Performance Information Procurement System (PIPS) is a state of the art procurement tool that is used in the Best Value Approach. Due to ever increasing requirements and decreased funding, organizations are finding it difficult to deliver high performing business services. Twenty years of testing has identified that the inefficiency of the owner’s traditional delivery system creates non-transparency, which nullifies the majority of the value that new technology brings, and makes it impossible to use the experience of the vendor community.
Kashiwagi Solution Model has developed PIPS to minimize complexity and increase transparency, enable owners to utilize expertise and improve project performance. It has been tested and proven to be the most successful and documented procurement process in the world (Kashiwagi 2016). It has become the primary tool for procurement experts from all over the world.
The Best Value PIPS has three phases: the Selection Phase; the Clarification Phase; and the Execution Phase.
The BV PIPS is able to simplify the delivery system by the following:
- Requiring vendors to differentiate their level of expertise based on performance metrics.
- Requiring vendors to create a plan before they receive a contract.
- Requiring vendors to measure their performance throughout the entire contract.
- Require all communication to be non-technical and simple.
The BV PIPS Selection Phase has four filters: (1) Project Capability, (2) Interview, (3) Prioritization of Vendors, and (4) Dominance Check.
The BV PIPS Selection Phase uses five selection criteria in which a selection committee rates four. These criteria are how the vendors will differentiate their levels of expertise. All five criteria are given a weighting to determine the “Best Value Vendor.” They are:
- Project Capability (PC)
- Risk Assessment Plan (RA)
- Value Added (VA)
Before a vendor is allowed to proceed to Phase 2 (Clarification), a dominance check will be performed which consists of the following:
- Ensure ratings are understandable and justifiable.
- Verify that the information the vendor(s) submitted is accurate.
Project Capability Submittals
Project capability submittals (PC, RA, and VA) address a vendor’s competence to perform the project, capacity to identify/mitigate/minimize risk occurrence, and ability to increase value for costs outside the normal budget. All three have the following criteria:
- Maximum of two pages per document (Maximum of six pages for all 3 submittals).
- Should only contain claims and supporting dominant information [performance metrics] to validate the claims.
- Must not contain any marketing material or information used to identify the vendor.
The vendors are required to send key personnel who will be actively working on the project to the interview. The interview is based upon non-technical/non-scope specific questions. The goal is to identify if the interviewee is an expert/visionary not to verify or scrutinize their scope. An interview may last from 15 – 25 minutes depending on the project.
Only the highest prioritized vendor(s) moves into the Clarification Phase. Before a contract is awarded the owner must clearly be shown the vendor’s proposed scope and deliverables. Items the vendor provides to show how they will deliver high performance is as follows:
- One page summary of scope and deliverables
- Detailed schedule
- Milestone schedule with a financial breakout
- Deliverables and performance in terms of metrics
- Identified risk within schedule (Activities outside control of vendor or which vendor does not have enough information)
- Risk mitigation plan (Plan to prevent risk from occurring and plan of action if risk occurs; plans of prevention and reaction must be defined in terms of metrics)
After the Best Value vendor has their offer approved by the owner, contract is awarded.
After the Best Value vendor receives a contract they must generate a Weekly Risk Report (WRR) throughout the Execution Phase. WRRs are used to mitigate risk and document performance until project completion.
The WRR should include:
- Milestone schedule
- Performance Metrics
- Risk Management Plan
- Documentation of risks that occurred and the impact to the original time, cost, and quality, of the contract.