IPD: A Commitment to Teamwork

Early proponents of design-build recognized that a successful construction project is achieved through a team effort rather than an “us versus them” mentality. This idea of teamwork continues to drive the newest generation of alternative project delivery, including integrated project delivery (IPD).

IPD is characterized by a contractual agreement between “key participants” to the construction project where risk and reward are shared and stakeholder success depends on project success. At a minimum, the key participants to an IPD contract are the owner, design professional and contractor (i.e., a tri-partite contractual relationship). In addition, IPD should exhibit the following characteristics:
  • early involvement of key participants;
  • collaborative decision-making and control;
  • liability waivers among key participants;
  • jointly developed project goals;
  • co-location of teams; and
  • transparent financials.
When used properly, BIM facilitates the type of collaboration in programming, analysis, budgeting, design development, permitting, bidding, fabrication and construction that is at the core of IPD. The goal of IPD is to have all of the key participants working together from day one to create a single, shared point of responsibility for the project and to minimize or eliminate the unanticipated circumstances and disputes that can throw a job into disarray.

Overcoming Resistance to Change
IPD participants have reported a reluctance to give up control over what they initially feel is their sphere of the construction process. Owners are reluctant to cede the project’s programming, budgeting and purse strings to other parties. Designers hesitate to give up control over design and engineering decisions. Contractors question whether they want to be responsible for the design of the project and whether they want to lose the ability to recover additional construction costs. 

However, after participating in a truly collaborative IPD process, the same parties that are often concerned about a loss of control indicate having more control over the actual construction process. Studies have shown that from an owner’s perspective, IPD results in a project that is no more costly than traditional project delivery methods and is typically shortened by one-third of the time. Indeed, the entire bid phase is eliminated under IPD, so that time can be apportioned to more comprehensive design development by the key participants and, eventually, construction. IPD removes a level of redundancy from the traditional construction process, and that increase in efficiency should ultimately result in a benefit to the owner. Most owners report that the largest difference in their role under IPD is that they cannot be passive participants in the process. By being more actively involved in the programming, design development and construction of their projects, owners actually report an increase in control.

Incentive Compensation Language
Similarly, designers’ and contractors’ concerns over a loss of control in their respective scopes are offset by their increased interest in and control over the overall success of the project. A true IPD contract includes incentive compensation language in which the designer’s and contractor’s potential profits are tied to the success of the project (and each other). If certain project goals are met, the designer and contractor both receive their anticipated profits. However, if the project goals are exceeded, the designer and contractor share in increased profits. If, on the other hand, project goals are not met, the designer and contractor both see an equal reduction in their profits. 

Liability Waivers
An equally important element of the IPD process is the idea that liability should be waived between the key participants. Liability waivers typically release all claims among or between the key participants to the IPD contract except claims for fraud, willful misconduct or gross negligence. Under an IPD contract, the contractor should not sue the owner or designer for changes to the project design because the contractor participated in, and is responsible for, that design. Similarly, the owner should not sue the contractor or designer for delays to the completion of the project because the owner participated in, and is responsible for, the development of the design and construction schedule. 

Here’s an example of a common IPD liability waiver: “For those project risks arising from collaboratively reached and mutually agreed-upon project decisions made by the management group, the parties agree to release each other from any liability at law or in equity from any act, omission, mistake, or error in judgment, whether negligent or not, acting in good faith, in performing its obligations under this agreement, except to the extent such act or omission amounts to a willful default of an obligation under this agreement.”

Again, this type of language in an IPD contract seeks to create joint responsibility among the parties for all aspects of the project in which they mutually participated. In doing so, the IPD contract incentivizes cooperation between the key participants, which leads to increased control on the part of each party with respect to the project as a whole. Under the IPD process, what is good for the project is truly good for the parties. 


Michael Sams is co-founder of Boston-based Kenney & Sams, P.C. and Ross C. Wecker is a litigator. For more information, visit kandslegal.com.