What Is Integrated Project Delivery, and Is It Suitable for Your Project?

Published: March 09, 2022
Last updated: April 19, 2022
Read time: 4 minutes

Just 2% of construction projects are completed on time and on budget. This encouraged construction professionals to develop new, more efficient project delivery methods. We’ve explored a few of these, like pull planning, value engineering and lean construction. One of the most popular project delivery methods that has emerged is Integrated Project Delivery. Here, we’ll discuss what sets IPD apart from traditional project delivery methods, and how to decide if it’s right for your project.

What is Integrated Project Delivery?

At a high level, Integrated Project Delivery is a delivery approach where core team members like the owner, architect, GC and subs work together as one unit to maximize efficiency and reduce waste throughout all phases of a project. IPD is considered the highest level of collaboration in project delivery because all team members are focused on the same goal: efficiency. 

The entire team shares responsibility, risk, and reward throughout the project, and this can be solidified by having the owner, architect and contractors sign on to a single contract. As a result, the IPD approach veers away from more traditional, fragmented construction delivery methods. 

It focuses on the following key stages: 

  1. Conceptualization: The project team meets early to establish a collaborative vision for the project, develop a plan to achieve that vision, and analyze potential risks using each other’s expertise.
  2. Design: The above vision is factored into the project design, while keeping an eye on regulations and laws that could affect how the vision gets translated into the design.
  3. Approval: The owner, architect and engineer work with subs in other trades to ensure that the building is viable under the contract terms, reducing potential delays.
  4. Implementation: At this stage, the team transfers all of the information from the design phase and project teams to a computer-modeling software to predict the project’s outcome.
  5. Construction: This is where all of the hard work and planning pay off. This phase would be smooth if the previous steps were done correctly, resulting in minimal delays, waste and scheduling issues.

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What Are the Features of an IPD Contract?

Financial Pools

The IPD method allows each team to collaborate to create a “financial pool.” This means that everyone involved on the project puts their profits in a shared pool, ensuring they all get a proportionate percentage based on their successful contribution to the project.

Collaboration Around the Target Cost of the Project 

The teams work together to develop an ideal Target Cost Design Proposal for the owner to approve, reject or make revisions to. When the proposal is approved, the team creates a strategy to achieve it.

Continuous Collaboration to Address Issues

If a problem arises, the lead designer and general contractor consider making changes to the design and construction process. The collaboration enables more effective use of the design and construction processes, without affecting the time and resources of the entire team. 

Tips for GCs Taking On Integrated Project Delivery 

While the IPD approach has many advantages and has been used for over a decade, owners and developers should be aware that not all projects are well suited for this method. Consider the following before implementing an IPD contract: 

Are you prepared for the level of collaboration needed, and do trust your collaborators? Because risks and rewards are shared among team members, the agreement’s terms must clearly define each participant’s roles and responsibilities. The agreement must also include provisions addressing risk sharing, liability waivers, waivers of consequential damages, indemnification, shared project incentives and goals, insurance, and dispute resolution. Professional advisors should be brought in early in the project to avoid insurance issues.

Is your client/the owner ready and able to be heavily involved? On IPD projects, the owners do far more than choose the contractor and designer and pay the bills. To communicate clear project goals to the team, IPD requires owners to be heavily involved in the process. 

Are you prepared to maintain the same level of collaboration, post-substantial completion? Remember that it’s your due diligence as a contractor in an IPD contract to ask permission from the owners and follow engineering ethics after the project is completed. It means that, even though the lead designer’s collaboration has ended, contractors and the owners should still communicate for minor repairs, cleanups, and installations until the project is finished

Benefits of Integrated Project Delivery

If you’re thinking about using the IPD approach for a project here are some of its key advantages of doing so: 

  • Less RFIs and expensive, time-consuming change orders, resulting in lower project costs

With IPD, contractors, suppliers, facility managers, and end-users are all involved in the design process, allowing them to make timely and consistent decisions together. As a result, stakeholders identify potential problems and find solutions early in the planning stages to avoid conflicts and unexpected issues that lead to rework. 

  • Innovative Approach Method

IPD uses each stakeholder’s strengths to deliver the best outcome possible, so open dialogues and innovative thinking are encouraged. For example, a specific architectural design can be challenging for the subcontractor without any collaboration from the designer. With the IPD Method, the two parties can think of an approach to implement the design in the best possible way. It saves the team a lot of time, effort, and budget that further maximizes the project’s outcome. 

  • Effective Communication

IPD allows better coordination among key stakeholders, making communication open, clear, transparent, concise, and honest. Unlike traditional delivery methods, where parties involved don’t always get a chance to communicate directly, IPD enables stakeholders to discuss necessary changes. This allows less room for misunderstanding, and disputes are recognized and promptly resolved. 

Under the IPD  method, the possible risks throughout the process are appropriately shared because designers fully understand the implications of their decisions when they are made. At the same time, the team’s success is tied to the project’s success, so the rewards are appropriately balanced among all team members. The IPD method gives incentives to the whole team, as they all share the same financial pool. Incentivizing the team drives the members to become more productive by working with their best. It will affect your project’s quality and completion time significantly. 

To get started and try the delivery method for yourself, you can explore courses offered by companies like LeanIPD, while the AIA officially offers IPD contracts that serve as a starting point for adopting this method.

About Billd: At Billd, we provide a payment solution that enables commercial construction contractors to free up cash for material purchases while enjoying the flexibility of 120-day payment terms. You get financing for commercial materials upfront with the freedom to pay it back at your own pace. Learn more about how we can help eliminate your company’s cash-flow problems so you can win more bids and grow your business.

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Jesse WeissburgCCO & Co-Founder of Billd

Jesse Weissburg is an accomplished business development leader with experience across a variety of industries — including finance, real estate development, construction and renewable energy. With Billd, he uses his experience and knowledge to help contractors grow their businesses by fixing the broken payment cycle in the construction industry.