Using Agile in Construction Projects: It’S More Than a Methodology

Using agile in construction projects: It’s more than a methodology

Milind Padalkar Indian Institute of Management, Kozhikode, Kerala, India

Saji Gopinath Bennett University, NOIDA, UP, India [email protected]

Abhilash Kumar UL Technology Solutions Ltd., Trivandrum, Kerala, India

Abstract Agile methods have been successful in information technology projects. Can they lead to superior performance in construction projects under high uncertainty? From case study of a high performance construction company, we find that agile methods succeed when supplemented by high levels of trust, vertical communication, empowerment, and ethical values.

Keywords: Agile methods, Construction industry, Organizational trust, Values

INTRODUCTION

Despite several decades of practice experience and research attention, project performance remains far from satisfactory. According to a recent Standish Group survey report, 61 per cent of information technology projects either failed or were challenged to meet success criteria; and 74 per cent faced schedule overruns (Standish, 2013). Zwikael and Globerson (2006) survey project managers from several industries and report that despite much discussion in practitioner literature about critical success factors, the failure rate of projects remains high, with average schedule overrun of 32 per cent and average cost overrun of 25 per cent. Another study finds that 40 to 200 per cent schedule overrun is normal in information technology projects (Lyneis et al. 2001). Multiple studies link failures in information systems projects to an inability to foresee and manage uncertainty in project contexts such as user involvement, stakeholder communication; or process risks such as weak estimates, requirements analysis (Yeo, 2002, p. 245; Nelson, 2008, p. 70-71; Chua, 2009, p. 35; Lehtinen et al. 2014, p. 633). Studies from construction industry report similar findings about delayed and unsatisfactory completion of projects listing client-related, contractor-related, materials-related, and project-related factors (Chan and Kumaraswamy, 1996, 1997; Kumaraswamy and Chan, 1998; Aibinu and Jagboro, 2002; Odeh and Battaineh, 2002; Assaf and Al-Hejji, 2006; Sambasivan and Soon, 2007; Nguyen and Cheleshe, 2015).

To overcome the adverse effects of exogenous uncertainty arising from factors such as client issues, requirements management, etc., a group of software developers formed the Agile Alliance (www.agileAlliance.org) and published an agile manifesto advocating the adoption of agile methods in software development (Beck et al. 2001; Fowler and Highsmith, 2001). Following this, agile methods gradually gained acceptance and began receiving attention from IS researchers (Abrahamsson et al. 2003; Meso and Jain, 2006; Chow and Cao, 2008). These methods were patterned after the agile concepts from manufacturing (Yusuf et al. 1999; Gunasekaran, 1999). In parallel, construction industry and researchers began debating the applicability of lean and agile methods in construction projects in the mid-1990. For instance, University of Bath, UK joined with the industry to form the Agile Construction Initiative to foster adoption of lean and agile methods in construction projects (Elliman and Orange, 2000; Pollock et al. 2007). However, judging from the fact that there are few articles on agile methods (e.g. Ribeiro and Fernandes, 2010; Demir et al. 2012), and even fewer empirical studies, the agile methods do not appear to have gained as much acceptance in the construction industry, with some even questioning whether it is appropriate for construction (Owen et al. 2006).

Given that construction projects have continued to underperform, the question of construction methods remains open to enquiry. In particular, it is instructive to understand whether agile methods hold advantages over the traditional methods, what benefits do they yield, and whether their practice requires establishment of any supporting mechanisms. This motivates our enquiry. We employ single case study approach to examine a successful construction firm, and map its methods against agile principles. We find that agile methods offer a tactical operational advantage over traditional methods for mitigating project uncertainty; but can become a strategic instrument of sustained superior performance when complemented by appropriate initiatives leading to organizational trust and a culture of teamwork. We examine our findings with organizational trust literature and propose a model that integrates the practice of agile methods within the enterprise vision and strategies.

This paper is organized as follows. The next section describes the case study target and the research design. The following section provides analysis of interviews and a mapping of the study target’s practices against agile principles. We propose a model integrating agile methods with organizational trust and argue that agile methods can be a key element of operationalizing the firm’s strategic intent. The final section discusses the implications of our research, its limitations and future directions.

CASE STUDY AND RESEARCH DESIGN

The target of the case study is a cooperative, for-profit society (C-Soc) engaged in civil construction projects. It is located in the southern part of India. We chose it as a candidate for case study because it has had a stellar record in delivering high quality work within the planned timelines, and we had geographical proximity to its offices and project sites.

C-Soc consists of approximately 2000 members having equal shares and voting rights, and around 300 non-voting employees. It is driven by the values of integrity and ethics in business, and strives to deliver quality and on-time performance. It has won several national and

2 international awards for excellence in construction projects and social work. It states its values and specifies code of conduct for its employees as follows (source: C-Soc’s website):

“…a work culture emphasizing on integrity and ethics upholds the values of the Organization. Our never compromising attitude on quality front and never-say-die attitude, which makes even the most difficult task look easier, help us in building a robust work culture on the basis of which the code of conduct of the Organization is developed.”

C-Soc follows a four-tiered hierarchical structure for executing projects under the overall stewardship of President who reports to the Director Board (Figure 1, source: C-Soc data).

No of personnel Director Board * 13 Corporate strategy and governance roles President 1

Director 13

Non-permanent role, Project execution Project manager/ staffed from team leaders and operations roles Engineer

Team leader @/ 80 Sub-team leader

Team member 1900

* Director role has a direct line responsibility for project execution. All directors constitute the Director Board. Directors are elected by the members. @ Team leaders are elected into the position by the members.

Figure 1: C-Soc organization structure

It has an exemplary record of successful project completions (Table 1, source: C-Soc data).

Table 1 – C-Soc’s performance on recent projects

Project description Size (Rs Year of Schedule Planned Quality million) completion (Actual) in months performance # National Highway bypass Ph. II 1410.2 2015 24 (16) Very high Construction of office complex 507.3 2016 @ 24 (Ahead of High at state capital schedule) River bridge with approach road 173.7 2015 24 (22) High Approach road for river bridge 142.4 2015 12 (10) High Construction of educational 444.5 2016 @ 24 (ahead of High building complex schedule) # Rated by an independent auditor/consultant @ Estimated completion

The organization structure presents a few interesting features. First, the Director Board consists of the directors who also have the day-to-day operational responsibility for projects. Second, everyone joining the organization starts as a voting shareholder (class A member), or as an employee without voting rights (class C member). Every class A member generally starts as a contract laborer before being invited for membership, which is offered based on assessment of value congruence. Thus, every voting member must perform physical/manual tasks on the construction projects before advancing in the organizational hierarchy. Third, the positions of Team leader and Director are chosen through elections where the members vote from among themselves. Members typically enjoy long tenures (unless expelled for disciplinary actions) and tend to spend long durations at a given position in the hierarchy. Fourth, Project managers or Engineers generally tend to be non-voting employees who must be accepted by the team leaders by the virtue of prior interactions. Apart from receiving wages for the work, members receive performance bonuses and dividends at the close of financial year. Benefits include free meals, medical facilities, education for children and low-interest loans. Members generally view the total remuneration and benefits quite favorably, as reflected in the long, and often lifetime tenures with the organization.

As our research motivation was to examine the methods and practices of C-Soc in context of the debate about agile methods in construction, it was necessary to obtain the data freely without imposing the structure of agile principles. Therefore, we chose semi-structured interview as the method of data collection for our research, ensuring that the focus remained on the methods actually employed and protecting the responses from our a priori mental frame of agile principles. To facilitate the process of interviews, C-Soc assigned a senior and long-tenured member (SLT) to work with us. The choice for interview candidates was made jointly by us and SLT based on variety of hierarchical levels, organizational roles and project types. A total of 20 informants were interviewed. Appendix 1 shows the interview questions.

The interviews were conducted in-person at C-Soc’s offices and project sites. English or Malyalam (local language) was used as the language of interviews, based on the informant’s familiarity with the language. Malyalam interview scripts were subsequently translated into English and independently verified for their correctness. The interview durations ranged from 50-90 minutes. During the interviews, we let the informants define project performance in accordance with their own lived experiences within C-Soc, and allowed them to articulate the context, the measures and the consequences of performance. The responses were audio-recorded as well as hand scripted. We observed semantic saturation emerging after about 12 interviews.

DATA ANALYSIS, RESULTS, DISCUSSION

Agile manifesto lists 17 principles (Beck et al. 2001; Fowler and Highsmith, 2001). We reviewed the construction and operations management literature to extract key process capabilities relevant to construction projects against the principles from the agile manifesto (Table 2).

Table 2 – Key agile principles and corresponding processes in construction industry

Agile principle (A) Required processes in construction (B) Literature source(s) (C) Effective response to R1: Cope with emergent requirements Yusuf et al. (1999); Owen et al. change (Response) R2: Inter & intra enterprise integration (2006); Demir et al. (2012) R3: Rapid decision making, short time periods Effective communication C1: Frequent & honest interactions Scott and Harris (1998); Owen et among stakeholders C2: Transparency of information al. (2006); Salem et al. (2006); (Communication) Khalfan et al. (2007) Organize teams to control O1: Team accountability & empowerment Owen et al. (2006); Ribeiro and the work (Teamwork) O2: Experienced & competent resources Fernandes (2010) O3: Collaboration & cooperation Motivated, empowered M1: Supportive, positive feedback Gunasekaran (1999); Owen et al. teams (Motivation) M2: Interference-free project management, (2006); Khalfan et al. (2007); Focus on customer F1: High customization Gunasekaran (1999); Yusuf et al. priorities (Focus) F2: Frequent customer interactions (1999) Organizational learning L1: Root cause analysis of failings Scott and Harris (1998); (Knowledge) L2: Feedback system Gunasekaran (1999); Yusuf et al. L3: Continuous improvement (1999); Salem et al. (2006)

From the interview scripts, we extracted key organizational practices, actions, outcomes, and traits; and mapped them to one or more processes listed in Table 2, column B (Figure 2).

RESPONSE R1 R2 R3

Morning site Direct access meetings, to leadership CUSTOMER F1 Evening reviews C1 FOCUS at Corporate HQ, Open, honest 2- COMMUNICATION F2 Weekly reviews way reporting C2 High presence of leaders at sites

“Master plan Primacy of values on the wall” “Take charge” O1 behavior at all levels Negligible personal M1 Visible, quick or industrial TEAMWORK O2 consequence disputes MOTIVATION management M2 O3 Team accountability, Self-policing Team awards by teams Long tenures Job rotations

L1 L2 L3 C-Soc practices or actions KNOWLEDGE C-Soc outcomes, traits

Figure 2: Evidence of agile methods at C-Soc

We observe from Figure 2 that C-Soc’s work processes obtain high frequency of internal interactions and rapid sharing of reliable information across organizational levels. These directly enable the dimensions of Teamwork, Communication, Motivation, and Effective Response to Change. The latter appears to be primarily aimed towards treating changes arising from endogenous or natural causes, rather than those motivated by customers, as the Customer Focus dimension which addresses high customization and frequent customer interactions does not get mapped with any of C-Soc’s organizational practices or traits. This is not surprising because the construction industry projects generally tend to be well specified through the architectural and structural engineering designs, and standardization in materials. Unlike software projects, we expect lower levels of changing customer priorities or designs in construction industry. Likewise, the Continuous Learning process under the Knowledge dimension receives no mapping from the interview scripts. We note that Continuous Learning has strong correspondence with sense making in dynamically changing contexts. As C-Soc’s projects generally tend to be from the government or public sector domains, the changes in priorities would consist of unplanned stoppages due to political considerations rather than design changes that would require such learning. Thus, C-Soc could be viewed as a case of strong project performances associated with agile implementation with an understated Customer Focus dimension. This raises two questions. First relates to the fact that agile methods are primarily focused on managing customer requirements (Naylor et al. 1999; Beck et al. 2001; Power et al. 2001). The weak link between C-Soc’s methods and Customer Focus dimension would imply a material deviation from the core agile principles which specify active sense making, teamwork, and intervention capabilities driven primarily by a customer-induced dynamic. Absence of such core could weaken the shared intent, and reduce the methods to instrumental procedures. Given that C-Soc has rather low supervisory overheads (Figure 1), its strong project performance (Table 1) clearly owes to its methods/practices. Thus, we ask whether agile methods are instrumentally sufficient to explain its performance; and whether other enabling mechanisms are necessary to create the shared intent as a supplement to agile methods for performance and efficiency. Second, since the employees are bearers of any intent, it is important to understand how the employees experience these methods; whether they view the methods as purely instrumental to specific outcomes, or do they lead to better person-organization fit (Kristof, 1996), especially given the long tenures and slow pace of movement up the hierarchy. We noted very high congruity across the informants on values, ethics, empowerment, and organizational do’s/don’ts, sometimes transferring into their personal lives. We were puzzled by the strong motivation, enthusiasm and initiative displayed by employees at all levels, particularly the ‘take charge’ behaviors, e.g. engaging in financial transactions without prior formal authorizations and a relative absence of agency costs (Wicks et al. 1999). We also noted that employees did not feel constrained or intimidated when “speaking up” or accessing the organizational hierarchy. To understand whether a linkage exists between the practice of agile methods and the employee behaviors at C-Soc, we semantically analyzed the interview responses to isolate phrases informing on the methods, the context, the measures, or the consequences related to project performance. The phrases were associated with representative keywords (codes), which were then grouped into categories in terms of their semantic adjacency. The process was iterated until no new codes or categories emerged. Due to space limitations, only an extract is shown below (Table 3).

Table 3 – Relevant extracts from interview scripts and associated categories

Interview extract Categories “I can buy more expensive material if quality if better … I will call the President and take his Trust, phone approval … later have to file a justification for deviation” (Purchasing exec) Empowerment “Only team rewards … we don’t single out people on performance. You must cooperate. Loners Teamwork, who don’t align, will move out. You can’t have ego” (Team leader) Trust “Members are trusted people. If someone goofs up at site, they will report next morning” (Project Self-policing, manager) Trust “I must come on time. If I am late, I can be suspended” (Member); “Quality and timeliness is Values critical. Cost is not important if quality suffers” (Team leader, Design engineer) “Many times site teams nominate their own leader, even if he is younger” (Project manager) Trust “Information cannot be rationed for personal gain. You must quit if that happens” (Team leader) Teamwork “Workplace violence or alcoholism is not acceptable. You can be sent to crusher” (Member) Ethics, Values “We never give bribes. Government officers know that. It is ok if the work stops.” (Manager) Ethics, Values “Members are very experienced. They are twice my age, but they accepted me as the manager, Competence, told me everything and corrected my mistakes. I can’t think of bossing over them” (Young project Trust, Learning manager) “If I see my boss doing something unethical, I will report that to his boss. Such people are not fit Trust, Ethics, to stay in our organization. If nothing happens after that, I will report to President.” (Junior Empowerment employee)

From the analysis, we find that ethics, values, and organizational trust emerge as key variables from the practice of agile methods at C-Soc. Organizational trust equates to positive perceptions and beliefs on part of an organizational member towards other members, which influences her behaviors. It embodies the trustor’s belief in ability, benevolence, and integrity of the trustee, which motivates a risk taking behavior by the trustor (Mayer et al. 1995. C-Soc’s practice of agile methods is characterized by leaders making these attributes of benevolence, integrity and ability visible through high interaction intensity, enabling investment in shared values (Gillespie and Mann, 2004). By letting employees “take charge”, the leadership gives up a part of its control without reducing the control over the operations because this stimulates self- policing behaviors by employees (Spreitzer and Mishra, 1999). C-Soc’s low supervisory overheads equate to reduced transaction costs (Bromiley and Cummings, 1995). Based on our interviews and a review of literature on organizational trust, we propose an integrated model of performance that complements agile methods with organizational trust. The model proposed by us is inductive and not necessarily causal. However, we use causal loop diagrams for visual ease to show the nature of proposed stimulus-response phenomena that could work as trust-accretive or trust-depletive. For illustrative purposes, we show a trust-depletive model involving social loafing by manager (Langfred, 2004) as a trustor (Figure 3). Similarly, free-riding by a trusting employee would reverse the polarity of the employee’s trust – engagement link. From our case study, we find that agile methods are more than information gathering and rapid interventions – they represent opportunities for the hierarchical interactions and value reinforcement which become harder as the organizational size increases.

Peer pressure + Employee's intent + & competence + + + Employee's Employee's Trust engagement + Performance information Manager's & intervention (Agile Trust methods) + - Manager's intent & + competence Manager's + + engagement

Rewards + +

Accountability

Figure 3: An integrative model of agile methods and organizational trust

CONCLUSION

Adoption levels of agile methods remain low in construction industry, while projects continue to underperform; and the debate about their applicability remains unresolved. In this paper, we present a case study of a high performing employee-owned construction firm and find a correspondence between its methods/practices and several agile principles. While we do not find the presence of core agile dimension of Customer Focus, we find strong evidence of shared values and shared intent across the organization. Through content analysis of informant responses, we find organizational trust as a key construct interacting with agile methods to supply shared intent, and ensuring sustained high project performance at substantially reduced managerial overheads. Based on our findings, we propose an integrative model of organizational trust and agile methods. To our knowledge, our model represents a novel contribution to agile literature, as there is no systematic study linking organizational trust to agile methods. Further work on this line of enquiry is intended. We acknowledge a few limitations to our work. First, we use the single case study method; hence the normal limitations of qualitative research methods such as lack of generalizability or lack of falsifiability are applicable. Second, organizational trust being a multi-dimensional construct, its interaction with work methods could involve complex behaviours and additional variables. Third, while our case study finds high organizational trust associated with positive intent and workplace behaviours, it is quite possible that high trust could generate negative employee behaviours such as free-riding/social loafing on part of employees, or negligence/disengagement on part of managers. Thus, the linkages could possibly operate as trust-accretive or trust-depletive feedback loops. While our model accommodates such possibilities, further research is needed to understand conditions under which the different loops occur. Finally, the representation of the phenomena in the system dynamics nomenclature corresponds to our proposition that the trust-agile linkages have a strongly inductive, if not a causal character. Other variables such as leader characteristics may participate in the phenomena to alter the induced effects in ways that requires further investigation.

Appendix 1: Interview questions

1. Briefly describe your role and professional journey. What induced you to join C-Soc? 2. How were (are) you trained for your job? 3. What does good performance mean at C-Soc? How do you control performance? 4. How do you know something is not right? 5. What do you do when you know something is not right? What do you ask others to do? 6. Do others know what you are doing? What do you do to let them know that? 7. How often do you meet or interact with your President and Directors?

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