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Autodesk AEC Headquarters, Waltham, Mass © Tocci Building Companies

Integrated Project Delivery from the Builder’s Perspective

By Phillip G. Bernstein, FAIA LEED © AP on December 01, 2010

Times remain challenging for the U.S. building industry.  The economy weighs heavily on each of us, the supply chain is rapidly getting globalized (even if it feels like most of the work is in China) and every day brings some sort of new technological innovation.  And while Twitter and texting won’t change building much, more profound ideas like the web, building information modeling (BIM), and digitally-controlled fabrication and installation are already challenging existing approaches and models.  Enter “integrated project delivery” (IPD) into this mix, a heady stew of aspiration, new project structure, changing risk/reward ratios, and fresh contracts.  What does all this mean for builders?

WHAT IS IPD?

Like other trendy ideas such as sustainability and BIM, right now IPD is more an industry direction than a concisely defined project delivery approach like CM-at-Risk or Design-Build.  Those typologies have defined roles, structures, and protocols.  The idea of “integration” began to emerge in 2002 simultaneously with the (theoretical) collaborative potential of BIM as a platform for transparent exchange of information between designers and builders.  As the technology and its use have matured, a more structured “IPD” methodology is coming into focus.  The industry has produced several IPD contract prototypes, and some general characteristics are starting to emerge, including:

  • Multi-party contract instruments (agreements or general conditions) – where the owner, designer and builder sign a consolidated contract.
  • Shared risk/reward structures – risks and rewards are more evenly distributed across the players, and rewards accrue to the entire team, rather than individual participants.
  • Collaborative, consensus-based decision-making – rather than traditional “propose/dispose” models, important decisions are made by unanimous consent of the owner, builder and designer
  • Outcome-based compensation – profit for integrated participants is paid based on accomplishing defined project outcomes, rather than hard bid reserve or cost/plus
  • No lawsuit provisions – where key parties agree to limit or eliminate claims against each other to establish a “reduced risk” environment.

WHAT DOES AN IPD PROJECT LOOK LIKE?

Looking to understand more clearly how several industry trends—IPD, BIM and green design—might affect a project, our company undertook a project in 2008 that was New England’s first pure IPD project.  We hired a team of architects, engineers and builders who came to the project ready to collaborate under our newly written three-party agreement that was designed under the principles described above.  The project RFP included our proposed scope, model IPD contract, and very aggressive schedule.  The consolidated team of KlingStubbins (the AE) and Tocci Builders (the CM) undertook the collaboration, endeavoring to complete our 55,000 square foot improvement of a vacant building on Trapelo Road in Waltham, Massachusetts on Route 128.  Our IPD contract was designed to push the contractual limits of alternative, integrated project delivery structure by incorporating the following provisions:

  1. A single agreement was signed by the Owner, Designer and Builder (with two critical sub-contractors added later in the job), creating a cooperative arrangement with shared risks and rewards.
  2. This contract stipulated that all significant project decisions were to be made by a consensus of the signatories, meaning all decisions were shared equally by the primary players.  A team of representatives—one from each signatory—was the management platform for the job, and these folks made all important decisions together.
  3. Costs on the project were charged without profit to the project budget, and profits were connected to designated, measurable project outcomes.  For the Trapelo Road project these outcomes were:  completion of the project within our budget; completion of the project within our schedule; achieving LEED © Platinum certification for the tenant fit-out and LEED © Gold certification for the building shell and core; and achieving a level of design quality ascertained by a third-party design inspector.  Profit allocations to each outcome were paid jointly to the designers and builders, or not at all.
  4. Signatories to the contract agreed not to file any lawsuits against each other except in cases of willful negligence—including the Owner.  This meant the project proceeded, essentially, without the threat of legal action amongst the primary participants.  As there were no “IPD-specific” insurance instruments available to the team, everyone proceeded trusting that the no-claims provision provided adequate protection from undue risk.
  5. The project was to be designed, to the extent possible, entirely in Building Information Modeling (BIM) tools in order to work with the greatest clarity and transparently of process, and as efficiently as possible.

As a practical matter, these arrangements resulted in a project where the main players worked closely together, sharing information and decisions and with objectives that were coincident with those of the owner.  The IPD structure was intended to remove as many of the traditional barriers between and construction as possible to see how a project might proceed in a relatively frictionless context.  I think all of us who participated in the job were astounded by the results:  a $10.5 million construction job, completed in 8 months (including design and construction, half the usual time Autodesk requires), on budget, LEED © Platinum, and of superior design quality.   Almost 10% of construction value was recaptured from traditionally inefficient processes and reinvested in project quality, and the project has won fourteen design awards for excellence in project delivery innovation, design quality and sustainable outcomes.  Almost as important, everyone agreed it was one of the most challenging yet enjoyable projects of their careers.  A pretty nice result for a science experiment in IPD!


HOW IS THE BUILDER’S ROLE DIFFERENT UNDER IPD?

One of the most difficult challenges for all the players on an IPD project is dropping the traditional roles and stances burned into their memory—and behavior—from traditional projects.  While everyone on an IPD project has a specific role to play, and elements of the project for which they are responsible, information flows freely during design and construction, and good ideas come from anywhere.  Since the team is collectively responsible for the success (or failure) of the project, every project participant takes a holistic view and chips in where they can.  For the builder, this can mean significant changes in attitude, approach and delivery:

  1. While the architect and engineers are primarily responsible for the design (and maintain their roles as designers of record on the job) the builder should jump in early and often during the design process, making any suggestions that they feel would improve the project.  Constructability and cost are, of course, insights that are expected, but builders often seen opportunities for other improvements in the design long before the architects; a willingness to engage in the unfamiliar territory of design process and decision-making is a must.  And since every decision of importance—even colors and finishes—is made by consensus, it’s important to be engaged accordingly.
  2. The Owner’s budget on an IPD project is overall spending target, and allocations of money “inside” that target are controlled by the IPD collaborators.  This suggests that traditional adherence to strict design-to build targets won’t work in IPD, and the builder needs to see the owner’s budget as a whole, making recommendations to spend money more heavily in design activities or other consulting than might be traditional; of course, all such recommendations are made in the interest of the project itself.  The team spends in order to meet the overall budget rather than hit specific, individual line items that comprise that budget.
  3. “We All Work for the Project” was the mantra on the Trapelo Road job, and our builder posted it on signs around the construction site.  This meant that communications—even forbidden exchanges in traditional approaches between architects and subcontractors (gasp!) are encouraged if they progress the work.  Traditional communication protocols and information standards give way to transparent collaboration.  The terms “Change Order” and “Request for Information” are meaningless and unused.
  4. And while we’re all working for the project, the builder shifts from a stance of “project administrator” or “construction coordinator” to “construction enabler.” This means affirmatively working to further progress on the job irrespective of old barriers and roles.  On Trapelo Road, our builder regularly created 3D renderings from the jointly created BIM to show everyone on the job what things were supposed to look like.  He extracted geometry directly from that model and laid out all the partition plans at full scale on the unimproved floor slabs and then directed the partition sub-contractor to proceed on that basis after the architect’s approval, saving weeks of shop drawings.  Less glamorous but as important, he realized that he could provide his own, much less expensive labor to keep the job site cleaned each day rather than pay expensive craftspeople for that job; the resulting savings were plowed right back into the project improving the likelihood of hitting the budget and making the associated profit with that goal.
  5. The “propose/dispose” model of traditional construction documents is irrelevant in IPD, so the information necessary for the builder to get the job done is defined by the builder during the process. This means that there are no such things as “the Construction Documents” (although permit documents of record are necessary).  The designer and builder collaborate to create the BIM data necessary to define and understand the design, and further required to build the job.  This work is called “implementation documentation” in IPD parlance, and it means that the BIM is what is needed to build, created collaboratively by the team.  In some cases, it may contain data more typically found in shop drawings.   In any event, it’s clear that there’s no room, conceptually, for an RFI about documentation created this way.
  6. We all realize that even on the smoothest projects, design decisions are made in the field during construction.  If a good design idea occurs to the builder during construction that idea should be given a chance.   Builders have years of experience seeing how ideas become reality and that knowledge can improve decision-making to realize the design.  A willingness to encourage design excellence during construction and provide insight accordingly might feel strange, but it’s completely appropriate in IPD.  On Trapelo Road, several design improvements, made with minimal cost but to great effect, were suggested by the builder and endorsed by the architect.
  7. Finally, the adversarial relationships that characterize typical projects are completely, and thoroughly, abandoned. Since IPD is designed in a way that decisions that benefit the owner also benefit the balance of the team, cooperative evaluation, analysis and conclusions are critical.  This does not mean that ideas should not be challenged, discussed, examined and critiqued, but rather that in IPD there are not “winners and losers” for each decision.  The zero-sum mentality of traditional construction jobs is rendered not just obsolete, but counter-productive.

WHAT ARE THE BUILDER’S OPPORTUNITIES AND CHALLENGES UNDER IPD?

IPD purports to provide fair allocations of risk and reward to builders, aligning the business objectives of all the parties for mutual gain.  And it’s clear that, if the building industry is really only about 65% efficient, process improvements create profit opportunities for all involved.  Builders who can create trusted relationships with collaborators will reap these gains and the financial rewards that accompany them.  In theory, improved outcomes, better efficiency, lower cost, and far fewer of the traditional challenges of current construction should be a win for everyone.  One builder tells me that he spends about thirty percent of his construction administration resources making sure that he doesn’t get sued, and this activity adds no value to the project itself.  Turning that effort toward a more successful, profitable and less risk result seems logical—and provides a clear competitive advantage to contractors who can do so.  And successful IPD projects seem to be more fun to work on, to boot. IPD should allow builders to do what they do best:  build.

Finding owners interested in IPD, and designers willing to play, is the first step toward these improvements, but there are further challenges for contractors interested in IPD.  To some extent IPD, like any innovation not well understood, requires a leap of faith.   It means changing or challenging almost every process tradition we currently hold dear in building:  confrontational attitudes between players, distrustful clients, siloed operations, self-preservation first.   Perhaps most dramatically, building under IDP means embracing the counter-intuitive notion that by taking on more risk (of the consolidated responsibilities of design and construction tied to specific, measurable outcomes) it is possible to reduce the likelihood of failure.  “Assuming risk to reduce it” means holding two contrary ideas in mind at one time, and unlike the “doublespeak” of George Orwell’s 1984, embracing them both.

Scott Simpson of KlingStubbins Architects suggests that IPD’s challenges are not so much technical (contracts, compensation, risk management, project control) as sociological.  Designers and builders are acculturated from graduation to the non-cooperative behaviors, self-protective maneuvers, and resulting defensiveness that characterize almost all building projects today.  And since owners believe that almost a third of all projects miss their budgets and schedules, and that the vast majority are built from inadequate documents[i] there’s plenty of social unrest in your typical project.  The structures of IPD are designed to create a platform to change these attitudes, but a willingness to try new ideas and collaborate closely with project partners—and trust that good results for them are good results for you—is the most challenging idea to come from IPD.   Concepts foreign to many in the building process—like open-book accounting, trust-based relationships, and jointly achieved outcomes and profits—will become more familiar over time as integrated processes take hold.

WHAT DOES THE FUTURE HOLD?

We’ve reached a particular moment in time when many of the ideas about integration of design and construction processes have resolved into the delivery approach currently understood as IPD.  Whether this paradigm reaches the iconic status of predecessor approaches such as CM-at-Risk or Design-Build remains to be seen.  The construction industry is complex and rarely does a “one size fits all” approach suit, and IPD is no exception.  A wide variety of project delivery structures will continue to exist for some time and it’s unlikely that IPD is the cure-all for every building industry ill.  IPD, as currently understood, offers an alternative avenue of exploration and innovation to more traditional and contentious approaches that are generally considered to be at the root of the productivity and risk challenges of modern construction.  It’s likely that the idea we now know as IPD will continue to evolve, and that the principles of deep collaboration between players previously known for contention will be a common theme of the new structures, processes and contracts that will emerge as a result.  The best builders will adapt accordingly, changing their approaches, attitudes and business structures towards this new reality. As we emerge from the deepest construction recession of the modern era, the timing could not be better for some of the new, fresh ideas that IPD makes possible.

Phil Bernstein is an architect and Vice President at Autodesk, a provider of technology solutions to the building industry.  He teaches at the Yale School of Architecture.


[i] Construction Management Association of America Owner’s Survey 2005