Survival of the Facility Manager

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Today’s PresentationModerator: Joshua Amos, Components Liaison

Presentation Title: Survival of the Facility Manager

Presenter: Dean Kashiwagi, P.E., PhDDirector, ProfessorIFMA FellowCIB W117 CoordinatorFulbright Scholar

Presentation Logistics• Polls will be used throughout the webinar

• Q&A at the end of the presentation

• Quick survey at the conclusion of the Webinar

• PowerPoint & Recorded Webinar will be available online via FMCC’s Website (fmcc.ifma.org)

• Your Participation is Greatly Appreciated!

Learning Objectives1. 30,000 ft. approach (leadership

perspective)

2. Strategies to minimize costs & risks

3. Use of performance measurements

4. How to bring value to your organization

Presenter Bio• It is our pleasure to introduce our speaker today,

Dr. Dean Kashiwagi. He’s inspiring, engaging, and tireless best value expert, educator and researcher for more than two decades. He’s also a respected adviser and mentor within the association, the public sector, and academic circles. He is credited with establishing FM programs at six universities around the world. A powerful force in the Greater Phoenix Chapter of IFMA, as well as Arizona State University, he has championed programs to advance the FM profession, and prepare the next generation of FM’s. Please welcome IFMA Fellow Dean Kashiwagi.

FM’s World• Cut cost

– Utilize expertise to minimize cost instead of cutting cost by management, direction and control

• Be knowledgeable to minimize risk– There is too much to learn, environment is

changing too quickly– Inaccurate information [marketing is overcoming

fact]– Not sustainable today or in the future

9

Traditional Model is not sustainable

• Technical details will kill the FM• “Human Issue” is still there• Too much work, too reactive, dog eat dog• No time to learn or think or relax• This is not a sustainable quality model

10

Innovation• Stop the legacy model• Being the expert and requiring FM to make

decisions, manage, direct and control [MDC]

• Use innovation to increase value, minimize cost and have an impact

11

Innovation in the Netherlands

12

Crowne Plaza Hotel Amsterdam City Centre

13

Crowne Plaza Hotel Amsterdam City Centre• 20 minutes from airport; more convenient, comfortable, easier,

economical and faster than taxis• 5 minute walk from Amsterdam Central Station• Access by train to all cities• International Hotel Group Platinum member for Crowne Plaza Hotels• Cleanest, most comfortable beds, convenient power outlets• 24 hour access to “lightly used” gym with brand new unused sauna• Areas to give presentations and give certification exams• Free, fast internet for multiple users• Access to Genkis [15 min walk]

14

Perceptive Greeter at Crowne Plaza Amsterdam City Centre

• Melissa Grauwde• Has been “checking in”

attendant for last three years• Promoted to Guest Relations

[taking care of valued guests]• Memorized my name for the

past three years; always greeted me by name [twice a year guest]

Tremendous Value at the Crown Plaza Amsterdam City Centre

• Arrived at 7:30 AM• Greeted us, and immediately

looked to take care of us• Put us into an upgraded room until

my designated “upgraded and large” room was ready so we can shower, nap and work [she reserved based on my previous customer satisfaction response]

• Complimentary breakfast for the day if we were hungry [we do not check in until the evening]

Value and Performance• Five year customer: 10• Platinum upgrade: 10

• Customer care and satisfaction: 10

• Access to other cities & airport: 10

• Quality, size, cleanliness of room: 10

• Quality of bed: 10

• Power support for electronics: 10

• Internet support: 10• Breakfast: 10 • Gym: 10• Sauna: 10• Closeness to Japanese • buffet Genkis: 10

• Overall Rating: 10+

Conclusion• I will be staying at Crowne Plaza City

Centre for all visits due to the “best value” approach

Strategy to Minimize Cost• Use transparency to remove all silos• Everyone in the supply chain becomes the

resources of FM• Minimize the need to manage, direct and

control [MDC]• Utilize expertise to minimize cost, create

transparency, and have a major impact• Become responsible for even more

organizational functions

$13.3M Research, 20 years, 1700+ tests, 98% Satisfaction

180K 170K

380K

290K

460K

330K

1.01M

480K430K

120K

370K

560K

650K570K

870K

1.04M

950K

1.33M 1.31M

700K

1.08M

0,0

0,2

0,4

0,6

0,8

1,0

1,2

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1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

$ Am

ount

Aw

arde

d (M

illio

ns)

Year

Started: $180KTotal to Date: $13.3MAverage Yearly % Increase: 28%Total % Increase: 567%Number of Grants: 295

Best Value Research#1 Worldwide

Construction Projects 1,622Construction Projects ($) $4BNon-Construction Projects 95Non-Construction Projects ($) $2BProjects on Budget 96.7%Projects on Time 93.5%Largest Awarded Client ASUTotal $ Award to Date at ASU $1.7BTesting in Number of States 31

Testing in Number of Countries 6

• Over-management of vendors• Procurement and execution takes

too long [12 years]• Infrastructure repair is critically

needed [drivers spend 1-2 hours on road going and coming]

• 16 project, 6 awards, $1B test of best value PIPS

• Goal is to finish 10 projects in 3 years

Dutch Implementation

22

23

• Program results: 15 projects finished (expectation was 10)

• Delivery time of projects accelerated by 25%

• Transaction costs and time reduced by 50-60% for both vendors and client

• 95% of deviations were caused by Rijkswaterstaat or external [not vendor caused]

• NEVI , Dutch Professional Procurement Group [third largest in the world] adopts Best Value PIPS approach

• Now being used on complex projects and organizational issues

• Concept in entrie supply chain including engineers, risk/project managers

Results

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Project/Risk Management• RISNET will rewrite the risk model• Risk: what the expert cannot control• Transparency minimizes risk• Engineering practice

24

Mission: Increase quality of environmental engineering servicesTimeline: 1 year

Projects: • Yuma: Air Quality• ASRAC: Water Quality• Brownfields: Waste Management

Executive Team:• Teena Ziegler• Erik Massey

Canadian Efforts– University of Alberta– University of Ottawa– University of Manitoba– Wilfrid Laurier University– Queen’s University– University of Waterloo– Western University– Dalhousie University– Simon Fraser University– City of Spruce Grove– Alberta Infrastructure

Education/Research August 2014

Observation/Logic over 20 years and 1,700 tests

• Utilization of expertise is the only real way to minimize cost

• MDC leads to low performance and minimum standards • Concept of control of contractors is not effective• Utilization of expertise and transparency is the only way

to minimize risk• Project non-performance is not a technical engineering

or construction issue that can be resolved by construction technical expertise

• Hire based on expertise [system to measure]28

Industry Structure

High

I. Price Based

II. Value Based

IV. Unstable Market

III. Negotiated-Bid

Wrong person talkingManagement, direction, and controlNo transparency

Buyer selects based on price and performanceVendor uses schedule, risk management, and quality control to track deviationsBuyer practices quality assurance

Perceived Competition

Perf

orm

ance

Low

High

Minimized competitionLong termRelationship basedVendor selected based on performance

Utilize Expertise

Manage, Direct and Control [MDC]

High

Low

Owners“The lowest possible quality

that I want”

Contractors “The highest possible value

that you will get”

Minimum

MDC Systems Create Confusion, blindness, and reactivity

High

Low

Maximum

Utilization of Expertise

Expertise

MediumTrained

Vendor XCustomers

OutsourcingOwner

PartneringOwner

MDC Environment

MinimalExperience

“No control”• Control and influence increases risk and

transactions• Decision making accompanies MDC• Cannot override natural laws• We cannot control people

32

Use Experts with expertise• Minimize cost by seeing into the future• Understand people and risk that they

cannot control• Risk mitigation through transparency• Metrics create transparency• Create environment that makes the

experts better

Plan• Detailed schedule from beginning to end• Expertise used in areas where there is

insufficient information [II]• Risk that cannot be controlled [Risk]

Deliverables[metrics]

Milestones [metrics]

[II]

[II]

[Risk] [Risk]

34

Model of the Future: Performance Information Procurement System(details documented in manuals at pbsrg.com and ksm-inc.com)

Expertise identified by natural law

BV expert’s proposal must be acceptable to user

Expertise is utilized

Identify expertise

DominantSimpleDifferential(non-technicalperformancemeasurements)

Clarification Technical reviewDetailed project scheduleResource & Man- power scheduleExpectation vs. delivered

Risk Management using metricsQuality ControlQuality Assurance

SELECTION CLARIFICATION/PRE-AWARD

Execution

35

SYSTEM CREATED TO ASSIST PEOPLE TO SEE

System Created to Increase Value and Performance

BV Concepts Optimize Behavior

BV Environment Changes People• Tested concept in Kashiwagi

family• Now testing in ASU honors

program• Optimizes behavior through

simplicity, natural laws and transparency

• Minimizes negative behavior [depression, drugs, instability, suicide]

• Creates vision

39

Case Studies• Contractors in Hawaii become experts• Contractors increase profits and finish faster• “Blackballed” contractor turns into performer in

BV structure• Goes bankrupt when exposed to traditional

environment• BV contractors deliver at much lower costs

40

Transparency• Simple• Communicate in form of metrics• Does not require “trust”• Accountable• Forces pre-planning• Goes against human nature

41

Impact of MDC • 10 – 30 % cost increase• Vendor profit is minimized by 50%• No motivation to increase quality and

value• Reactive behavior• Silo based mentality

42

Metrics• Create transparency• Form of communication• Increase capability• Controlled by experts and used for

continuous improvement

43

Project Requirement/Intent• New laboratory construction• Intensive mechanical systems, clean room

environment• Fast track project• University campus

Project Capability SubmittalClaim: best project manager in company, does only clean room projects, best in the Midwest areaVerifiable performance metrics:1.last 10 years2.20 clean room projects3.scope $50M4.customer satisfaction 9.55.cost deviation .1%6.time deviation 1%

Continual Performance Documentation

Overall MEDCOM Performance by NTP 2007-2011

Completed Projects NTP 2007 NTP 2008 NTP 2009 NTP 2010 NTP 2011

# of Projects 110.00 129.00 122.00 92.00 27.00

Original Awarded Cost ($$) $181,945,282.27 $177,275,551.80 $183,989,041.03 $107,091,486.62 $16,278,439.41

Final Awarded Cost ($$) $193,881,007.60 $187,844,708.77 $192,602,961.59 $110,952,677.38 $16,352,909.79

Total Over Budget ($$) $11,935,725.33 $10,569,156.97 $8,613,920.56 $3,861,190.76 $74,470.38

Total % Over Budget 6.56% 5.96% 4.68% 3.61% 0.46%

% due to owner 4.58% 5.59% 3.61% 2.36% 0.46%

% due to Designer 0.00% 0.14% 0.00% 0.21% 0.00%

% due to contractor 0.11% -0.17% -0.01% 0.08% 0.00%

% due to unforeseen 1.88% 0.40% 1.09% 0.96% 0.00%

Total % Delayed 51.56% 48.43% 36.77% 28.53% 3.31%

% due to owner 41.38% 39.96% 28.51% 16.53% 9.20%

% due to Designer 0.00% 0.49% 0.00% 1.32% 0.00%

% due to contractor 1.86% -0.02% 1.29% 0.12% -6.40%

% due to unforeseen 8.32% 8.01% 6.97% 10.56% 0.51%

Owner Causes Most Project DeviationsBest Value PIPS records sources of all deviations

PIPS creates transparency

PIPS allows vendors to identify and mitigate risk that they do not control

PIPS forces client and buyer to be more accountable

General Overview

Ove

rall

Gro

up A

Gro

up B

Gro

up C

Gro

up D

Gro

up E

Gro

up F

Gro

up G

Total Number of Projects 399 1 8 21 10 3 355 1Total Awarded Cost ($M) $434.88 $0.19 $37.81 $17.24 $5.07 $29.50 $332.70 $12.36 Projects where BV lowest cost 54% 0% 83% 42% 33% 33% 55% 0%Percent Awarded Below Budget 6% 11% 1% 9% -13% 12% 5% 29%

Cost IncreasesOverall Change Order Rate 8.83% - 3.73% 4.04% 1.27% 2.54% 10.16% 4.53%Client 7.61% - 2.15% 1.08% 0.33% 0.34% 8.83% 1.16%Designer 0.69% - 1.68% 2.07% 0.63% 1.57% 0.33% 2.55%Contractor 0.01% - -0.21% -0.17% 0.00% 0.00% 0.01% 0.21%Unforeseen 0.52% - 0.12% 1.06% 0.31% 0.63% 0.51% 0.62%

Schedule IncreasesOverall Delay Rate 47.17% - 35.31% 1.59% 16.38% 7.44% 51.68% 12.73%Client 21.92% - 15.26% 0.00% 7.41% 3.93% 24.13% 5.45%Designer 4.47% - 5.69% 1.59% 8.97% 0.00% 4.48% 7.27%Contractor 2.65% - 10.93% 0.00% 0.00% 3.51% 2.42% 0.00%Unforeseen 4.54% - 3.42% 0.00% 0.00% 0.00% 5.04% 0.00%

Satisfaction RatingsNumber of Close Out Surveys 233 0 2 18 0 0 212 1Vendor 9.5 - 9.0 9.9 - - 9.5 8.8Selection Process 9.7 - 8.5 10.0 - - 9.6 10.0

MEDCOM PERFORMANCE MEASUREMENTS

*Measurements include All Completed Projects Before February 1, 2011

49

Overall MEDCOM Performance (Completed Projects) Completed Projects NTP 2006 NTP 2007 NTP 2008 NTP 2009 % Improvement

2007-2008

# of Projects 86 95 106 56

Original Awarded Cost ($$) $146,824,849 $100,760,367 $109,828,790 $48,014,717

Final Awarded Cost ($$) $156,896,978 $106,620,895 $115,480,571.07 $48,676,390

Total Over Budget ($$) $10,072,128 $5,860,528 $5,651,780 $661,673

Total % Over Budget 6.86% 5.82% 5.15% 1.38% 11.52%

% due to owner 5.33% 3.97% 4.55% 1.15% -14.56%

% due to contractor -0.07% 0.15% 0.00% 0.03% 100%

% due to unforeseen 1.61% 1.69% 0.37% 0.19% 78.36%

Total % Delayed 48.62% 44.63% 27.20% 11.35% 39.05%

% due to owner 32.58% 36.79% 26.39% 8.61% 28.27%

% due to contractor 3.22% 0.55% -3.35% 1.58% 100%

% due to unforeseen 12.82% 7.29% 3.81% 1.08% 47.82%

*Estimated*PROJECT OVERVIEW Without WRR With WRR With WRR & RMP# of Projects 130 274 121Awarded Cost $249,336,707.47 $363,645,708.52 $152,133,643.46 % of Projects on Time 28% 32% 46%% of Projects on Budget 40% 48% 64%% Over Awarded Budget 7.02% 6.28% 3.60%

% due to owner 4.77% 4.20% 3.14%% due to contractor 0.02% 0.06% 0.01%% due to unforeseen 2.23% 2.03% 0.29%

% Delayed 39.1% 37.09% 28.57%% due to owner 25.0% 25.57% 28.75%% due to contractor 3.58% 2.49% -2.77%% due to unforeseen 10.52% 9.03% 2.26%

Completed Project RMP Analysis

No Project Location Risk # Contractor

1 Replace Shower Pans Ft. Gordon, GA (EAMC) 79.35 E

2 Install Clean Steam Generator Bldg 1425 Ft. Detrick, MD 48.99 B

3 Provide Emerg Power for Medical Data Sys Ft. Lewis, WA (MAMC) 43.12 C

4 RO Water Loop Ft. Detrick, MD 36.47 C

5 Repair Buildings 1776 and 521 Ft. Detrick, MD 26.30 E

6 Repair Wayfinding & Signage Ft. Lewis, WA (MAMC) 21.98 B

7 Electrical System Renewal Ft. Jackson, SC (MACH) 16.68 E

8 ER Treatment Room Repairs Ft. Bliss, TX (WBAMC) 15.97 C

9 Replace Internal Electrical Substations Ft. Detrick, MD 14.87 B

10 Rpr Vet Clinic HVAC, Bldg 2018 Ft. Meade, MD 14.80 B

TOP 10 RISK RANKING PROJECTS 02/04/2011

Contractor Performance Completed ProjectsA B C D E

# of Projects 54 149 58 25 77

Original Awarded Cost $85,944,851 $165,219,120 $124,400,872 $33,171,047 $61,265,219

% of Projects on Time 39% 37% 49% 28% 53%

% of Projects on Budget 50% 56% 68% 60% 61%

% Over Awarded Budget 3.16% 5.37% 4.33% 0.99% 8.13%

% due to owner 1.72% 4.13% 1.83% 0.00% 7.19%

% due to contractor 0.00% -0.07% 0.00% 0.11% 0.30%

% due to unforeseen 1.43% 1.15% 2.50% 0.87% 0.64%

% Delayed 39.45% 36.61% 16.73% 21.07% 48.68%

% due to owner 30.80% 27.52% 14.03% 11.55% 38.87%

% due to contractor 1.41% 0.51% -2.33% 0.91% 4.68%

% due to unforeseen 7.25% 8.33% 5.03% 8.61% 5.12%

Contractor Performance On-Going ProjectsA B C D E

# of Projects 6 126 66 23 36

Original Awarded Cost $22,574,598 $297,060,326 $227,713,904 $66,134,627 $84,961,482

% of Projects on Time 50% 34% 26% 48% 31%

% of Projects on Budget 67% 66% 44% 61% 36%

% Over Awarded Budget 3.15% 3.76% 5.72% 2.97% 5.37%

% due to owner 0.49% 2.48% 5.02% 1.50% 3.95%

% due to contractor 0.00% 0.01% 0.00% -0.01% -0.37%

% due to unforeseen 2.67% 0.91% 0.56% 1.47% 1.79%

% Delayed 24.91% 20.62% 30.83% 29.41% 52.77%

% due to owner 2.31% 16.54% 24.55% 11.99% 20.02%

% due to contractor 2.74% 0.76% 0.00% -0.28% 9.08%

% due to unforeseen 19.87% 2.78% 5.68% 17.53% 23.66%

Risk AnalysisTop risks - $ & Days Impacts

Cause of risk % impact on schedule

% impact on budget Main Source entity

Modification in design/specs/scope 25% 50% Facility/COE

Additional scope of work 15% 29% FacilityNot described 10% 11% UnknownDelay in approval 15% 2% COESub-Contractor issue 3% 5% Facility/ContractorUnknown Site condition 9% 8% UnforeseenChange in schedule 18% 0% Facility/COEContractor generated 6% 0% ContractorMaterial related 4% 0% Contractor/Facility

CL Performance at ASU

56

Business Outcomes Pre MSA MSA (2010) MSA (2013)

MSA Baseline $12.29M $10.81M $11.96M

CL Business Outcomes: Costs

Growth – Out of Scope N/A N/A $1.15M

Value Add N/A $0.43M/yr $0.98M/yr*see appendix for details

Net MSA $12.29M $10.38M $9.83M

CL Business Outcomes: Reliability & Satisfaction

Business Outcomes Pre MSA MSA (2010) MSA (2013)

# of Major Outages N/K 37 11

% Uptime 99.802 99.989 99.998

Customer Satisfaction 3.6 3.71

(max 4.0)3.81

(max 4.0)

% of Tickets within SLA 94% 97% 97%

Business Outcomes: TechnologyBusiness

Outcomes Pre MSA MSA (2010) MSA (2013)

% Networksupported

(Not at end-of-maintenance)89% 99% 99%

% 1Gb- Wired Connections 57.0% 71.5% 96.0%

% Wireless(n) 9.0% 8.7% 92.6%

IT Spending Ratio

6/94(New vs. Maintenance)

26/74(New vs. Maintenance)

56/44(New vs. Maintenance)

Includes New GrowthIncludes Wireless-n

Conclusions• FMs need higher performance at a lower

price• Replace MDC with utilization of expertise• Expert vendors need help to transform

their business • Education and exposure to correct

principles will add value to everyone’s life• FM needs to take its practice to the next

level60

Effort to Change the Future• FM visionaries [IFMA subgroup]• PM visionaries [PMI and IPMA]• Risk managers [Risnet/CROW]• Procurement visionaries [NIGP/ISM]• Professional services [engineering and

architects]• Expert vendors/services

61

IFMA Chapters

• Rocky Mountain (CO)• East Bay (CA)• Atlanta (GA)• Birmingham (AL)• Northern Plains (ND)• Greater Phoenix (AZ)

IFMA 2014 Efforts: Seeking FM visionaries [see us in New Orleans]

Participant Poll #1

[Text]?

Q&A

Best Value Education

Linked inDean.kashiwagi@asu.eduYouTubePbsrg.comksmleadership.com

Jan 11 -15, 2015Tempe, AZ2014 Best Value Education and Training

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