Archive | September, 2012

Public Procurement – Not So Easy – Rarely Cheap

28 Sep

I have worked for many years in various capacities both in the federal, state and local governments as well as in the private sector.  Now retired, I can reflect on my procurement experiences with some degree of latitude not offered while one is still employed and must be careful what they say.  Both the private sector and the public sector want the same things with a procurement – high quality services, timeliness and low costs.  However, the approaches vary widely.

In the private sector as a CEO or CFO I would often seek out an industry leader, many times one I had worked with in the past.  Instead of spending time looking around, I would go to someone I knew would do the job right and with whom I had a relationship.  If I could get a good price I would stop looking.  If their price seemed high, I would ask around.  Often, I would end back up in the first place, having found their price was not so high after all.  Jumping vendors once in awhile kept your friends “honest” on their prices.  They want to make a profit just like you, but if you allow them to be complacent, or don’t occasionally look around, the quality and timeliness can drop and the price can go higher.  You don’t want to be taken for granted, especially if you are a small client for them.

On the other hand, constantly jumping around establishes no relationships, and if it ain’t broken why fix it.  Lasting vendor relationships over ten to twenty years can build real trust and respect.  Resolving complex issues becomes a single phone call and a handshake.  Each party trusts the other to do right by them.  In the private sector this leads to a lot of doing business with people you know, or with those your friends know.  It is harder to “break-in” to an established industry unless price is the only driver.  In the public sector, this way of doing business is not only not accepted, but sometimes a crime.

The public sector often assumes that all procurement bodies are corrupt and can be bribed by a meal at a nice restaurant or a sporting event.  At my consulting firm, I spent over $10,000 per year on meals and entertainment with clients.  It was how you got to know each other.  It was considered “bad form” to bring up anything business related.  It was about establishing relationships and trust, not about sales.  In the public sector, that same behavior is viewed as trying to influence future contracts.

Starting with that premise, procurement laws are set up to provide statutes and rules that eliminate the ability of anyone to be corrupt.  This is of course impossible.  People cannot accept gifts, they cannot discuss contract needs unless every submits questions and everyone gets the same answers, they have to do formal bid processes, set up panels, involve people who are impartial (which often means they know nothing of the project).  Staying with the same vendor is often viewed as corruption.  “This vendor has won every bid for ten years in a row!”  Is viewed as some sort of empirical proof that there is corruption, not that the firm could be the best and lowest priced.

The procurement code can even pre-set criteria such as cost, quality, and other measures in formats that don’t fit well with the project.  A colleague in private sector big constructions, stadiums, civic centers, etc. told me that their company would lose money on every bid.  They make all their profits off change orders and overrides because the procurement folks did not anticipate issues.  So, they go for low price, then get a 50% overrun to do the job right.  They told me it was industry practice.

When I was CFO for a major state agency, we had a line item appropriation for $1.9 million.  No matter who bid, they bid within $100,000 of that amount.  Why?  That is the amount we had.  I could have bid for them to write one letter for me, or to work for an entire year with five people – $1.9 million would be the bid.  I am not suggesting that nepotism, fraud, corruption or other bad behavior be tolerated, quite the opposite.  I am just pointing out that the very laws intended to get good pricing often lead to substandard services and higher pricing.

What to Do?  First, if you are in any sector, think about the types of procurement available to you – project management bid, single source, emergency bid, multiple RFP, RFI, what tools will work best for your project.  Then, bring in an expert with a history of skill in both following ALL the laws, AND with getting good vendors and pricing.  These are rare individuals indeed.

Arizona Rural Schools Association Conference that Bill Munch provided training. From the left, Bill Munch, Superintendent for Palo Verde, Robin Berry and Executive Director, Bill Blong.

An Example – Recently, the Valley Schools Management Group (VSMG) a group purchasing organization serving the public sector, hired Bill Munch to work on procurement issues.

Bill Munch graduated from Arizona State University in 1988 with a Bachelor of Arts in Purchasing and Materials Management.  He has received certification as a Certified Purchasing Manager (C.P.M.) and Certified Professional Public Buyer (CPPB).  He was the first President of the Greater Phoenix Purchasing Consortium of Schools (GPPCS), a purchasing cooperative comprised of over fifty school districts in Arizona.  He has also served as Vice President and is currently Membership Officer of GPPCS.  He has dedicated his entire career to the topic of public procurement and has a flawless record.

Bill currently serves on the Arizona Association of School Business Officials (AASBO) Board of Directors as Treasurer and is a certified Arizona Community College Instructor that regularly teaches the AASBO 4-Day Purchasing Classes and “Purchasing for Users”.  He is a member of the Capitol Chapter of the National Institute of Governmental Purchasing (AZNIGP), has served on various committees and regularly presents at their conferences.  Bill has always been an active procurement advocate for Arizona public procurement entities.

The amazing thing here, is that VSMG did not just hire Bill Munch to help their organization.  They hired him to help all of their member organizations as well – for free!  Talk about going the extra mile.  In addition, they are even offering his services to NON-members.  Already, Bill Munch has helped with training at Tolleson Union School District, Tuba City Unified School District, Santa Cruz Valley Union High School District, Wickenburg Unified School District and Scottsdale Unified School District.  Only two of those are VSMG members.

Over the next few months, Bill has another twelve seminars and trainings planned across Arizona.  When you see an organization that committed to helping others follow the procurement laws and save public funding, you just have to say Bravo!  Many of those districts do not have the resources for that level of assistance on their own, and VSMG is there to help.


Jerry Cipriano Promoted at VSMG

7 Sep

Jerry Cipriano has been promoted at the Valley Schools Management Group (VSMG).  The following is his picture and a copy of the letter announcing his promotion:

Jerry Cipriano, second from left, with solar panel for saving schools energy costs.


Deer Valley High School from above. One of many projects Jerry Cipriano worked on to save millions in energy costs.

We are pleased to announce that Mr. Jerry Cipriano has agreed to accept the position of Director of School Services.  Jerry will be providing a critical role for our member districts in his new capacity, ensuring a smooth continuation of project management services and assistance.

Jerry Cipriano has over thirty-one years of experience in building management, design, construction and warranties in school districts.  His many accomplishments include the construction and remodeling of many elementary schools, construction management of Sandra Day O’Connor High School and Boulder Creek High School and the remodeling and refurbishing of Deer Valley High School and Barry Goldwater High School.  Since 1981, Jerry has worked every aspect of school construction.

In addition, Mr. Cipriano also has been CEO of a private construction firm that built numerous homes in Arizona and has nearly twenty years of experience in the private sector construction management field.  Jerry is extremely competent and experienced and we look forward to having him take a greater role in assisting our member school districts on projects.

Please join us in congratulating Jerry Cipriano on his new role and his new challenges in helping Arizona public entities through improved project and utility management programs.


Tom Boone

Chairman and CEO

Valley Schools Management Group

Ways to be a Competent Project Manager

3 Sep

reposted from:

Project management: How to make good use of the financial resources?

A competent project manager has an equally competent and agile team. The team comprises of various subject matter experts who bring their individual expertise to the table and achieve dizzying heights of success. It must be noted that immense business productivity is the fulcrum on which the entire business rests.

A project manager has to perform various complex tasks simultaneously in order to complete the project on hand. He tries to complete each and every project in minimum time possible and enhance the project’s bottom line. A project manger has to co-ordinate with the logistics department, human resources department, sales & marketing department, purchase department and most importantly finance department (including cost and accounts section).

Speaking mainly of how a competent project manager uses his company’s finances to extract most benefits out of those investments.

Investment tips for a competent project manager

Here are few suggestions on how to invest in a project that reaps good profits:

  1. Overall wellbeing of the project manager – A project manager must not get stressed out because of the pressure from the management to complete the project in time and spend less money. He should be in a good condition both physically and mentally. The management should extend all the necessary help and support to the project manager. This will assure him that he can expect full consideration from the management in case anything goes awry.
  2. Execution of a good business plan – A company must have a clear idea as what are the basic amenities a project manager would need in order to complete a project in the stipulated time. Before starting a project, the company should have a well-sketched budget and a business plan. Moreover, the project manager must be able to persuade the policymakers of the company to have a financial priority list and make adjustments accordingly within the company’s finances. This will increase the performance of the project manager and the team. Ultimately, the project will be a profitable one.
  3. Reduction in work pressure – A company should be emotionally inclined towards the burden of the project manager he goes through each day. Therefore, as a burden reduction measure the management can shoulder some of the responsibility of the project manager. For instance, calculating the finances of the company and project on behalf of the operations department will give some relief to operations team. Mostly, an operations team would only need to know about the company’s bottom line and nothing more than that.

A competent project manager should have more skills than what are discussed above. Some of them are far-sightedness, problem solving skills, interpersonal skills and people management skills.

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