The Development of the Best Value Approach in the State of Minnesota

The Development of the Best Value Approach in the State of Minnesota

By Dean Kashiwagi, Jacob Kashiwagi, Kenneth Sullivan, Isaac Kashiwagi

December 2015

Owners in the State of Minnesota have a ten year history of implementing the Best Value (BV) approach utilizing the Performance Information Procurement System (PIPS) with the Performance Based Studies Research Group (PBSRG) at Arizona State University (ASU). The University of Minnesota started testing and implementing in 2005. Other users quickly followed. By 2015, over 400 projects valued at approximately $500M had been delivered using the Best Value process. The results of the BV test projects validated the industry structure analysis concepts and results from another longitudinal study performed by the U.S. Army Medical Command (MEDCOM). The paper also discusses the modifications in the BV approach during the ten year development. The research conclusions include the following: identified the owner and owner’s representatives as the major source of project risk (time and cost deviation); the identification of professional designers as a source of risk; contractors selected by the BV approach was the smallest source of project risk; and a paradigm shift is required to optimize the delivery of construction services. This paper concludes with a case study on a large construction renovation project with the Best Value minimizing project cost by the contractor thinking in the best interest of the client. Key Words Best Value, Minnesota, delivery of services, source of risk, minimizing cost.

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