Partnering...Swedish Style!

An Interview with NCC Partnering Manager, John Thorsson

In late July, IPI Executive Director Rob Reaugh and CEO Sue Dyer met with NCC Partnering Manager, John Thorsson.  NCC has become Sweden’s leading “Partnering Contractor” using a highly integrated approach.  We wanted to learn about NCC’s approach to Partnering and how it has improved NCC’s bottom-line.

First, a little background:

Like the United States, Sweden has a highly contentious construction industry and infighting, Claims Arbitration, and constructability issues often sink projects.  As one of Sweden’s three largest contractors, NCC has focused on Partnering as a strategic way to improve market share.  NCC Group self-performs many types of projects including office buildings, housing, industrial and processing plants, and heavy infrastructure including roads and highways in both public and private sectors.  They have 17,500 employees (7,100 in Sweden), and in 2010, NCC Group delivered $7.1B USD in work.

In 2001, NCC first introduced formal Partnering on individual projects.  Since then, Partnering has become a core organizational value and a key corporate strategy.  In 2011, Partnered Projects represented 33.4% of NCC’s revenue.  Currently, the head of Partnering sits on the Executive Management Team and the organization has Partnering Managers in each of its 5 regions and internal and external Facilitators leading project teams throughout Europe.  NCC implements Partnering on projects with the “Project Ltd.” approach and also through Strategic Partnering.

“Project Ltd.” a definition:

NCC has developed what it calls “Project, Ltd.”.  This is a three-part, virtual contract between the Owner, the Contractor, and the Designer, which enables them to pool the risk.  A“Project Ltd.” team enjoys increased transparency (NCC opens its project financials entirely and expects the same from the owner – an uncommon practice in Sweden, even for public Agencies).  The foundation of the approach is the collaborative project culture and then the team incorporates co-location and other features similar to Integrated Project Delivery.  NCC has had so much success with the “Project Ltd.” approach they will walk away from opportunities with Owners who refuse to attempt it.

The fundamental elements are similar to how we partner in the U.S.; the team identifies mutual goals, discusses project issues and creates a signed, Partnering Charter.  Additionally, NCC’s Project Facilitators take scorecards and lead training throughout the project.  However, there are key differences.

First, the contract - IPI defines Project Partnering as “a formal, structured system for creating culture change on construction projects by resolving issues, improving relationships, and aligning goals and expectations”.  The IPI Model is thus a series of structured Program Management tools, which allow project teams to implement a collaborative culture without changing the underlying contract so it works for all types of delivery methods.

In “Project Ltd.”, the Contractor, Owner and Designer sign an agreement forming a virtual corporate entity for the duration of the project.  In addition, they consent to NCC’s required Partnering elements, including a 2-day Partnering seminar to launch the project in design phase, monthly Facilitated Sessions, and follow-up surveys.  Perhaps most impressively, the team (both Owner and Prime) agree to totally open financials throughout the project—the Contractor sets out from the beginning to earn 6-10% and in exchange the Owner gets a project on time or early and on or under budget.

Does it Work?

Impressively, yes.  John shared the example of the City Tunnel Project (CTP) in Malmö, Sweden.  This was a highly visible project consisting of two underground train stations and an above ground station on a stretch of 10.5mi railway in Sweden’s most Southwestern tip.  NCC was the prime for the E400 Contract, which included internal construction of the interiors for all three stations including installation of systems and IT.  From the outset, the team faced challenges: The project budget was not finalized when NCC won the bid, drawings were not complete and issues arose relating to technology and access to the small work envelope.  In order to help reduce the risk, CTP agreed to the “Project Ltd” approach.  The increased transparency and collaboration allowed the team to overcome delays and finish 6 months early and well below the 450MSEK ($64M USD) budget.

In addition, the Triangle Station (pictured) received the Kasper Salin Prize 2011, the annual Swedish Award given by the Swedish Association of Architects to the building or project “of highest architectural standard”.  Results like this have made “Project Ltd.” NCC’s preferred delivery method and they plan to continue using it to drive Partnering in the Nordic region.

In our interview, John also described how NCC is using Strategic Partnering.  NCC defines this process as “an in-depth cooperation spanning several projects with the same team”.  By forming a trusted relationship early on in a program of projects, the both the Owner and Contractor can benefit greatly.  For example, NCC Strategically Partnered with contractor Telge Fastigheter on a series of preschools.  To date, ten have been completed.  By the time the 3rd preschool was delivered, the total time required to deliver each school was reduced from 2 years to 12 months, project-planning costs had fallen by 60% and actual production costs had been reduced by 20%.  And the team continues to streamline the process.

Needless to say, it was fascinating for IPI to learn about a Contractor that has taken Partnering to the next level with a structured process similar to Integrated Project Delivery.  Simultaneously, it was refreshing to meet a Partnering Manager who valued IPI’s mission and core values of sharing resources with the industry.  NCC has made Partnering an essential strategic piece of its Corporate Strategy because it improves project performance and increases predictability.  IPI is grateful for the opportunity to learn more about NCC’s cutting-edge processes and that we were able to share our lessons learned with an International Contractor dedicated to construction culture change!

IPI Committees are Working for YOU!

IPI Vertical Construction and Mechanical Buildings Committee
Have developed Draft Partnering Specifications for Owner Agencies who desire to follow the IPI Model for predictable partnering results... Coming Soon!

IPI Horizontal Construction Committee - (Launched April 2012)  
Creating a Partnering Specification and Owner's Partnering Guidance

IPI Research Committee
This June launched "Barriers to Partnering" Research Project.  Dr. Sinem Korkmaz may be contacting you shortly to learn about your experience with Partnering and when it best works!

Call Rob Reaugh (925) 447-9100 to get involved

Aditazz wins Kaiser Permanente "Small Hospital Big Idea Competition"

On March 28, 2012, Kaiser Permanente announced that IPI Member Aditazz has been named as a winner of the "Small Hospital, Big Idea Competition".  This Competition was created to generate cutting-edge, sustainable designs for health care facilities.

As a winner, Aditazz is eligible to contract with Kaiser Permanente for a small hospital project. The new small hospital is tentatively planned for Southern California, and the model can be adapted for use in other markets as well.

IPI Members in the News
SANDAG Partners and opens $8M Steel Reinforcement Replacement Bridge early and 5.5% under budget

IPI Founding Member's Flatiron West, Inc. and Skanska receive UCON Safety Awards

IPI's newest Members!
DeSilva Gates Construction
City of Napa

IPI Anniversaries...we love our Members!
1st Anniversary - SANDAG (June 2nd)
1st Anniversary - OCTA (June 2nd)
4th Anniversary - OrgMetrics (July 14)

IPI is supported by our Member Organizations and our Board of Advisors

John Martin
IPI Chairman
SFO Int'l Airport Director

Sue Dyer
IPI CEO
ORG-Metrics President

Larry Anderson
DCLG, Inc, Senior Associate

Jon Ball    
Hensel Phelps,
VP & District Manager

Pierre Bigras  
PG&E, Dir. Const. Mgmt.
Gas Transmission

Larry Eisenberg 
Sustainable Strategies Today, Principal

John Franich
Granite Construction,
VP & Grp 3 Mgr.

Stephen George
Connecticut College,
Director, Physical Plant

Michael Ghilotti
Ghilotti Bros., Inc., President

Dan Himick
C.C. Myers, Inc., President

Mark Leja
Caltrans, Chief Div. of Construction
Zig Rubel
Aditazz, Head of Engineering

Ivar Satero
SFO Int'l Airport, Dep. Dir, BDC

Stuart Seiden
County of Fresno,
Capital Proj. Division Manager

Todd Sutton
Skanska USA Civil, Sr. VP Nor Cal

David Thorman
CA Div. of the State Architect (Ret)

Curt Weltz
Flatiron West, President