be discussed early on in the process versus at the end of the process. Communication is the key to successful implementations. Change management and business process re-engineering for organizations can be minimized at the technology and management levels. Management can get early buy-in at the “grass roots” level and include them in the technology planning process. The Team focuses on providing very configurable and flexible tools to minimize process re-engineering tasks. The Team focuses on automating existing business processes and providing additional tools to improve those processes that need to be improved such as data management….

Technical Information vs. Verifiable Performance Information 27 RISK: 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, 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. Vendor B 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.

Things to Avoid Marketing data: – Our company is known worldwide as a leader in… – We will use our 20 years of expertise to… – We will use a state-of-the-art process to… – Non-project specific risk solutions Technical data: – The system we propose has 200% elongation and 600psi tensile strength. – The product will pass the ASTM-568a test. – The system can process up to 24GB per second Transferring risk back to client: – We will work with the owner to resolve issues… – We will work with the user to establish the proper tests/procedures to ensure that data is transferred properly… – We will have team meetings / partnering meetings with the owner…

Avoid General Statements Clear communication between all parties is essential Project planning is vital to keeping the project on schedule and on budget. Meetings are essential to gathering information to define and implement the solution. Tracking tools will aid in keeping the project on schedule. It is important to have buy-in from key stake holders. An experienced project team will increase the chances of success Complex systems may not be embraced by the end users 29

30 Value Added Risk Assessment = key risks (you don’t control) Risk Assessment = key risks (you don’t control) Value Added = additional expertise beyond requirements Value Added = additional expertise beyond requirements Project Capability = capability to meet Requirements (technical plan) Project Capability = capability to meet Requirements (technical plan)

Value Added Plan at below budget 1.Provide ways to keep project at or below budget – Modifications to requirements to meet budget – Specific cost ($) savings – Supported by metrics (high performance) 2.Increase customer satisfaction 3.Increase performance

Why a Value Added Plan? Opportunity to identify any value added options or ideas that may benefit the Owner Respondent should identify: – What the Owner may have excluded or omitted from its scope – How these options or ideas have been successful through verifiable performance information and/or best value practices MUST have a cost impact (and possibly schedule impact) If none, denote as “$0” Value add ideas are NOT included in the base cost proposal

Scope is Above Budget Owner’s Budget ($$) Owner’s Scope (-$ value add)

Intent Doesn’t Match Scope Owner’s Budget ($$) Owner’s Scope Owner’s Intent (+$ value add)

Example of Value Added

Value Added Template 36

37 Value Added Example 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. For an additional $10K and 3 weeks in schedule we can replace and repair all of these items.

“Did you actually mean…?” Example 1: Air Duct System Improvements In lieu of using redundant dual duct air systems (shown in bridging documents), a design solution is proposed to substitute redundant variable air volume (vav) systems with reheat We believe the rationale for using dual duct was to eliminate the potential risk of having a wet heating system leak through the ceiling into the production areas With the proposed creation of an interstitial service space, the risk for leaking of the wet heating system is mitigated, servicing space is increased, control complexity is reduced, and capital cost is mitigated. Cost ($): ($158,000) Savings 38 Value Added Examples

Additional Scope / Service Options: Example 1: Augmented Reality Synchronization of model to real world view from HD Camera on mobile devices (iPad2, Samsung Galaxy) Allows in-situ visualization of recommended design solutions Uses BIM REVIT model, demonstrates pros and cons of programmatic opportunities based on functional programming relationships Cost ($): $35,000 Example 1: Replace Existing Wood Roof Deck with Steel Decking The existing wood decking has been exposed to moisture for a considerable number of years, as evidenced by the leaking roof which was noticeable during the site visit. The existing wood decking will naturally absorb moisture inside the building and may eventually result in mould growth on the surface of the wood. Replacing the wood deck while the new facility is operational will not be practical. Cost = $128,456, no schedule implication 39 Value Added Examples

Value Added Example Option to Reduce Project Cost: Instead of purchasing “Named Licenses”, the Agency may want to consider purchasing “Concurrent Licenses”. In a “Named Licensing” model, the software designates a license per user and only that particular named user can use/access the license. If that named user is in meetings, on vacation, or not using the system, the license is not utilized. In a “Concurrent Licensing” model, the server keeps track of the total number of licenses and loans the licenses to users as they log in. If a user is inactive, the server releases the license and allocates the license to the next user. The advantage is that the Agency is not required to purchase licenses that are not being used, which can result in approximately 25% savings in cost. 40

Option to Optimize Project Schedule: Alternate Interior Partitions Quality control of the installation of epoxy coatings is challenging and the traditional drywall method consumes precious schedule time and creates heavy dust in an area where cleanliness is a priority. The drywall sub-trade also occupies the critical path for the bulk of the schedule. Arcoplast is a composite wall panel that fastens directly to the steel studs, thus eliminating the need for drywall. It has a permanently finished antimicrobial gel coat formulation that inhibits mould, fungus and mildew growth. Arcoplast will be installed in all cGMP areas that are required to be clean areas. Arcoplast is a product that meets or exceeds cGMP specific guidelines pertaining to surface finishes for maximum containment facilities. Key features include: Impact, chemical, corrosion and water resistance. Reduces the schedule impact of the drywall trade by 3 months. Cost = $1,697, Value Added Examples

Example: Value Added Items Option to Increase Service Revenue: We may be able to increase revenues to the University by an additional 5% per year, if we are allowed to install and operate our own vending machines throughout campus. 42

43 We are Looking for Vendors Who Can Think Ahead… …And Act In Our Best Interest

Page Limits Goal is to make the process as efficient as possible (for all parties) Proposal is limited to – 2 Pages = Project Capability Plan – 2 Pages = Risk Assessment Plan – 2 Pages = Value Added Plan Remember: No Names (vendor names, product names, etc) in any of these documents!!!! 44

45 City of Peoria Case Study The City of Peoria began testing PIPS in 2004 Implemented on 11 projects / $66 Million (DB, CMAR, A/E) Collected 70 RAVA Plans Allowed vendors to submit up to 5-pages per project – RAVA Plans contained too much marketing information (60% compared to 30%) – RAVA Plans contained general risks / solutions (weren’t project specific) (75% of risks were very general) City then dropped the page limit to 2-pages

Consultant Feedback Debriefs in Edmonton (February 2013) Proposal Process “What we found was that the time that we spent in the RFP response is productive time” “[Best Value Procurement] makes it about this project and makes your references about this project. You getter better proposals and better services.” "In an RFP response it really takes the smoke and mirrors out of the process" 46

Most Common Mistake: Not involving operations personnel (only using marketing / business development / estimator) 47

Tips for Proponents 1.Identify the available operations individuals that have the greatest expertise. 2.Have them lay out the project plan how they would do it. 3.Identify what risks they see are involved within the plan (also: assumptions & what info is needed) 4.If it was your money, what would you change with the RFP scope to add value. 5.Price it out. 6.Then, write the response to the proposal. 48

How much preparation is needed? 49

Writing Risk & Value Submittals Workshop #1 50 Comments / Questions