Building Successful Partnerships: How the Best Value Approach Prioritizes Performance

In the world of procurement and project management, the traditional method of selecting vendors often revolves around one key factor: cost. However, there’s a more effective approach that’s gaining traction for its ability to foster strong partnerships and drive successful outcomes— the Best Value Approach. It allows clients to form partnerships with vendors based on performance metrics rather the traditional relationships. The idea makes sense but can be difficult to implement in an organization.

Understanding the Best Value Approach

At its core, the Best Value Approach is a methodology that prioritizes value over cost alone. This  approach recognizes that while cost is important, it’s not the sole indicator of a successful partnership or project. Instead, Best Value considers factors such as quality, performance, and risk management to ensure the best overall outcome. For over 30 years, Dr. Dean Kashiwagi, has been testing and refining “The Best Value Approach” that has been utilized over 2,000 times in projects totaling $6.6 Billion with a customer satisfaction of 98%. It is also the most licensed technology are Arizona State University with 67 licenses from all over the world.

Shifting Focus to Performance

One of the key principles of the Best Value Approach (BVA) is its emphasis on performance. Rather than solely evaluating vendors based on their proposed cost, this methodology looks at past performance and the vendor’s ability to consistently deliver high-quality results. The logic seems very simple, you look for the vendor who has the highest performance and you want them on the project. We want the vendor with the most expertise who can do the job the cheapest, fastest, and with the highest quality of service. When decisions are made based on performance it is a lot easier to justify and understand who a decision is being made. The BVA makes it simple for organizations to make decisions because it is almost too obvious why a vendor is being chosen.

Forming Partnerships Built on Performance

By prioritizing performance, the Best Value Approach lays the foundation for building strong partnerships based on transparency and numbers rather than trust alone. When vendors are selected based on their track record of excellence and their commitment to delivering value, it ensures that they have expertise to make the project a success! But a track record alone is not enough, in the BVA the vendor is required to track the project from beginning to end showing the performance metrics to prove they are succeeding. This comes in the form of a weekly risk report that should be tracked weekly by the vendor. The client should always know the status of their project and how it is going. If there are any deviations, it should be shown who caused the deviation.

Transparent Information

Another hallmark of the Best Value Approach is transparent information. Throughout the procurement process, there’s a clear and open dialogue between the buyer and the vendor. This ensures that both parties are aligned on expectations, goals, and timelines, leading to smoother project execution. The amount of communication will be minimized due to the vendor providing performance metrics to validate everything he claims. He uses his expertise to mitigate the risks and show clearly to the client what needs to be done and why. When the vendor is able to create a plan from beginning to end and track its performance. The amount of questions, communication, and dialogue needed goes to nothing.

Empowering Vendors to Excel

Rather than micromanaging vendors, the Best Value Approach empowers them to excel in their areas of expertise. By entrusting vendors who have demonstrated their ability to consistently deliver high performance, it allows them to innovate and find creative solutions to challenges that may arise during the project. If a client wants to fully utilize a vendors expertise, then they need to let the vendor take control of projects. This doesn’t mean that we trust the vendors but it means that we allow them to propose a solution and prove to us that it is the best solution. The vendor needs to make it clear what the plan is and why they are doing it that way.

Focus on Long-Term Success

Unlike traditional procurement methods that prioritize short-term cost savings, the Best Value Approach takes a more holistic view of success. It recognizes that investments made in building strong partnerships based on performance will yield long-term benefits, such as reduced risk, increased efficiency, and enhanced reputation. If performance metrics are tracked for each service and project, then the information becomes value to make choices in a business and each vendor realizes that they must continue to perform to keep their work. This enables an organization to have the leading vendors working for them that continue to improve and develop rather than the vendors who are stagnant trying to keep their work.

Real-World Examples

Numerous real-world examples illustrate the effectiveness of the Best Value Approach in forming partnerships based on performance. From construction projects to IT procurement, organizations across various industries have seen tangible results by adopting this methodology. Organizations realize the value of partnerships and the necessity of having valuable partners to make their organization a success. The Best Value Approach creates a way for organizations to be transparent with vendors and have partnerships based on performance. In the traditional partnership, it is based on who you know and how much the organization likes you. This is all fine until organizations are looking to cut costs and need to improve their performance.

Conclusion

In today’s rapidly evolving business landscape, forming partnerships based on performance is essential for driving success. The Best Value Approach provides a framework for achieving this goal by prioritizing value, fostering partnerships based on performance, and empowering vendors to excel. It is a pretty simple thought that is more difficult to implement than you would think. By embracing this methodology, organizations can unlock new opportunities for innovation which will lead to better outcomes for all parties involved!

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