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Hitching their wagons helps all parties involved in a construction project achieve great things together.

By Nadav Malin
September 2012
Illustration by Anders Wenngren

At the Bellevue Clinic project, the mechanical engineer handed design of the HVAC system to the contractor at just 60 percent completion, giving up some of his fee while trusting the contractor to work out the remaining details in the fabrication model. As a result, according to Jack Avery of Sellen Construction, the mechanical contractor was able to hit the ground running with confidence during construction, saving time and reducing errors. And the engineering firm recouped those reduced design fees in its share of the incentive payment, which was tied to project budget and schedule.

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That Bellevue, Washington, project "was a home run," says Todd Johnson, vice president of facilities at Seattle Children's Hospital. "We measured it in a lot of different ways." That included not only budget and schedule but also postoccupancy surveys and patient feedback. Key to its success was integrated project delivery (IPD), in which the owner, architect, and contractor all enter into a joint agreement to deliver the best results in terms of product quality, budget, and schedule.

In a conventional design-bid-build project, the parties spend a lot of time and effort documenting everything in detail so that each is covered legally and financially when problems emerge or requirements change. IPD seeks to turn that situation on its head: No one wins unless everyone wins, so there is no incentive to prove right or wrong.

"IPD makes for faster problem solving," notes Johnson. "The architect and builder came together and worked through issues that ordinarily might have gotten escalated to RFIs [requests for information]."

Many green-building practices are going mainstream, but meeting increasingly rigorous performance goals in a cost-effective way still requires ongoing innovation. That innovation works best in a highly integrated environment. For example, on a $322 million MaineGeneral Health hospital currently under construction in Augusta, the designers initially planned to use graywater to flush urinals, according to attorney Howard Ashcraft, partner at Hanson Bridgett in San Francisco and an IPD pioneer. The mechanical contractor, who was involved in the design under an IPD contract, pointed out that the graywater could be used more effectively, with less piping, in the cooling towers. "There are payoffs in having the right people there at the right time," notes Ashcraft.

Chris Leery of KlingStubbins was project director for an early IPD project that started in 2008, a tenant fit-out for Autodesk in Waltham, Massachusetts, which began with a commitment to the lowest level of LEED certification but wound up at LEED Platinum. "No architect would ever put a commitment to LEED certification in the contract," says Leery, because there are too many actions and decisions outside of the architect's control that could jeopardize that plaque. "But in the IPD structure, that's no problem. It's almost set up for that.

"Design-build is a good way to get the optimum outcome for particular, defined deliverable," he explains, while "IPD is a better tool to elevate the product." Whereas design-build projects often have a shared-savings clause, IPD provides the incentive to turn that into higher quality. That should be especially attractive to ideologically motivated green builders: "Many of us love to do things better. It is kind of tragic that we do it at our own cost, or for no benefit."

IPD is still relatively rare because it's such a radical departure from business as usual. All the usual rules about the transfer of responsibility and accountability fall away, and the owner has to be highly engaged to take advantage of the potential for ongoing improvements to the project. "IPD gives you a precision tool to manage the risks inherent in any construction project," notes Ashcraft. "If you don't have the competence to manage those risks, then maybe it's not the right thing."

Most of the projects that have pursued it to date have been health-care facilities, because health-care providers care so much about exactly how their buildings are built, and rapid technology innovation makes changes during design and construction almost inevitable, according to Avery. "They don't want to get into bidding and change claims," he says. "IPD is all about continuous improvement," so the team doesn't stop innovating when construction starts.

Because IPD is so different legally from conventional practice, it makes people nervous. "Teams typically each come in with conventional insurance, but they aren't covering themselves conventionally with defensive behavior, so in a way they're more exposed," notes Leery. An elegant solution emerged recently when insurance broker Ames & Gough provided a single coverage package for the entire IPD team building the new Owensboro Medical Health Center in Owensboro, Kentucky. That solution recognizes the fact that when the parties commit to a collaborative approach, overall project risk goes down.

In a similar vein, IPD is a great model in which to make use of building-information modeling because it eliminates any questions about who owns the model through design, construction, and operations. The team, operating as a single entity, owns and manages the model.

According to some owners, the traditional design-build process wastes up to 30 percent of the total resources of a project. New technology and software combined with IPD can help make orders more precise, cut waste significantly, and improve a project's bottom line. So what are we waiting for?


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