You have the person who designed the jigsaw (the architect), someone who knows the picture and you have an edge expert, and someone who knows what a tree looks like. Now imagine the process of putting together the jigsaw. Firstly, the picture guy (project manager) asks the corner and edge expert (foundation contractor) to build the parameter of the jigsaw. Then the tree guy and his friends (subcontractors) pitch in to complete the work.
This well-established step-by-step process ensures that the foundations are built before the windows, that conduits are built before the fiber optics are arranged, and that carpets are laid before the furniture is delivered. However, what if the windows are prebuilt? What if conduits are built offsite with built-in cabling? What if concrete floors are mirror-polished, negating the need for carpeting altogether?
What is Integrated Project Delivery?
Integrated Project Delivery (IPD) is a method that pulls together all project teams, from the architect to general contractor to owner and interior designer, in order to take advantage of all key stakeholder knowledge and maximize the best project outcome. IPD is the highest form of collaboration because all parties, owner, architect, contractor, etc., are joined by a single contract.
The project is defined by a multi-party contract, which includes shared risks and rewards. Project partners typically include the owner, architect, designer, general contractor and key trade partners. They all form a virtual organization to design and deliver the project. Each participant’s profit is separated from their cost base, and all the participants pool their profits at risk.
4 Top Benefits of IPD
- Increased Transparency and Cooperation Since all involved parties are one legal entity, there is increased collaboration and transparency. The entire team can openly share documents without any legal or proprietary risk.
- Shared Risk and Liability The IPD team often has a multi-party contract, forms a joint venture or will form a project-specific LLC. This means the risk and liability for project delivery are now spread equally among the core IPD team.
- Unified Goals Every key stakeholder in a construction project always has his or her own specific goals and objectives. For example, the general contractor wants to deliver a great building that performs well for their owner and is delivered on time and on budget. The architect wants the most creative and innovative design. By using the IPD model, everyone’s goals are aligned because all team members are working together from the start. The parties are focused on the project as a whole, rather than their own individual part of the project.
- Cost Certainty The team embarks on what is called a validation study. It typically costs the client 1 to 2 percent of the hard costs. At the end of validation, the client gets a high degree of cost certainty. This is a major benefit of IPD; most other delivery methods typically require a spend of approximately 4 percent of hard costs to get to the same cost certainty.
History of Integrated Project Delivery
IPD was developed in San Francisco by health care providers who hit a crisis with the construction of medical facilities in the bay area. They needed a better way of building much needed medical facilities on time and on budget, which led to key construction professionals getting together to discuss the best way to meet the needs of the health care provider.
The traditional bidding process tries to optimize the individual scope of each trade contractor.
“The theory goes that if we optimize each individual part—and bring them all together—the whole will be optimized,” explains Tim Coldwell, Managing Director of Chandos Construction.
“But what if we optimize the whole? Maybe, it is better to allow some inefficiencies with the drywall scope as it has a larger positive effect on other trades in the project. The basic idea is to incentivize the team to optimize the whole instead of the parts.”
Steps for a Successful Integrated Project Delivery Implementation
The American Institute of Architect’s Integrated Project Delivery: A Guide, considered the bible of IPD, sets out the following standards for a successful IPD implementation:
Mutual Respect and Trust In an integrated project, owner, designer, consultants, constructor, subcontractors, and suppliers understand the value of collaboration and are committed to working as a team in the best interests of the project.
Mutual Benefit and Reward All participants or team members benefit from IPD. Because the integrated process requires early involvement by more parties, IPD compensation structures recognize and reward early involvement. Compensation is based on the value-added by an organization and it rewards “what’s best for project” behavior, such as by providing incentives tied to achieving project goals. Integrated projects use innovative business models to support collaboration and efficiency.
Collaborative Innovation and Decision Making Innovation is stimulated when ideas are freely exchanged among all participants. In an integrated project, ideas are judged on their merits, not on the author’s role or status. Key decisions are evaluated by the project team and, to the greatest practical extent, made unanimously.
Early Involvement of Key Participants In an integrated project, the key participants are involved from the earliest practical moment. Decision making is improved by the influx of knowledge and expertise of all key participants. Their combined knowledge and expertise is most powerful during the project’s early stages where informed decisions have the greatest effect.
Early Goal Definition Project goals are developed early, agreed upon and respected by all participants. Insight from each participant is valued in a culture that promotes and drives innovation and outstanding performance, holding project outcomes at the center within a framework of individual participants objectives and values.
Intensified Planning The IPD approach recognizes that increased effort in planning results in increased efficiency and savings during execution. Thus the thrust of the integrated approach is not to reduce design effort, but rather to greatly improve the design results, streamlining and shortening the much more expensive construction effort.
Open Communication IPD’s focus on team performance is based on open, direct, and honest communication among all participants. Responsibilities are clearly defined in a no-blame culture leading to identification and resolution of problems, not determination of liability. Disputes are recognized as they occur and promptly resolved.
Appropriate Technology Integrated projects often rely on cutting edge technologies. Technologies are specified at project initiation to maximize functionality, generality, and interoperability. Open and interoperable data exchanges based on disciplined and transparent data structures are essential to support IPD. Because open standards best enable communications among all participants, technology that is compliant with open standards is used whenever available.
Organization and Leadership The project team is an organization in its own right and all team members are committed to the project team’s goals and values. Leadership is taken by the team member most capable with regard to specific work and services. Often, design professionals and contractors lead in areas of their traditional competence with support from the entire team, however, specific roles are necessarily determined on a project-by-project basis. Roles are clearly defined, without creating artificial barriers that chill open communication and risk-taking.
Three Levels of IPD Agreements
The AIA provides agreements for three levels of integrated project delivery. The types of agreements are listed below:
Transitional Forms are modeled after existing construction manager agreements and offer a comfortable first step into integrated project delivery.
The Multi-Party Agreement is a single agreement that the parties can use to design and construct a project utilizing integrated project delivery.
The Single Purpose Entity (SPE) creates a limited liability company for the purpose of planning, designing and constructing the project. The SPE allows for complete sharing of risk and reward in a fully integrated collaborative process. AIA documents for IPD can be used on large private sector commercial projects.
Collaboration and Communication = Success
At this point, collaboration, communication and an appreciation of the shared risk are key to the success of the project. The focus moves away from the profitability of the individual company, be it the architect, general contractor or subcontractor, and toward the shared pot. Decision making is based on what’s best for the project. This way, it is sometimes better to pay more for a component, for example, of suboptimal design, production, or delivery because it’s better for the overall project.
All team members are brought together in one location to support collaboration. Construction management software, like Procore’s, allows all key stakeholders from the project managers and superintendents to architects and subcontractors to build a truly collaborative environment and stay in the loop so that any issues that arise are dealt with proactively and promptly for the mutual benefit of the project.
If there’s an issue with a duct clashing with a column, it’s not just the draftsperson who is involved. Superintendents, the architect, mechanical, and structural team members all huddle together to find a solution.
“We insist on co-location to promote rapid resolution of a problem,” explains Coldwell. “For instance, if there’s an issue with a duct clashing with a column, it’s not just the draftsperson who is involved. Superintendents, the architect, mechanical, and structural team members all huddle together to find a solution. An issue can be rectified within 30 minutes whereas, in the traditional delivery method, it goes back and forth for weeks.”
Shared communication and honesty are critical to the success of the project. Coldwell explains that “the ability to forecast costs is key, so every month, the entire project team discusses costs in an open setting and forecasts a projected final profit.
“You get a sense of the complete transparency of costs and a mutual sharing of the ups and downs, so when there’s an issue, the whole project team jumps on it to find the best possible solution,” adds Coldwell.
Fast Growth of IPD Expected
What’s the future look like for Integrated Project Delivery in North America? Quite rosy, according to a study by the University of Minnesota. The report titled IPD: Performance, Expectations, and Future Use examines the use of IPD across North America and its propensity for future use. When compared to non-IPD projects, approximately 90 percent of the respondents rated their expectations of IPD better or significantly better.
Approximately 150 integrated delivery projects are underway or have been completed in North America. Of those, there are nearly 30 IPD projects in various stages across Canada. Many of the Canadian projects are publicly funded. It allows for transparency where taxpayers’ dollars are used, for instance when building schools or hospitals.
In 2018, Kingston, Ontario was the first North American city to have an IPD bridge construction project. The Canadian city partnered with designers and contractors to build a $180 million bridge, one of the city’s largest infrastructure construction projects, using the integrated project delivery method. According to Kingston officials, this not only marks the first time the IPD model will be used in North America for the construction of a bridge, but the Third Crossing Bridge is also one of the largest infrastructure projects in recent years.
“IPD lends itself to projects with a high degree of complexity,” says Coldwell.
Research shows that a more collaborative and integrated delivery will likely lead to successful outcomes and optimal team performance. As we see more government agencies and owners embrace the Integrated Project Development model, other more mainstream construction projects will also likely jump on the IPD train.