Word-of-the-Month: Integrated Project Delivery
Integrated Project Delivery (IPD) is an approach to teamwork as well as a contractual production method that integrates owners, designers, contractors, engineers, facility managers, systems suppliers, and the best industry practices into one highly-collaborative process. It harnesses the talents, experience, and perspectives of all the participants early in the building process to optimize design production and construction by grounding the group in the development’s objectives and aligning incentives.
The method utilizes lean practices, otherwise known as the Toyota Model, to drive inefficiency and ‘waste’ out of the production process. IPD uniquely leverages the team’s diverse perspectives and empowers a group of leaders within the firms, which form the project management team, to evaluate options transparently and make clear and concise decisions based on the team’s shared risk and reward. Using the IPD method, all project constituents work for the same project-centric ‘company.’ The team members cannot sue each other (now or in the future), are protected by an encompassing insurance product called an OCIP (owner controlled insurance program), and put their profits at risk through an ICL (incentive compensation layer) pool. If the project comes in at target cost, the group achieves their projected profits. If it comes in over target cost, the additional funding comes from the ICL. If the project is delivered under the target cost, the group realizes more profit. The team’s success is then directly tied to the project’s success.
The benefits of IPD are tangible and robust because everyone works together from the beginning, utilizing the best available information to make value-driven decisions. It is an unique and challenging method of working and requires that the firms involved are highly collaborative culturally and fully commit to the new approach. But, for companies that explore this option, the result of the effort is incredibly impactful.
The IPD method was introduced by the American Institute of Architects 10 years ago, but is a relatively new delivery method in the Midwest.