EGLC Conference Incentive System to Support Collaboration in Public Construction Projects

Transcription

1 EGLC Conference 2015 Incentive System to Support Collaboration in Public Construction Projects Annett Schöttle 19. March 2015 INSTITUTE FOR TECHNOLOGY AND MANAGEMENT IN CONSTRUCTION, DEPARTMENT OF CIVIL ENGINEERING KIT University of the State of Baden-Wuerttemberg and National Research Center of the Helmholtz Association

2 Content Current Situation Steps of research Defining Cooperation and Collaboration Incentive System Tendering Procedure Case Study: UCSF 2

3 Ongoing Public Mega Projects in Germany (Schöttle and Gehbauer 2013) Concert hall Elbphilharmonie (only amount of public client) Berlin Brandenburg Airport (BER) Railway project Stuttgart 21 Kind of tendering procedure Public private partnership (PPP) with a general contractor Planned as PPP, then divided into several operations resulting in many tendering procedures Many tendering procedures based on sections and operations Original cost estimation Current cost estimation (March 2013) EUR 77 million (2005) EUR 1.7 billion (2004) EUR 2.45 billion (1995) EUR 575 million EUR 4.3 billion EUR 6.8 billion Cost increase % % % Original completion date March 2010 June Current completion date June 2016 open

4 Background: Public Projects in Germany (Schöttle and Gehbauer 2013) Complex, uncertain, ambiguous and dynamic project environment Strict separation of design and construction phases by law Design-bid-build-tendering with lowest bid selection Transactional contracts fixed and inflexible framework Construction supply chain is split into several pieces Information asymmetry between the project parties Knowledge and skills are allocated among various organizations Non integration results in competence gaps Individual decision-making process Transferring risk from public client to contractor Hierarchical project organization structure Missing commitments between the stakeholders 4

5 Construction Projects are Networks (Schöttle and Gehbauer 2012) Corporate culture Business objective Client Business objective Corporate culture Construction company Project culture Architect Business objective Corporate culture Business objective Corporate culture Engineer Project objective Project manager Business objective Corporate culture Business objective Subcontractor 2 Subcontractor 1 Business objective Corporate culture Corporate culture 5

6 Steps of Research (according to Lukka 2003) Awareness of Problem Non-collaboration in public projects. Suggestion Incentive system to support collaboration and increase the project performance. Development Flexible incentive system consisting of different modules. 6

7 Research Question What does collaboration mean and what is the difference between the terms cooperation and collaboration? 7

8 Compering Collaboration and Cooperation (Schöttle et al. 2014) 8

9 Compering Collaboration and Cooperation (Schöttle et al. 2014) 9

10 Defining Cooperation and Collaboration (Schöttle et al. 2014) Collaboration is an interorganizational relationship with a common vision to create a common project organization with a commonly defined structure and a new and jointly developed project culture, based on trust and transparency; with the goal to jointly maximize the value for the customer by solving problems mutually through interactive processes, which are planned together, and by sharing responsibilities, risk, and rewards among the key participants. Cooperation is an interorganizational relationship among participants of a project, which are not commonly related by vision or mission, resulting in separated project organization with independent structures, where the project culture is based on control and coordination to solve problems independently in order to maximize the value of the own organization. 10

11 Lean Project Delivery System (Ballard 2000) 11

12 Definitions in Context to Lean Construction (Schöttle et al. 2014) Lean Principles Cooperation Collaboration Value maximization Individual Customer Reducing waste Partly achievable Fully achievable Standardization of processes, continuous improvement, learning Partly achievable Fully achievable Lean Tools Implementation of Building Information Modeling (BIM) Last Planner System (LPS) Depending on the information access between participants Controlling instrument Full implementation possible Network of commitment reliable promises Lean Organization 5 Whys Asking is often futile Finding the root cause Culture Leadership No common project culture Directive and partly supportive, controlling Cultural integration Supportive, selfreflection, and trust 12

13 Collaboration in Context to Lean Construction (Schöttle et al. 2014) Lean project delivery calls for collaboration at least among the key participants. While developing a project team, participants and especially the client need to address the question of which kind of relationship leads to the achievement of project goals. 13

14 Research Question How can we change the traditional system to a collaborative approach; Lean Construction? 14

15 Types of Incentive Systems based on Lewin s revolution change process (1947) Balance of the Traditional- System Activate Change ( Unfreezing ) Change Occur/ Managing the Change LEARNING Stabilization of Change ( Freezing ) Balance of the Lean- System Incentive system to implement collaboration CHANGE Incentive system to support collaboration Lean Collaboration 15

16 What is an Incentive System? (Schöttle and Gehbauer 2012) Author Wild (1973) Rosenstiel (1975) Kossbiel (1994) Becker (1995) Brandenburg (2001) Definition Deliberately designed working conditions, which activate a specific behavior. Organization itself is an incentive system. Categorization in financial incentives, social incentives, incentives of the work itself and incentives of the organizational environment. Strong correlation between the effect of incentives and the need of the incentive for recipient. Incentive system depends on the objectives to be achieved. The management system of an organization with all its elements as an incentive system. Distinguishes between monetary and non-monetary incentives and adds the work environment to the incentive system Quantity of all used monetary and non-monetary incentives influencing the collaboration between the project parties. 16

17 Collaboration: Process of shared creation (Schrage 1995) Project team is key and will decide between fail or win of the project. How the project team works together depends on: Corporate culture Project culture Business objectives Project objectives Working environment Social behavior Contract Tendering procedure 17

18 Research Question How can a public client and the project team work together collaborative, if the project team is selected based on lowest bid resulting in a inflexible and fixed contract? 18

19 Working Hypotheses The tendering procedure and the form of contract itself are incentives, which impact the degree of collaboration between the project participants. Design-bid-build-tendering procedure set incentives against collaboration, because it leads to speculative behavior of the contractors resulting in unrealistic cost estimates and an intensified focus on claim management. Requirement: Change of bid process. 19

20 Incentive System in all Project Stages Tendering Procedure to Select the Project Team Incentive System 20

21 Research Question How should the incentive system be designed, implemented, and managed to improve collaboration and what are the requirements and boundaries of the incentive system? 21

22 Lean in Public Sector: Case Study at UCSF A technical report about the construction project delivery system of the University of California, San Francisco (UCSF) will be published soon! 22

23 Purpose of the Developed Incentive System Builds strong, trustful, and sustainable relationships between the construction parties. Keeps promises agreed on. Support information and knowledge sharing. Built Transparency. Support sharing and minimizing risks. Help to realizes the optimal delivery of the project. 23

24 Thank you for your Attention! by Scott Adams ( March 06, 2013) 24

25 Contact Karlsruhe Institute of Technology (KIT) Dipl.-Wi.-Ing. Annett Schöttle Research Fellow / PhD Student Am Fasanengarten Building 50.31, Room Karlsruhe Phone: Fax: Mail: [email protected] Web: 25

26 Literature Ballard, G. (2000). Lean project delivery system. LCI White Paper 8, Lean Construction Institute. September 23, Available at Becker, F.G. (1990). Anreizsysteme für Führungskräfte: Möglichkeiten zur strategisch-orientierten Steuerung des Management. Poeschel, Stuttgart. Brandenburg, A. (2001). Anreizsysteme zur Unternehmenssteuerung. Deutscher Universitäts-verlag, Wiesbaden. Kossbiel, H. (1994). Überlegungen zur Effizienz betrieblicher Anreizsysteme. Die Betriebswirtschaft, Lukka, K. (2003). The construction research approach. In Ojala, L. & Hilmola, O-P. (eds.) Case study research in logistics. Publications of the Tuku School of Economics and Business Administration: Series B1, Rosenstiel, L. von (1975). Die motivationalen Grundlagen des Verhaltens in Organisationen. Duncker & Humbolt, Berlin. Schrage, M. (1995). No more teams!: Mastering the dynamics of creative collaboration. Currency Doubleday, New York. Schöttle, A., and Gehbauer, F. (2012). Incentive systems to support collaboration in construction projects. Proc. of the 20th Conf. of the of Intern. Group for Lean Constr., San Diego, USA. Schöttle, A., and Gehbauer, F. (2013) "Incentive Structure in Public Design-Bid-Build Tendering and its Effects on Projects", Proc. of the 21th Conf. of the Intern. Group for Lean Constr., Fortaleza, Brazil. Schöttle, A., Haghsheno, S., and Gehbauer, F. (2014). Defining Cooperation and Collaboration in the Context of Lean Construction, Proc. of the 22th Conf. of the Int. Group for Lean Constr., Oslo, Norway.. Wild, J. (1973). Organisation und Hierarchie. ZFO, 42(1)