Performance Based Studies Research Group

-Abstract-

The motivation behind alternate delivery systems has been the poor performance of the traditional design-bid-build process. Construction professionals have identified public contract law and bureaucratic procurement/contract offices as one of the sources of problems in construction industry. The United States Army Medical Command (MEDCOM) (approximately $100M in construction renovation awards per year) attempted to overcome this obstacle through a partnership with the Performance Based Studies Research Group (PBSRG) at Arizona State University.

The MEDCOM implemented the information environment portion of the Performance Information Procurement System (PIPS) into IDIQ contracts through the specifications. No procurement was conducted in the research and the concept has met with preliminary success, minimizing construction management issues by over 50%.

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-Abstract-

Poor construction performance has resulted in researching procurement process efficiency and overall delivery environment. This paper identifies the maximization of the passing of information as one of the root causes of the poor performance. The hypothesis is validated using several approaches: using deductive logic and the analysis by the Kashiwagi Solution Model (KSM), by associating the relationship between the client’s professionals and contractors with the process of outsourcing, quality control, measurement, and the construction industry structure, and ongoing research tests with the US Army Corps of Engineers and US Medical Command (MEDCOM).

� The hypothesis proposes that as communications between the client’s professionals and the contractors increases, the level of accountability, transfer of risk, and the minimization of risk by the contractor decreases. The hypothesis proposes that the amount of information that is being passed, the client’s documentation, and the management of the contractor by the client’s professionals should be minimized. Furthermore, the hypothesis proposes that this will lead to an increase in the contractor’s ability and interests to modify their behavior to perform, to preplan, and to measure their performance. The paper proposes that conventional "best practices" of increasing communications, meetings, extensive client representative documentation, and client construction management and inspection are inefficient, results in less accountability, and lead to an environment with a lack of performance information (measurement of value, customer satisfaction, on-time, on-budget, overall costs, and continuous improvement).

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-Abstract-

The hypothesis of this paper is that the construction industry will not be able to significantly increase its value and move away from commoditization until it becomes efficient. Best business practices have identified increased management, the lack of performance measurements, and subjective decision making as obstacles to efficiency. The paper proposes that a leadership model is required to effectively increase construction and organizational efficiency.

The paper also proposes that the developed leadership model, an information environment, and the project manager who uses performance information will impact construction performance with greater positive results and sustainability. The authors also propose that the number of leaders who represent construction clients and contractors is insufficient to sustain the developed structure. By using a Deming concept of process structure and stability to create an organizational and project framework that forces efficiency instead of depending on the "information worker" project manger, the benefits of a leadership model can be realized without the presence of the traditional leader figure. This will result in an increase in construction performance.

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-Abstract-

To achieve owner satisfaction, projects must be completed on time, within budget, while meeting or exceeding owner expectations. A delivery system with the ability to minimize risk can result in consistent owner satisfaction. A delivery system in a best value, or performance-based environment has a greater ability to minimize risk than a delivery system in a price based, or low bid environment.

The differences between the performance based and the price-based environment are provided in this paper Along with a statistical comparison between the results of a specific best value procurement system (The Performance Information Procurement System (PIPS)) and the low bid, a price based delivery system in the USA. A survey was conducted to collect data from owners who had implemented PIPS as well as low bid. Results complement the theoretical understanding that risk can be minimized by moving to a performance based environment from a price-based environment.

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-Abstract-

There are two ways to analyze the problem of construction nonperformance (not on time, not meeting the quality expectations of the owner, and not having cost increase change orders). The first is a project-specific approach, which assumes that the problems are being caused by the uniqueness of each project. This approach stresses: finding solutions in better trained personnel and craftspeople, more standards, construction management, and inspection. The other is a process approach, which assumes that the problems are being caused by the process. Performance-based procurement uses the process approach.

It hypothesizes that the current price-based design-bid-build procurement process is inefficient, supports an adversarial environment, is devoid of performance information, is highly inefficient, maximizes management and inspection instead of quality control, and treats highly differential construction products and services as commodities. The Performance Information Procurement System (PIPS) was created to resolve these issues causing construction nonperformance. The results of 380 tests of construction procurement will be assessed in terms of performance. Using case studies from a variety of large clients, the results of performance will be analyzed in terms of on-time, on budget, and meeting customer expectations. Lessons will be drawn on the cost of performance, the minimization of client management and inspection, and the creation of a "win-win" relationship of best value for the owner while concurrently maximizing the contractor profit.

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