Early Contractor Involvement in the Netherlands

Abstract

Public construction projects have an image of poor performance, both in the Netherlands and other countries. Too many public projects go over budget and over time. A possible improvement to this poor performance could be Early Contractor Involvement (ECI). ECI literally translates to involving a contractor “early”, which in current practice implies that the contractor is involved before the design phase. As a more unambiguous definition was missing for this principle in the Netherlands, this research identified two varieties of ECI; a consulting form (like a market consultation) or a contracting form, where the contractor is contracted during the final stages of the initiation phase. ECI is suggested in literature to be a promising option to improve public construction projects in the Netherlands, but literature is split on what ECI is and what the benefits are. This thesis study aims to identify the effects, implications and implementation of ECI in the Netherlands. From this study, eight potential benefits of ECI have been identified by means of a Delphi study. Some examples of these benefits are improved risk assessment, risk distribution, higher project quality and higher certainties in both costs and planning. However, reaping these benefits requires preparation and experiments with projects using ECI. There currently seems to be no initiatives with ECI on the agenda, except the refurbishment project of the Hoevelaken intersection.
To implement ECI in the Dutch public construction industry, this research found several conditions to implement and use ECI. Firstly, the role division of the client, design firm and contractor should be done differently. Secondly, the distribution of the risks must change. And thirdly, procurement may have to be specifically designed for ECI. In addition to these conditions, there are three barriers to overcome. These barriers are primarily concerned with the client side of the market. The client fears the early commitment to just one contractor and finds it hard to secure the competition in the market properly when ECI is used. Following these two barriers is a third; there is a lack of determination to experiment and implement ECI. To help overcome these barriers, four incentives are identified to be applied simultaneously:
• An investment from the public sector to experiment with ECI,
• Design of a proper exit-clause to terminate the contract,
• The use of Past-Performance criteria for procuring projects with ECI,
• The application of incentives on contractor behavior.
When ECI is implemented in public construction in the Netherlands, ECI will have implications on both public construction projects and the construction industry. In procurement the criteria other than price are likely to become more important, as price is unrealistic to test on so early in a project. Contractors will have to develop their advising role and expand their designing/engineering capacity. As their expertise and capabilities develop, design and engineering work is likely to flow from the design firms to the contractors. The engineering expertise of the client must expand as well, to be able to communicate on the same level as the contractors to prevent communication errors and opportunistic behavior.
This research suggests that ECI can indeed improve public projects on several aspects, but if there are too few experiments to develop and improve the concept it is unlikely to see implementation soon. As communication, perseverance and determination are key in experimenting with something new, this thesis advocates investing in ECI experiments with people who are capable and willing to try to make ECI work. Proper preparation and learning from the experiments will create forward momentum. When forward momentum is gained, ECI could be disproved to work or be proved a working innovation in the construction market, marking the next market improvement on the road to collaboration in the construction industry.