CONSTRUCTION COLLABORATION: A CASE STUDY OF PARTNERING Tas Yong KOH Sep 2009 (RECO3005)

CONSTRUCTION COLLABORATION: A CASE STUDY OF PARTNERING

Tas Yong KOHSep 2009 (RECO3005)

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Why partnering? Some views . . .

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Why partnering?The industry’s characteristics

Commercial aspects

Hard competitive tenderingDecision based on priceConditions of contract

Multiple subcontractingLow investment in training

Operational aspects

FragmentationDiffused responsibility

TMOHierarchical nature

Macho environment

Adversarial industry culture

Mistrust Confrontational attitude

ConflictOpportunistic behaviour

HIGH WASTAGEHIGH COST!

“I am convinced that over half the cost of a project is socially

determined”- John Mather, NASA, 2006 Nobel

Laureates for Physics

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Why partnering?Ways of working not sustainable!The Tang’s Report (CIRC, 2001): • Strategic thinking on future development • Move away from traditional approach

• Fair consideration of interests and risks for all To move forward and improve, we need to:• Increase harmony among clients, consultants,

contractors, and subcontractors• Address the critical relationships between time,

cost, quality, and safety

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Why partnering?

Partnering is recommended as a management tool to achieve the above!

• Fair apportionment of risks• Economic construction cost• Achieve value rather than price

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Definitions of partnering• National Economic Development Office, UK (NEDO 1991:5):

– A long-term commitment between two or more organizations for the purpose of achieving specific business objectives by maximizing the effectiveness of each participant’s resources

• Construction Industry Institute, US (CII 1991:iv):– Long-term agreement between companies to cooperate to an

unusually high degree to achieve separate yet complementary objectives

• Association of Project Management Hong Kong (APMHK 2003:4):– A commitment between two or more organizations to achieve

specific business objectives by maximizing the effectiveness of each party’s capability through cooperation

• Barlow and Jashapara (1991:3):– A variety of managerial practices and organizational designs that

enhance and maintain collaboration

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Definitions of partnering• No standard definition!• Defined mostly by its outcomes and processes• But, central themes are:

– Long-term commitment– Cooperation – Complementary objectives– Win-win(-win) attitude

• For successful partnering, need:– Attitudinal change– Managerial practices– Organizational designs

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Success factors– Trust – Equity – Commitment – Proactive attitudes– Shared understanding– Improved communication– Mutual goals– Joint evaluation– Joint problem-solving– Training and maintenance– Incentives – Performance measurement

Soft aspect

s

Hard aspect

s

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Some issues

Competing demands

Power relations

Cultural divide

Temporary settings

Some issues . . .

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A tale of one project!

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Project description

ROUTE 8 SHATIN HEIGHTS TUNNEL & APPROACHES

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Project descriptionROUTE 8 SHATIN HEIGHTS TUNNEL &

APPROACHES

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Project description

ROUTE 8 SHATIN HEIGHTS TUNNEL & APPROACHES

• A direct link between northeast of New Territories and airport.

• The Contract involves:– 1.0km long dual three-lane tunnels under Shatin Heights,– Site formation for a toll plaza at a valley,– 0.6km long dual two-lane tunnel approach road in Tai Wai,– Two 1.0km slip road viaducts to Che Kung Miu Road,– Noise barriers and enclosures, – Slopes, and– Drainage, and landscape works.

• Tunnels runs through rocks!

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Project descriptionROUTE 8 SHATIN HEIGHTS TUNNEL &

APPROACHES• Client: New Territories East Development Office, CEDD• Commencement date: 18 November 2002• Expected completion date:

November 2007 • Contract type:

Engineer’s design, re-measurement contract with provision for price fluctuation

• Revised contract sum:

HK$1,196 million (?)

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CEDD partnering approach

• HKSAR Government’s initiative for public works contracts (since mid 2002)

• Non-binding, post award partnering approach• First deal with relationship aspects• Then develop tools and techniques:

– Procedures, processes, and systems

• Believes that:– Contract sets out legal relationships– Partnering process establishes working

relationships

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• Develop among the project team mutual strategy of commitment and communication

• Aims to create an environment of:– Trust and teamwork, co-operative bond

• Objectives:– More fruitful business relationship– Effective communication and decision structure– Supporting culture

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Start-up partnering

Steering group

sessions

Cascade workshops

Reviews

End of project review

Implementation flow chart

Pre-workshop meeting

One-day partnering workshop

Workshop type

Workshops for middle

management

Workshops for middle

management

Half-day review workshops

Half-day review workshops

End of partnering review workshop

Auxiliary activity

Partnering charter

Act

ions

track

ing

meeti

ngs

Soci

al events

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• A structured format to develop, foster, engineer, and implement partnering through:– Teambuilding exercises;– Signing of charter;– Facilitation workshops;– Problem resolution mechanisms; and– Continuous evaluation, monitoring, and

improvement of performance.

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Pre-workshop meeting

• Attended by senior managements of both the client and main contractor

• To develop and promote:– Understanding of partnering concepts,– Understanding of partnering

implementation process,– Change in culture, and– Commitment and rapport

Laying the ground works

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• Attended by senior management of all parties• Workshop aims to achieve:

– Commitment from the senior managements of stakeholders;

– Team spirit - team building exercises (e.g. Red/Blue Game);

– Mutual objectives – formation of Partnering Charter; and

– Improved decision making process – Problem Resolving Process, and Problem Resolution Matrix

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One-day partnering workshop• Key factors learnt from team building exercise:

– Cooperation is better than internal competition,– Selfish behaviours led to lose-lose outcomes ( BLUE

behaviours),– Necessary to take risk to help others ( RED

behaviours), – Groups are interdependent,– Trust needs to be built, and– Mutual understanding of rules and objectives.

Client

Designer Contractor

Client +Designer +Contractor

The worksT

o

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One-day partnering workshopObjectives of various parties:

Client Designer Designer (RSS) Contractor Time, budget, quality

Time, budget Job security Time, safety

Safety No disputes No complaints from Client

Reduced prosecution

Set good standard Profit No complaints from public

Reduced waste

Environmentally friendly

Improved reputation No quality problems No quality nonconformance

Minimum claims Recognition from Client

On schedule Alternative design / VE

No public complaints On time submission Cooperation with all

Auditable Smooth handover of work

Trust, no paper war!

Employment No accidents Profit

No claims Be successful

Sufficient site staff More experience / capability

Less paperwork Long term relations with all

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One-day partnering workshopPartnering Charter:

Mutual Objectives

On programme Within budget

Safety: Good quality:

Work environment Right first time

Low accident rate Minimize disputes

Environmental considerations:

Good public relationships

Environmentally friendly Early contract finalization

Reduced prosecution Sufficient resources

Less paperwork Time & cost saving thro VE

Long term thinking

Values and Behaviours

Trust Consideration

Fairness Honesty

Proactive Open-minded

Professionalism Understanding

Cooperation Respect

Communication

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• 4-way analyses of needs and expectation:– Each party lists needs required of other parties– Each party identifies typical barriers– Based on importance to achieve mutual objective 1, low to 10,

high importance– For example . . .

Client Consultant Consultant - RSS Contractor

Client -- Fast / accurate response to requestProactiveness

Close supervision Good record-keepingProblems anticipationEnvironmental aware

Quality product Contractual complianceSafety awareness

Contractor

Consider alternative designPositive reviews More flexibleSharing info

Quick response to proposal Early problem solvingClear and prompt info

Positive attitude Clear instructions Understand Contractor’s constraints

--

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Problem Resolution Process

• A model that emphasizes:– Common understanding– Joint problem solving

• Problem resolution matrix– Allocate responsibilities– Communication links – Sets time target

>> No stagnation of issues!

Clarify understanding

Define problem

Decide decision level + time limit

Create options

Propose option

Agreed?

Yes

No

Raise to next level

Aligning team to solve problem together

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One-day partnering workshopProblem Resolution Matrix

Process Client Designer Designer -RSS

Contractor Typical issues

Resolution time

Safety Proj Engr 1Proj Snr Engr

Engineer 1 SIOW Site managerSafety manager

Temporary works

Immediate

Design Proj Engr 2Proj Snr Engr

Engineer 2Engineer 3

RE or Res Geo-technical Engr

Engineering Mgr, PM

Temp worksSubcon approvAlt design

1 week2 weeks1 month

Quality Proj Engr 1Proj Snr Engr

Engineer 1 SIOW Asst Constrn Mgr, Agent, QM

Reluctance to rectify

2 weeks

Programme and progress

Proj Engr 1Proj Snr Engr

Project Engineer

SRE PM, Engrg Mgr

Delays to critical path

2 weeks

Cost and variations

Proj Engr 1Proj Snr Engr

Project Engineer

QS Constrn Mgr VO valuation 2 months

Environmental and public relations

Proj Engr 2Proj Snr EngrChief Engr

Executive Director

SIOW, CRE Site Mgr, PM, Env’t and Publicity Officer

Major complaint

1 week

Senior staff Chief Engr, DPM, PM

Executive Director

SIOW, CRE Project Mgr, Executive Director

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Partnering steering group

• Meeting held every 4 to 6 weeks• Membership comprises of senior management of

client, designer, and main contractor

Main roles andresponsibilities:• Provide role model • Promote partnering behaviours• Induct new members• Review and monitor performance

To promote partnering behaviours:• Promote model behaviours• Arrange workshops• Establish joint team• Arrange social events

Review andmonitoring: • Score aspects given in Charter • Reveal critical issues• Clarify differences • Better understand progress thro dialogue • Agree on actions

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Partnering steering groupReview and monitor performance – Partnering Scoring (Apr 2003)

MUTUAL OBJECTIVES A B C D E F G H I J

Safe environment and low accident rate 4.40 5 4 5 5 5 3 5 4 4 4

Complete to programme 3.75 4 5 3 4 4 3 4 4 3.5 3

Complete within budget & early finalization 4.30 5 5 3 5 5 4 4 4 4 4

Quality of work – right first time 3.80 4 4 3 4 4 4 4 4 4 3

Environmentally responsible without prosecution 4.60 4 4 4 5 5 5 5 4 5 5

Good public relations 4.60 5 4 5 5 5 4 5 4 4 5

Minimize disputes 3.90 5 4 3 3 3 4 5 4 4 4

Less paperwork 3.85 5 4 4 4 3 5 4 4 3.5 2

Time and cost savings through value engineering 4.10 4 4 3 5 4 4 4 5 4 4

Model site and long term thinking 4.10 5 4 3 4 4 5 4 4 4 4

Sufficient resources 4.00 5 4 5 3 4 4 4 4 4 3

Average 4.13 4.64

4.18

3.73

4.27

4.18

4.09

4.36

4.09

4.00

3.72

VALUES AND BEHAVIOURS

Consideration and respect 4.65 5 5 4 4 5 5 5 5 4.5 4

Professional and proactive 4.70 5 5 4 4 5 4 5 5 5 5

Honesty 4.40 4 5 4 5 4 4 4 5 5 4

Trust 4.20 5 4 3 4 4 4 4 5 5 4

Cooperation and communication 4.50 4 4 3 5 4 5 5 5 5 5

Fairness 4.55 5 5 4 4 5 4 4 5 4.5 5

Open minded and understanding 4.40 5 4 4 4 4 4 4 5 5 5

Average 4.49 4.71

4.57

3.71

4.29

4.43

4.29

4.43

5.00

4.86

4.57

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Partnering steering groupReview and monitor performance: Matching Needs (Dec 2003)

Client needs from: (Current performance: 1 low to 10 high)

Needs Performance Perceived barriers

Designer Early identification of problems 6 Insufficient resources

Formulate and evaluate viable options

4 Ditto

Quick and meaningful response 6 Ditto

Contractor Good planning 7

Adherence to target dates 6

Understanding client objectives 6 Communication

Contractor needs from:

Client Support for SA 4 Not proactive

Trust the Designer 3 Lack of trust

Assist in application of CNP ? Lack of active involvement

Joint problem solving 4 Lack of proactive attitude

Designer Quick decisions on temporary works design

2.5 Bureaucracy

Risk sharing and taking 2 Difficult to change

Reduce unnecessary paperwork 2 Bureaucracy

Joint problem solving 5 Lack of proactive attitude

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Partnering steering groupReview and monitor partnering performance (Dec

2003)• Assess and discuss on “what has gone well?”

– Teamwork and cooperative relationships– Quality – Safety – Environmental aspects– ENT North Portal and Toll Plaza site formation

• Assess and discuss on ”what has not gone so well?”– We are running behind schedule!– There is still too much bureaucracy and paperwork– Finalizing the supplementary agreements

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Partnering steering groupReview and monitor partnering performance (Dec 2003)Some key issues requiring improvement:• Joint problem solving:

– Definition: Problems not resolved quickly enough, cannot be resolved by one party alone etc

– Causes: Concentrate on reasons rather than solutions, solving problems for oneself only etc

– Improvement: Concentrate on solutions and deal with reasons later, establish joint group, close communication

• Construction planning: – Definition: Insufficient planning– Causes: Uncertainties over design, lack of experience in

foreseeing problems– Improvement: Employ more experienced frontline supervisors,

better risk management

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Challenges and difficulties• Challenges for government teams working

on partnering projects:

Structural• No clear procedures• Lack of incentive• Lack of authority• Unclear line of communication

Structural• No clear procedures• Lack of incentive• Lack of authority• Unclear line of communication

Relational • Difficult trust building• Difficult relationship building• Arm-length treatment

Relational • Difficult trust building• Difficult relationship building• Arm-length treatment

Stakeholder • Conflicting objectives• Outside stakeholders’ challenge• Other departments not keen

Stakeholder • Conflicting objectives• Outside stakeholders’ challenge• Other departments not keen

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Challenges and difficulties• Changes made:

• Trading the REDs• Avoid throwing problems to others • Be open about own mistakes• No blame culture• Use less formal communication• Share good ideas from other projects• Include other authorities in the partnering

• Some RED behaviours reported:• Take risk• Sticking to promise• Give and take• Accepting responsibility• Showing trust in others

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Outcomes and performance

Meeting objectives

Improved communication

Speedier problem resolution

Improved quality

Fewer claims

Better public relations

Cost effective design

Better environmental concerns

Improved safety

BENEFITS

Possible budget surplus

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What are the management functions

involved?

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Roles and activities

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Project management functions

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How about leadership and motivation in partnering?

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Leadership in partnering

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Motivation for collaboration - Operation

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Motivation for collaboration - Theory

Motivators

Hygiene factors

Self-actualisation

Esteem

Social

Security

Physiological

Growth

Relatedness

Existence

Self-satisfaction

Job security

Partnering charter

Team buildingexercise

Meeting project objectives

Problem resolutionprocess & matrix

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But, . . . some issues . . .

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Our findings (1/4)

• Presence of partnering arrangement on project success:– Comparison across 28 success criteria; soft criteria and hard

criteria – No significant difference for almost all criteria except the

above two– “Information sharing” higher in “No partnering” projects!? – Difference is not very clear! – Partnering beneficial?

Means (N=376)

Item F-value Sig. No partnering (N=240)

With partnering (N=136)

Cost saving proposal benefits contractor

5.927 0.015 4.41 4.74

Open information sharing 3.195 0.045 4.99 4.73

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Our findings (2/4)

• Type of partnering arrangement on project success:– “Binding partnering” consistently higher rating– “Non-binding partnering” consistently lower rating; even lower

than “No partnering”!– Communicational benefits – effective meetings, info sharing, good

communication– Binding partnering better?

Means (N=373)

Item F-value Sig. No partnering (N=240)

JCT Non-binding (N=12)

Other non-

binding (N=84)

Other binding (N=39)

Meetings were effective 2.843 0.038 4.82 4.58 4.93 5.20

Stakeholders interests considered 3.375 0.019 4.82 4.00 4.52 4.92

Problems rectified at earliest stage 4.771 0.003 4.57 3.83 4.17 4.98

Open information sharing 4.088 0.007 4.99 4.33 4.57 5.18

Communication was good 2.770 0.042 5.25 4.50 5.11 5.48

Rectified mistakes collectively 3.951 0.009 4.72 4.17 4.63 5.20

Collective goals achieved 3.333 0.020 4.89 4.17 4.70 5.18

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Our findings (3/4) • Some sample quotes from other case study:

“. . . partnering charter . . . they are a bit soft material . . . you can say that this is the ‘gentleman agreement’ between the parties, but the only powerful and valid document is the contract documents.” – Client senior representative

“ . . . the only document is the contract document. That’s the most powerful document that govern the duties and responsibilities of each parties.” - Client senior representative

“(The partnering sessions) helps in conveying the accurate message in a quicker manner, but of course these need to be done in the framework of the contract . . .” - Client senior representative

“The whole project is run based on the government handbook. Let’s say Project Administration Handbook. That is the fundamental guiding principle for this contract.” – RSS senior representative

“. . . working together with contractor can sometimes be mis-construed. If you find yourself too helpful or too cooperative with the contractor, the client may consider that not to be healthy. . . . We are all bound by procedures, rules, regulations, contract document . . .” - RSS senior representative

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Our findings (4/4) • Some sample quotes from other case study (cont’d):

“No contract partnering, ok, I am not a lover of partnering but I have to say that it steps in the right direction. With every intention, good engineer and good contractors always done partnering” – RSS senior representative

“Like to work in partnership as we said!? . . . not for me, it just matters because I will do the same. It is not because we said it in the beginning we go to work in partnership then we have to do that. That is out of my mind. . . . I tried to put in place good spirits, working conditions with them.” - Contractor senior representative

“I think partnering didn’t work properly! The reason of that is we have three parties; the contractor, the RSS, and the employer. The employer never got himself on this project . . . All these people from (the client organisation) they are very, they are not familiar with partnering and all that. All these guys are, in my view, are very old fashion style administrative things. . . . it seems that it will never work with (the client organisation). . . because you have to wash their brain first if you want them to run that way!” - Contractor senior representative

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The issues • No systematic trends on partnering benefits

(Nystrom, 2008) • Still in “infancy” stage or “old habits die

hard”? • Intangible effects:

– Improved communication – (Slight) Change in attitude? – Less stressful work environment – Better public image

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The issues

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Over to you . . .• Your thoughts on the followings, please:

– The project parties encountered difficulties in building good working relationships and trust at the beginning of the project. What do you think were the causes and how do you propose to solve it?

– The objectives of the four main parties in the project are different. What problems do you foresee will emerge in the running of the project?

– The partnering approach is non-binding in nature. How do you think this arrangement affect the running of the project?

– What do you think are other factors that affect the level of cooperation in the project (apart from those already covered)?

– Which approach do you think is better in implementing partnering in construction: an engineered or evolutionary approach? Why?

End of our partnering for now . . .

Thank you for your attention!

Appendixes

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Success factors and likely problems

• Success factors:– Trust – Equity – Commitment – Improved attitudes– Shared understanding– Improved communication– Mutual goals– Joint evaluation– Joint problem-solving– Training and

maintenance– Incentives – Performance

measurement

• Likely problems:– Lack of commitment– Uncomfortable in

trusting– Lip-service– Win-lose mentality– Lack of perseverance– Commercial pressures– Not all parties are

included– Lack of empowerment– Inefficient problem

solving process

Soft aspect

s

Hard aspect

s

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• A proper start-up workshop for the partnering project two months after commencement.

• Attended by:– Senior management of the client, – Senior management of the main contractor, – Consultant and his resident site staffs (RSS),– Representatives of other interfacing government

departments (e.g. HyD, ICAC!)

• First three parties jointly formed a Partnering Steering Group.

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One-day partnering workshopClient’s needs to achieve mutual objectives: Client needs from:

Needs Importance Typical barriers

Designer Fast /accurate responses to client’s request and contractor’s proposals

10 Resources

Pro-activeness 10 Resources / training

Open minded 9 Attitude

Designer (RSS)

Close supervision 10

Good record keeping 10 Lack of training

Anticipation of problems 9

Environmental awareness 9 Lack of training

Contractor Quality product 10 Quality resources

Contractual compliance 10 HQs support

Safety awareness 10 HQs support

Early identification and notification of problems

10 Attitude

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One-day partnering workshopContractor’s needs to achieve mutual objectives: Contractor needs from:

Needs Importanc

e Typical barriers

Client Consider alternative design (Gain share)

10 Other govt dept procedures

Sharing of information (reports) 8Misunderstanding claims

Positively review performance/suggestions

10Communication channels

Linking Designer and Contractor 7Communication channels

Clear government internal bureaucracy

9 System/procedures

Flexibility in procedures 8 system/proceduresDesigner Solve the problem at an early stage 8 Resources/behaviour

Clear and early information 8 Resources/behaviour

Assume responsibility 7 Resources/behaviour

Quick response to alternative design 10 Openness win/win

Designer (RSS) Positive attitude 10 Resources/behaviour

Understand Contractor’s constraints 8 Resources/behaviour

Quick response 7 Resources/behaviour

Clear instructions 9 Resources/behaviour

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Partnering steering group

• Main areas of concern:– Agreed actions to promote partnering behaviours– Agreed actions to reduce waste and improve

processes– Review and monitor partnering performance

• Actions to promote partnering behaviours:– Promote model behaviours– Arrange cascade partnering workshops– Establish Joint Improvement Team at lower levels– Arrange team social events.

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Partnering steering group• Actions to reduce waste and improve

processes:– Examine re-use of excavated materials on site– Consider Contractor’s alternative designs (e.g.

retaining walls)– Reduce paperwork by encouraging team to

communicate more (e.g. discuss problem and confirm in writing)

– Review and streamline meeting schedules to reduce time spent on unnecessary meetings

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Partnering steering group• Review and monitor partnering performance:

– Members of Group, selected middle management, and front line staff score aspects given in Partnering Charter

– Score against scale of 1 (poor) to 6 (excellent)– Scores bring out critical issues– Gives better understanding on the progress as a

team– Clarify differences in perception – Steering Group monitors the scores– Discuss issues and agree on actions

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Cascade workshops• Project’s success depends greatly on the skills and

experience of middle management:– Day-to-day running of site operations– May lack overall perspective– Restricted by rules and practices from the past– May become bureaucratic, defensive, and adversarial

• Workshop for middle management• Membership comprises:

– Contractor’s engineers and supervisors– Designer’s RSS– Subcontractors

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Cascade workshops• Functions:

– To foster partnering culture– To promote the cooperative way of working– To get middle management’s commitment to the mutual

objectives– To get contribution on process improvement and waste

reduction efforts

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Outcomes and performance• Some success examples:

– Speedy conclusion of Supplementary Agreements– Early achievement of 2 major site formation key dates and

handover to interfacing contractor– Timely completion of access road for interfacing contractor– Joint resolution of blasting constraints enabling improved

progress of tunnel excavation– Joint resolution of difficult piling at the pier in close

proximity to KCRC railway tracks– Maintaining good public relation – only a few substantiated

public complaints!– Etc. . . .

Documents

CONSTRUCTION COLLABORATION: A CASE STUDY OF PARTNERING Tas Yong KOH Sep 2009 (RECO3005)