An evaluation of the performance information procurement system (PiPS)

Pages187-210
DOIhttps://doi.org/10.1108/JOPP-10-02-2010-B002
Publication Date01 Mar 2010
AuthorJoop van Duren,André Dorée
SubjectPublic policy & environmental management,Politics,Public adminstration & management,Government,Economics,Public Finance/economics,Texation/public revenue
JOURNAL OF PUBLIC PROCUREMENT, VOLUME 10, ISSUE 2, 187-210 SUMMER 2010
AN EVALUATION OF THE PERFORMANCE INFORMATION
PROCUREMENT SYSTEM (PiPS)
Joop van Duren and André Dorée*
ABSTRACT. Since procurement is seen as a crucial element in project
success, many methods have been developed to manage this process and
many papers written about this issue. A remarkable contribution in this field
comes from Dean Kashiwagi who underpins his support for the Performance
Information Procurement System (PiPS) with claims of high project
performance and client satisfaction. Kashiwagi’s explanation for PiPS’s
success is based on a theoretical framework that is related to staff
members’ ability to deal appropriately with information by making sound
decisions based on more than implicit expectations and tacit experience.
This does not, however, provide a fully satisfactory explanation. Our paper
provides an overview of perspectives taken from the New Institutional
Economics which, we argue, are better able to explain the effects of PiPS.
The linking of these ideas to innovative PiPS elements makes it possible to
effectively select and apply appropriate PiPS elements within suitable
projects in the Dutch construction industry. This will enhance industry
performance and should thus be of interest to all stakeholders.
INTRODUCTION
Procurement essentially revolves around inviting project offers
and selecting the “most suitable” one. Since procurement is seen as
crucial for project success, many methods have been developed and
papers written about this issue. However, most projects (over 80% in
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* Joop van Duren, Ph.D., is an Assistant Professor, Department of Facility
Management, Zuyd University, The Netherlands. André Dorée, Ph.D., is a Full
Professor, Department of Construction Management & Engineering, Faculty
of Engineering Sciences, University of Twente, The Netherlands. Van Duren’s
research interests are in innovative tendering. Dorée’s research interests
are in market dynamics, procurement and industry change in the
construction industry.
Copyright © 2010 by PrAcademics Press
188 DUREN & DORÉE
the Dutch construction industry) are still contracted in the traditional
manner: design, put out to tender, and selected on the basis of the
lowest bid.
The client first hires designers and engineers, and the whole
project is elaborated in detail, including estimated costs, quality, and
appearance. After this preparation and specification stage,
contractors can provide quotations for what they expect to charge.
Once a winning contractor is selected, an adversarial relationship
between client and contractor often develops. The client tries to force
the contractor (who may not be given the opportunity to utilize the
latest know-how and experience) to act in a particular way, while the
contractor tries to boost profits having had to submit a low tender to
win the contract. The contractor does this by actively seeking
opportunities to charge for extra work. In other words, in this form of
contractual arrangement there is no alignment of goals: the
relationship has more to do with competition than cooperation. This
leads to cost overruns, delays, and dissatisfaction for both client and
contractor.
A growing number of publications show that there is a great
potential to increase the quality of tendering processes and the
subsequent project results. The economic and environmental
benefits are evident; there is also socioeconomic relevance in
increasing performance, avoiding overspending and time-wasting,
and in cooperating in order to create a high-value built environment
with acceptable price - quality ratios. Therefore, it is not surprising
that an increasing number of authors are considering innovative
procurement methods. Many publications promote integrated project
delivery schemes (e.g., turnkey and design-build approaches), and
propose selection based on quality-based criteria rather than just
price (Barret, 2007; Courtney, 2004; Fernie et al, 2006). Another
growing suggestion is to include past performance as a selection
parameter.
As part of this debate, Dean Kashiwagi promotes an approach he
calls PiPS (Performance Information Procurement System), and
claims outstanding results in terms of project performance and client
satisfaction (Kashiwagi, 2001, 2002).
In the literature on procurement systems, the effects and
outcomes of different arrangements are often explained from

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