29 Jan Is Performance-Based Procurement A Solution to Construction Performance?
By Jacob Kovel, David Greenwood, Charles Egbu, Dean Kashiwagi, Kenneth Sullivan, John Savicky
June 2005
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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