HVAC Commercial Market

Examining Potential of Integrated Project Delivery

January 28, 2013
Trans

The commercial, new-construction market has been operating for decades under two processes: plan and spec, and design-build. These systems are now being challenged by integrated project delivery (IPD), a new concept that is gaining traction nationwide. Projects in California, Florida, and Minnesota have successfully used IPD to create teams that work closely together to complete projects ahead of schedule and under budget without sacrificing quality and innovation.

Defining IPD

IPD is a collaborative alliance of people, systems, business structures, and practices into a process that harnesses the talents and insights of all participants to optimize project results, increase value, reduce waste, and maximize efficiency through all phases of design, fabrication, and construction.

IPD is a relational design and construction approach that typically includes a contractual arrangement among an owner, constructor, specialty contractors, architect, and design professionals. The contract strives to align the business interests of all parties and motivates collaboration throughout the design and construction process, tying the team’s success to the project’s success.

The IPD concept has been championed by the American Institute of Architects (AIA) and Associated General Contractors of America (AGC). The Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA) has showcased IPD methodologies during recent national conventions. According to a white paper produced by AIA, AGC, and other organizations, including the Construction Owners Association of America (COAA), the impetus behind IPD is increased waste, lack of productivity, the evolution of technology, and building owners becoming increasingly focused on demanding more value. The 2010 white paper cited a study which suggested, “As much as 57 percent of time, effort, and material investment in construction projects did not add value to the final product as compared to a figure of 26 percent in the manufacturing world.”

The report also credits a multiparty contract as a key ingredient to the success of IPD.

“At a minimum, the owner, architect, and contractor all sign the single agreement, and in some cases other members of the project team that are deemed critical to the project’s success are also brought into the multiparty agreement. Besides the parties all signing a single agreement, what is also unique is how risks are shared and how compensation is tied not to an individual party’s performance, but rather the team’s performance on the overall project.”

Three Examples

The Sutter Medical Center in Castro Valley, Calif., which celebrated its grand opening, Dec. 1, 2012, utilized a team of construction partners that all operated under a relational contract whereby the project’s leaders paid out profits to the 11 partners based on the final costs compared to the initial budget. The 11-partner team shared the risk and potential reward.

The Orlando Utilities Commission Events Center Energy Plant, in Orlando, Fla., was spearheaded by a team of specialty contractors, a general contractor, an architect, and an engineering firm. All parties utilized the same one-page agreement. Utilizing the IPD system, the project’s leaders helped save the Orlando Utility Commission more than $1 million by collaborating on all decisions.

A third project, the Daikin McQuay Applied Development Center, Minneapolis, utilized IPD and building information modeling (BIM) throughout construction. Sharing the BIM model with the contracting team before the completion of construction documents enabled the team to meet a 16-month construction schedule.

Compare and Contrast

IPD differs substantially from traditional project delivery. A 2007 AIA and AIA California Council document, “Integrated Project Delivery: A Guide,” examines the many differences.

While traditional project delivery assembles teams on an as-needed or minimum-necessity basis, IPD refers to teams as an integrated entity composed of key stakeholders.

While traditional projects may view the process as linear, distinct, and segregated, IPD processes are concurrent and multilevel, including early contributions of knowledge and expertise, shared openly.

Risk in a traditional setting is individually managed and transferred to the greatest extent possible. In an IPD setting, risk is collectively managed and appropriately shared. On the flip-side, compensation is individually pursued, with maximum rewards often handed to those exhibiting minimal effort in a traditional sense. In an IPD arrangement, rewards are granted based on team success, project success, and are value-based.

The document further states that IPD’s growth has been aided by technological advancements, specifically the wide-spread usage of BIM.

The report states, “The tool of BIM, especially employed in a collaborative setting, can greatly enhance collaboration, sharing of information, and streamline project design and construction.”

Orlando Group Trademarks IPD

IPD’s origins are traced back to a group of construction industry professionals including Westbrook Service Corp., an Orlando, Fla.-based HVAC and plumbing contractor. The group, which goes by Integrative Project Delivery Inc., claims to have originated the concept of IPD and has since trademarked the name. The group’s website states, “We are proud that today organizations such as American Institute of Architects, and other industry groups, have endorsed, published papers, and held seminars on the IPD process we originated in the ’90s and trademarked in 2000.”

The IPD collaborative includes Central Florida-based Andrew General Contractors Inc., Helman Hurley Charvat Peacock/Architects Inc., Peninsula Engineering Inc., Territo Electric Inc., and Westbrook Service Corp. Jim Roberts, executive vice president, Westbrook Service Corp., said the group’s key to success lies in its ability to draft a single-page partnering agreement.

“It is a circular arrangement where we all share equal responsibility for the entire project and we all share the costs,” he said. “This allows us to make decisions that are in the best interest of the project as a whole and not decisions that are only optimizing individual pieces of the project. All companies share costs, and we have developed a way to distribute the profit at the end of the project.”

What Lies Ahead?

IPD has gained immense popularity in select markets, and it has the support of several influential organizations, but the most recent commercial market downturn has certainly left a negative impact. Westbrook Service Corp.’s Roberts definitely feels that the mechanical contractor will play a major role in the short-term and long-term future of IPD.

“Which systems does an owner really interface with on a daily basis,” he asked. “If you are part of a large project, it’s not the floor tiles or the paint on the walls that create the most issues, but rather the mechanical system that plays an integral part. The contractor will certainly play a big role as this process develops.”

Publication date: 1/28/2013

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