Integrated Project Delivery – With or Without an IPD Contract

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Starting off in full disclosure, I have not been involved with a project that has formally implemented an integrated project delivery (IPD) contract. Having said that, we have been involved with numerous projects that have the philosophical foundation IPD professes, but without a singular IPD agreement.

My first observation is that owners who develop buildings hire experts in their respective fields with the intent of transferring certain risks to the professional team (design professionals, construction professionals, etc.), at least during the process of developing the building. Ultimately, all owners carry the entire risk of their development, from soup to nuts.  If you believe in the business tenet of shedding risk as an owner, why would an owner want to share risk with the construction and design professionals in an IPD contract?  Amongst my peers with IPD experience, I have discussed the structure of the IPD’s they have been involved with and the majority of them have experienced an IPD contract between the design and construction professionals and in some cases the prime subcontractors. However, in the majority of IPD examples that I have reviewed with my colleagues, the owners were not a party to the IPD agreement.  Evidently, these owners did not desire to enter into an IPD agreement. So is an IPD agreement without an owner included, contractually speaking, a true IPD agreement or is it a form of a design-build agreement? A design-build agreement can properly incentivize all parties to work in a more integrated fashion without “cutting corners” as is the perception in the marketplace.

There is no silver bullet; there is no one way to deliver all projects. Each project has its own specific objectives.  I am confident there are projects where IPD would be the preferred approach. Fundamentally, I am a believer in hiring the right people (notice I did not say firm) in the first place through a disciplined qualification/selection process — and then contracting with them under the properly defined contract terms. These two aspects are fundamental in assembling the appropriate team for a project. Through the selection process, we watch intently for indications of how collaborative they might be with the owner and other potential team members, based on what they say in their proposal, behavioral indications during an interview and through reference checking.

There are no guarantees that you will always hire the best team members for your project. After all, we are imperfect humans. But, then if you depend on a contract type to make team members behave in a more integrated and collaborative fashion, I would offer that they may not be the most appropriate team. Contracts are made for those who don’t play by the rules; not for those that play by the rules.

True IPD is great in concept but quite rare in our experience. Vincent King, P. A., a St. Paul- based attorney specialized in construction law, notes that “I’ve probably reviewed several hundred contracts, large and small, over the past few years and have yet to see a single true IPD project. Sometimes owners want all the benefits of it but without all the risk sharing…they still want indemnities, warranties, risk-shedding, etc. Those are tough contracts to deal with. Sometimes design-build contractors will develop an IPD-like approach, but will keep the traditional contracts. From what I’m seeing there is a very strong trend to contractor-led design-build, especially in the medical arena.”

In summary, our firm’s preferred approach is to achieve collaboration and integration through assembling a team that will work  together and still be allowed to professionally challenge one another. Positive tension amongst a group of collaborative and open-minded team members is always a healthy attribute in making the best business decisions and delivering the best project for our clients.

Our experience has been that regardless of any specific agreement type, selecting people that have the experience, focus and reputation to work in a collaborative environment is typically the most successful approach.

One thought on “Integrated Project Delivery – With or Without an IPD Contract

  1. Great article Nicole – makes a lot of sense… instead of worrying about the right contract, put your focus on hiring the right people with the right experiences to make the design and overall outcome a success!

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