Construction projects sometimes seem like they are run by committee. However, according to a project delivery method that is gaining some traction, if construction really was run by committee you could reduce inefficiency, labor costs, and other extra costs while boosting project outcomes.
That method is integrated project delivery (IPD).
In traditional design-bid-build, a developer or owner hires an architect to produce a full set of plans and specifications for a construction project. Then the owner requests bids from general contractors to build the project. In this scenario, the GC is going to bid a low as possible because the owner will want to pay as little as possible.
That is only part of the problem with traditional construction; you can probably think of more.
IPD is a different approach altogether.
What is integrated project delivery?
The IPD approach is a joint venture that uses a carrot much more than a stick. A builder, an architect, and an owner enter into a single contract (that sounds like the set-up for a joke, doesn't it?). However, what IPD can accomplish isn't a joke; it is the approach that yields better outcomes than current practice does.
As we were saying, three professionals enter into a contract together. The group can include others such as engineers, large subcontractors, and suppliers who all work together to determine:
- Project objectives
- Stakeholder responsibility
- Risk sharing
Everyone is involved from the beginning of the project, each bringing particular expertise, to design and build a project that should have less rework, fewer errors, and adhere more tightly to the needs of the owner.
IPD promotes effective communication and collaboration among the owner, architect, and builder from the earliest stages until project hand-over. Every member of the project reaps the rewards of teamwork, so everyone has an incentive to do what is best for the project.
Helping make it all happen is a technology that we have written about before: building information modeling (BIM).
BIM works best when every trade involved with the project looks over the 3D or 4D plan to make sure everything will work as expected. IPD takes that a step farther by having all the stakeholders working together throughout the project.
How do you do IPD?
There is no single right way to do IPD. Instead, the delivery method is based on broad concepts that are customized on a project-by-project basis.
Typically, after the builder and architect are selected, the group enters into a multi-party arrangement that is often formalized as a limited liability company (LLC) or the members all sign an American Institute of Architect’s IPD document. There are three types of arrangements to choose from depending on the level of project delivery.
The core members share all the risk and all the reward of undertaking and completing this project. Completion is accomplished by making part of the compensation of the architect or engineer and the contractor contingent on meeting specific goals. Often a bonus is offered for exceeding the goals.
IPD is a highly collaborative endeavor in which all plans, schedules, and other information are developed jointly instead of being shared out to different silos. All decisions are made jointly with rules of order created either at the outset of the project or by a designated member such as the owner.
- Decisions may require unanimous approval
- Votes may be weighted
- Veto power may be invested in certain team members
- The owner may be given the right to make a decision when consensus is not achieved
- Decisions about different parts of the project will be handled differently depending on the expertise needed to reach a reasonable solution.
IPD requires regular meetings with all core members in attendance. When you put together your IPD group, choose wisely. Look for professionals who do not have a history of disputes or litigation. Invite those who have participated in an IPD before or that are capable of working as a team.
Some considerations before you begin
Integrated project delivery is still rather new, so there is a learning curve for everyone involved. You may have problems finding people in the industry that have heard of it and who are willing to commit to it.
The time to complete a project may take a little longer than expected because of the learning curve and the significant amount of participation required of all members. The owner needs to be a strong leader to keep the group on the same page and the project moving forward.
Communication is paramount, and an owner with significant experience in design and construction will be the best choice to lead this group. Make certain the leader is legally capable of doing an IPD project. Many government entities do not yet have statutory authority to engage in this process.
In addition, US contract law is not fully suited to IPD. A contract is usually drafted to hold certain parties ultimately responsible for certain matters while all else is collaborative.
When should you use integrated project delivery?
The best project for IPD is one that is large enough and has a long enough lead time to make the effort worthwhile. If the project is complex or unique, IPD is an excellent choice of delivery method. Certain projects require collaboration:
- Corporate headquarters
- Prominent university buildings
- Museums and libraries
Standardized, run-of-the-mill, high volume, fixed design construction project does not need IPD.
Benefits and advantages of IPD
IPD creates buy-in from all stakeholders from the beginning. The team sets objectives, goals, timetables, and budgets. They work closely together, and the decision making is highly informed.
It fosters collaborative decision-making and open communication. Redundancies and conflicts are eliminated while efforts are optimized. One nice perk is that it taps the knowledge and skills of tradespeople who are not often consulted in the planning stages.
IPD offers fiscal transparency, produces shared risks and rewards, and saves on costs. The risk of design and construction defects and the liability for designers and contractors is substantially reduced.
Barriers and disadvantages
You may have trouble finding capable team members willing to participate in such a new way of doing business. Getting everyone to agree on one form of multi-party agreement could be difficult.
Banks and lenders are unfamiliar with integrated project delivery and balk at approving a loan for the owner. Limiting liability means if the project goes badly everyone suffers.
Teamwork of the highest order, supported by strong leadership and management are required to make IPD work, and that may be a tall order.
Integrated project delivery holds promise for efficiently planning and completing complex or highly unique projects on time and under budget. A collaborative approach where everyone understands the risks and agrees on how to proceed provides transparency and requires trust.
When integrated project delivery is successfully used, everyone wins.