Construction Informer

Since Integrated Project Delivery (IPD) is a process that requires collaboration, the typical ways construction contracts are crafted don’t fit it very well. According to the IPD symposium report by the California Council of the American Institute of Architects (AIA) most construction contracts

“create incentives for individual firms to protect their own interests at the expense of the project.”

So the characteristics of contracts used in IPD have to be different – different enough to stimulate open collaboration and innovation. Here are some of the key points the symposium participants came up with.

• Participant compensation can be raised or lowered based upon their performance as measured against predefined targets
• Balancing risk and reward eliminates the need for inflationary contingency pricing, promotes relationships that can solve problems, and creates incentives to innovate
• Multi-party agreements instead of individual two-party agreements are preferential
• Bringing subs in for pre-construction work, and compensating them for that, is well worth it since it reduces RFIs and their associated costs
• Problem participants who refuse to play by the new rules, and who won’t bend to peer pressure, may have to be removed with the whole group’s agreement

At the risk of over-simplifying, the concept that comes through the most for me relating to IPD is that it has at its heart the idea of helping many players to build the best project they can while looking out for one another. And that, as an HVAC pro used to say to me – “is a beautiful thing.”