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). 1 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 3 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.