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INTEGRATED PROJECT DELIVERY

MAY 9, 2012

© Institute for Leadership in Capital Projects (I-LinCP)

TABLE OF CONTENTS

I.       Introduction

II.     What is IPD?

         A.     Core Team

         B.     Management Committee

         C.     Goals

                  1.      Cost

                  2.      Schedule

                  3.      Quality

                  4.      Minimize Changes

                  5.      Eliminate Claims and Litigation

         D.     Incentives

         E.      Tools

                  1.      BIM

                  2.      Lean

                  3.      PMIS

         F.      Agreement

III.    When to Use IPD

         A.     Collaboration

         B.     Conflict Avoidance

                  1.      Unique, Complex, Large

                  2.      Frequent Changes

         C.     Qualified Team Members

IV.    The Agreement

         A.     Types of Arrangements

                  1.      Multi-Party

                  2.      Single Entity

                  3.      Alliance

         B.     Key Concepts

                  1.      Price Guarantees

                  2.      Shared Incentives and Risks

                  3.      Early Completion Bonuses

                  4.      Transparency

                  5.      Conflict Resolution Methods

                  6.      Parties, Roles, and Responsibilities Defined Identically

                  7.      Align Interests

                  8.      Co-location

         C.     Key Legal Provisions

                  1.      Confidentiality

                  2.      Waiver of Liability

                  3.      Waiver of Consequential Damages

                  4.      Data Sharing

V.     Leadership and Culture

VI.    Processes and Phases

         A.     Conceptual

         B.     Criteria Design

         C.     Detailed Design

         D.     Implementation Documents

         E.      Agency Review

         F.      Buyout

         G.     Construction

         H.     Close-out

VII.  Benefits and Drawbacks

         A.     Benefits

         B.     Drawbacks

VIII. IPD-ish

         A.     Limitations and Restrictions

         B.     Workarounds

IX.    Conclusions

Resources

I. INTRODUCTION

Integrated Project Delivery (IPD) evolved out of an industry frustration with construction and design mistakes, excessive costs and delays, and the resulting litigation. Techniques such as partnering and early involvement of construction managers in the design phase were useful in reducing such problems, but more change was needed. A process that reinforced collaboration from the beginning of design to the end of construction, and that gave everyone a stake in the outcome, was essential. The increasing technological sophistication required for complex projects made such collaboration even more important.

The use of IPD is growing. I-LinCP members, whether consultant, contractor or owner, should have a basic understanding of this process. Because IPD is new, there is no one single definition.  There are, however, key principles with various permutations.

This paper provides a description of those key principles, the characteristics of IPD, when it is best used, the special type of agreements used, project processes, and its benefits and drawbacks.  IPD is more than just a different set of contractual arrangements. It requires something of a culture shift and a different approach to leadership, which are discussed. 

Public sector owners may be limited in their ability to fully implement IPD. This paper suggests certain of the IPD methods that such owners may employ to approach an “IPD-ish” project delivery system. A change to governing laws to allow certain state agencies, such as institutions of higher education for example, to use IPD is advocated.

II. WHAT IS IPD?

IPD is a project delivery method that supports collaboration and a shared stake in the project outcome. There is, however, no rigid standard definition. Each project tends to be customized by the core team based on the needs of the project. There are some common elements as described below.

A. Core Team

The core team typically consists of the owner, prime design consultant (such as the architect), and the general contractor or construction manager.  The team may also include major engineering consultants, other key consultants, and key subcontractors, in either primary or supporting roles depending on the project. The team and its representatives should be defined as early as possible in the project process. The owner plays a much more active role on an IPD project.

B. Management Committee

The core team forms a management committee.  It is important that the management committee members be persons who have significant involvement in the project, and the authority to bind their respective entities (such as executives). There may be multiple committees or subcommittees with specific roles, such as senior overall management and strategy, and day-to-day project management. The members of the management committee are expected to provide leadership that fosters trust, openness, communication, respect, and collaboration.

C. Goals

The management committee establishes goals for the project. Goals may be both objective and subjective. Key goals usually include measures of project cost, schedule, and quality. It is also common to include goals for safety, operational performance, sustainability, and minority participation. The team decides how and when such factors are measured, and weighting criteria. More subjective goals may be of an aspirational nature, such as design creativity, or fostering  peak level performance.

1. Cost

The project cost should be established at the outset of the project processes. The team, consistent with the owner’s goals for the project, determines whether other factors such as life-cycle costs, for example, are part of the project cost metric. Target pricing can be used. Design is then performed to the detailed target pricing budget estimate, rather than a detailed estimate being produced in response to the design.  Time-consuming, difficult, and often contentious “value engineering” and redesign exercises can be minimized through the use of target pricing. Target pricing requires contractors and subcontractors who can produce accurate detailed estimates without extensive sets of drawings. Rather than “buy-out” being a single event, it is a continuously refined process (although, ideally, buy-out should be completed by the time the documents are completed). Target pricing also requires consultants who can establish requirements without fully developed designs and respond nimbly to immediate feedback continually throughout the design process.

2. Schedule

IPD has the potential to reduce typical schedule durations. That is a chief selling point to owners. Because of the extensive early planning and early design used in IPD, it is possible to more accurately predict schedule, and to produce detailed phasing and sequencing schedules. Early buy-out of equipment and materials is enhanced thereby reducing overall schedule duration.

3. Quality

BIM is integral to the IPD process and to improving quality over the standard project process. BIM models can be shared at an early stage.  Contractors and subcontractors can use the model to perform constructability reviews and for pricing. Phasing, sequencing, and animation of the projected construction can be produced and evaluated. Clash detection can prevent costly errors in the field. The actual metric for quality will vary from project to project, and may be tied to industry benchmarks, or specific past successful projects, for example.

4. Minimize Changes

Changes, particularly when untimely, are costly and delaying. The goal of minimizing changes is furthered by an effective use of BIM, the early involvement of all major players, the early determination of pricing, constructability and sequencing, and the shifting of certain design activities to an earlier point in the process.

5. Eliminate claims and litigation.

Eliminating, or at least reducing, claims and litigation is treated not just as a matter of risk-shifting achieved through contract language. It is a goal that can be achieved through the collaborative trust-based mindset of IPD, the use of BIM, and the shifting of certain work and decisions to earlier points in the process.

D. Incentives

Shared risk and reward is part of the essence of IPD. With goals aligned among all the major players, conflict is reduced. Incentives may take different forms. The form of incentives may also depend on the nature of the IPD model used (such as relational contract, single-purpose entity, or alliance).

Participants’ compensation may be broken down into the direct cost, overhead and profit, and bonus for exceeding goals. Generally, participants will receive their direct costs of designing or executing the work (but retain liability for cost overruns within their control). Overhead and profit, and participation in the bonus pool may be contingent upon performance and results. Profits can be pooled and then reallocated based on a predetermined formula. The bonus pool allocation can be based not only on the objective goal metrics, but also on subjective goals as established by the owner. Contingency funds that are normally thought of as assigned to a particular contract on a conventional project can also be pooled. The remaining contingency then  reverts to the owner.

Public owners will often be constrained under current law from offering incentive pay or from pooling funds to be shared among participants (or from having one contract that includes all the major players). So-called “IPD-ish” techniques can, however, still be used by public owners. Those are discussed later in this paper. The public owner may be able to award compensation under separate contracts that is ultimately determined by the same set of criteria applied to each party, depending on the jurisdiction.

E. Tools

1. BIM

BIM, like any other software, is not foolproof. The output is only as good as the information that is put into it. The close collaboration anticipated in IPD is highly enhanced by effective use of BIM. Ideally, the contractor, subcontractors and suppliers, architect and engineers, and other consultants can access the model and extract, change, or add information, as well as detect problems.

Data-sharing agreements have become more sophisticated as BIM has become more common in the industry. Earlier concerns about responsibility for data appear to be adequately addressed in well-drafted agreements so long as they contemplate the unique structure of the IPD team.

The BIM project model may even be directly used by fabricators. BIM can be used for 4-D and 5-D applications on the IPD project to visually represent the construction and design process, interim and final completion, and construction sequence durations.

BIM and IPD each enhance the other. The principles of IPD can only be realized to their full potential when BIM is employed. The possibilities of BIM are often not explored except in an environment such as IPD where parties have agreed to intense collaboration, mutual goals, information sharing, and limitations of liability.

2. Lean

Lean is a set of practices developed in the manufacturing sector. As Lean methods become more commonly used in project delivery, they are an excellent adjunct to IPD, as they are effective at squeezing out inefficiencies (and thereby increasing the common incentive bonus pool), gathering more accurate detailed information for decision-making, and promoting collaboration. General principles, concepts, or timelines may be established and then filled in with more detailed information as it is developed – often as late as possible in the process without causing delay. The development of detailed information should include the input of those actually doing the work.

3. PMIS

Project management information systems (PMIS) are almost a given on any large project in today’s world, but PMIS is an essential tool for an effective administration of an IPD project. The PMIS is a system or systems that contain all of the data pertinent to the project, identification of all of the players and their roles, and governing or controlling documents. The PMIS is accessible to the participants. It is also, ideally, more than just storage on a server, but also a task flow management system and a means of providing record documentation of decisions.

F. Agreement

An IPD project requires a special agreement that can take many different forms. The type of team structure will determine the basic type of agreement, but there are certain similarities across contract types.

The legal structure of the team can assume various formats. Most common are single purpose entities, such as a limited liability company, or joint venture, formed for the purpose of completing the project; and “relational” multi-party agreements in which different legal entities retain their separate form, but agree to the IPD process. Because of the high degree of collaboration required in IPD, and the shared risk and reward system, a relational contract creates what may be thought of as a virtual joint venture partnership.

The relational contract is more about the duties the team members owe to each other that arise out of their special collaborative relationship. It is different from a more traditional list of rights and obligations, and transfers of risk with respect to the other party. The project processes must be laid out, along with the team members’ duties for these processes, how they are to be performed, and when.

The IPD contract will, to the extent possible, impose the same terms and conditions on all parties. The basis for sharing or obtaining incentives, profits, and bonuses will be defined. In a multi-party agreement, the parties should be required to show that there are no contingencies hidden in their costs (if a shared contingency fund approach is used). Allocation of shared rewards should take into account relative risk and contributions of the parties. Typically, the parties will agree to limit most liability to one another.

The governing committee structure must be defined, as well as the method for reaching consensus. In a relational contract, often the owner will act as the tie-breaker. Dispute resolution processes should be detailed, and should foster the greatest amount of internal resolution without resort to claims or litigation. Various means can be employed, such as partnering techniques, executive committees, dispute resolution boards, and mediation. Litigation should be the method of last resort.

When using a single-purpose entity approach, the owner should satisfy itself that insurance products are available that will provide the desired coverage. These may be non-traditional products. Design professionals should assure themselves that professional licensing laws and regulations will not be contravened.

III. WHEN TO USE IPD

Not every project may be ideally suited to the implementation of IPD. IPD is best used under the circumstances described below.

A. Collaboration

IPD is ideal for projects that need a high degree of collaboration. Not every project may need that degree of collaboration. Today’s complex projects, however, often do among Owner, Architect, Engineers, specialty consultants, Contractor, and Subcontractors. Unlike the partnering process, which is largely aspirational, IPD incorporates contractual provisions to enable and require extensive collaboration.

B. Conflict Avoidance

Certain types of projects are more likely to generate conflicts. These include the following:

1. Unique, Complex, Large

Projects that are unique often come with high expectations.  The Owner expects a signature building that may be intended to serve as an icon, or it may be a building that has certain unique functional characteristics. Those characteristics may be untested. The Architect may view the unique project as one in which to make an attention-getting or award-winning design statement. The Contractor will often be unable to completely accurately predict all costs and durations for the unique project. IPD, with its project management structure, shared risk and reward, and collaboration tools will help to avoid conflicts by dealing with them before they reach an intractable point.

The large or complex project presents similar challenges. The highly technical nature of many of today’s projects, along with frequently accelerated schedules, can lead to expensive physical conflicts in the field and the resultant disputes over responsibility. The large project presents unique challenges in that it will typically be divided into segments or blocks that will have different management teams that are expected to seamlessly interface their segments and produce a successful whole. IPD provides methods and practices for preventing such conflicts, and for resolving them early in the process when they arise.

2. Frequent Changes

Many of today’s projects are fast-tracked, or even super-fast-tracked. Frequent changes are the norm. The Owner may apply great pressure on a Contractor to meet interim and overall schedules. Consultants often struggle to feed the Contractor necessary documents in a timely manner. Such documents are often found wanting. Under such circumstances, antagonistic relationships quickly develop. All parties will often start the finger-pointing and setting each other up for blame for any delay and conflicts in the field. IPD typically includes a great deal more advance planning. The collaborative nature of IPD creates a more nimble structure for quickly responding to changes.

C. Qualified Team Members

To be most effective, each of the principal entities should assign management team members who are highly knowledgeable, imbued with authority, and thoroughly involved in the project. IPD also requires an Owner who is knowledgeable and hands-on, unlike some other project delivery formats. The neophyte Owner, or the Owner who wants to leave the day-to-day workings of the Project to the Architect and Contractor, is not suited to an IPD project.

IV. THE AGREEMENT

The usual IPD agreement is a single document signed by all of the major team members, including the Owner. The IPD agreement is often described as “relational,” which is unlike the typical two-party agreement that is limited to defining the business transactions between the two parties. The agreement sets forth rights, duties, and obligations that arise out of the special ongoing relationships between – and among – the parties over the course of the project, rather than out of the discrete transactions.

A. Types of Arrangements

1. Multi-party

This is the type of agreement that will be most commonly found, and is what is contemplated by most major industry form agreements. The major parties all sign the same agreement. The Owner retains some degree of control and ultimate decision-making.

2. Single entity

Various types of entities can be formed by the parties, such as a joint venture partnership, a limited liability partnership, or limited liability company. Each member of the entity has an equity interest in the entity. Single entities may present more complex issues of  insurance and licensing.

3. Alliance

IPD grew out of the concept of alliancing first used in the North Sea oil fields. In a typical true alliance agreement, the parties waive all liability against one another (except for intentional default), and the Owner guarantees direct costs only. The alliance concept is probably a step too far for many, hence the multi-party relational agreement discussed below is more common.

B. Key Concepts

This paper addresses the most common format: the multi-party relational agreement structure.

1. Price Guarantee

Typically, there will be some type of price guarantee to the Owner. Costs are broken down into cost targets. The targets are defined by the team collaboratively during the concept phase of the Project. If, however, GMPs are used with trade contractors, it is advisable to audit such amounts so that hidden contingencies do not inflate the overall project price. The best practice is to have an overall project contingency (which will usually be smaller than if each trade contractor had buried a contingency in its subcontract). Unused project contingency may be shared with the Owner. To avoid the problem of unnecessary hidden contingencies, many IPD projects use an Estimated Maximum Price rather than a GMP.

2. Shared Incentives and Risks

One of the unique characteristics of IPD is the use of a common fee pool. This can take different forms. The precise nature of shared incentives and risks depends somewhat on the legal structure of the project team (project alliance, single-purpose entity, joint venture, or multi-party).

Much like a cost-plus with a GMP contract, cost will be broken out by direct costs, overhead, and profit for each party to the contract. For example, profits may be pooled. This can include all or a portion of the profits. The sharing of profits at the end of the job is then determined on the basis of whether quantifiable goals are met. Profits can also be reduced if goals are not met. A shared performance bonus can also be used, based on project goals rather than individual performance. Commonly included goals are cost, schedule, errors (quality), and sustainability performance. The amount of reduction depends on the goal and its value to the Owner. The sharing ratio among the team is defined in the Agreement. In general, the more aggressive the goals and targets, the greater the available reward should be so as to foster creativity and innovation. Likewise, significant consequences should flow from failing to meet interim and final target pricing and costs.

One of the most difficult issues to work out under the relational contract model is the extent to which there is shared responsibility for project cost overruns. It should be expected that this issue will be one of the more vigorously negotiated during the contract formation phase.

3. Early Completion Bonuses

Early completion bonuses should be considered as an additional incentive. These bonuses are also shared according to a predetermined formula.

4. Transparency

The agreement should include provisions that require open and prompt sharing of information. In more traditional project delivery methods, the parties carefully control and guard the outflow of information to protect themselves from liability, and also to ensure advantage over other parties.

All of each party’s project operations, including its financial information (revenues, costs, profit, overhead, etc.), will be open to the other parties.

The effective sharing of information in IPD then requires different approaches to liability, as well as data sharing, as discussed below.

5. Conflict Resolution Methods

The phrase “brass to brass, staff to staff,” is often heard in the IPD context. Much like partnering, parties will be required to resolve their differences at the lowest possible level before escalating. Members of the management committee should have the power to resolve disputes that are escalated to them. One of the chief goals of the IPD method is to limit or avoid litigation.

6. Parties’ Roles and Responsibilities Defined Identically

Because of the high degree of collaboration, shared risk and reward, and other features such as open-book accounting, care must be taken to define roles and responsibilities identically across all documents and agreements, including with parties that are not part of the core team.

7. Align Interests

The interests of each party should be aligned toward what is best for the Project rather than individual “silos” of interest. The involvement of third parties, such as community associations, commercial interests, governments, utility companies, insurers and sureties, and other stakeholders should be considered when aligning interests.

8. Co-location

Whenever possible, all parties, including the Owner, should co-locate. Co-location strengthens the IPD principles of communication, sharing of information, and consensus building.

C. Key legal provisions

1. Confidentiality

Because of the use of open-book accounting, free exchange of information, and BIM a robust, carefully crafted confidentiality provision is essential. It must be specific to the unique needs of the IPD process.

2. Waiver of Liability

When parties are overly concerned about their own liability, communications are too often tailored with a slant. Information is not shared, trust is damaged, and consensus-building and collaboration break down. Consequently, waivers of liability are essential. Unlike the alliancing concept, something short of a universal waiver of liability (except for intentional default) is the norm for the multi-party relational agreement. The chief distinction from alliances is that each party retains responsibility for its errors and omissions, whereas, in the alliance, inter-party liability for errors and omissions is waived. Waivers may except negligence, but not gross negligence, for example, and indemnification provisions should parallel such waivers. Waivers and indemnification provisions may also be tied to insurance limits.   

3. Waiver of Consequential Damages

This is a fairly standard provision even in traditional project delivery methods. Consequential damages can be speculative, hard to predict, and can dwarf the expected profit on a project. It is essential, therefore, that they be waived. (Consequential damages are not the direct result of the act of a party, but flow from that act as a secondary consequence.)

4. Data-sharing

Data-sharing agreements are commonplace in today’s world of CAD and BIM. Most data-sharing agreements, however, are drafted for use when one party is sending data to another party that is not necessarily in contractual privity, such as an architect sending a BIM model to a contractor. In IPD, with all of the major players in some sort of contractual arrangement together, a standard “off the shelf” data sharing agreement may not be appropriate. Consider using or creating one that is specifically tailored for the IPD project.

V. Leadership and Culture

If there is anything that sets IPD apart, it is the culture and attitude of an IPD project. The legal agreement should be viewed as strictly secondary to the formation of the proper culture and relationships on an IPD project.

The qualities expressed above of openness, trust, respect, alignment, and collaboration must be exhibited by the project team leaders.

Leadership will not come from the usual defensive or aggressive posturing of the traditional “silo-based” approach to project delivery. IPD requires a great deal of early planning and decision-making, even as many major players, such as major subcontractors, may be brought to the table before their scope of work or services is even known. Leadership must be directly involved in the actual workings of the project so that collaborative decision-making can occur, and  so that a viable framework is created for later decisions, as well as changes, throughout the course of the project.

A larger project may have more than one committee, whereas on the smaller project, the management committee may be the sole committee, serving all roles. On the larger project, the management committee is usually responsible for the big decisions such as project strategies, how to comply with schedule demands, assigning the right talent or expertise, and final internal dispute resolution. An operations committee will provide day-to-day project management, and more detailed hands-on management. There may even be a third level directed toward project implementation that includes field personnel who address more specific items such as submittals and RFIs.

Owners should avoid engaging companies that are not willing to commit their top management to active participation. The selection of the individual members of the leadership team is critical. Because of the need for trust and collaboration, it is not unheard for individual members to undergo personality testing and communications training.

The culture of IPD is foreign to many in the design and construction industry. Roles and responsibilities are overlapping, rather than segmented. Self-interest is no longer exclusive of the interest of others; it is aligned with the interest of others and the project as a whole.

VI. Processes and Phases

One of the essences of IPD is that design decisions occur earlier in the process, and the involvement of contractors, subcontractors, suppliers, and fabricators in those early design decisions is standard. As a consequence of the early development of a substantial amount of information, later design and documentation phases are shorter than similar phases on a traditional project.

A. Conceptual

The conceptual phase of an IPD project (often referred to as “conceptualization”) will typically include the following:

• ·         Selection of all significant team members
• ·         Space program if not already completed
• ·         Initial contact with authorities having jurisdiction regarding requirements, and creation of schedule for applications, reviews, inspections, and other submittals
• ·         Size of project
• ·         Sustainability goals and criteria
• ·         Establishment of project goals and the measurements to be used to determine success
• ·         Operational performance goals and measurements
• ·         Preliminary schedule, connected to the BIM model
• ·         Cost targets defined preliminarily, by building system, and linked into the BIM model so that effects of design decisions can be measured
• ·         Initial cost estimating
• ·         Definition of subsequent phase requirements

B. Criteria Design

• ·         Finalization of scope
• ·         Refinement of program
• ·         Further development of cost estimate using model; confirm and validate target costs
• ·         Further development of schedules; confirm lead times
• ·         Initial design of major building systems (note that this step will be at a more advanced stage than at this point than on a traditional project)
• ·         Owner’s operational goals and requirements developed further
• ·         Select any remaining team members
• ·         Finalize and understand regulatory requirements, including codes
• ·         Produce outline and performance specifications

C. Detailed Design

• ·         All significant building elements are finalized with specificity, including major equipment, materials, systems
• ·         The work of all consultants is coordinated
• ·         Not only architectural design, but also engineering, is coordinated and completed
• ·         Cost estimates include all work, are confirmed, and are a reliable basis for reliance thereon
• ·         Constructability has been thoroughly analyzed and confirmed
• ·         Schedule is finalized in detail
• ·         Coordination and delineation issues between trades are defined and resolved
• ·         Performance by all team members is closely monitored and tracked
• ·         All required detailed design is produced
• ·         A design that is known to be code compliant is produced
• ·         Develop BIM model to a detailed level, including input from trade contractors

The work of this phase occurs at the point at which design development might occur on a conventional project, but the output is more like that of the conventional construction documents phase. All design activity, including on a detailed level, should be considered essentially finished by the end of this phase.

D. Implementation Documents

It should be clear by now, that conventional phasing is not applicable to the IPD project. As can be seen, many tasks occur at least one phase earlier in the IPD project than in the conventional project.

Before the implementation documents phase commences, the design should be complete, as should the detailed design documents. Changes should be minimized, if not prohibited altogether, in this phase.

Perhaps surprisingly, some of the usual construction phase documents may be pushed back into this phase, such as submittals and shop drawings.

Milestones and major tasks include:

• ·         Schedule is finalized and tightly integrated with the BIM model
• ·         Means and methods are finalized
• ·         Specifications are completed
• ·         Costs are finalized and tightly integrated with the BIM model
• ·         The product of this phase can be used as bid documents
• ·         Fabrication of some elements and systems begins
• ·         Trade contractors input information into BIM model
• ·         Documents under review by authorities having jurisdiction prior to completion of phase

E. Agency Review

To the extent possible, authorities having jurisdiction, and other outside groups having input, should begin preliminary review as early as possible, preferably during Criteria Design. If possible with the given agency, the team should provide BIM data through shared on-line interfaces.

The Owner will lead the team with respect to strategies for presentations and regulatory submittals, and particularly for direct negotiations. The team’s relevant committee should direct team efforts, and delineate and manage the agency review process.

The design consultants should develop the documents, including preferably the BIM model, in such a manner that code compliance can be readily demonstrated to agency officials.

F. Buyout

The inclusion of this step as a separate heading is somewhat misleading, but serves to illustrate some fundamental differences between IPD and conventional project delivery methods. Because of the early development of project criteria and design, along with a parallel development of the BIM model, the contractor and trade contractors will be generating pricing along the way, which will lead to a greater ability to commit to pricing and the purchase of long lead items at early stages. Project buyout, therefore, will already have been performed, to some extent, prior to the conclusion of agency review. As much buyout as possible should be conducted by the conclusion of the implementation documents phase. After agency review, any remaining items will be bought out.

Items which must be fabricated, or equipment that may have special installation requirements or difficulties, can be tested against the BIM model, and refined and finalized.

G. Construction

All too often we see the construction phase as yet another phase of design. Incomplete or otherwise lacking construction documents are issued to the field for construction, while the design consultants constantly issue change orders, clarifications, directives, and supplemental instructions, usually in an attempt to simply finish the design, coordination, and documentation.

The goal of IPD is for the construction phase to be much less eventful than under conventional methods. The contractor and trade contractors should have been involved from the earliest possible point in the design process. Claims, RFIs, and errors, therefore, should be minimized. Input by trade contractors into the model should have served to minimize potential conflicts that otherwise would have arisen in the field. Submittals should have been already prepared and reviewed prior to commencement of construction to the extent possible. The usual submittals and RFIs will, of course, be expected from trade contractors who were not part of the early design process. Ideally, team efforts and time can be redirected toward quality control and other more useful purposes.

H. Close-out

Close-out will include delivery of a competent, accurate, useful, interactive BIM model to the Owner, which can be used for purposes of building control systems, security, performance monitoring, and maintenance. Calculation of allocation of shared risks and rewards will occur. Other typical close-out activities such as those involving authorities having jurisdiction, punchlists, warranties, and commissioning are usually not any different on an IPD project.

VII. Benefits and Drawbacks

A. Benefits

The IPD process has the potential to eliminate unnecessary costs and contingencies from pricing. The early involvement of the contractor and trade contractors will reduce inefficiencies. Some studies have shown as much as a 30% savings over conventional project delivery methods.  Moving more of the design process to an earlier point in the process, along with early involvement of contractors, helps to minimize changes, as well as errors both in design and construction. A successful IPD project fosters deep collaboration, which ultimately leads to a realization of project goals – for all parties. Part of that success is a sharp reduction in the usual claims and disputes, which is brought about by many of the standard IPD principles: early involvement of contractors, early design decisions, a spirit of collaboration, shared risk and reward, and contractual waivers of liability.

IPD is not, at least as of yet, for every project. The projects that will benefit most from IPD are those that are unique and complex. Many of today’s projects are (i) highly technical and complex, requiring technical knowledge often possessed only by subcontractors, (ii) subject to ambitious schedules, (iii) signature pieces of marketing for the Owner, and (iv) come with enormous financial and reputational risk for all involved. IPD is ideal for those projects.    

B. Drawbacks

IPD is only the latest attempt in the project delivery arena to attempt a thwarting of the inevitable human instinct to compete and to foster self-interest. Partnering, construction management, design-build, and other developments have come along to deal with the true need for better cost and schedule management, fewer errors and omissions, and fewer claims and disputes.

Old habits die hard. Corporate cultures, individual experience and training, and fear of the unknown all contribute to making IPD less than easy. Consequently, unless all the parties are experienced with IPD, and preferably have worked together before, an IPD project requires strong leadership. Because of the interdependent nature of the IPD project relationships, an IPD project is truly only as strong as its weakest link.

Except for the most experienced Owners with professional project management staffs, IPD may be most challenging for the Owner. In the past, the Owner generally set back and let each party with whom it had contracted separately be responsible for its own scope of work. The Owner got involved in participating in interviews during the programming phase, and providing criticism and ultimately approvals at the end of discrete design phases. The Owner’s main function was to provide budgets and approve costs, but with little input or involvement. During construction, the Owner might not be closely involved until the punch list step.

To avoid the usual inclinations and habits, it is important to follow closely the established principles of IPD. Collaboration and widespread involvement must be made real. Design decisions must be made early. Costs must be established early. All parties must be held accountable for adhering to a budget that is set early in the life of the project.

If a GMP is used, care must be taken to ensure that hidden contingencies are erased, that the contractor and trade contractors have not overloaded the project with personnel and overhead. When all parties have funds at risk for overruns, there will be a tendency to inflate costs and budget. Close and detailed monitoring of costs, along with open-book accounting, is essential.

The culture is everything. If the participants and their leaders do not exhibit the essential qualities of openness, trust, mutual respect, transparency, and collaboration, then IPD is unlikely to succeed.

VIII. IPD-ish

A. Limitations and Restrictions

Most governmental entities, regardless of jurisdiction, will be unable to proceed with a true IPD project. Government procurement statutes and regulations will typically require that architects be selected separately, engaged under a defined fee schedule and with a prescribed contract form. Contractors (including construction managers) will be engaged separately. Even construction managers will be selected under a similar manner, albeit somewhat earlier in the process. When design-build is authorized statutorily, the construction and design team can be selected at the outset, which provides something of a leg up on a quasi-IPD process. There is often no authorization for the multi-party agreement.

B. Workarounds

There is probably no avoidance of the initial selection and contracting processes that are statutorily mandated for governmental entities in most jurisdictions. To construct a workaround, the first step should be to start with either construction management (at risk) or design-build. If using construction management, the CM should be brought aboard as early as permissible. Where constructors cannot be brought in as early as necessary, bridging can be used, or other contractors can be hired as pre-construction consultants to provide some of the early design input that is essential. Public administrators should investigate whether expert subcontractors could be brought in as subconsultants to a pre-construction consultant without violating applicable laws prohibiting such advisors from seeking the actual construction work later.

The agreements for architectural services, and for construction services, can contain an exhibit that amends the basic agreements. The exhibit should contain mutually aligned goals, binding descriptions of duties owed to other team members, and, to the extent possible, inclusion of identical terms and conditions across contracts. Other exhibits should include the data-sharing agreement, but with similar obligations and responsibilities as defined in IPD. Although the multi-party agreement may not be possible, it is possible to nearly reach an IPD-like state by careful redrafting of existing contracts (within legal limitations), and by the addition of carefully considered exhibits.

The collaboration processes, BIM modeling requirements, data-sharing, communication requirements, and financial openness can be added to a conventional design-build or CM-at-risk project through the add-ons described above. In addition, a separate teaming agreement can be entered into by all parties, including the Owner, to the extent its provisions do not contravene legal limitations. Design-build presents the greatest challenges, as it is usually the most opaque to the Owner. Design-build agreements should be modified to increase Owner involvement and scrutiny throughout the project, and to provide mechanisms to encourage continual testing of costs, and continual achievement of improvement in costs, even after the initial price has been accepted by the Owner. The Owner should have enhanced access to the architect, as compared to the typical design-build project. The early involvement of trade contractors, and the early design decisions required for IPD, can all be included in a modified design-build agreement. Collaboration and data-sharing requirements also can be included in the design-build agreement itself without the need for additional agreements with other parties.

The greatest obstacle to incorporating IPD principles in most public sector contractual arrangements is in finding a way to create shared financial risks and rewards. For architects under separate contract, fees are stipulated by statute or by rules of the applicable board. Where such percentage fees may be viewed as maximums, rather than absolutes, it may be possible, however, to negotiate a fee lower than the maximum percentage, and to reserve the remainder up to the maximum as reward-based compensation. For contractors, there is usually no prohibition on liquidated damages, but that is typically only for contractor-caused delays. Unlike with architects, where fees are often subject to a published fee schedule, the profit and overhead charged by the contractor is typically the area subject to greatest flexibility and competition. There may be considerable leeway in fashioning a risk and reward system that affects such profit and overhead.

The most traditional project delivery system is design-bid-build. Because of its highly rigid format for the scheduled involvement of parties, the separation of interests, and confining compensation schemes, it is the least likely candidate for the successful application of IPD-ish methods.

Public procurement laws are periodically revised and brought up to date with the latest methods. A future revision to such laws to allow for true IPD should be obtainable within publicly and politically acceptable boundaries.

IX. Conclusions

Many changes have occurred in the last 50 years to the usual project delivery models. Design-build and construction management at risk have become much more common. Partnering has spread from the military to the private sector. Meanwhile, many projects have become more technologically sophisticated and difficult. The knowledge base of design and construction has shifted from the design consultants and the general contractors or construction managers to the trade contractors and specialty suppliers, who are often the most removed contractually, and in communications, from the design consultants and the Owners.

Despite constant improvements and changes in project delivery, widespread dissatisfaction remains. The atmosphere of the large, complex, or unique project is still often one of distrust, contention, defensiveness, and ultimately claims and litigation. Silos of interest have shifted and solidified in response to the morphing of project delivery methods and contracts.

No one project method will ever be a panacea. Human behavior and the need for self-interest, whether personal or corporate, will always be present. There is widespread perception, based on experience, that the current systems are not workable. Current contractual systems, despite their improvements, do not reflect the reality that everyone, in the end, will sink or swim together. Costs are too great, durations are too long, changes are too disruptive, and conflicts are too many and too serious.

IPD may not be so radical as it appears. The improvements in collaboration, early integration of design and construction, and early costing provided by design-build and construction management have led to what is really a logical next step: the creation of a virtual single entity, via a multi-party agreement, that greatly enhances responsibility for overall outcomes, rather than personal benefit at the expense of others. IPD, when used on the right projects, with the right players, has the potential to be a win for everyone.