Integrated Project Delivery (IPD): What, Why, and How?

Introduction

The construction industry is continuously evolving, with innovative delivery models like Integrated Project Delivery (IPD) reshaping project execution. As projects grow in size, complexity, and execution challenges, the choice of delivery method becomes crucial. It’s not enough to select qualified partners and teams; adopting an appropriate collaboration and delivery method is key. IPD emphasizes collaboration, shared risks and rewards, and collective decision-making to optimize project outcomes. This article explores the intricacies of IPD, its real-world implementation, and its comparison to other delivery methods.

What is IPD?

Integrated Project Delivery (IPD) is a project delivery approach that integrates people, systems, business structures, and practices into a collaborative process. The goal is to optimize project results, increase value to the owner, reduce waste, and maximize efficiency throughout all phases of design, fabrication, and construction.

IPD Formation in the Real World

Project composition in IPD is typically organized in a tiered manner. Delivery Team members must assign staff to the execution team, management team and executive team. The Management Team plans and manages day-to-day activities, while the Executive Team oversees these activities and makes significant decisions impacting the project’s budget, schedule, and quality. In case of a management team dispute, it escalates to the Executive Team for a decision. Unresolved issues are referred to a pre-agreed third-party neutral, ensuring equal input from all team members unless otherwise agreed upon at the project’s outset.

Contractual Agreements in IPD

1. Multi-Party Contract Structure: The IPD contractual model involves a single contract signed by all key project participants, including the owner, architect, engineers, contractors, and sometimes key subcontractors. This contract specifies shared risks and rewards, aligning financial incentives with project outcomes. It could take other forms, like signing contracts with the main vendor, who signs contracts with sub-vendors, and then signing a collaboration agreement with all parties defining the risk, liability, and profit sharing.
2. Pooled Risk and Reward: The contract establishes a pooled risk/reward structure, where financial incentives are tied to the overall success of the project rather than individual performance. This promotes a unified team effort towards achieving project goals.
3. Governance and Decision-Making: The IPD contract defines a governance structure that supports collaborative decision-making. Typically, a project leadership team or steering committee makes decisions based on consensus, with the owner having the final say in cases of disagreement.

Benefits of IPD

Achieving More Financially:

Team members collaboratively structure the incentive pool and decide on allocation based on defined performance goals with clear metrics such as quality, schedule, safety, changes, communication, business, and environmental issues. last planner methods and others can be used to quantify the goals using targets like the number of punch list items, requests for information, and change orders during construction. Schedule-related metrics might include completion dates or construction pacing measured by square feet completed per day.

Shared Risk and Liability Waivers:

Team members agree to waive certain first-party claims to encourage candid contributions without fear of reprisal. The incentive pool rewards members for their contributions. However, this restructuring of liability and risk can be challenging in insurance. Many IPD projects address this by using an Owner Controlled Insurance Plan.

Limitations of IPD

1. Complex Contracts: The multi-party agreements used in IPD are complex and can be challenging to negotiate and manage.
2. High Initial Investment: IPD requires significant upfront investment in team formation, training, and technology integration.
3. Legal and Regulatory Barriers: IPD is not always legally authorized for public projects and may conflict with existing procurement laws.
4. Market Acceptance: Despite its advantages, IPD is still less widely accepted and used compared to traditional delivery methods.

Conclusion

Integrated Project Delivery (IPD) offers a transformative approach to construction project management, emphasizing collaboration, efficiency, and shared success. For senior leaders, understanding and implementing IPD can lead to significant improvements in project outcomes. By adopting the key principles of IPD, organizations can achieve superior performance and greater value in their projects. For more detailed guidance and case studies, refer to the Lean Construction Institute and the American Institute of Architects resources.

References :

IPD in lean construction

The Integrated Project Delivery Model

DBIA position statement in IPD