Best Value approach: lessons learned & success factors from Norway

31 August 2017 Consultancy.uk

The Best Value approach has seen its adoption increase rapidly in Norway – the country currently has ten pilot projects in various phases leveraging the methodology. Three experts actively involved in the pilot projects – Wiebe Witteveen (a partner at consultancy Best Value Group), Ari Soilammi (Innovation Manager at RIF, the Norwegian association of consulting engineering firms) and Cecilie Blytt (Senior Adviser at Difi, the Norwegian Agency for Public Management and E-government) reflect on the developments so far, provide lessons learned and share success factors that could facilitate further roll-out in Norway.

Norway’s use of Best Value clearly still finds itself in its infancy. The Association of Consulting Engineers (Rådgivende ingeniørers forening; RIF) started promoting Best Value in Norway in 2013. RIF focused efforts on the major public clients in the road and rail sector. This sector has a very small and reachable group of very large public client organisations combined with a huge presence in the construction industry. There are currently three major client organisations: Nye Veier AS – The New Roads Agency - client, Statens Vegvesen (the public road authority - client) and The Norwegian Railway Directorate, (the railway authority - client) and BaneNOR, (the railway construction company – vendor to the Railway Directorate). RIF also made an announcement in the Norwegian construction media, recommending that Nye Veier should adopt Best Value as a new organisation. This was done at the time when Nye Veier was being established in 2015 – and before their new organisation had started up any projects.

In 2014 The Norwegian Agency for Public Management and E-government (Difi) initiated the introduction and legislative anchoring of the Best Value approach in Norway. To provide stakeholders with guidelines, RIF translated and edited the book ‘Best Value Procurement’ book from Dean Kashiwagi, the founder of the Best Value approach, and conducted  thorough research into the usage of the method in the Netherlands, the first country to adopt the methodology in Europe. Difi, in addition, organised a Best Value study trip for public clients to the Netherlands, visiting Rijkswaterstaat for two days, allowing its stakeholders to gain first-hand information.

The Best Value approach: lessons learned and success factors from Norway

Pilot programmes

In order to give the method a viable starting-up environment, Difi launched a pilot programme for ten projects, as well as crafted BVP templates to be used by the pilots. In 2016 Difi initiated the development of an evaluation method and benchmark of the usage of Best Value in cooperation with NTNU and Project Norway. This project was financed by Bygg 21, a cooperative between the construction industry and public authorities. An issue that seems to arise in any new market is the question of legality of the procurement method, especially the clarification phase. Difi therefore took this issue head on, translating several legal documents and court proceedings from Dutch, and publishing these free of charge on a special website.

The following organisations have started, or will be starting a project in 2017: Asker municipality, Nye Veier AS – The New Roads Agency: (3 pilots), Oslo municipality Omsorgsbygg KF (2 pilots and more coming up), Rælingen municipality, Stavanger municipality, Sykehusbygg HF – The national hospital construction agency and Trondheim municipality. Finally, Bane NOR, a public company responsible for the Norwegian national railway infrastructure, The Museums in South Trøndelag and Oslo Municipality Undervisningsbygg – Agency for school constructions, are in the early phase of planning Best Value projects. All of the projects are in the construction industry. Interestingly enough, 60% of the pilot projects are buildings and 40% are infrastructural projects. In the Netherlands, most of the pilot projects in the construction industry are infrastructural projects. Also noteworthy is the appetite for the Best Value approach by the Norwegian municipalities. Of the ten pilot public clients, six are municipalities, which is interesting because in the Netherlands the central government was previously the only public agency driving projects in the early phase.

The main reason why municipalities are involved in so many pilot projects is probably that Difi, though a central government agency, has an important role as provider of general purchasing guidance for the Norwegian municipalities. Difi provides purchasing information through a special website (‘Anskaffelser.no; which translates to “purchasing.no”) with a section of the site dedicated to Best Value. Furthermore these municipalities are primarily investing in building projects and to a much lesser extent in road and rail infrastructure, which is the domain of national state owned agencies like The Norwegian Public Roads Administration and the Norwegian Railway Directorate.

Large launching project

A major similarity between the Netherlands and Norway is a large launching project. In the Netherlands the launching client was Rijkswaterstaat, the Dutch agency responsible for highways and waterways among others. In 2008 Rijkswaterstaat decided to resolve 16 major road bottlenecks in the Netherlands using Best Value. The so-called Fast Track Program (Programma Spoedaanpak Wegen) is the world’s largest Best Value program with a combined worth of €600 million. This program kickstarted the usage of the Best Value approach in the Netherlands. In Norway, the launching client is also a highway agency: New Roads (Nye Veier AS). New Roads, which was established on 4th of May 2015 and is a stateowned company, has as its goal to build roads faster, cheaper – and more innovative. New Roads is a clear example of an innovator (like Rijkswaterstaat): with highly educated personnel, government funded and more risk-oriented than the Norwegian Public Roads Administration. One of the innovations that New Roads has embraced is the Best Value approach.

The E 18 Rugtvedt-Dørdal is Norway’s first Best Value project

The combination of public authorities (Difi and Dutch agencies) and private organisations (RIF, the Association of Architect and the Norwegian Contractor Association and others) actively recommending Best Value through the media at various conferences and at face to face meetings with client organisations made Best Value virtually impossible to neglect in the Norwegian construction industry at the time  Nye Veier was starting up. With an innovative client organisation, plenty of information available about Best Value, and the combination of private and public promotion efforts, it was not a coincidence that Nye Veier were the first movers on the client side in Norway.

The first project that New Roads applied the Best Value approach to was the E 18 Rugtvedt-Dørdal. The contract E18 Rugtvedt – Dørdal consists of engineering and construction of an approximately 16,8 km new four-lane highway from Rugtvedt to Dørdal. On May 10th 2017 the contract was awarded to Hæhre Entreprenør AS for around €180 million. Throughout the process, New Roads was supported by the Dutch consulting firm Best Value Group.

There are two more similarities between Norway and the Netherlands apart from a large launching project. The first is  a large public knowledge institution embracing the Best Value approach. In the Netherlands the NEVI (Dutch purchasing association) adopted the Best Value approach and received a license from Dean Kashiwagi / Arizona State University in 2011. The social system in which Best Value was applied was the Dutch purchasing community. NEVI organised many meetings on the topic of Best Value. In Norway, RIF and Difi are the main adopting organisations. Difi is the Agency for Public Management and eGovernment that aims to strengthen the government's work in renewing the Norwegian public sector and improve the organisation and efficiency of the government administration. RIF and Difi have been the driving forces in Norway. Under their influence pilot projects in the Netherlands were visited and several documents were translated from Dutch to Norwegian.

This is also the second similarity: the translation of the Best Value manual into the native language. In 2016 the Norwegian Engineering association RIF translated the book ‘Best Value Procurement’ into Norwegian*, while more recently Difi has also translated some case studies from the book ‘Best Value Werkt’ (translates as “Best Value works”) and is the process of translating parts of ‘Best Value Stroomt’ (translates as “Best Value Flows”)**. The number of copies sold of the Dutch book suggest that it has helped paved the path for further adoption, with a similar scenario forecasted in Norway.

To turn Best Value into a success, many more stakeholders will have to be trained.

Growing its maturity

The uptake of the Best Value approach in the Netherlands can be described as tremendous. What used to be a “niche” way of procuring has now gained momentum. The tipping point was crossed in 2012 and today many organisations are either contemplating using Best Value or are using it already. In Norway the first project E18 Rugtvedt-Dørdal needs to be successful. This will stimulate other contracting authorities to start using the Best Value approach. The procurement law in Norway follows the European procurement law for all major public financed projects above certain investment levels. These laws encourage the use of both quality and price as award criteria instead of just price (using MEAT, or most economically advantageous tender). In the Netherlands the new procurement law has increased momentum for the Best Value approach, with the same expected to happen in Norway.

Another lesson that can be learned from the Netherlands is the importance of education. In the Netherlands, thousands of people on both procurement and sales side have been trained. Best Value is another way of thinking that starts with thorough education. In Norway several hundred people have been given short introductions to the Best Value approach since 2013, and more than one hundred professionals have now been trained and/or certified to a B level by the Best Value Group and other experts during 2016. To turn Best Value into a success, many more stakeholders will have to be trained.

* The book is authored by Jeroen van de Rijt and Sicco Santema. The Norwegian vergion, titled ‘Prestasjonsinnkjøp’ is co-authored by Ari Soilammi.

** The book ‘Best Value Werkt’ (2015) is authored by Jeroen van de Rijt and Wiebe Witteveen, while ‘Best Value Stroomt’ (2016) is authored by Jeroen van de Rijt, Wiebe Witteveen and Sicco Santema.

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