Editorial: Getting Along Better
Traditional construction contracts are based on confrontation—parties undercut each other, architects fight with contractors, delay claims are common. So the Canadian construction industry is abuzz about a new form of procurement—Integrated Project Delivery (IPD)—that is instead based on increased cooperation.
The premise of IPD is a multi-party contractual agreement, rather than the two-party contracts common with other systems. Before the design starts, all key stakeholders—the owner, GC, architect, consultants, sub-consultants, and potentially even the suppliers—agree to share the project’s risks and rewards. The base-hours of the team are covered, but the profit shared between the project team members is at stake, depending on how well the project performs.
While a version of the process has been used in Australia since the 1970s, in Canada, the form is relatively new—perhaps a dozen IPD projects are underway. A standardized Canadian version of the IPD contract is anticipated to become available in the coming year.
David Dow, MRAIC, principal at Diamond Schmitt Architects, has been involved in two IPD projects—an academic and a residence building for St. Jerome’s University, completed last year, and a set of municipal buildings for the city of Oakville, currently in progress. “So far, our clients have been driven to IPD out of frustration with other methods,” says Dow. “IPD is highly collaborative with the client: they come out with a phenomenally intimate knowledge of the building they’re procuring.”
In an initial validation phase, the team goes through a detailed costing exercise to verify if the client’s pro forma is realistic, or to recommend a revised budget. If the project doesn’t go forward, everyone is compensated the base cost of their hours to date. If the project comes in on or under budget, it proceeds into detailed design and construction.
During the project execution, if the construction costs increase, the overage comes out of the profit pool, but if the costs are lower, the team shares the spoils. The budget is updated on a weekly or bi-weekly basis, and discussed in a “big room”—a common workplace that stakeholders commit to regularly working in. “The whole team can see where the project’s headed,” says Dow. “If we’re supposed to be at $40 M, and we’re at $40.2 M, everyone in the room is like, ‘Whoa, what’s going on?’ Everyone on the team has the opportunity to comment and interject, finding ways to take corrective action.”
For instance, on Oakville, says Dow, the team is considering flipping the sequencing of two of the buildings—an addition to a recreation centre and a firehall—because completing winter concrete work on one of them was going to significantly increase costs.
Overall, IPD encourages front-loading work and decisions, investing time in planning to avoid expensive delays and extras down the road. Technology and the sharing of big data that keeps everyone informed and up to date also drive the process. But it’s not all sunshine and roses. The many meetings can be onerous, particularly at the start. And as in all construction, things still inevitably go wrong. “However, with the more collaborative process, people tend to address the problem,” says Dow, rather than resorting to the finger-pointing, acrimony and lawsuits of traditional contracts.
For an IPD project to be successful, all players have to be open to discussion, debate and compromise. “You’re all making some concessions, and yet you’re collectively moving forward with what you believe is a good solution,” says Dow. “The people are key—you need people that are experienced, but are still willing to experiment with new ways of doing their job.” This includes being sure that the clients on IPD teams are collaborative and understanding of the challenges that can arise in a construction process.
There are many tools associated with IPD. A simple one happens at the first big room meeting. Everyone introduces themselves, and says how long they’ve been in the industry. The numbers are tallied, and the total is often many hundreds of years. It’s a powerful reminder that together, we’ve got far more intelligence than any single player—and we are benefited by finding ways of working that tap into this collective strength.