Revision as of 14:36, 28 February 2019

Abstract

Integrated project delivery (IPD) is an emerging construction project delivery system that aligns different stakeholders’ interests and objectives, while collaboratively involving key participants very early in the project timeline. It is distinguished by a multiparty contractual agreement that incentivizes collaboration and allows risks and rewards to be shared among the parties of the contract. IPD is becoming increasingly popular with various organizations expressing interest in its benefits to the construction industry. The objective of the article is to provide a description of the IPD method and a short discussion on how it has been rising as a promising method to avoid some of the inefficiencies of traditional contracting systems, as a way to reduce the conflictual relationships between the parties involved in construction projects and maximize construction project success. Furthermore, This article seeks to illustrate what are the main benefits of IPD and address the main obstacles that refrain from unlocking the value of IPD as a precursor of a larger adoption in the industry. IPD has emerged as a solution, although its implementation is not without challenges and limitations.

Definition of IPD

Figure 1: Integrated Project Delivery

There is no single definition for IPD. In fact, numerous definitions can be found throughout published studies and reports, some of the definitions continue to evolve. Mathews and Howell (2005) define IPD as “a relational contracting approach that aligns project objectives with the interests of key participants.” Formally, Integrated project delivery (IPD) is defined as a project delivery approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to optimize project results, increase value to the owner, reduce waste and maximize efficiency through all phases of design, fabrication, and construction. ^[1] . (American Institute of Architects)

IPD principles can be applied to a variety of contractual arrangements and IPD teams can include members well beyond the basic triad of owner, architect, and contractor. In all cases, integrated projects are uniquely distinguished by highly effective collaboration among the owner, the prime designer, and the prime constructor, commencing at early design and continuing through to project handover.

The current form of IPD was born out of the general belief that traditional contracting approaches create barriers to collaboration, transparency and the trust needed to truly collaborate; hence the rise of the multi-party agreement. The intent of the multi-party agreement is to create a contractual vehicle that removes barriers to collaboration (i.e., protecting profit, blaming others, hiding contingency and the mentality of every company for itself). There are many IPD proponent in the industry who believe this environment can only be created through the use of a multi-party agreement in which there are a shared risk/reward pool and no traditional financial cost guarantees.

Differences between IPD and traditional delivery methods

Table 1. Comparison between traditional project delivery and IPD. Adapted from ^[1]

A summary of the major differences between traditional project delivery and integrated delivery is shown in Table 1. And in practice, there can be more differences between IPD and design-build ^[2] :

• Procurement method: Best practices in design-build may use either qualification based selection or the best value model, where price as well as non-price, qualitative factors are taken into account. In the multi-party IPD model, only qualifications-based selection may be used.
• A degree of owner involvement: In the design-build model, the owner defines the performance expectations for the project (often with the design-builder’s input), while the design-builder is responsible for managing the details of design and construction. The owner can select its level of participation along with a broad spectrum: from fully participatory to a more delegatory approach. In the IPD model, the contracting parties form a team which assumes joint responsibility for both the definition of the project and the management of the process.
• Price and schedule commitments: In design-build, the owner typically receives commitments for price and completion date early in the process. In the multi-party IPD model, the owner does not receive price or schedule guarantees from the other parties. The owner pays for the cost of the work, even if it exceeds the budgetary goal and even if the project is delivered late.

• Accountability and risk: The design-builder accepts risk for designing and constructing the project in accordance with the project criteria and the owner can look to the design-builder as a single point of accountability. In the multi-party model, by contrast, the owner contracts with at least two other parties and yet retains ultimate accountability and risk for decision-making and the project outcome.

Traditional methods can be a catalyst for an anti-collaborative, “every man for himself” mindset — this is unfortunate because the owner may never realize the strength of fully integrated teams. Architects and engineers don’t fully engage with contractors under the traditional DB process. Also, subcontractors often follow engineering assumptions without being coordinated or validated by design professionals. Once value engineering or another scope/price reductions occur, the designer often asks for additional fees to rework drawings to reflect the contractor’s input. These time and cost overruns lead to potentially more adversarial roles between designers and contractors. In contrast, IPD is all about highly collaborative interactions, shared risk, and team building, where the key participants are involved as early as practicable ^[3].

Traditional project delivery incentivizes uncoordinated behaviour by tying firm compensation to the firm’s performance, rather than project outcome. In addition, traditional structures allow the individual firms to profit by transferring risk and blame to other parties. In this framework, it is more advantageous—at the individual firm level—to blame others for a problem than it is to expend the effort to avoid or solve the problem.

Principles of Integrated Project Delivery

Allison is one of the developers of the American Institute of Architects IPD Guide ^[1], known as the "bible" of IPD. The guide sets out the following principles to be followed for successful IPD implementation:

• Mutual Respect and Trust: All involved parties-owner, designer, contractor consultants, subcontractors, and suppliers realize the value of collaboration and commit to teamwork in the project's best interest.
• Mutual Benefit and Reward: IPD compensation recognizes and rewards early involvement. Compensation is based on added value, and it rewards positive behaviour, often by providing incentives tied to project goal achievement.

• Collaborative Innovation and Decision Making Innovation: The free exchange of ideas is supported, and ideas are evaluated by merit, not by status or role. Major decisions are weighed by and possible, made by unanimous judgement.

• Early Involvement of Key Participants: Key participants are involved as early as is practical. Decision making improved by the inrush of key participants' expertise, and this shared knowledge is most profound during the projects early stages when informed judgments have the highest impact.

• Early Goal Definition: Project aims are developed and agreed upon early in the process and upheld by all participants, Insights from every participant are valued to support innovation and superior performance.

• Intensified Planning: The point of IPD Isn't to make less of a design effort. but rather to advance design results in order to streamline and shorten the much more costly construction effort.

• Open Communication: Direct and honest communication among team members is fundamental. In a no-blame culture, the goal is to identify and resolve problems rather than assign liability or blame When disputes arise, they are acknowledged as they happen and quickly resolved.

• Appropriate Technology: IPD often relies on cutting edge technologies. Specifying which technologies you will use at the start of the project maximizes interoperability and technologies that support interoperable data exchanges are essential to project support.

• Organization and Leadership: All team members must be committed to the goals and values of the project team. Leadership is given to the most capable team member based on specific situations. Clearly define roles, but keep in mind that creating artificial barriers can tamp down open communication and risk-taking.

• Multi-Party Contract: A multi-party agreement attempts to increase collaboration even further through a shared “pain/gain” payment structure along with “no blame” contract clauses.

Figure 2 shows the fundamental characteristics from the latest version of the AiA guide (2014) and the primary behaviour are derived from the literature Trust and collaboration is the basis for all main principles. It also further suggested that principles should be used in order to reduce waste and optimise efficiency.

Table 1: Overview of all the literature that discusses what a true IPD really is and its key principles/ characteristics

IT shows also the defining principles of IPD are to create a climate of trust and collaboration for implementing the goals of the project. Such a relationship requires honest and open communication and only then can the parties respect each other and establish a trustful relationship. Other key elements include sharing, commitment, predictability, ownership, reliability and empowerment. It is important that all parties are meeting their obligations, looking out for other party’s interests as well as their own and acting honestly and with integrity, without hidden agenda, this behaviour empowers the team to trust and collaborate towards continuous improvement.

Multi-Party Agreements

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According to the AIA Californian Counsel (2007a, p. 32), “In a multi-party agreement (MPA), the primary project participants execute a single contract specifying their respective roles, rights, obligations, and liabilities”. Each party’s contributions and interests are known to everyone. Trust is required as compensations come from project success. Project success is dependent on the participants’ commitment to work together as a team. Integrated teams are creative and flexible, thus making Multi-Party agreements well suited to handle uncertain or complex projects. These type of agreements require team building, thorough planning and negotiation, which needs to take place at an early stage of the project and may be costly. In effect, the multi-party agreement creates a temporary virtual, and in some instances formal, the organization to realize a specific project. Because a single agreement is used, each party understands its role in relationship to the other participants.

Common forms of multi-party agreements include:

• Project Alliances, which create a project structure where the owner guaranteed the direct costs of non-owner parties, but payment of profit, overhead and bonus depends on project outcome.
• Single-Purpose Entity, which is a temporary, but formal, a legal structure created to realize a specific project; and
• Relational Contracts, which are similar to Project Alliances in that a virtual organization is created from individual entities, but it differs in its approach to compensation, risk sharing and decision making.

Benefits of IPD

Challenges/ Limitations

Bibliography

• AIA and AIA California Council, “Integrated Project Delivery, A Guide,” 2007,[1]

Document forward: “This Guide provides information and guidance on principles and techniques of integrated project delivery (IPD) and explains how to utilize IPD methodologies in designing and constructing projects. This Guide responds to forces and trends at work in the design and construction industry today. It may set all who believe there is a better way to deliver projects on a path to transform the status quo of fragmented processes yielding outcomes below expectations to a collaborative, value-based process delivering high-outcome results to the entire building team.”

References

1. ↑ ^{1.0 1.1 1.2} Integrated Project Delivery: A Guide https://www.aiacontracts.org/resources/64146-integratedproject-delivery-a-guide/ American Institute of Architecture (2007)
2. ↑ Haskell-INTEGRATED PROJECT DELIVERY VS. PURE DESIGN-BUILD http://www.haskell.com/media/10651/integrated-project-delivery-vs-pure-db.pdf
3. ↑ blah blah blah
4. ↑ Ghassemi, R. & Beceric-Gerber, B., (2011). Transitioning to Integrated Project Delivery: Potential barriers and lessons learned