Link to thesis - Concept - NTNU

The concept of project flexibilityFlexibility management as a systematic approach is not a new concept. Sager (1990) found severalexamples of flexibility as one approach to prepare for the effects of uncertainty in planning. However,Sager also points out that flexibility is an important term very often used by planners but rarelyscrutinized theoretically.One approach to project flexibility is based on theory related to financial options, referred to byBrennan & Trigeoris (2000) as the real options paradigm. In this paradigm, flexibility is compared toowning an option - the right, but not the obligation to take an action in the future (Amram & Kulatlaka,1999).Koskela (2000) describes how production principles such as just-in-time has been adopted in atheoretical framework aimed at the construction industry under the term lean construction. In thisframework, the term “last responsive moment” is used to achieve flexibility in projects (Ballard &Howell, 2003). According to Ballard & Howell (2003), the last responsive moment means thatdecisions must be made within the lead time for realizing alternatives and that a decision should not bemade until it has to be made.Mandelbaum & Buzacott (1990) uses the number of the remaining alternatives after a decision hasbeen taken as a measure of flexibility. Eikeland (2001) discusses “room for manoeuvring” related toproject flexibility. He relates “room for manoeuvring” to the internal uncertainty of the project,represented by future yet undetermined internal decisions. According to Eikeland (2001), a decision iswithin the room for manoeuvring if it does not violate the consequences of previous decisions. Termslike adaptability and robustness are often used when discussing issues related to what this paper callsflexibility. Flexibility may also be described as a way of making irreversible decision more reversibleor postponing irreversible decisions until more information is available.Note that flexibility as discussed in this paper is not seen as an alternative to strategic management, butas a means to help realising a strategy, in the way that Samset (1998) argues that successful projects arecharacterised by a distinct strategy in combination with sufficient tactical flexibility.Flexibility in the process and the productFlexibility in a project can be associated with the process or the product. The former refers to flexibilityin the project’s decision process. The real-options paradigm recognises that decisions are madesequentially over episodes. The use of decision gate models provides a successive commitment to aproject, including the possibility of iterations, as shown by Eskerod & Östergren (2000). Thephilosophy of not taking decisions until the last responsible moment, as shown by Ballard & Howell(2003) is also an example of flexibility in the decision process. The latter refers to the effects of aproject, in the sense that the final product of the project is prepared for alternative use. This approach toflexibility is used in office building construction, as described in Brand (1994) and Blakkstad (2001),where the need for adaptability is well known.Efficiency and effectivenessIn this paper, the term efficiency is linked to the immediate outcome of a project. It is a question ofdoing things right and producing project outputs in terms of the agreed scope, quality, cost and time. Itis an internal measure related to what Samset (1998) refers to as the project or contractor perspective.The term effectiveness is linked to the longer-term effects of the project, or in other words, to do theright things. It is an external measure. Eikeland (2001) relates effectiveness to how the results of aproject contribute to value added for owners and users. According to Samset (1998), effectivenessmeasures the realization of the project’s purpose, or the project’s long-term consequences. This is theperspective of the project owner or financing party, who to a large extent have a similar perspective asthe users.2