Have You Heard of IPD? Ignoring It Could Cost You a Lot of Money

More and more projects are being carried out using the IPD method.

 

Established for several years in the United States and Australia, it is beginning to appear in Canada. And if the trend continues, a significant proportion of projects under construction will be carried out in the near future using this method.

So what is IPD? Integrated Project Delivery or IPD is a fundamentally different method from the traditional top-down, hierarchical method in which the different actors establish bipartisan agreements with their usual service providers, e.g., the client with the architectural firm (BA), the general contractor (GC) with the interior system (IS) sub-contractor (IS)… Indeed, in an IPD project, key players such as the project owner, GC, BA, consultants, suppliers and sub-contractors are called upon to collaborate fully from the start of the project. The main objective of this method is to achieve maximum value, quality vs. cost, for the delivered project.

THE ADVANTAGES

The construction of a building, be it a hospital, a factory or a multi-residential complex, represents the solution to a customer’s need, for example a company is building a new factory in order to reduce its manufacturing costs. In an IPD, the talents and ideas of all parties involved are solicited from the beginning and throughout the project to optimize this solution (the building) to the customer’s need. All the professionals involved in the project have a clear vision of the project’s objectives. A climate of trust between all the actors favors listening and ideation, and the advantages are numerous :

  •  Design better adapted to the objectives
  •  Use of information and construction technologies.
  •  Increased productivity
  •  Reduction of waste
  •  Better adherence to deadlines and budgets
  •  Building of greater value in the end
  •  Reduction of conflicts between owner, designer, suppliers and contractors

HOW DOES IT WORK?

The client, the initiator of the project, must ensure that his entire organization agrees to this method of construction. IPD requires clearly defined objectives (and approved by all departments involved (finance, operations, etc) and a much more extensive pre-construction planning than with a traditional method.

In an IPD, as mentioned above, the collaboration of all partner firms is the main driving force behind the project. Transparency between partners is essential. And collaboration even includes risk and profit sharing. When firms are selected, their experience and skills are evaluated, as well as their willingness to innovate, collaborate and share risk and higher profit potential.

This last point deserves an example. The firm ABC_Interior System wishes to participate in the construction of a new university hall. When presenting its file for selection, ABC indicates its desired level of profitability (generally based on a % of costs), which will be non-negotiable if it is selected. Then, when the overall value of the project is defined, this profit percentage is converted into a fixed sum proportional to the value of its sub-contract linking it to the full project. And this sum is totally put at risk with the other profit margins of all the other partners, thus creating an overall profit margin available upon full delivery of the project.

 Since the risk and profitability of all partner firms depends on achieving the objectives defined at the start of the project, all are highly motivated to successfully complete the entire project. When a problem arises, all partners are invited to find the most efficient and economical solution, since the level of profitability depends on it. The formula ensures that there can be no winners and losers. Everyone wins or everyone loses.

Points to remember:

  • Objectives, including delivery date and budget, well defined and integrated by all project partners
  • Project management based on collaboration and transparency by all the actors involved
  • A risk and profitability shared by everyone

 IPD, THE SOLUTION FOR EVERYONE?

 In the report ‘Integrated Project Delivery-An Action Guide For Leaders’, referenced below, experts on the subject list the winning conditions for the success of an IDP project. They are:

  • An internal culture among all partners that is open to innovation, collaboration and transparency
  • A project manager who has the support of all its internal departments involved
  • Business leaders and key employees experienced, or at least knowledgeable, about IPR requirements
  • The willingness of all collaborators to participate in important planning from the outset (which paid off during project execution)
  • A project budget in excess of $15M where partners have little or no experience with IPD to absorb training and organizational costs. The budget envelope may be significantly lower when partners have experience with RPI.

IN CONCLUSION

Projects under construction are facing increasing regulatory, community and environmental requirements. In addition, there are challenges related to the availability and training of manpower, productivity and cost control. RPI can offer a very advantageous solution to contractors and owners who are open to collaboration. Soon an RPI project will be at your door. Are you ready?  As the saying goes: “Alone, we go faster; together, we go further”.

The internet is full of information on ‘Integrated Project Management’.

 Here are some links: 

https://en.wikipedia.org/wiki/Integrated_project_delivery

https://www.lexology.com/library/detail.aspx?g=c133634a-8482-4db9-8b36-45816b791844

https://static1.squarespace.com/static/5c73f31eb10f25809eb82de2/t/5d62ee3a85843d000123def1/1566764631296/IPD_Full-Pass_180606-single_page.pdf

https://www.ccdc.org/documents/set/contract-forms/