Integrated project delivery saves time, cuts costs, shares rewards

Integrated project delivery saves time, cuts costs, shares rewards

All for one: Integrated project delivery (IPD) binds owner, architect, and builder as equals and frequently integrates consulting engineers and subcontractors in the conceptual phases as a means of achieving early consensus on key building components. (Image courtesy of ArchDaily)

by JOHN GREGERSON | March 23, 2017

As alternatives to traditional design-bid-build arrangements go, integrated project delivery (IPD), a practice that aligns owner, designer, and builder under a single contract, has yet to achieve the marquee value of design-build and construction management (CM).

Yet, IPD, a method that frequently incorporates principles of lean construction, namely elimination of waste, can—and often does—play a prominent role in shaving project schedules and achieving substantial cost reductions.

Super savings: The $180 million, 369,000-square-foot Kay Pavilion at Akron (Ohio) Children's Hospital, a 2015 project built in accordance with integrated lean project delivery, was completed two months ahead of schedule and achieved $20 million in cost savings. (Image courtesy of CCG Automation)

Among the reasons is that the IPD contract typically binds participants together as equals, requires shared financial risk and reward based on project outcome, stipulates fiscal transparency among key participants, and promotes early involvement among parties, thereby facilitating jointly developed project criteria and collaborative decision-making, according to “Primer on Project Delivery,” a document developed jointly by the American Institute of Architects and Associated General Contractors of America (AGC). Significantly, rewards may include profit sharing that derives from cost-saving measures, including early completion of the project.

“If successfully implemented, IPD results in fewer change orders, less rework, and fewer adversarial relationships,” says Mike Stark, AGC's executive director of knowledge programs and building markets. One of method's key tenets is to remove silo-like structures that preclude collaboration among project teams, he adds.

In addition to owner, architect, and builder, consulting engineers and key “risk” trades, including those involved in executing structural and MEP components, may be parties to the IPD contract or brought on board as risk-sharing partners under separate tri-party agreements, says Josh DiGloria, senior project manager with Suffolk, a veteran of several IPD projects, including a 120,000-square-foot addition to and a 220,000-square-foot renovation of Boston Medical Center's Menino Pavilion, due for completion in 2018.

Good Medicine: Hospitals and medical centers were early champions of IPD and remain so. Suffolk currently is engaged in an IPD project involving a 120,000-square-foot addition to and 222,000 square feet in renovations for Boston Medical Center's Menino Pavilion. (Image courtesy of Medical Construction and Design)

Among other benefits, “key parties are on board early to discuss and define project scope, design intent, costs, and schedule rather than joining the project later, when predetermined variables are too far along to modify," DiGloria says.

The results speak for themselves. The $180 million, 369,000-square-foot Kay Jewelers Pavilion at Akron (Ohio) Children's Hospital, a 2015 project designed and built in accordance with integrated lean project delivery (ILPD), was completed two months ahead of schedule and achieved $20 million in cost savings according to Paul Becks, a project executive with Welty Building Co., which partnered with The Boldt Co. on Kay. “The single greatest cost savings—about $1 million—came from relocating the mechanical system from the roof to the basement,” Becks says. "The project team also trimmed 34,000 square feet of space without altering the program, accounting for 10 percent of total cost savings.”

Space savings largely resulted from constructing full-scale mock-ups of virtually the entire facility, including private rooms, the emergency department, and the outpatient surgery and birth delivery center. “We placed end users, including nurses and doctors, in the mock-ups and observed their every move,” Becks says. “If a nurse had to take an extra step, we'd mark it down.” Overall cost savings, Becks adds, didn't result from just a handful of tactics but literally from 1,000 innovations the delivery method facilitated.

To date, DiGloria has been involved in several IPD projects, including the Baystate Medical Center in Springfield, MA. All, he says, were completed ahead of schedule.

So why haven't more project teams adopted the concept? Owner resistance, according to Becks. “IPD changes the risk structure,” he says. “They're more comfortable with a GMP, believing they've waived risk, even when, chances are, changes during design or construction may push costs above that threshold. With IPD, all parties work collectively to ensure that doesn't happen.”

Despite reservations among owners, “we're seeing slow but steady adoption of IPD,” says Sue Klawans, senior vice president and director of operational excellence with Gilbane, a veteran of IPD projects ranging from stadiums to offices to research labs to the Henry J. Carter Specialty Hospital and Nursing Facility, in New York City, and Kerry Ingredients and Flavours' Kerry Innovation and Technical Center, in Beloit, WI.

Adoption has been especially strong among owners or developers of complex projects, with hospitals and medical centers chief among them, Klawans says. “Health care has been on a lean journey of its own in terms of internal operatons,” adds Christopher Barry, vice president and support operations manager for Gilbane's western division. “Mission critical projects such as data centers also are ideal candidates for IPD, since they need to be built rapidly and efficiently in order to generate revenues as quickly as possible.”

All kinds: Construction manager Gilbane has implemented IPD on a variety of project types, including the Kerry Ingredients Flavours Innovation and Technical Center in Beloit, WI. (Image courtesy of HGA)

Approaches vary, but Gilbane has found that IPD contracts typically are executed during conceptual design, once programmatic elements are in place. Contracts also vary in terms of detail, with some forming a veritable road map for organizing parties and workflow from design through construction. “The contract may may spell out hierarchy structure, senior management team, project management team and working-level teams—in essence, a decision-making mechanism that brings order to the project,” Klawans says.

While senior management teams frequently are composed of the principal or CEOs of contract signatories, project-management teams typically are populated by project executives and project managers that oversee the work of working-level teams, including project architects, engineers, estimators, end-users, and specialty contractors, according to Becks.

Teams may be organized in accordance with particular systems such as core and shell, MEP, and interiors, Becks says. “At varying phases, concepts are presented to members of the project executive teams, who must unanimously approve plans,” he adds.

To promote collaboration and real-time decision-making, members of the project-management and working-level teams often colocate in a facility for the duration of the project.

“IF SUCCESSFULLY IMPLEMENTED, IPD RESULTS IN FEWER CHANGE ORDERS, LESS REWORK, AND FEWER ADVERSARIAL RELATIONSHIPS.”

— Mike Stark, executive director of knowledge programs and building markets, Associated General Contractors of America

Although circumstances may vary, key subcontractors frequently join the effort during design development, if not earlier, to provide constructability analysis, fabrication details, value engineering, and pricing, says Alexis Carver, senior virtual design and construction manager with Gilbane's western region. Because subcontractors don't submit bids, Gilbane evaluates candidates on the basis of hourly rates, overhead, and qualifications, including demonstrated ability to execute building information modeling and generate fabrication detail, Carver says.

Many enterprises don't use IPD but do incorporate aspects of it in their projects. “I would say that many our projects are IPD-ish,” says Nathan Lingard, director of design phase with the suburban Chicago offices of Mortenson Construction. However, while a director of design with Mortenson's Milwaukee office, he worked on the University of Wisconsin's 2010 Wisconsin Institutes for Discovery, a $213 million R&D center on the school's Madison campus that was executed under a IPD contract. Features of the project included colocation, creation of an organizational model that included an executive team, core team, and project-level team organized in accordance with components such as foundation and structure, enclosure and roof, interior finishes, MEP, and site work, Lingard says. Project team members targeted 10 percent savings and achieved 12 percent savings. Construction was completed one month ahead of schedule. 

Since then, “we tend to incorporate aspects of IPD into more traditional models, such as CM at risk,” Lingard notes, adding, “IPD elements are particularly well suited to circumstances when collaboration is needed to get it right.”