1. Preamble
Concept Report No. 61 is the second report out of a total of three we have found in the CONCEPT program.
The report consists of six chapters and 143 pages in total. It falls far too far to review all of this in an article like this.
We are primarily looking for the moments we consider most relevant to a builder/project owner considering interaction, and what is required from all parties involved in the interaction itself.
Therefore, the report's Chapter 5 is central to us. “Results from the Case Studies”.
We considered including Chapter 6 “Discussion and some approaches to conclusions”, but this chapter builds largely on the results from Chapter 5. To keep this article at a sensible level, and avoid duplication, we dropped Chapter 6.
The entire report, and the rest, are available on NTNU's website and the report series can be found here.
2. The report's use of the term interaction
On page 25 of the report, interaction is explained as “to leverage the contractor's expertise earlier, speed up implementation, reduce the level of conflict and involve the user side with the goal of both increasing quality and reducing costs”.
In the same place, the report writers clarify that interaction “places great demands on the actors in terms of leadership, cooperation and transparency between the parties”.
3. The study is based on six concrete, and successful, interaction projects
From the preface (p. 1) it is clear that the study “builds on projects from, among others, Nye Veier AS, Helse Sør-Øst, Statsbyggelse, Statsbyggelse, Statsbyggvesen and the Municipality of Oslo (...) The purpose is to highlight and analyze the most important lessons learned so far”.
The study itself ran for one year (2019-20).
It is clear from p. 37 of the report that the common denominator of the six projects was that all participants had considered the interaction as “successful”.
In the interests of good order, we will make a statement on page 71 of the report clarifying that the report writers had no basis for saying that the six projects “are representative of implemented interaction projects, but when selecting projects, we have emphasized variation in terms of project type, size, builders and variants of interaction models”.
One of the projects concerned rehabilitation, three projects concerned new buildings of varying sizes, as well as two construction projects where one was medium and one was small.
At the time of the interview, three of the projects had been completed, while three projects were in the implementation phase.
It is clear from the report p. 37, paragraph 1.6, that they had focused on “projects that were previously designated as successful”.
Despite the fact that only successful projects were the basis of the study, the report authors clarified that interaction “It puts a lot of pressure on the players.” and in the preface they wrote that interaction “as an implementation model” is “in itself (..) no guarantee of success”.
Thus, the study did not shed light on collaborative projects that (one or more) parties had considered unsuccessful or particularly challenging. Challenges, on the other hand, are the topic of Concept Report No. 74 which we have dealt with in an article in which you can find here.
4th. Results from the case studies (p 81 flg)
1. Competition (p 81)
One of the topics was whether interaction increased competition for missions.
The interviewees had very different opinions, and consequently we have chosen to focus on moments that are important to consider when considering whether to use interaction.
Interaction assumes that the contractor allocates good people to assist in the project development phase (phase 1). In order for one to get to that, it is important that the contractor is large enough to have such people available for Phase 1.
Our opinion is that good people are aimed at employees of the contractors who have long and good experience (competence) in implementing projects (i.e. phase 2). It is people with this type of expertise who are particularly important to bring into phase 1 of the interaction (pre-project phase).
The challenge is that most entrepreneurs (small, medium and large) want to use their people with this type of expertise in the implementation phase of ongoing projects, and therefore have challenges in freeing them to phase 1 of a new collaboration project.
The report highlights that the challenges are probably greatest with the smaller and medium-sized entrepreneurs who, after all, have fewer people to choose from.
It is emphasized that experienced project professionals bring greater value to their employers in Phase 2, where they produce large volumes, than they can manage to bring in profits through hourly assignments in the pre-project phase.
The report highlights that the actors viewed the interaction model as advantageous because the scope of work in preparing tenders was significantly reduced compared to traditional implementation models.
In conclusion, it is mentioned that both builders and contractors perceived the interaction model as attractive in “projects of high complexity and unpredictability, such as rehabilitation projects and listed buildings”.
2. The cost picture (p 83)
In the study, an assumption had been made that project costs would be reduced by the use of interaction, and this was confirmed. However, the report writers clarified that it was “There are some interesting differences in the answers.”.
It falls too far to account for all differences, but we will include some input.
The assumption of reduced project costs was built up of four individual elements, namely;
- “Better and more buildable solutions”
- “optimization of project scope”
- “early risk clarification and better allocation of risks”
- “clerical staffing and rigging and operation”
It was largely agreed that the contractors had the best expertise in construction. These were therefore considered to be the best at incorporating cheap solutions, and there was an important cost gain.
In sum, it resulted in better and more buildable solutions, and the project scope was optimized.
In furtherance of this, we would like to highlight an important clarification made on page 85 of the report.
Among the interviewees, there were some who stated that “you get more value for money, but not necessarily lower costs”.
This statement pointed to two different ways of thinking in that one can “either maintain value for users at reduced cost, or increase value assuming the initial budget”.
Since it is possible to have two different approaches to optimization, the report writers recommend that the parties try to identify which of the two ways of thinking creates the greatest value for the interaction, and then relate to this.
It is also shown that interaction led to reduced costs because risks were clarified early, risk was better distributed between the parties and increased predictability for the parties.
Some of the interviewees had also highlighted that production was more cost-optimal because it was possible to draw up better progress plans, leaner staffing, better logistics and optimised the use of machinery.
At the same time, the interviewees seem to have answered less certain whether any kind of savings were achieved in terms of rigging and operation, as well as clerical staffing. On the other hand, some interviewees have replied that the builder's organization could be reduced by interaction in phase 2 because one should then “work together” and not “control each other”.
3. Quality (s 86)
In general, the interviewees confirmed that interaction increased the quality of the final result, but the interviewees had slightly different perceptions of what was meant by “quality”.
Some of the interviewees considered “quality” This means fewer construction errors.
Others used the concept of quality in relation to the solutions chosen for the users.
The interaction (and we assume in phase 1) between the builder, the designer, the user and the contractor made that”a better assessment of options related to user requirements, solutions and costs was obtained” than in traditional execution, thereby increasing quality.
4th. Execution time (s 87)
“There was a great deal of agreement that the builder had a reduced lead time overall because they contracted the contractor early, without a finished specification. Project development and contracting are carried out in parallel. In traditional construction contracts, the development must be done in sequence until there is a fully specified competitive basis”.
It was also emphasized from the contractors that one received”more correct construction time, more agility and fewer surprises during the implementation phase”.
5. Risk (p. 88)
The interviewees agreed that “interaction reduces cost risk for the builder and contractor, but to a lesser extent for the designer”.
“The builders state that the risk is significantly reduced. In traditional competitions, the builder is far more at the mercy of the market response to announced competition. In a collaborative project, there is a much greater opportunity to adjust content, requirements, standards, solutions, etc. when one sees the cost consequences of choices and opportunities. In traditional competitions, the contractor must take great cost risk to win contracts. In collaborative projects, there is competition in terms of price for profits and partly for rates, which leads to lower financial risks for the contractor as well”.
It was also argued from the builders (and partly by the contractors) that it was “too many engineering hours” and that “was challenging to get the projectionist away from the hourly focus”.
6. Level of conflict (p. 90)
“Most agreed completely (7) or near completely agreed (6) that interaction reduces the level of conflict between the parties and that interaction leads to a reduced risk of legal disputes. Many pointed out that this was a strong motivation for wanting to undertake more such projects. There was no measurable disagreement between the different types of actors. There were also no measurable differences between the answers for the two questions. Implicitly, this means that reduced level of conflict between the parties during implementation, also reduces the risk of legal disputes between the parties in the aftermath”.
This theme ended with the following paragraph:
“It seemed that in all the projects it had managed to establish trust and good cooperation between the parties and that the level of conflict was low”.
5. “Complementary questions” (p 91)
1. Common incentives for implementation phase (p. 91)
This section deals with the customary use of target price, where excesses and savings are divided according to an agreed key. Excesses in the form of malus and savings in the form of bonuses.
In addition, mention is made of the challenge of the fact that the designers are not included in such schemes.
2. Culture and trust (p 92)
Under this heading, a number of topics are dealt with, but not so much is written about each one. We have therefore listed them as moments that you should take into account if you are going to carry out a project together.
That said, several of these will be found in the article where we restate key points from Concept Report No. 74 “Challenges of collaborative projects” which you can read here.
Concept Report No 61 pages 92 — 96 discuss, to varying degrees, topics such as:
- The importance of having key people with the right understanding of what interaction is, and what is required. This requires having the right people, being able to adjust according to needs, and ensuring continuity.
- Everyone involved in an interaction must work for the good of the project, do each other good and have respect for each other's goals. The builder has a budget, but the contractor and advisor should also make money, while the users should make a profit.
- Management must be good at communicating the individual goals and milestones, as well as marking when goals are reached.
- Transparency and transparency should be a clue for everyone involved. In the opposite case, one risks sub-optimization, reduced confidence and inefficient work.
- Various activities should be undertaken to build cohesion across, and leadership rallies where the same is the purpose.
- Central plans should be drawn up in a collaborative effort to create a common ownership. Detailed plans are then drawn up on the basis of joint plans.
- The parties to an interaction should, as far as possible, define challenges as something common, and cooperate among themselves to solve them.
- Parties should seek balanced, reasonable and equitable solutions in commercial gray areas
- Co-location is presented as a good starting point for interaction, but there is also input that one envisages a differentiated arrangement based on who should sit together, and when.
- It is clear from the report that the actors involved in the six projects were led by good managers who knew about interaction. It is also stated that “(G) odt leadership is a crucial success factor”and by good leaders is meant ““modern” leaders with strategic capacity, ability to put together good teams (...) build trust and create enthusiasm (...) see their own strengths and weaknesses, as well as (...) highlight others (...)”.
- “It was joked that interaction projects reduce the need for two professional groups: lawyers and construction managers”. This was explained by fewer conflicts and less control needs on the part of the builder.
- At the bottom of page 97 it is stated that someone thought the builder should have minimal staffing because there was nothing to control and that the trust in the contractor should have been “very high”, while others “believed that the builder should get more involved to ensure management and control; as well as to actually have an interaction also in the implementation phase”.
6. Our summary
A great deal of what emerges in this report is good and valuable input for those who are either considering bringing interaction into their project or who will participate in an interaction after this has been decided.
At the same time, it is important to take into account the fact that even where all parties have considered the interaction successful, it is clarified that interaction is demanding, and it places great demands on everyone. There are also no guarantees of success.
The individual aspects of the report have not been commented on by us. We may have influenced enough through the pull-out of moments that we have included in this article. Hopefully we have given a balanced account -- at least that has been the intention.
