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Furniture Services Contracting and Management Best Practices Jake Smithwick, PhD, MPA, FMP, SFP The Simplar Institute University of North Carolina at Charlotte
Furniture Services Contracting and Management Best Practices
Jake Smithwick, PhD, MPA, FMP, SFP
The Simplar InstituteUniversity of North Carolina at Charlotte
• Common challenges we face in furniture contract management
• Recommended practices for hiring furniture suppliers
• Case Study: results from multi-year study
Agenda
• Group of researchers and educators
• Integrated within the organizations (clients/buyers and suppliers)
• Developed tools, methods, & training to enhance:
– Organizational Transformation
– Procurement & Sourcing
– Project & Risk Management
– Operational Efficiency
– Human Dimensions
– Performance Measurements
– Benchmarking & Workforce
– Facility Management Professional Training
Simplar Institute
Canadian Efforts
– University of Alberta– University of Ottawa– University of Manitoba– Western University– Vancouver Island Univ.– Wilfrid Laurier University– Queen’s University– University of Waterloo– Dalhousie University– Simon Fraser University– University of Toronto– City of Spruce Grove– Workers Comp NS– EfficiencyOne NS– Leduc County– SaskPower– BC SS
20+ Years | 210+ Publications | 100+ Partners
2,500+ Projects | $15+ Billion Procured
InformationTechnologyNetworking
Data centers
Hardware
COTS software
ERP systems
Help desk services
eProcurement
FacilityManagementmaintenance
landscaping
security service
building systems
industrial moving
waste management
energy management
custodial
conveyance
pest control
Health Insurance/Medical Services
Manufacturing
Business /Municipal /University ServicesDining Services
Multi-media rights
Fitness equipment
Online education
Document management
Property management
Communications systems
Recycling
Bookstores
Laundry
Audio Visual
Retirement Funds
Construction /Design /
EngineeringInfrastructure
Municipal
Laboratory
Education
Hospital
Financial
Specialty
Renovation
Repair
Maintenance
Roofing
Demolition
Development
Supply chain
DBB
CMAR
DB
IDIQ
JOC
Low Bid
IPD
What Percent of SOWs / Specs / Reqs
/ CDs / RFPsare 100% Accurate?
Problems?
• Only 2.5% of projects defined as successful (scope, cost, schedule, & business)
– PricewaterhouseCoopers, 2009
• Only 30% of projects completed within 10% of the planned cost & schedule
– Construction Industry Institute Performance Assessment Committee, 2015 edition
• 24% growth in owner’s construction indirect costs since 1995 (net of inflation and escalation)
– Construction Industry Institute Performance Assessment Committee, 2015 edition
Built EnvironmentProject Performance Research
• No significant performance difference between delivery or contract methods
• Key difference makers for project success:
– Qualifications based selection of project team
– Involvement of key people earlier in project
– Cost transparency on the project during construction
Delivery Methods:Recent Study CII & Charles Pankow Foundation
• Hire Experts and Leverage their Expertise
• Expertise lies within the people
• People make the difference
• Individuals drive project success
• Individuals determine the effectiveness of the delivery method
• Individuals can properly preplan
• Individuals can bring innovation
• Non-experts can bring…
Our Research…
supplier 1
supplier 2
supplier 3
supplier 4
High
Low High
Low High
Low High
Low
Impact of the Usual Approach
supplier 1supplier 2supplier 3supplier 4
High
Low
Owners
“The lowest possible quality
that I want”
suppliers
“The highest possible value
that you will get”
Minimum
Problem with the Usual Approach
High
Low
Maximum
Team-supplier 1
Team-supplier 2
Team-supplier 3
Team-supplier 4
High
Low High
LowWhich of these teams brings your project the most risk?
Proven Solution To Increase Odds of Success On ANY Project:
Hire & Work w/ Experts (High Performing Individuals & Teams That
Actually Know How To Create Value & Mitigate Risk)
This Is Not As SimpleAs It Sounds
There Is A Fundamental Problem With Our
Traditional Approach To Procurement
What we have seen…
19
Client
supplier
supplier
supplier
supplier
supplier
What we have seen…
20
Client
supplier
supplier
supplier
supplier
supplier
What we have seen…
21
Clientsupplier
What we have seen…
22
Client
Client PM & Team supplier PM & Team
supplier
Biggest Challenge – Functional Silos
Programming UsersManufacturersDealersContractingDesign
difficulty in communicating with different groups
everyone has their own “lingo” → confusing
cost goes up, schedule delays
final product does not match expectations
Tip #1: Be Aware of Supplier Perceptions
• The Owner has a favorite supplier they always select
• The Owner always hires the same 3 firms
• You really don’t have a fair chance of winning
• The Owner is asking you to submit too much
• Selection process is confusing and/or not transparent
• The Owner does not pay on-time, difficult invoicing
• The Owner micro-manages and control
• The Owner will not allow them to be efficient/optimize profit
Put Yourself Into The Shoes Of The Proposer
What impacts would this have if YOUwere a supplier?
#1) Don’t propose
#2) Don’t invest in quality proposal
#3) Increase price
Poor supplier Perception Can Result In…
Vendors Have Options!!!
So… we looked at the data
56 Contractor Responses
68% believe the procurement process is not fair
75% believe the State is not concerned about value
Overall satisfaction with the State
31%
• supplier perception is important
• Can’t “trick” suppliers
• If you are “dangerous” they may disappear
Self Awareness
Tip #2: Organize & Simplify the RFP
Assessing RFP’s
40%
Why Are RFP’s So “Bad”?
Why Do Owners Issue “Bad” RFP’s???
1. Lack of RFP experience (don’t know what to do)
2. Too much RFP experience (“this is the way we’ve always done it”)
3. Resistance to change (“we are too busy right now…maybe next time”)
Nothing will make you work harder, work longer, and stress more than working with the “wrong person”
Common Blunder - Requirements
Mixing Submittal Requirements Throughout The Document!
Common Blunder - Duplication
Tip #3: Create and Use Submittal Forms
Commonly Overlooked - Submittal Forms
Scope of Work & Current Conditions
Administrative Requirements
Evaluation Procedures
Submittal Forms
1
2
3
4
Proposal Requirements
5What To Submit
Minimize The Amount Of Time supplier Has To “Think” About What Is Needed To Submit!
• Simple & fast
• Less frustrating
• Minimize odds of missing a requirement
Easier For Owner To Compare & Evaluate
• Simple & fast
• Improved Consistency
• Less frustrating (Procurement)
• Minimize odds of missing a requirement
Tip #4: Use Procurement Fundamentals
Core Procurement Fundamentals
Transparent
Open
Fair
ValueProcurement Fundamentals
!
Not Just Words On Paper!
• Alternative approach to traditional RFP procedures
• Developed based on procurement research
• Maximize: Openness, Fairness, Transparency, Value
• Documented Impacts:– Increased performance outcomes
– Increased competition
– Increased customer satisfaction (50%)
– Decreased cost deviations (15%)
– Decreased project delays (10%)
XPDExpertise-Driven Project Delivery
Awarding To Expertise
• Team 1’s Plan
– By optimizing the building location, using a hybrid design and exploring strong fundamental architectural design process with will provide an optimum solution. As design progresses, continuous verification of the budget will be utilized to ensure success
• Team 2’s Plan
– The owner can be assured that the budget is not a risk. Our world class team has connections to a wide range of high performing suppliers to ensure that you always get the best prices and ensure the budget is met.
Example of Solutions Risk: Owner’s Budget (DB Residence Hall)
Generic Marketing InformationNOT a Plan
Will say whatever they think the client wants to hear in order to get the job
• Team 3’s Plan– The Owner’s budget cannot accommodate the building program per the
requirements.
– We have identified multiple Value Added options that enable us to meet the budget and still deliver the required number of beds (in order to maximize owner revenue streams):
– Removal of underground parkade – $2,054,717 savings– Reduction in certain finishes (wall panels vs. dry wall) – $67,000
savings– Design efficiency opportunities: Adjust net-to-gross ratios in targeted
areas of building program (hallways, common spaces). Reduction in building footprint results in significant material savings – net savings $1,686,149
Example of Solutions Risk: Owner’s Budget (DB Residence Hall)
Traditional Presentation Process?
50
Key Personnel Interviews
• Conduct an actual ‘interview’ (not presentation)
• No notes, handouts, presentation material
• Interview 2 key personnel (primary and secondary)– Project Lead & Integration Lead– Project Manager & Site Superintendent– Lead Designer & Lead Architect
51
• Interview the personnel individually not as a team
• 20-30 Minutes per person
• General Questions: – Background and experience
– What differentiates you personally
– What differentiates your key personnel
Key Personnel Interviews
52
Whiteboard Exercise
• Layout the project/service from start to end
• Identify areas of greatest risk/concern
• What activities worry you the most
• Anything that you need from us
Tip #5: Most Organizations Need Help to Improve
Continuous Improvement
• If the organization is not improving every day, it will cease to exist in the future
• Not just about doing a facility management function
• FM = facilitators of value & guardians of the strategic mission
How We Help You Become Better
1. Diagnostics: Organizational assessment; RFP assessments; comparison to peers; benchmarking; change readiness;
2. Change: XPD education, training, support, and administration; IT implementation (communication plan, change plan, resistance planning, training plan, etc.)
3. Measurements: Individual project performance, department reports, organization performance (including Suppliers)
4. Talent: Professional Development & Training, Human Dimensions mapping and talent management/development
5. Adoption: Reporting how a change has been implemented and adopted.
Change Adoption
Innovators & Early Adopters
(make it happen)
EarlyMajority
(support it happening)
LateMajority
(let it happen)
Laggards
(begrudge it happening)
Fighters
(stop it from happening)
Chasm
16% 33% 24% 20% 7%
N=104
Need to keep this group at 30% or less
Partial Adoption
Changed
• Organizational Change Management Study
• 586 Case Studies from Organizations globally
• Each response represents a single, large-scale change initiative within an organization.
• Survey objective: profile of numerous change initiatives across industry
Org Change Study
1. Effective Change Agents acting as implementation doers & champions
2. Realistic Speed & Timescale
3. Organizational Measurement & Benchmarks
4. The Org & the People can see clear personal benefit
5. Proper training of the Change
6. Senior leadership committed to the change initiative
+ The Importance of Proving Hope
Drivers of Successful Change Implementation
Case Study: Does it actually work?
Background of Project
• GOALS:– collaborate better with multiple public owners– standardize the ordering process– receive better pricing
• PROBLEMS:– Customers expectations not aligned– Lack of communication, measurements– Manufacturer design expertise not used
• SPEND: $7M / annually (all project types)
• Application of Expertise-driven Procurement (XPD) / “best value” for a traditional commodity contract
Proposed Solution
RawMaterials Manufacturing Ordering Purchasing End Client
Expertise-driven Procurement
• Interview
• Risk Assessment and Value Added Plan
• Service Proposal
• Financial Proposal
• Past Performance Information
Evaluation Criteria
Approach to Financial Evaluation64
• Traditional approach: biggest percentage discount
• Average of Previous Contract Discounts: 60.4%
$10,00050%
Widget “X” List PriceDiscount % Final Price
$5,000
$12,00058% $5,000
Firm X
Firm Y
Program Overview
User / department
needs furniture
Determine type
of project
Match existingNew, non-capital
(not match existing)Capital Project
<=$25,000
Add project to Project
Record List
PBSRG Initiates PIPS
process
Vendor PPI
(close-out scores)
Update Project Record
Design, Install, Punch-list
Trigger event for new Risk
Management Plan & WRR
Start sending in WRR
Complete close-out survey
Design, Install, Punch-list
>$25,000
Total Projected
Cost?
Complete (simple) close-
out survey
Risks during project
✓ monitor performance✓ simplify the selection
process✓ prepare “risk
management plans” for challenging projects
Simplar XPD
Different Types of Projects
Project Type Selection Process
Match-existing No decision (existing furniture)
Non-capital User discretion
Capital Expertise-driven Project Delivery
• RISK: client gets (free) design from supplier, and bids out to other suppliers
• SOLUTION:– user may request a design and quote from a single supplier, and then
award to that same supplier.
– user may request designs and quotes from two or all awarded suppliers under the Contract.
– user may purchase a design from one supplier, and award the project to a different supplier
Project Designs
Performance Measurement
clientsdealer
ProjectProjectProjectProjectProject
• On-time• On-budget• Client satisfaction• Expectations met
OWNER
• Project: Furnish new high-end science & technology building
• Cost: $3.0M (3% of total project budget)
• Status: 66% complete
Pre-planning Saves Costs
The “Plan” Putting it Into Practice
Risk: “Floor completion schedule has changed…affects order of delivery…”Solution: “Contacted manufacturer and adjustedproduction schedule.”
The Result
0% schedule deviation 0% cost deviation
Overall Program Outcomes
✓Documentation of all projects
✓Measurement and accountability of team
✓Improves coordinationbetween trades
General Overview Dealer A Dealer B Dealer C Overall
Total Number of Projects 227 836 867 1,930
Total Awarded Cost $ 3,934,224 $ 8,891,214 $ 22,825,371 $ 35,650,809
Average Awarded Cost $ 17,642 $ 11,745 $ 27,802 $ 20,436
Cost Analysis (Projects >= $100K)
Overall Change Order Rate 0.1% 0.0% 0.0% 0.0%
Client 0.0% 0.0% 0.0% 0.0%
Designer 0.0% 0.0% 0.0% 0.0%
Dealer 0.0% 0.0% 0.0% 0.0%
Unforeseen 0.0% 0.0% 0.0% 0.0%
Schedule Analysis (Projects >= $100K)
Overall Schedule Delays 3.1% 7.8% 6.9% 4.6%
Client 0.0% 4.7% 5.5% 3.8%
Designer 0.0% 0.0% 0.0% 0.0%
Dealer 0.0% 3.1% 1.5% 0.8%
Unforeseen 0.0% 0.0% 0.0% 0.0%
Satisfaction Ratings
Overall Client Satisfaction 9.3 9.6 9.1 9.2
Total Number of Surveys 56 29 50 135
Is Furniture Really a “Commodity”?
No Deviation Source Firm 1 Firm 2 Firm 3
1 Client 0.0% 4.7% 5.5%
2 Designer 0.0% 0.0% 0.0%
3 Dealer 0.0% 3.1% 1.5%
4 Unforeseen 0.0% 0.0% 0.0%
No Criteria Firm 1 Firm 2 Firm 3
1 Total Number of Projects 227 836 867
2 Total Awarded Cost ($M) $3,934,224 $8,891,214 $22,825,371
3 Average Awarded Cost $17,642 $11,745 $27,802
Performance Differential
Purchase Volume
Is it better than before?
Survey Source Unit Group 1 Group 2 Group 3 Overall
Before XPD 1 to 10 7.2 6.4 7.4 7.0
After XPD 1 to 10 9.3 9.2 9.2 9.3
33% increase in customer satisfaction
“On a scale 1-10, what is your satisfaction with the dealer?”
Conclusion & Takeaways
• Owners – more efficient procurement, better results
• General Contractors – method to document supplier plan; communication
• Furniture Industry – increases professionalism; fewer barriers to optimize profit; reduced transactions
Who does this benefit?
• You are not the only ‘fish-in-the-sea’
• Increase your awareness of supplier perceptions
• Goal is to attract suppliers to our solicitations
Summary #1
• Organize and simplify the RFP to attract suppliers
• Avoid duplicative language
• Strictly avoid mixing scope of work with submittal
Summary #2
• Create Submittal Forms for all required responses
• Keep simple (fill in the blanks, check boxes, etc.)
• Avoid making the suppliers ‘think’ about what needs to be submitted
Summary #3
• Adjust your interviewing process
• Interview the key personnel only (on-the-job everyday)
• Whiteboard activity
Summary #4
• Should always be seeking ways to improve
• How can we do it faster, cheaper, more efficiently, more effectively
• Actually doing something different vs education & training
Summary #5
• Research projects: 1:45pm to 5:15pm, Thursday
• Available throughout the whole week
• Send me a note!
I will be at World Workplace
• Assist in scope development
• Writing the RFP for your project or services (Furniture, IT, any service, construction/design, etc.)
• Running the Procurement so you can hire the best value
• Facilitate partnering with your supplier and Risk Management
RESULTS:
• We can reduce total procurement time by 50-75%
• Better pricing, fewer change orders, minimize delays(avg. 70% reduction change orders and delays)
• Reduce your time managing your suppliers by 30-60%(high performers don’t need you to tell them what to do)
Where Simplar Can Help
