One of the most important aspects a person should carefully articulate before starting any project is defining the project’s delivery method. Both Construction Management at Risk (CMAR) and Design-bid-build (DBB) are among the top and most in-demand project delivery systems used today.
Design-build is another great alternative option to DBB that can effectively and efficiently provide both vertical and horizontal projects of all kinds.
However, there’s yet another fourth delivery approach that’s rapidly gaining much widespread traction in the industry. It is called Integrated Project Delivery (IPD).
What Is IPD?
IPD (Integrated Project Delivery) is a project delivery approach that integrates people, practices, systems, and business structures into a system in order to leverage the astonishing talents and brilliant ideas of all team members.
The chief goal of this approach is to effectively and efficiently optimize project results, reduce waste, increase owner value, and enhance efficiency through all stages of fabrication, design, and construction. In other words, IPD brings the owner, contractors, and all design professionals together at the earliest stage of project conceptualization to create a project “team.”
The team members formed usually work together across all stages of development and help determine each project’s costs and schedules, as well as tackle any challenge that may arise in between. IPD is more than just a contractual instrument, and because of the mutual trust established between all participants, the occasion of dealing with any inefficiencies is very minimal. In other words, IPD strives to forge meaningful partnerships and create a friendly community that makes it easy for people to work on shared goals.
What Are the Functions of IPD?
Contract Terms
The primary goal of any IPD agreement is to build a collaborative setting in which team members can easily share and work on a project together. Because this approach is different from other traditional forms of construction contracts, the terms provided in the underlying agreement must clearly define the duties and roles of each team member. Thus, the agreement should specify provisions that address the scope of services, shared project incentives and goals, liability waivers, risk sharing, indemnification, waivers of consequential damages, dispute resolution, and insurance, to mention a few.
Waivers of Liability and Third-Party Liability
The liability waivers commonly found in IPD agreements describe a significant shift in construction contracting and highlight the most crucial benefits and risks the owner experiences. Every team member agrees to waive claims to each other based on each individual’s duties and responsibilities under the contract. This specific approach makes it easy for all parties to exchange data and information, and ideas without fear of liability from other team members.
Additionally, this approach also enables all participants to efficiently and effectively tackle burning issues together that would otherwise add extra fees and take more time to complete a particular project. IPD agreements also clearly establish that the whole project’s participants are jointly liable to third parties, including those damages or injuries that occur due to a team member’s negligence. Team members aren’t liable to third parties for damages or injuries that occur out of the project nevertheless.
Assumption of Expanded Liability Exposure
Collaboration between team members during the fabrication, design, and construction stages of projects raises chief concerns on whether the parties may be assuming liability for these functions. For instance, all contractors involved in IPD should provide relevant data and information to the design staff so that they may carefully articulate and formulate the design process. The same contractors should also follow through conflict checks and compatibility reviews when working on the same design.
Thus, all contractors should bear in mind that they’re held accountable and are also liable for the design by providing such data and collaborating at the design stage. Although IPD doesn’t require this kind of risk shifting, the agreement must clearly articulate each team member’s roles, duties, insurance, and scope of services, including the extent of liability.
Data Protocol and Copyright
Since IPD requires parties to exchange information and data for free, the agreement should address the use and ownership of such data, along with the protective measures provided to ensure easy access and distribution. Moreover, the agreement should also address the fact that all confidential information will become part of all the data exchanged between team members.
Project Incentives
IPD agreements require all parties to create a financial incentive program that acknowledges each team for successfully accomplishing tailored performance goals, project expectations, and other important benchmarks. The financial incentive program also establishes whether a particular project is completed for less than the overall agreed-to project fee. If a project is finished for less than the allocated project fee, team members share these funds in the cost savings after that project’s budget is established.
The same financial program also contains other incentives based on performance goals in areas of quality, cost, safety, schedule, construction processes, planning system reliability, innovative design, and teamwork. The owner may also allocate further responsibility for the occasions where the project costs exceed the projected fee, or where the project’s goals and expectations aren’t accomplished. On such occasions, the financial incentive product should clearly articulate whether the team members should return the profits they’ve earned or whether such parties shouldn’t earn future profits.
Dispute Resolution
IPD agreements have particular provisions that cover the dispute resolution procedure that allows all participants to govern themselves by solving issues together. The procedure is put in place to cut dispute resolution fees and attorney fees, as well as stop any inconvenience such disputes may have on a particular project. Some IPD agreements also provide further dispute resolutions such as arbitration, mediation, and litigation in case a team fails to solve problems internally.
Using the IPD for Decision-Making
While many owners may wish to have a collaborative team that’s geared towards project-level goals, it’s important to note that a full IPD model may not be appropriate for every project. This delivery approach is specifically tailored for big projects that take more than a year to complete and require substantial budgets. Thus, IPD appears to fit seamlessly in the fields of higher education, healthcare, manufacturing, and mission-critical and infrastructure project sectors.
By analyzing current trends, IPD allows organizations to effectively and efficiently employ collaborative delivery methods to drive value through innovative approaches. In other words, IPD serves as a vehicle through which owners can leverage to support their asset allocation and investment decisions.
Conclusion
There’s no doubt that IPD will continue becoming huge and will continue gaining massive traction in the realm of complex projects. However, trying to launch a full-scale IPD model on projects with a budget that doesn’t meet minimum requirements can result in significant administrative issues. The many procurement issues involved can make it very difficult for any organization to complete any substantial project. Also, most IPD projects demand a great deal of time and a great effort from all participants for a project to be successful. It’s important for owners first to consult a professional project management team to help determine the best delivery option that suits their project.