What on earth is Agile Contracting in the construction industry?

Recently, one of the SUKAD network members reached out for Agile Contracting advice in the Construction Industry. As we were talking, I was struggling to understand the term Agile Contracting. The reason for my struggle is that in the project management community, the word ‘Agile’ typically refers to (a) Agility or (b) Agile Development, as per the Manifesto on Agile Software Development. Further, this would be the same understanding when people use the term Agile Project Management. Consequently, I was wondering

what does agile contracting means? Does it mean the contracting approach would be flexible and responsive to change, or does it mean the contract development is done in increment? Please note that either of these views raises too many questions. Therefore, we need to analyze, then I will share some excerpts from a study.

Agile Contracting means Flexible Contracting

First, does Agile Contracting means flexible contracting, using business agility in the contracting process? If that is the case, then fine. Flexibility is always good, where possible. However, we must ask, are not good practices in any domain (project management, contracting, etc.) has to be dynamic and flexible, where possible? Further, rigidity often means fragile. Therefore, any organization with mature project management and business processes understands the need for flexibility and business agility. Consequently, if they do not, their processes are too rigid and would not produce optimal results.

Therefore, we fail to see what Agile Contracting means here. Except, just adding the flavor of the month, the term agile to everything we do.

Agile Contracting means Agile Development

However, if Agile Contracting means Incremental/Iterative Development (Agile Development), then if possible, why not.

Have you noticed how many times I have used the term “if possible” in this article? If you follow this blog site, you probably know that we have written many articles and recorded numerous videos, on Agile Development. To summarize, most of the content that we share is that Agile Development, as in incremental/iterative, is great where it applies. Please refer to this image.

Development Approach Per CAMMP, Big Bang or Iterative/Incremental Development

Does Agile Development Apply in Contracting?

Henceforth, if the contract terms can be flexible and developed over time, then why not. One can imagine situations where a project has many components, and each component is contracted differently or incrementally. Would this be likely, or common? We do not believe so, but we cannot exclude the possibility.

Why do not we believe this can be common or likely?

Let us think of an example. We want to build a residential building, 10 stories, or so. How would agile contracting works here? Do we award every floor separately? Depend on the contracting approach. If the client is not using ONE General Contractor, we are likely to have:

  • Site clearance and preparation contract,
  • Foundation and subsurface installation contract,
  • A contract for the structural work,
  • Another possible contract could be MEP – mechanical, electrical, and plumbing,
  • Further, there could be other contracts for interior fit-outs and external cladding.

All that the above list gives us are different types of contracts for different specialties, which has been the common practice for decades. Each of the contract documents will be developed in a few days or weeks (depend on the size) and each contract would last weeks or months, if not more than a year.

In the conclusion of this article’s first part, what Agile Contracting in the Construction Industry mean?

A Research Paper (book)

The SUKAD Network member that we mentioned at the start of this article shared with us a study. I will review the Executive Summary below. Please note that I will not share the author’s name or the university and organizations involved for their privacy.

It is time to be a critic.

The Executive Summary – Part 1

The following image is the first paragraph. However, before reading our comments, read the excerpt and see if there is anything wrong here.

First, the definition of Agile. What the author included is the footnote is the following:

The online oxford dictionary (2016) describes agile as: “able to move quickly and easy.” However, in this context it refers to ‘agile project management’.

I will be picky in this first point. The author is equating Agility with Agile, then in the definition, he is saying Agile is Agile Project Management. So, is it Agile or Agility? The distinction between these two terms is critical since they do not mean the same thing, especially when the author defines Agile as Agile Project Management.

Further, the author also defined Agile Project Management as a “method” in the second sentence and an “approach” in the third sentence. OK, let us accept this is a matter of semantics (approach = method). Is Agile Project Management a Method? Where is this method defined?

Further, on the point of Multi-Disciplinary team, please refer to this article, to avoid making this article any longer.

The Executive Summary – Part 2

In the conclusion of the executive summary, the author states:

Is anyone reading this article, from the capital project industry, construction, or any industry “completely specify” the work?

Further, ‘if there is not detailed up-front scope description”, then what is included for the RFP for the structural contact of a 10-story building?

Closing Remarks

I will continue reading and maybe will publish other articles on the subjects. However, the executive summary has not given me any sense of credibility or logic.

Followup Note: I wrote a blog post on the same subject, generating great discussions. Therefore, we invite you to visit that post.