Integrated Project Delivery Contracts

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By Hafez Daraee

Integrated Project Delivery ("IPD") is a construction project delivery framework by which the owner, designer, and general contractor put the success of the project ahead of each member's individual well-being on the project. The hallmark of IPD is the core belief that because a construction project consists of hundreds of parts and systems, all of which have to come together in concert, each member will achieve greater professional and economic success if the project success is maximized through focused, efficient construction and dispute avoidance. Put simply, IPD subscribes to the notion that "a rising tide lifts all boats."

The concept of mutual cooperation, where the success of the project is put ahead of individual success, is foreign to an industry in which conflict is not only anticipated but expected and typically accounted for through contingency line items in bids and through the traditional adversarial approach to problem-solving.

In traditional construction project agreements, lawyers spend countless hours perfecting contracts that focus on putting the well-being of the lawyer's client ahead of everyone else's well-being.

But if IPD is specified as the delivery method, the focus of the contract is not on who is to be blamed when a dispute arises, but on how to solve the problem most efficiently and economically and without regard to fault. In this type of approach to project delivery, the lawyer's role changes into something resembling that of a mediator and a diplomat, without losing sight of ethical commitments to the client. Is this approach even possible?

For lawyers drafting IPD agreements, the traditional form contracts have to be jettisoned in favor of project-specific documents, with special attention afforded to the following four areas: problem-solving, economic benefits, building information modeling, and collaboration.

• Problem-Solving Responsibility
  
  In typical construction agreements, liability is limited through allocation of risk and through onerous procedures for making claims. Often, if the claim procedures are not strictly followed, an otherwise valid claim can be rendered void.
  
  Where IPD agreements differ substantially from conventional construction agreements is in how fault allocation is replaced with objective procedures for problem-solving, often through express collaborative procedures and rapid timelines. In IPD agreements, the emphasis is on procedures that allow a problem to be solved by the most qualified person regardless of how the problem was initially created.
  
  
• Allocation of Economic Benefits
  
  Construction projects are built by individual contractors who receive only the contract price for their work. If the work proceeds well, any benefit created by such efficiencies remains with the contractor who created that opportunity.
  
  One of the hallmarks of an IPD agreement is that participants agree to pool all benefits above the contract price and derived through construction efficiencies, creating a pot that is then distributed to the designated participants at the conclusion of the project. This approach allows the designated participants to benefit through the global success of the project. Lawyers drafting IPD agreements need to be creative in drafting clauses that create the benefit pool.
  
  
• Incorporation of Building Information Modeling (BIM)
  
  Nowhere is the sharing of information more critical than in an IPD relationship. In order for a project to be constructed with the greatest possible efficiency, BIM systems and software must be incorporated at the earliest opportunity.
  
  Within the confines of the IPD agreement, considerations such as interoperability of modeling systems, where the project database will be located, access to data, rights to modify the design, and general copyright and licensing considerations will be the focus for those drafting such agreements.
  
  
• On-site Space for Collaboration
  
  It is critical that all major participants have a physical presence at the project location so that actual communication and collaboration can occur face-to-face. Thus when drafting or reviewing IPD agreements, special attention should be paid to clauses addressing the creating of a central "war room" and how the management of such a space will be addressed by the parties.

IPD is not only a cutting-edge approach to construction project delivery but also uncharted waters for lawyers representing contractors who will certainly face increasing pressure from owners to employ this method of delivering projects in the near future. Because there is no such thing as a form IPD agreement, the environment is ripe for creative drafting by legal professionals.

Published Summer 2010

This article is intended to inform the reader of general legal principles applicable to the subject area. It is not intended to provide legal advice regarding specific problems or circumstances. Readers should consult with competent counsel with regard to specific situations.

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