1. Preamble
Concept Report No. 74 is the third, and youngest, of a total of three we have found in the CONCEPT program.
The report is based on analyses of 105 interaction projects, and we will write a little more about it below in point 2.
The report consists of six chapters. We have reproduced some of what is stated in the first three chapters (“Introduction”, “Literature” and “Method”), but our focus is mainly the report's Chapter 4 “Results”. The last two chapters (“Discussion” and “Conclusion and further work”) are based on the results discussed in Chapter 4. In order to keep this article at a reasonable level, avoid repetition, and focus on topics we believe are of the greatest practical interest, we do not address any of the items in Chapters 5 and 6.
The purpose of the study states the following in the preface on page 1:
“There is some existing research that shows good results of interaction projects. Among others, Concept Report No. 61 (...) where interaction had worked well. At the same time, we know that interaction is a demanding implementation model that places great demands on the parties. Until now, there have not been many studies that have systematically looked at the challenges faced by using such implementation models. This study is intended to shed light on just this”.
In addition, we refer to the summary page 4-5 where it is stated that there is a lot of non-fiction dealing with interaction, but that these mainly look at “the benefits of interaction models, while the literature on challenges is more limited”.
According to the report writers, this may have meant that “the presentation of the challenges comes in the shade”.
In the report, page 4 at the bottom, it also states that previous literature has largely maintained that”interaction models are suitable for projects that have a relatively large degree of uncertainty and complexity”.
In addition, the researchers write that their study shows that one”may not take full advantage of the interaction models” At the same time that they open “that the models are sometimes chosen indiscriminately”.
2. Briefly about data bases and main findings (11 key elements)
It is clear from the summary (p. 4) that the researchers have drawn data from 105 interaction projects distributed among 34 sources.
These interaction projects were very diverse; “from smaller school buildings and swimming pools in the 100 — 200 million range to large projects such as the Tønsberg project and E6 Helgeland-Sør”, see Chapter 3 “Method” p. 38.
The researchers' review of the material from the 105 interaction projects resulted in 11 key elements that should be particularly focused on when deciding on the possible use of interaction as an implementation model.
The 11 key elements are:
1) the entrance to the interaction, 2) the contract, (3) the time of involvement of the supplier, 4th) the target price trend, 5) the organization, 6th) collocation, 7th) soft elements, 8) the project team, 9th) the interaction phase, 10) Continuity and ! 11) implementation phase.
3. Interaction in phase 1 is most common
At the end of the report's chapter 3 “Method” the authors (p. 43 at bottom) state, inter alia, the following:
- “Interaction models are (...) not an unambiguous topic because there exists such a spacious understanding of what this really is.
- It exists “a flora of interaction models that have actually been implemented”
- Interaction models vary “from project to project in terms of the means used to create interaction”.
In the report point 2.6 (p. 29) states that it is the “so-called two-stage model with the involvement of the contractor in the interaction phase before construction (as) is the second most used model in Norway”.
While using interaction in phase 1 (preliminary project including functional requirements), phase 2 is carried out in an ordinary turnkey contract with a fixed (fixed) sum.
Contractually, NS 8401 or NS 8402 is used to regulate the parties' intermediation in phase 1, whereas NS 8407 is used in phase 2, see the report page 30.
4th. Results (p 45)
4.1 The Entrance to Interaction, Market and Contracting (p 46)
4.1.1 The parent organisation and interaction (p 46)
The key point is that the parent organization should make its choice of implementation based on an analysis.
In such an analysis, one should, inter alia, take into account points such as 1) project characteristics, 2)market, (3) Competence in your own organization, 4th) time perspective and 5) cost perspective.
The report writers conclude by stating that interactions are often chosen for reasons other than such analysis.
They refer in this regard to a master's thesis at NTNU from 2020 (Groven) where the person concerned found that interaction is often chosen because it is “new and exciting” and/ or “popular”.
4.1.2 Market and Purpose (p 47)
Under this heading, the researchers highlight that interaction is demanding for all parties in a project “because it requires a special expertise and available resources”.
Several of the sources pointed “in their findings that builders can often have as motivation to use interaction to reduce costs by involving the contractor early and a desire to reduce the risk of a cost increase”.
Such motivation considers the report writers to be in violation “with the core” in interaction, nor consistent with the strength of the model which is “to maximize utility within a given cost framework, and reduce uncertainty for all involved by involving them at the appropriate time in the process”.
With this starting point, the report writers reviewed several project types.
They did not consider interaction with early involvement to be particularly appropriate in standard projects, but that projects should be of a certain size and/ or complexity.
Interaction requires a lot from the building organization in terms of “competence, staffing, and resources for follow-up”.
Interaction is simply a “relatively resource-intensive implementation model for the building organization”.
4.1.3 Award criteria (p 47)
Less emphasis should be placed on price when acquiring an interaction contractor, and more emphasis should be placed on experience and reference projects.
However, when it comes to experience and reference projects, it is a challenge that one risks ending up in a situation where only a few entrepreneurs (for-) become eligible to participate in the competitions.
You also run the risk of looking blindly on the number of interaction projects in which the contractors and resources concerned have participated, and not so much on how the individual interaction projects developed.
4.2 Contract (s 48)
It is clear from the report that several missed a standardized contract for interagency contracts.
Regarding the use of the advisor standards NS 8401/NS 8402 in phase 1 it does not seem to be the use of these in isolation sets that is the problem. The problem described is the concern about high hourly consumption during the design phase because the designers lack incentives to work rationally and efficiently. At the same time, fixed-price engineering is not considered any good solution for fear of sloppiness.
The circumstance that NS 8407 is used in the implementation phase also raises conflicting issues. On the one hand, it recognizes that the parties are well acquainted with this standard contract and that gives the parties a reassurance. On the other hand, the use of NS 8407 encourages traditional and hierarchical forms of organization. It is also claimed that NS 8407 allows the general contractor to make economically justified choices that do not necessarily serve the builder.
The use of function descriptions is not perceived as problematic in itself, but for technical subcontractors it creates unnecessary challenges if the function descriptions are too vague or unclear. It is also said that if the developer wants qualities beyond technical minimum solutions, it must be explicitly stated.
Furthermore, it is clear that the developer must have decision-making power and use it actively during the interaction phase.
The chapter also addresses the situation where a contract for interaction in phase 2 with a target price has been signed. When this is the case, challenges are reported if the subcontractors are not covered by the principle of open books. At the same time, it is pointed out that the subcontractors may have good reasons for opposing open books (e.g. trade secrets). In any case, secrecy about the actual costs and mark-ups of the subcontractor can create distrust in the builder because the contractor becomes afraid of paying more than agreed (cost + agreed markup).
Under this topics (“Contract”) bad experiences with the bonus/malus regime are also described, but it falls too far to reproduce everything that says.
From page 52, however, an example is highlighted where the general contractor received “incentive to propose changes that reduced costs, while reducing value to users”. Another example mentioned is that the builder made changes after the target price had been set so that the contractors had to pay half the cost.
The skewed distribution of the pot also provided grounds for discontent.
4.3 The time of involvement (p 52)
Since it is most common to use the two-stage model, it is reasonably clear that performers must be involved early in the pre-project phase to avoid all (or most) important actions being taken.
It is central to the interaction that the executor's practical experience and expertise are acquired in time so that the person with the implementation competence has a real influence on the design.
On the other hand, it is highlighted as important that entrepreneurs do not get involved too early. The builder's sketch project is so good that he knows what is wanted before the contractor is brought in. In the opposite case, the builder risks spending significant resources on the contractor's participation without the latter really having so much to contribute.
4.4 Target Price (p 55)
We have already visited the target price a bit, and we are content to highlight the absolute most important.
Firstly, the target price should be calculated in parallel with the design in order to be as time efficient as possible.
Secondly, the builder should be involved in the calculation work. In the opposite case, the builder can easily feel distrustful of the spreadsheets because they are not as open as one assumes, cf open book.
Third, the contractor's mark-up is apt to create friction because the builder fears it is baked “in multiple layers with mark-up” This is especially evident in projects. “with long value chains”.
In conclusion, we mention that this chapter (“Target Price”) contains a number of casuistic examples of conditions that create, or are apt to create, distrust and then especially in the builder in relation to subcontractors etc.
4.5 Organising (p 58)
The survey shows that “the work and decision-making processes in general are becoming more extensive” when a project is organized in an interaction.
For a builder who wants early contractor involvement in interaction phase 1 there is an expressed desire to bring in people with execution expertise.
At the same time, the survey seems to show that the contractor rather works with people in administrative roles such as project and project manager.
The introduction of an overall project board with representatives from the builder and contractor, and in some cases counsel, raises challenges with regard to mandate, role clarification and responsibility placement.
There is also a risk that participants in the project board lack the competence to take a position on and solve technical issues. However, this can be solved by having such decisions made at lower levels of the organization to ensure better decisions and reduce the amount of decisions that the project board has to make a decision on.
Since it is described, among other things, that some people choose interaction because it is popular, we choose to adopt the following quote:
“New roles in collaborative projects can be demanding for smaller building organizations. If the builder is to engage in an equal interaction, the builder organization must mirror the contractor's organization. It may require more resources than smaller building organizations have at their disposal.”
In this chapter several important considerations are highlighted, and we think it is equally fine to cite much of this.
From page 60 of the report, the following is found:
“The organization of the builder has a great impact on interaction projects. (...)
Projects depend on clear decision lines (...) When, for example, a consultant according to the contract only has direct communication with a contractor, it can create challenges — the builder must be included (...) the developer may perceive the flow of information between himself and the designer as challenging (...)
Although the contract specifies the role of the builder, it can be challenging that the builder is not always so active.
Some contractors find that it takes an unnecessary amount of time to process requests from participants in collaborative projects before the builder says yes or no to the wishes. This may be due to the fact that the builder does not attend meetings with participants who have expertise and decision-making authority.
The interaction phase requires the builder to be more involved than in traditional turnkey contracts, and some actors highlight absent builders as a challenge.”
“In interaction projects, the contractors are obliged to provide production expertise during the interaction phase.
The gain for the contractor is the eventual award of a turnkey contract and, if necessary, a settlement for the elapsed time. At the same time, people with production skills are sought after, and the entrepreneur can achieve much better profits if these people lead production in projects.
In addition, it is not provided that the contractor is left with the contract for its implementation. This depends on whether they succeed in the interaction phase and agree on a target price. If this is not the case, the builder will be free to contract another contractor for the actual implementation (...) Thus, the contractors do not necessarily align themselves with the people who actually have production expertise, but with people who on a daily basis work with, for example, engineering.
There is thus an uncertainty as to whether the contractor's production expertise can actually be utilised”.
“The architect can find himself in an unfortunate crossfire between contractor and builder” when this one is “subject to the contractor and not the builder”.
“(...) the interaction phase (...) is demanding for the contractor in that they are given an administrative responsibility for a process for which they have historically not had responsibility.
This makes it difficult to put the right person in the right job as those who hold the skills are already tied up to other work tasks”.
4.6 Collocation (p 62)
This chapter also contains several key points, and as for the previous chapter, we quote much of what is said. From page 62 of the report, the following is found:
“In collaborative projects, colocation means that the project team physically sits together to develop the project. (...) How colocation is practiced and how it is understood varies from project to project”.
“No significant challenges with co-location during the construction phase have been found in the investigated cases”.
The challenges seem primarily to concern co-location in Phase 1.
“In the interaction phase, co-location means that the designers each have their own workstation in shared premises, and that they work on the project as a common organization instead of as their own.”
“Several of the sources point out that colocation can be perceived as resource-intensive and as a less beneficial use of time”.
“It is pointed out that colocation can be challenging if there are many participants (...) up to 40 participants is a cost driver for the project. Then it becomes difficult to optimize the special meetings and prioritize which issues to be solved. (...) when there are more participants who are co-located, more of the time - the one that should have gone to actual project work - helps to inform”.
“Co-location in the interaction phase can cause the designers to spend a lot of time traveling”
“Lack of decision-making authority is also a challenge (...) where the project team lacks participants with the will and authority to make decisions”.
“At the same time that participants with decision-making authority should be present, people with professional competence are required.”
“The central technical subcontractors should participate in the interaction and co-location (...) issues when the technical subcontractors did not participate in the co-location with the builder but only interacted with the contractor. Then the communication with the builder went through the general contractor so that the distance from the builder to the technical advisers became too great. At the same time, it is necessary to consider the time of involvement and which subcontractors have something to contribute in the co-location in order to avoid too many participants”.
“Challenging for counselors. Continuous presence requirements for those designing in co-located projects can be challenging if they are engaged in multiple projects at the same time. Then decisions will have to wait until the right designee is present again. Advisors may also need to discuss technical solutions with other subject matter experts, and it can be difficult if they are located outside on a project rather than in a larger professional environment”.
4.7 Soft elements (p 65)
Soft elements are largely present in all projects. The soft elements, in contrast to the hard and contractual elements, are not regulated in the contract. Nevertheless, they are often central to the desired effects of the interaction.
Ownership.
“Creating ownership of the project and having common goals are highlighted as key soft elements in the interaction literature. For the builder, it will be natural to pivot these common goals towards value for users. Several of the sources mention that it can be challenging for commercial actors to take ownership of such targets because their main objectives are economic. Another challenge is that common goals are often ambitious and they are perceived as wishful thinking. The balance between common goals that are ambitious but at the same time realistic in terms of the stakeholders' self-interest is difficult. Several sources point out that such common objectives should be developed jointly and anchored early in the interaction phase. The last point that comes up about common goals is that these must be rooted downwards in the project organization”.
Confidence.
“Another key element is trust, which is necessary when the parties are, for example, to arrive at a target price. It is difficult to balance between showing the necessary trust and having control in an interaction phase (...) At the start of the interaction phase, the parties cooperate on solutions, but towards the end they must agree on the financial framework. Then cooperation can change, especially if the economic starting points of the parties are far apart”.
“No-blame” culture.
“A culture in which actors find solutions instead of apportioning blame is basically positive. Some individual projects have gone so far as to include a “no right to sue” clause in the contract. However, such a tool can reduce the productivity of the project team because participants are given reduced opportunities to make demands of each other and possibly sanction. According to Skoglund (2019), some of the informants experienced that other participants were downgrading work tasks in favour of tasks in other projects”.
Human resources.
“Several of the sources mention human resources as sources of challenges in collaborative projects. Wøien (2016) suggests that the challenges associated with interaction are more process-related than product-related. A good team requires human resources with overall the right skills and attitudes. Several of the studies point out that collaboration projects are not suitable for all individuals or companies. If the parties put in individuals who act differently than expected, there may be friction within the project team. It seems appropriate, therefore, to contract a right to replace people who create friction, even though replacing personnel may be a long way off.”
Communication.
“New contract formats can lead to ambiguity about who is in charge of what and demanding communication. The project can gain participants who do not deal with the implementation model or leaders who do not believe in the principles of it, which can propagate outwards in the organization. Timberlid (2021) highlights that the leaders in the studied case acknowledged that they had been too traditional in that they had put too little time into developing the organization to make it work”.
4.8 The project team (p 67)
In this chapter, the most important message is that decisions should be made jointly and that the builder must be a quorum.
A non-quorum builder opens up rematches and a lack of anchoring.
It is emphasized with strength that the builder “must be involved in the project team, and have the mandate and knowledge to make decisions”.
By extension, the need to be co-located is raised.
Co-location is a double-edged sword and we have already reproduced part of what is stated in the report's chapter on collocation, see paragraph 4.1.8.
In other words, one must strive for a balance between what is necessary to ensure a rational and efficient decision-making process and, on the other hand, not sit together so much that it is perceived as irrational and as a misuse of time.
4.9 The interaction phase (p 69)
One of the most important things to highlight from this point is that one has considered “the importance of sufficient time for the project development phase as one of the major learning points. Adequate time must be set aside for team development, concept development and cost estimation. In addition, sufficient time should be set aside for initial work on the construction site”.
It also highlights the internal contradiction between the builder who wants the most certainty about what is to be built and therefore wants a relatively high level of detail in the design, and the general contractor who wants the least amount of detail so that the freedom of choice remains as great as possible when entering the execution phase.
4.10 Continuity (p 71)
It is pointed out that continuity is very important, and that “soft elements such as ownership, trust and communication” is “perhaps more importantly” in interaction “than in other projects”.
In this point, examples are mentioned that contractor offers people with extensive experience of interaction, but then none of these come after contract is awarded.
Another example is the frequent replacement of personnel, which acts negatively in the interaction.
We are a little unsure whether the right of the builder to terminate the interaction after phase 1 is something that creates irrational fears on the part of the contractor and/ or is used by the builder.
It is common for the developer to have the right to terminate the cooperation with the contractor in the transition from phase 1 to phase 2.
Our impression of the report is that the contractors were largely retained. For the builders, it was not desirable to replace the contractor from phase 1 to phase 2 precisely because the contractor had become so familiar with the project at that time.
4.11 Implementation phase (p 73)
The report writers had little information about how interplay works in the implementation phase.
Subject to the fact that some contracts had not been finalized when the report was prepared, we allow us to assume that this is an indicator that interaction is mostly used in Phase 1, while Phase 2 is carried out as a traditional turnkey contract with a fixed (fixed) price.
This is consistent with the experience of the report writers that the two-stage model is most common, see paragraph 3 above.
In conclusion, the report writers addressed an issue that becomes relevant from experience when the interaction is continued to phase 2, namely that the general contractor replaces people and inserts someone who primarily relates to an ordinary turnkey contract. From page 75 we find the following:
“Then a short-term contractor can benefit from producing as cheaply as possible within the established framework of quality, while the builder has lost influence in the detailed design. A workshop with the old participants who leave and the new ones who enter can help define what the interaction should be like in the implementation phase”
5. Our Concluding Remark
Much could have been referenced from the report's paragraph 5 “Discussion”, but it falls too far.
Nevertheless, we would like to quote some statements from Chapter 5 that may be of interest to you.
Paragraph 5.1 (p. 76) of the report states:
“The interaction models do not represent a “quick-fix” on the implementation process or the gain realization. Several in their findings point to the motivation of builders to both reduce costs, improve quality and complete projects faster by involving the contractor early. This would be an unrealistic expectation for the model”.
Paragraph 5.9 (p. 82) of the report states:
“Early involvement of the entrepreneur in the interaction phase can be positive for both productivity and the final product. At the same time, the parties enter the phase of different interests. The builder wants the most value for their money. The entrepreneur wants the greatest possible profit. The counselor will write as many hours as possible and work on what he can. The user will benefit the most while there are others who pay the bill”.
At the very end, a quote from paragraph 6 of the report “Conclusion and further work”:
“It is also important to point out that although this publication takes a critical look at these types of implementation models, this should not be read as a holistic criticism of this way of implementing projects. Rather the opposite, in the last 10-15 years a lot of research has been published that points to good results related to these models. This report should be read as a supplement to previous research. All implementation models have weaknesses and challenges. By putting the spotlight on them, one can improve tomorrow's practice”
