Integrated Project Delivery: are you prepared? • Dan Leduc
By Dan Leduc
April 10, 2017 – In April 2012, I attended the Forum on Construction Law (an annual conference presented by the American Bar Association), which was almost exclusively premised on what was then a new and emerging contractual platform called Integrated Project Delivery IPD).
(In 2008, the American Institute of Architects [AIA] and ConsensusDOCS were the first two American industry organizations to publish the first standard IPD contracts, and all indications point to the Canadian Construction Documents Committee [CCDC] publishing a Canadian version of a standard form IPD contract in early 2018.)
Five years later and, despite the enthusiasm at the 2012 conference for this new platform, I do not believe IPD has achieved the market penetration many thought it would—particularly in Canada.
So what is IPD?
CCDC has characterized IPD as:
a method of project delivery distinguished by the contractual arrangements among a minimum of: owner, contractor and design professional, that aligns the business interests of all parties and motivates collaboration throughout the design and construction process tying stakeholder success to project success.
In other words, the notion of IPD involves one contract for the Project in which the parties focus on design and construction, and financial success is tied directly to the Project outcome. Parties to the contract (the stakeholders) share in any profit or loss (with a cap, to some degree), and any additional profit/loss is ascribed to the owner.
The main driving force behind this arrangement is shared financial risk and reward. Where liability is waived between the parties, there would be early involvement between key stakeholders, with jointly developed project outcome criteria and collaborative decision-making throughout. This notion would operate from a project budget with an estimated total cost and associated risk pool.
Early American experiences in IPD demonstrate a dramatic decrease in the number of RFIs, and the ability to start and mobilize project work without a full and complete design—all while reducing the time to completion.
Beyond the contractual context, IPD requires a dramatic shift in corporate culture, calling all parties to be willing to collaborate and/or operate on mutual trust and respect (often the opposite of current project experiences). The process requires a complete restructuring of current risk allocation so that the party best-suited to manage a particular risk is allocated that risk.
Early experiences with IPD reveal numerous projects coming in under budget and earlier than planned, but it seems like quite a departure from our current provision of design and construction services (sometimes referred to as economic Darwinism*).
Were this new IPD platform to take hold, I suspect the starting point would be owners and architects deciding their particular project should proceed by IPD. As electrical subcontractors, you may want to start having managers (and, in particular, younger managers) understand the IPD process so they can start developing the requisite skills and, when you’re asked to submit a proposal or to join/qualify for an IPD team, you will be prepared.
Note * Patrick J. O’Connor Jr., “Integrated project delivery: collaboration through new contract forms”, © 2009.
Dan Leduc is a partner in the law firm Norton Rose Fulbright Canada LLP and practices almost exclusively in construction law. He is frequently called upon to advise and represent owners, engineers, subcontractors, suppliers and builders in such front-end services as contract review, tender issues and general construction matters, as well as in litigation and arbitration. Dan can be reached at 613-867-7171 or firstname.lastname@example.org.
* This article also appears in the April 2017 edition of Electrical Business Magazine. Check out our ARCHIVE page for back issues.