1. Performance Based Studies Research Group
State of Oklahoma Risk Management Training
How To Minimize Your Risk As A Consultant

2. State of Oklahoma Strategic Plan
Compete based on value (proven performance and expertise)
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

3. State Vendor Expectations
Proactive and Accountable
Vendor has control
Focus on risk in the seams
Risk – Plans to minimize risk – impact – customer satisfaction
Performance measurement – uses dominate information
Performance information/risk identification disengages the bureaucracy
Win-Win
Vendor’s success is just as important as State’s success
Goal alignment
“No contract” – “Vendor writes their own”
Contract is a guide
If we have to go to the contract then everyone has already lost
Should never have to go the contract

4. 2009 State of Oklahoma Consultant Selection and Risk Management Process
Filter 1
Registration:
Past Perf. Info.
Filter 2
Scope
RAVA plan
Filter 3
Interviews
Filter 4
Best Value
Prioritization
Filter 5
Pre-planning
Phase:
WR and Scope
Filter 6
Weekly Report &
Post-Rating
High
Criteria:
Interview
RAVA
PPI
Qual.
Criteria:
RAVA
Tech.
PPI
Qual.
Shortlist
Award
Identify BV
Low
Time 4

5. 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.
Before we discuss the Pre Award Phase, it is important for the vendor to understand that this project will be evaluated upon completion.
The Final Rating will be heavily impacted by:
Change orders
Project delays
Poor Quality
Owner surprises
Complaints
This rating will impact the vendors past performance database by 50%, so it is important for the vendor to get a high rating to stay competitive. 5 5

6. 50% Modification 6 6

7. State of Oklahoma Risk Management Process
Vendor takes into account all client requirements and constraints
Vendor creates a baseline (cost, schedule, scope, quality)
Vendor identifies all risks that they do not control that could impact baseline plan and shows a plan to minimize them.
Vendor takes into account all client concerns and shows how they will be minimized.
If any deviation occurs during the project it is documented and tracked on the weekly report.
Vendor will be rated by the client on their deviation from the baseline.

8. The Weekly Report
An excel document that tracks pre-identified risks/concerns and actual risks/concerns on a project.
Pre-Identified Risks/Concerns:
Any concerns of the client at any point in the project
Any risks identified before the project begins
Actual Risks/Concerns
Risks that are unforeseen
Risks that the contractor feels has a good probability of occurring
All information on the weekly report must be in “Dominant” fashion.
“Dominant” means:
Simple, clear, concise, accurate…..
Easy to understand without a lot of information.

9. Weekly Report Schedule
Inserted in the “Schedule&Budget” tab of the weekly
The schedule should go from task order award till construction close-out (even if contractor was only awarded till the design/workplan phase)
The schedule items should include the following types of activities:
Major milestones
High risk activities
The schedule should be updated every week.
It should have incorporated impact of risks
It should accurately reflect the current status of the project

10. Reporting Pre-Identified Risks
Before a project begins the vendor should have done the following:
Talked with all client parties and documented their concerns
Identified any potential risks that the vendor does not control
Created a plan to minimize all concerns and risks
Placed all concerns/risks and minimization plans in the weekly report in the RMP tab
Throughout the course of a project if anyone has concerns or identifies more potential risks the vendor should add them to the RMP tab with plans to minimize them.
If a pre-identified risk becomes a potential problem on the project it is then documented on the Risks tab as well.

11. Reporting Actual Risks
Actual risks should be identified on the “RISKS” tab of the weekly report
When an actual risk is identified the following should documented:
How it became a risk
If it was not pre-identified, an explanation of why it was not
A dated history of actions performed to minimize the risk
Impact to cost and time
Owner rating of risk
Until a risk is resolved the following must be updated:
Estimated impact to time and cost
Actions performed to minimize the risk
Owner rating of the risk
Every resolved risk with an impact, must clearly be linked to a modification on the “Schedule&Budget” tab.

12. Industry Structure Best Value is best predictable performance
High
III. Negotiated-Bid
II. Value Based
Owner selects vendor
Negotiates with vendor
Vendor performs
Best Value (Performance and price measurements)
Quality control
Best Value is best predictable performance
Performance
IV. Unstable Market
I. Price Based
Specifications, standards and qualification based
Management & Inspection
Award is based on subjective minimum which has to be enforced
Low
Competition
High

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

14. Impact of Minimum Standards Blind vs Visionary
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Performance
High
Low
Risk
High
Low
Risk
Performance
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Low
High
Decision making: what is the minimum standard, and do all contractors meet the minimum standards

15. Traditional PM vs. New PM Model
Risks
Control
Don’t Control
Me & Them Us
Risks
Control
Don’t Control

16. Accurate perception leads to less decision making and expectations
Initial conditions
Final conditions
Laws
Laws
Time

17. Best Value Selection Contractor 1 Contractor 2 Contractor 3
Performance
High
Low
Risk
Contractor 1
Contractor 2
Contractor 3
Contractor 4
Performance
High
Low
Risk

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

19. Impact on Professionalism
High
I. Price Based
II. Value Based
IV. Unstable Market
III. Negotiated-Bid
Specifications, standards and qualification based
Management & Inspection
Best Value (Performance and price measurements)
Quality control
Competition
Performance
Low
Owner selects vendor
Negotiates with vendor
Vendor performs
Minimized decision making
Maximized decision making
Best Value Environment
More accountability
More expertise
More professionalism
Price Based Environment
Less accountability
Less expertise
Less professionalism
Less perceived “value added”
Movements to make designer work for contractors due to lack of value added

20. Dominant information
What does the most qualified, experienced people in a firm do?
Get work, or do work?
Why is this?
It is more important in a destabilized industry to get work then to do work….
Downside….what happens to our professionalism????

21. ASTM Standard Setting

22. ASTM Standard Setting

23. What Will Manufacturer ‘C’ Do?
Standards motivate manufacturers to lower quality

24. There is something wrong with the delivery of services…..
No one knows how bad the problem really is…..
Entire system is broken….
Requires more management….
Performance/value is decreasing….
Relationships are more important than results….

25. As management, control, and direction become more important…..
Skill 1
Skill 2
Skill 3
Skill 4
….it becomes less important to be skilled, accountable, and able to minimize risk

26. “Manager’s Code” The movement of risk.....when making decisions
Is It Working? NO
YES
Don’t Mess With It!
Did You Mess
With It?
YES
YOU IDIOT! NO
Anyone Else
Knows?
Will it Blow Up
In Your Hands?
YES
You’re SCREWED!
YES
Can You Blame
Someone Else? NO NO
Look The Other Way NO
Hide It
Yes
NO PROBLEM!

27. Impact on Designer’s Value and Professionalism
High
I. Price Based
II. Value Based
IV. Unstable Market
III. Negotiated-Bid
Specifications, standards and qualification based
Management & Inspection
Best Value (Performance and price measurements)
Quality control
Competition
Performance
Low
Owner selects vendor
Negotiates with vendor
Vendor performs
Minimized decision making
Maximized decision making
Best Value Environment
More accountability
More expertise
More professionalism
Dominantly clear that the designer can add the most value
Price Based Environment
Less accountability
Less expertise
Less professionalism
Less perceived “value added”
Movements to make designer work for contractors due to lack of value added

28. What is the difference? Do designers spend more time in reacting to bureaucracy or doing a good technical job? 2 1 2 3 4 1 3 4

29. Traditional PM vs. New PM Model
Risks
Control
Don’t Control
Me & Them Us
Risks
Control
Don’t Control

30. Evolution of Delivery Processes
Design-Bid-Build
(DBB)
Design
Bid
Build
Design-Build
(DB)
Bid
Design-Build
Construction Manager At Risk
(CMAR)
Design
Bid
Build

31. Construction Manager At Risk
Where is value added?????
Design-Bid-Build
(DBB)
Design
Bid
Build
Design-Build
(DB)
Bid
Design-Build
Construction Manager At Risk
(CMAR)
Design
Bid
Build

32. Who should be the center of the Universe in construction? In design?
Outsourcing
High Performing
Vendor
Client
Client
Professional
Low Performing
Vendor
Direction, control, review

33. CMAR Best Practices 0% 30% 60% 100% Designer 1 3 5 Contractor 2 4
Design Intent
Baseline $
Designer
Final
Design 1 3 5
Contractor 2 4
Scope
Cost Est.
Re-Scope
w/Modifications
Bonding capacity

34. Self Regulating Loop (Six Sigma DMAIC Generated)
Actions
Minimize data flow
Minimize analysis
Minimize control
Requirements
(DBB, DB, CMAR, DBO)
Scope
Risk Assessment/Value Added Plan M R
Past Performance
Information M R
Interview Key Personnel
Identify value (PPI, RA, Interview) M M V R
Preplanning, Quality Control Plan M
50%
Efficient Service
= Minimize Risk
= Self Measurement
= Identify Value M R V
50% M M
Measure again M R

35. 2009 State of Oklahoma Consultant Selection Process
Filter 1
Registration:
Past Perf. Info.
Filter 2
Scope
RAVA plan
Filter 3
Interviews
Filter 4
Best Value
Prioritization
Filter 5
Pre-planning
Phase:
WR and Scope
Filter 6
Weekly Report &
Post-Rating
High
Criteria:
Interview
RAVA
PPI
Qual.
Criteria:
RAVA
Tech.
PPI
Qual.
Shortlist
Award
Identify BV
Low
Time 35

36. Past Performance Surveys/ Past Performance Sheet
Design Firm
Compiles Information
Design Firm compiles and sends surveys and past performance sheet back to State
/Fax Survey
Call To Verify
The final step is for your past clients to fax the survey back to the current client
Mail survey back to Design Firm
State of Oklahoma
Past
Client 36

37. Past Performance Information Form 254
Design firms
Critical sub elements
Lead project managers

38. Traditional Management
Initial conditions
Final conditions D
M&C
Laws
Laws
Time D
Risk is deviation from
expected measurements

39. When do we determine the expectation so we can measure performance?
Initial conditions
Final conditions M M
Laws
Laws
Time M M
Risk is deviation from
expected measurements

40. Scope Will be rated in relative fashion
Conservative plan on how the work will be done
If other options are available, they will be considered along with the risk
30,000 foot level description
Final design description
Milestone schedule

41. Risk Assessment and Value Added Plan (RAVA)
The Risk Assessment and Value Added (RAVA) Plan consists of two pieces
The Risk Assessment
The Value Added
The Risk Assessment section is used to identify high performing vendors that can:
Identify and minimize risk before the service has started
Deliver plan to minimize risk during the life of the service.
The RA Plan should clearly address the following items:
List and prioritize major risk items (areas that may cause the service not to meet the expectations of the Government).
Each vendor should focus on risks it does not control and
Explain how the vendor will minimize the risk. 41

42. Risk Assessment Plan Steps
What events cause risk
How will the design firm minimize the risk from happening
If the risk happens, what will the designer do
Transfers control and the opportunity to minimize risk to the design firm

43. RAVA Plan Rated Blind The RAVA Plan must NOT exceed 2 pages.
The RAVA Plan must not have ANY NAMES (such as vendor or manufacturer names, personnel names, project names, product names, or company letterhead)
Do NOT include brochures, marketing information, or product names!
The RAVA Plans will be evaluated “blind” in order to minimize any bias. 43

44. Value Added Differentiation
Answer the questions: “What value do I bring that differentiates me from my competitors?”
The Value Added Differentiation section of the RAVA Plan is to allow a vendor to:
Show how it will add value (that its competitors cannot)
The impact of that value in simple, provable terms
How the value added will be measured – must have an impact on dollars, time, and/or satisfaction of the Government
Marketing material is worthless and will negatively impact scores
Value Added is where vendors provide “great ideas” 44

45. How The Submittal Process Works
Average
Score
Proposal Form
(1 page)
Proposal Form &
Other Documentation
Submittal
Contracting
Officer
Proposal Form
(1 page)
RAVA and Tech. Prop.
(2 Pages Each)
Evaluation Members

46. Interviews The following individual will be interviewed
Project Manager/Lead Designer
All interviews will be individual
The same individuals used for the past performance survey will be the same individuals interviewed and will be the same individuals that will be assigned to the project
No bait and switch

47. Sample Interview Questions
Why were you selected for this project?
How many similar projects have you worked on?
What is different about this projects from other clients that you have worked for?
What are you doing differently on this project than you have done before?
Identify, prioritize, and how you will minimize the risks of this project.
What risks don’t you control? How will you minimize those risks?
What are your personal goals on this project?
How are you going to measure your performance?
What value do you bring to the project in terms of differences based on dollars, quality, or time?
How will you measure performance for this project?

48. Best Value Selection Past Performance
Risk Assessment (don’t control) / Value Added
Scope/Technical Proposal (2 Page proposal/milestone schedule)
Qualifications
Interview

49. Rating Scheme (1-10, 1(not qualified, 5(can’t differentiate/don’t know), 10 (dominantly better)
Filter 1
Registration:
Past Perf. Info.
Filter 2
Selection:
RAVA plan
Filter 3
Interviews
Filter 4
Best Value
Prioritization
Filter 5
Pre-planning
Phase:
WR and Scope
Filter 6
Weekly Report &
Post-Rating
High
Criteria:
Interview
RAVA
PPI
Qual.
Criteria:
RAVA
Tech.
PPI
Qual.
Shortlist
Award
Identify BV
Low
Time 49

50. Risk Management Plan Sheet (RMP)
Weekly Report
Unforeseen Risks
Risk Management Plan Sheet (RMP)
Pre-Identified Risk
Risk Minimization
Risk Sheet (Actual)
Risk that actually occurs
Unforeseen Risks
QUALITY ASSURANCE
Checklist of Risks
Sign and Date
PERFORMANCE SUMMARY
Vendor Performance
Client Performance
Individual Performance
Project Performance

51. What are the measurements of a Designer
Scope and cost
Plan with minimal risk
Plan to minimize risk
Knowing this with minimal effort
Has the designer done this before
Do they know what they don’t know on a future project
Can they clearly articulate their vision

52. Traditional PM Model: Influence and Control (micromanagement)
Reactive
Focus on changing people
Followers are the constraint
Requires maximum amount of resources
Relieves management from accountability of nonperformance
Inefficient and nonperforming

53. New PM model: Leadership Model (measurements)
Proactive
Alignment (measurement)
Requires Understanding (acceptance of measurements)
Leader/manager and system is the constraint (blindness)
Focus is on setting up a quality controlled system based on performance measurements, best value requirements, and dominant information
Efficient (measurement)

54. State of Oklahoma Best Value Process for Designers and Contractors
Filter 1
Past
Performance
Information
Filter 2
Proposal & Risk / Value Plan
Filter 4
Prioritize
(Identify
Best Value)
Filter 5
Pre-Award
Phase
(Pre-Plan)
Filter 6
Weekly Report &
Post-Rating
Time
Quality of Vendors
Filter 3
Interview
Award
High
Low

55. Differences in new system
Provide past performance information (PPI) from references
PPI on organization and critical components
Submittals (scope and RAVA plan) will be two pages each
One additional page for milestone schedule
Interview will be with the project manager
How do you know you can do it
How are you doing it
How are you taking control of the project and minimizing risk and decision making of client
How did you pick your engineering subvendors

56. Requirements on Competing Firms
More or less time invested on a project?
More or less detail?
Risk they control or do not control?
Dominant differential or technical qualifications?
Risk minimization done when?
More risky approach or conservative control?

57. Designer should separate the requirement from the risk
Propose the vision that they can do with minimial risk
Propose to immediately analyze any “potentially risky options” in the beginning of the design contract
Only pursue “risky options” if there is dominant information that justifies the “perceived risk”
Cost should be based on “vision” and “requirements”
Makes all other parties accountable and gives control of the design back to the design professional

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