Last edited 04 Nov 2020

Integrated project delivery (IPD)

Integrated project delivery (IPD) is a project delivery model built around a collaborative alliance of stakeholders who each share risk and reward. It involves the key project stakeholders (the client, architect, contractor, and so on) entering into a single contract that encourages collaboration, optimises results, reduces waste and maximises efficiency and expertise.

The stakeholders collectively determine project goals, budgets, allocation of risk and compensation. The contract typically specifies the separate responsibilities of the stakeholders but enshrines collective responsibility for the project’s successful delivery.

The IPD contract agreement is typically signed by a ‘leadership team’ comprising the client, lead designer/architect and contractor. They are primarily responsible for delivering the project to the budget, schedule and quality specified by the client. Subcontractors and other stakeholders may agree to become ‘risk/reward partners’ (or they can be contracted on conventional sub-contract agreements).

Risk/reward partners agree to be reimbursed on a cost plus overhead and profit basis if the project performs well. The profit is fixed as a lump sum amount at the point at which the contract amount is negotiated and agreed by the stakeholders. The risk/reward partners may lose some or all of their profit if the project falls behind the budget or schedule, and the contract will lay out the terms of this loss. It is usual for the client to agree to pay for the project at cost if all profit is lost, thereby allowing stakeholders to limit their losses purely to the profit they would otherwise have earned on the project.

The benefit of the IPD method is that the contract removes barriers to collaboration and innovation, combining incentives for the project team as a whole rather than having them seek increased profits from the project individually. Instead of individual successes or failures, the overall outcomes determine the collective rewards.

By openly sharing the project goals, risk and rewards, this can result in a more dependable flow of information between the main parties, leading to a sharing of knowledge and technology. In addition, the project can benefit from being able to adopt lean construction principles, overlapping design and construction phases, and so on.

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