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Harvard University Best Value Procurement System
 The Harvard University team included (from left) Robin Nachman, Diane Devlin, Dr. Dean Kashiwagi and Herman Faigenbaum. |
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Host Harvard University's administrative side came to the table with a fresh look at ways to proactively harness capital costs to better manage campus and community assets while controlling risk more.
Harvard Senior Manager Herman Faigenbaum teamed up with project partner Dr. Dean Kashiwagi, Professor, Director of PBSRG, Arizona State University, to introduce the judges to PIPS - The Performance Information Procurement System.
“Harvard University is an extremely decentralized organization that offers faculty and administrators a great degree of independence,” according to Faigenbaum. “While this enables Harvard to attract the world's finest scholars, it can create significant problems for managing the University's large capital program.”
Currently, he cited, Harvard undertakes about 180 capital projects, representing $400 million, each year. The program is projected to increase to more than 200 projects, valued at a total of $600+ million annually, for many years to come.
Capital projects are currently managed independently by four groups: three of the larger schools and Harvard Real Estate Services (HRES). This has led to a set of unique management challenges for the University:
Lack of consistency and information sharing among the four non-integrated, stove piped groups
Uneven vendor performance and lack of performance measurements throughout projects/schools
Absence of consistent management standards to mitigate budget, schedule and quality related risks
According to Dr. Kashiwagi, who devised the resource in 1991, “After an extensive search, the Performance Information Procurement System, or PIPS, was identified as an innovative methodology that consistently identifies vendors currently operating in Quadrant 4 and encourages others to improve their performance so that they can get there. We decided to start using it for some of capital projects.”
PIPS strengths are comprehensive, resulting in a sound process based on principles of outsourcing, transfer and minimization of risk, efficiency of both contractor and client's resources, maximization of competition, and delivery of best value while maximizing the vendor's profit.
Results have been consistent:
98% of projects delivered on time with no vendor generated cost change orders
Client's need to control, direct, and inspect were reduced by as much as 80% when compared to traditional requirements
A proven methodology that was tested for more than 13 years, with documented results on 240 capital projects valued at more than $300M, backed by 100 refereed journal and conference papers
PIPS comprehensive nature is based on six key filters that provide near-total due diligence to judge contractors' experience and more importantly knowledge of how to stay on or under budget:
Past Performance Information (PPI)
Risk Assessment Plan (RAP)
Strength of the Vendor Team
The Interview
Pre Award Process
Post Construction Score
“We have found the PIPS process to be extremely beneficial in many areas,” Faigenbaum stressed. “It creates increased competition and provides for a way to easily manage it; it encourages high vendor performance and has incentives for continuous improvement; and it significantly reduces the risk of cost overruns, schedule changes, and not meeting client expectations. Based upon these results, we plan to continue expanding the use of PIPS as our vendor selection methodology.”
– Richard Kadzis
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