Case study: The transformation of a procurement office

Kenneth Sullivan, John Michael, Charles Egbu

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

From 1994- present, the Performance Based Studies Research Group (PBSRG) has been testing the best value Performance Information Procurement System (PIPS), running over 530 tests on the delivery of $683M of construction services. The research results identified the low price award by the procurement function as a major source of nonperformance. It also identified that the following manifestations of the price based system: the inability of the client construction management to transfer risk and control to the contractor, the adversarial position between general, critical subcontractors and the client, the inability to differentiate, and the resulting loss of capability of the industry to preplan, proactively minimize risk, and inability to successfully administer the contract. The hypothesis testing results concluded that the issues with construction nonperformance were not technical, but management based. The issues dealt with delivery, and not construction technical performance. In 2005, PBSRG convinced the Arizona State University (the largest university in the United States at 65,000 people) Procurement office, to test this hypothesis, by using best value PIPS to procure the largest food services contract at a U.S. university, approximately $400M, ten year contract. The results of the test also convinced ASU procurement office to use the PIPS based concepts to transform the business approach of the university to a pure outsourcing approach with best value selection, information environment using dominant measurements, self administration of the contract by the contractor, and reorganization and a change of function of client procurement/management. These results validate the hypothesis testing to improve the construction industry performance. This is the first significant concept developed in construction management research that has been validated in the services industry.

Original languageEnglish (US)
Title of host publicationCOBRA 2008 - Construction and Building Research Conference of the Royal Institution of Chartered Surveyors
StatePublished - Dec 1 2008
EventConstruction and Building Research Conference of the Royal Institution of Chartered Surveyors, COBRA 2008 - Dublin, Ireland
Duration: Sep 4 2008Sep 5 2008

Publication series

NameCOBRA 2008 - Construction and Building Research Conference of the Royal Institution of Chartered Surveyors

Other

OtherConstruction and Building Research Conference of the Royal Institution of Chartered Surveyors, COBRA 2008
CountryIreland
CityDublin
Period9/4/089/5/08

Keywords

  • Best value
  • Procurement transformation
  • Services contracts

ASJC Scopus subject areas

  • Civil and Structural Engineering
  • Building and Construction

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