1. 1 2012 Annual Alpha Meeting Dr. Dean Kashiwagi, PhD, MBA Performance Based Studies Research Group Del E. Webb School of Construction Program School of Sustainable Engineering & the Built Environment Ira A. Fulton Schools of Engineering Arizona State University

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15. Worldwide as a leader in Best-Value Systems –Conducting research since 1994 –1000+ Projects –$4.4 Billion Services & Construction –5% Increase in Vendor profit –98% On-time, On-Budget, Customer satisfaction –PMI, NIGP, IFMA, IPMA –Tests in Netherlands, Botswana/Africa –ASU – investments of over $100M due to BV –WSCA Contract Gives Access to all states PBSRG’s Research Results (Performance Based Studies Research Group) © 2011, Arizona State University, PBSRG

16. International Efforts 16 Fulbright Scholarship- University of Botswana PIPS tests RMIT Teaching IMT PBSRG platform Netherlands Most successful implementation of BVP outside of United States Visionaries: Scenter, Rikswaterstaat, NEVI Largest test: $1B Brunsfield Complete Supply Chain implementation of best value PIPS University of Alberta United States- 65 clients WSCA, NASPO CIB Network PBSRG Network PMForum Network Finland BVP is being proposed as a part of risk/project management

17. 17 Dutch Efforts Approx. 50 general presentations Approx 2000 attendees 2nd and 3rd reprint of Dutch book 4 papers published NEVI education and certification

18. NEVI Third largest procurement organization in the world Represents both public and private procurement groups Educate and certify PIPS practitioners

20. Rochester School District University of Minnesota Contract City of Rochester Rochester School District Rochester School District Superintendent Rochester School Board Rochester School Teachers/Students

21. Eliminating the Confusion Planning / Programming DesignerContracting Vendors / Manufacturers UsersInspectors Simplicity/Dominant Information Technical Details 30K Foot Level

22. W W W. P B S R G. C O M Industry Structure (Reactive vs Proactive) High I. Price Based II. Value Based IV. Unstable Market III. Negotiated-Bid Specifications, standards and qualification based Management, direction, and control Decision making Technical expertise on client’s side Best Value (Performance and price measurements) Quality control and quality assurance Perceived Competition Performance Low High Owner selects vendor Negotiates with vendor Vendor performs © 2011, Arizona State University, PBSRG

23. W W W. P B S R G. C O M High Low Performance Owners “The lowest possible quality that I want” High Low Performance Vendors “The highest possible value that you will get” Minimum Maximum What is causing all the confusion?

24. W W W. P B S R G. C O M Performance High Low Risk High Low Best Value vs. Low Bid Contractor 1 Contractor 2 Contractor 3 Contractor 4 Contractor 1 Contractor 2 Contractor 3 Contractor 4 Performance High Low Risk High Low

25. W W W. P B S R G. C O M Industry performance and capability Highly Trained Medium Trained Vendor X Customers Outsourcing Owner Partnering Owner Price Based Minimal Experience

26. W W W. P B S R G. C O M Objectives Get more business Minimize risks for Neogard, client and contractor Support Alpha contractors Provide dominant documented performance 26

27. W W W. P B S R G. C O M Key items Being proactive and visionary Minimizing transactions and risks during the project Customer satisfaction policy vs. Alpha program requirements Pre-planning  Pre-award meeting  Risk Management Plan  Weekly Risk Report Create “win-win” DISD efforts Neogard Risk Management Program 27

28. W W W. P B S R G. C O M Current Alpha Contractors Alpha Contracting Services Brazos CAW Creative Times Cook Coatings Dallas Urethane IRC Longhorn Urethane Phoenix Coatings Phoenix 1 ProCo Tillotson Washington Roofing Wattle & Daub

29. W W W. P B S R G. C O M Best Value Alpha Project Alpha Contractor Pre-construction Risk Meeting Alpha Contractor Notified of PA Roof Inspection Warranty signed Weekly Risk Report (On-going) Roof Inspection (Once every two years) Roof Inspection (Once every two years) Follow up Call (Yearly) Follow up Call (Yearly) Awarded Project NTPBidClose Out Repeat Process Complete

30. DISD Bond PM /Planning / Programming Designer Contracting General Contractors Alpha Contractor Users Inspectors

31. Using Common Sense 31 Bidding AwardStart of Project End of Project Inspection Whatr is in What is out Risks Risk Mitigation Track deviations Value determined by BUR/MB

32. Past Alpha Projects WRR creates accountability and tracks cost changes and delays 32 Criteria Kansas Marine Ft Rucker Original Project Cost1,184,515885,400 Total Close-out Cost1,209,000885,400 Total % Over Budget2%0% % over budget due to Owner0% % over budget due to Contractor0% % over budget due to Unforeseen2%0% Total % Delayed391%119% % delayed due to Owner171%119% % delayed due to Contractor0% % delayed due to Unforeseen220%0%

33. W W W. P B S R G. C O M Pre-construction Risk Meeting Not the same as pre-construction meeting Meet on project-site Following should attend the meeting  Alpha Contractor  Owner representative  Neogard representative  Any other critical entity involved with the project Identify all the risks and a plan to mitigate them for all parties, create a Risk Management Plan (RMP) Create milestone schedule and track percentages (from detailed schedule) Initiate Weekly Risk Report

34. W W W. P B S R G. C O M Pre-construction Risk Meeting Clearly identify “what is in” and “what is out” Price what is specified Any additional items that need to be added / deleted and was not included in the specifications, immediately issue a change order or ask for additional funds Get approval from the client at the meeting 34

35. W W W. P B S R G. C O M Risk Management Plan Identify major risks that the contractor does not control Plan to manage and minimize the risk that they do not control Living document in Weekly Risk Report

36. W W W. P B S R G. C O M Why Risk Management Plan? Makes everything transparent Brings accountability Protects Alpha contractor Eliminates false expectations by owner No surprises during the project Creates “win-win” situation 36

37. W W W. P B S R G. C O M Best Value Alpha Project Alpha Contractor Pre-construction Risk Meeting Alpha Contractor Notified of PA Roof Inspection Warranty signed Weekly Risk Report (On-going) Roof Inspection (Once every two years) Roof Inspection (Once every two years) Follow up Call (Yearly) Follow up Call (Yearly) Awarded Project NTPBidClose Out Repeat Process Complete

38. W W W. P B S R G. C O M Deliverables Detailed Technical Schedule

39. W W W. P B S R G. C O M Deliverables Detailed Technical Schedule Interface with others who vendor DNC

40. W W W. P B S R G. C O M Deliverables Detailed Technical Schedule Interface with others who vendor DNC RMP

41. W W W. P B S R G. C O M Detailed Schedule, Interfaces with DNC parties, RMP, PM Detailed Technical Schedule Interface with others who vendor DNC RMP Performance Measurements

42. W W W. P B S R G. C O M Weekly Risk Report 42

43. W W W. P B S R G. C O M Weekly Risk Report 43

44. W W W. P B S R G. C O M Weekly Risk Report Risks are all issues that could affect budget, schedule or owner satisfaction 44

45. W W W. P B S R G. C O M Weekly Risk Report Track Change Orders Risk Management Plan 45

46. W W W. P B S R G. C O M Weekly Risk Report All numbers calculated automatically, no need to update

47. W W W. P B S R G. C O M Weekly Risk Report Project Contact Information 47

48. W W W. P B S R G. C O M Customer Satisfaction Policy 48 Alpha Contractor Follow-up call to client* Yes Problem? (Leak, open blisters) Problem? (Leak, open blisters) Repair roof within 15 days of notice Contact the Applicator Roof Installation No Next Job *Client can change the satisfaction rating anytime putting the Alpha Contractor under the risk of elimination from the program

49. W W W. P B S R G. C O M Customer Satisfaction vs. Alpha Program Customer Satisfaction Alpha Program  Roof inspections once every 2 years  Annually submit to Arizona State University (PBSRG) all SPF roofs installed over 5,000 SF  Attend educational presentation given by Arizona State University (PBSRG) (1/year)  98% of roofs do not currently leak  98% of customers satisfied  Maintain “Good Financial Standing” with Neogard 49 Roof Install Client Follow-up Problem? Yes No Repeat Process Dissatisfied Client Fix roof within 15 days Eliminate from program until roof fixed / client satisfied 98% of customers satisfied

50. W W W. P B S R G. C O M Alpha Inspections - 2012 Cook Coatings – March 2012 Phoenix Coatings – March 2012 ProCo – May 2012 Tillotson – June 2012 Washington – July 2012 Longhorn – July 2012 Brazos Industries – July 2012 50

51. W W W. P B S R G. C O M Alpha Annual List Please submit the annual roof list, if not already done, to Dhaval Gajjar at dgajjar@exchange.asu.edu meeting the following criteriadgajjar@exchange.asu.edu  All newly installed SPF roofs over 5,000 SF  Installed in 2011 Template for roof list will be sent 51

52. DISD Efforts 52

53. W W W. P B S R G. C O M DISD Risk Minimization Inspect DISD roofs every year DISD Weekly Risk Report sent every week Fix roofs that have over 1% blisters, leaking or GT 1 SF of blisters within 15 days Mike Smith can notify PBSRG anytime for dissatisfaction of not fixing the roof An Alpha contractor can be removed from the Alpha Program 53

54. W W W. P B S R G. C O M DISD WRR – Risky Projects JobID Job Name Contractor Street Address Job Area Original Install Date Warranty Length Insp. Date Ponding Blisters Repair Comments 1Hawthorne ESAlpha Contracting7800 Umphress45,2007/30/2005108/8/201150019235Open cracks in blisters 2Spruce HSAlpha Contracting9733 Old Seagoville Rd.85,0008/26/2005108/9/20110206610 Blisters repaired. Some more will be repaired by Travis 3Houston ESAlpha Contracting2827 Throckmorton Street23,0007/22/2005108/8/2011150500 Blisters on shady side of the roof due to no sun 4Peabody ESAlpha Contracting3101 Raydell Place32,6008/1/2005108/9/201123600open blisters in 2-4 blisters 5Hillcrest HSAlpha Contracting9924 Hillcrest Rd108,0006/10/2005108/10/20112001200Open Blisters - 4 6Hall ESAlpha Contracting2120 Kents Dr.68,0007/26/2005108/9/20110690Open cracks in blisters 7Seagoville HSAlpha Contracting15920 Seagoville Rd.57,3008/3/2005108/10/201110340Some open blisters Alpha Contracting Total DISD risky roofs7 Total DISD roofs repaired1 Roofs still need to be repaired 7 % of DISD risky roofs repaired 12.5% # of days since first notification 98 # of times contacted7 54 Sent to DISD h every week

55. W W W. P B S R G. C O M 2011 DISD Projects 55 NoJob NameContractorJob Area 1 Thomas Jefferson HSAlpha Contracting145,850 2 Sunset High SchoolAlpha Contracting44,580 3 Stonewall Jackson Elementary SchoolAlpha Contracting22,242 4 Alamo PoolAlpha Contracting13,030 5 Pleasant Grove PoolAlpha Contracting13,030 6 Lakewood Elementary - Modular BuildingAlpha Contracting5,688 7 Harry StoneBrazos Urethane95,000 8 D.A. Hulcy MSBrazos Urethane62,050 9 Whitney M. Young Jr. ElementaryBrazos Urethane59,000 10 JW RayBrazos Urethane54,500 11 David W CarterBrazos Urethane38,000 12 James B. Bonham - BP 45ªBrazos Urethane17,184 13 B.F. Darrell Male AcademyPhoenix 155,600 14 Nancy MoseleyPhoenix 122,300 15 Seagoville Alt.Edu.buildingPhoenix 12,000 NoContractor Total Jobs Total Job Area 1 Alpha Contractor6244,420 2 Brazos Urethane6325,734 3 Phoenix1379,900

56. W W W. P B S R G. C O M DISD WRR – Risky Project Status 56 Job IDJob NameJob Area Original Install Date Estimated Repair date 1Hawthorne ES45,2007/30/2005End of February, 2012 2Spruce HS85,0008/26/2005End of February, 2012 3Houston ES23,0007/22/2005Repair in-process, open blisters fixed 4Peabody ES32,6008/1/2005Have a renovation contract, will repair at same time 5Hillcrest HS108,0006/10/2005Repair in-process, open blisters fixed 6Hall ES68,0007/26/2005Have a renovation contract, will repair at same time 7Seagoville HS57,3008/3/2005End of February, 2012

57. W W W. P B S R G. C O M DISD WRR - Contractor Contractor Total # of roofs Average job area (SF) Total job area (SF) Average age (Yr) Total blisters (SF) Total percent of roof area blistered Total repairs (SF) Total percent of roof area repaired Alpha Contracting4841,1651,975,91852,1240.11%2,4260.12% Dallas Urethane296,000192,000600.00%0 Longhorn Enterprises336,167108,5006510.05%1800.17% Phoenix 12535,369884,215111,1260.12%6,3490.72% 57

58. W W W. P B S R G. C O M DISD WRR – Overall P-line 58 NoCriteriaUnit 2011 1Oldest job surveyedYears 25 2Average age of jobs surveyedYears 7 3 Age sum of all projects inspected (doesn't leak, total years combined) Years 558 4Average total repairs on each roofSF 110 5% of total roof area repaired% 0.29% 6Average blister area on roofsSF 52 7% of total roof area currently blistered% 0.14% 8Total existing blistersSF 4,117 9Average job area (of jobs surveyed and inspected)SF 40,630 10Total job area (of job surveyed and inspected)SF 3,209,733 11Total number of jobs inspected# 79

59. W W W. P B S R G. C O M Alpha Contractors – Blisters vs Repairs 59 NoAlpha Contractors Total SF Inspected Total SF Blisters % Blisters Total SF Repairs % Repairs 1Alpha Contracting 1,662,7851,585 0.11% 2,155 0.13% 2Brazos Industries 1,194,706240 0.04% 0 0.00% 3CAW 2,321,117575 0.07% 0 0.00% 4Cook Coatings 3,084,007290 0.01% 930 0.03% 5Dallas Urethane 2,010,21273 0.01% 0 0.00% 6IRC 4,395,540368 0.04% 0 0.00% 7Longhorn 449,758196 0.04% 2,103 0.47% 8Phoenix Coatings 1,272,08047 0.01% 0 0.00% 9Phoenix1 992,210 1,1260.12%6,3490.72% 10Pro Co. 281,931233 0.07% 0 0.00% 11Progressive Roofing 1,151,514179 0.01% 0 0.00% 12Tillotson 413,57495 0.03% 0 0.00% 13Washington 836,031484 0.08% 0 0.00% 14Wattle & Daub 993,95330 0.00% 0

60. Neogard Warranty Risk Management Program 60

61. W W W. P B S R G. C O M Neogard Warranty Program QC & Measurement of: System Performance Contractor Performance Follow up for issues Maintain Customer Satisfaction Neogard Owner PBSRG Warranty Performance Information Problems

62. W W W. P B S R G. C O M Neogard efforts Client satisfaction ratings for all projects (roofing, waterproofing, wall coatings, flooring)  Identify risky jobs (leaks, dissatisfied customer)  Annual checks on all projects under warranty Performance line all applicators  Differentiates low-performing and high-performing vendors  Identify risky applicators Overall performance line  Only manufacturer with documented performance  Use for marketing Neogard products 62

63. W W W. P B S R G. C O M Overall Neogard P-line 63

64. W W W. P B S R G. C O M Neogard Measurements 64 Neogard Segment P-lines Risky Applicators Risky Projects

65. W W W. P B S R G. C O M Example Applicator P-line 65

66. W W W. P B S R G. C O M 66 Comments / Questions W W W. P B S R G. C O M