Warning Lights for IPD Building-Production Movement

After five years of a collaborative building-production movement called Integrated Project Delivery, or IPD, skeptics are sending out a warning not to try an Integrated Project Delivery with contractors that you are unfamiliar with because of possible risks associated, and even to be cautious of waivers of claims. Furthermore, if Integrated Project Deliveries are used, lengthy contract negotiations are expects and contractors are warned to prepare to share any profits. Integrated Project Delivery is a project delivery method that integrated all parties, systems, and practices into a collaborative unit to optimize project results, increase value to project owners, reduce waste, and maximize efficiency through all the phases of construction. Furthermore, this type of multi-party contract has not been significantly tested in litigation.

Even IPD supports admit that there are no insurance products for covering multi-party contracts and that any successful IPD forces contractors and building teams to adopt a non-adversarial mentality while engaging in a multi-party contract of this type. Essentially, IPD’s shift toward a team-minded project delivery in which owners, architects and contractors sign a single contract, but IPD experts agree that this multi-party contract is still not consistently defined, understood or practiced. However, IPD veterans, as proof of concept, have continually shown off the success of IPD work, which have produced more collaboration and solidarity in the design and construction phases of projects, which have generally been finished with high quality and on budget with no claims. Project owners have grown wary, nevertheless, because most multi-party agreements do not include guaranteed prices and do not work with traditional liability insurance, presenting more of a risk to all parties. Furthermore, many building experts indicated that they are not interested in an agreement that forces contractors to watch each others’ backs, pay for each others’ mistakes, reveal profits and waive claims.

However, even with skepticism rising, the American Institute of Architects recently released a new standard form for IPD multi-party agreements. The document is a standard multi-party agreement through which the owner, architect, contractors, and other key project participants can execute a single agreement for the design, construction and commissioning of a project. It provides a framework for a collaborative environment in which parties can operate in the improvement of cost and performance goals that the parties jointly establish. Non-owner parties are compensated on a cost-of-the-work basis, which provides incentives for collaboration in the design and construction phases. Furthermore, management of the project comes in the form of a management team, comprised of representatives from each of the parties, and the conflict resolution process is designed for quick, effective issue resolution. Further information is available from the AIA regarding the new IPD agreement (The American Institute of Architects – Contract Documents).

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