What is Colocation (War Room)?
Colocation places the team physically together — same room or floor — to maximize the highest-bandwidth communication there is: face-to-face, with shared walls for information radiators. The intensified version is the war room: one dedicated space, plans on the walls, the project lives there.
Its trade-off is flexibility; its modern rival, the virtual team, trades the bandwidth back for talent reach. Hybrid setups try to buy both, paying in coordination.
Worked example
For a make-or-break bid, a contractor pulls estimators, engineers, and the bid manager into one room for three weeks — drawings on every wall, questions answered by turning around instead of scheduling a call. The bid that normally takes six weeks ships in three, tighter, because latency between questions and answers fell to zero.