Integrated Development

In various discussions about integrated project delivery (IPD) here in the US I'm often asked "what sort of projects are best suited for IPD?"  I consider these queries to be a derivative of a similar question of maybe eight years ago, to wit "what sort of projects are suitable for BIM?"  And I guess the correlation isn't unexpected since IPD as a concept emerged from the process implications and potential of BIM, and in early days (say the mid 2000s) the two ideas were often co-mingled and even confused.

But now that the technological process (BIM) has been conceptually parsed from the delivery process (IPD) have the answers to these questions changed?  In the case of BIM itself, I believe that we're way past the "what sort of projects suit" because the technology has matured, adoption widened, and I see projects from house additions to campus complexes being modeled successfully.  The project type question for IPD, however, is a little more nuanced because of a very important factor--and it's not project type--the client.

A fundamental precept of IPD (or any "integrated delivery" approach) is deep collaboration between the designers, the builders *and* the owner.  In the case of clients where success is deeply dependent on such collaboration, such as complex programmatic projects like hospitals, institutional buildings, research labs, or concert halls, an IPD approach is consistent with good design and construction practice.  The more the client is connected to every important decision the happier he or she is likely to be, and the more informed the architects, engineers and contractors who carry out that vision.

But what about developers, those commercial clients who might comprise (according to the latest AIA survey) as much as 28% of all projects (including hotel, retail, commercial and multi-family housing)? In theory, no problem:  IPD is based on collaborative decision-making (check), outcome-based compensation (well, maybe), advanced use of BIM technology for transparent decision-making (umm, perhaps not so much) and reduction of risk through cross-indemnification of the parties so they can work in the best interest of the project (uh oh).  Let's look quickly at each issue.

A "strong" IPD project is based on consensus-based decision-making, meaning that the primary players (designer, builder and client at minimum with others included as needed) must agree on every decision that any deems important, and only those decisions can move forward.  This suggests that the more normative "propose/dispose" model that we use traditionally with clients (do you like this scheme?  do you like this space? do you like this price?) gives way to total agreement or no agreement.  This means more detailed involvement in the project as it unfolds, bigger time commitments by the client to be deeply ingrained into the project process, and perhaps most importantly, jointly responsible for each of these decisions.  That closeness also closes off subsequent opportunities to hold other parties exclusively responsible for those decisions.  Many developers may not endorse the loss of such an enforcement mechanism.  For more on this issue, see “everyone “promises not to sue” below.

Strong IPD also means compensating the project team for accomplishing objectives that are defined at the outset and are in the interest of the project, and paying those profits jointly to the members of the project team.  Less paperwork and invoicing (a good thing for the client) but more importantly, perfect alignment of interests of all the parties and the project itself, so, as John Tocci says "Everyone works for the project."  And since many development projects are driven by well-established outcomes (meeting budget and schedules, or sustainability goals) this one seems like it would work well.  And perhaps there's an even more interesting oppotunity to get to even better alignment--if one such coutcome was the financial performance of the project in rental rates or rent/square foot, there would be even stronger incentive for quality work amongst the players, and a continued relationship beyond substantial completion that's more interesting than just the statute of limitations on a potential lawsuit.

Right now, I suspect the average developer client is disinterested in the use of BIM on projects, inasmuch as they don't dictate any of the tools that their teams might deploy to finish a project.  It's all about the schedule and the budget in most cases.  But as BIM empowers dynamic analysis of projects in ways that can allow developers to see, almost in real time, the cost, energy, occupant flow (and resulting revenue) of jobs as they unfold, perhaps interest will increase.  And those that operate their buildings after completion will surely engage in BIM-based facilities management as those solutions mature.

But speaking of which...many IPD projects attempt to create a "safe zone" for everyone's participation and ideas by providing cross-indemnification (legalese for "everyone promises not to sue everyone else") in the agreement.  The thinking here is that everyone, including the owner, is therefore free to take responsibility in the joint decision-making model--and include their best ideas irrespective of role--if they are not spending all their time making sure they don't get sued.  John also says that he can spend as much as 30% of his time on a typical CM-at-Risk project (many of which he does for developers) in "exculpatory" activity that only makes sure that he has documented or challenged everything that might create potential liability for his firm.  That's money that the owner pays, but sees no value from whatsoever.  The question, of course, is whether a developer is willing to relinquish this particular Sword of Damocles held over the team in case the project goes truly south.  It is likely only the most progressive who will be willing to experiment with such an approach to recapture the resulting value.  Of course, architects, statistically, probably benefit most from such provisions, since the vast majority of their claims come from clients and contractors.

[Sidebar:  in many large development projects like the ones that I worked on when I was practicing, even our sizable $5 million insurance policy wouldn't make a serious dent in any real problem that unfolded on the job.  The threat of litigation was as much an enforcement technique as a source of funds to resolve problems, and in any event getting access to those funds takes many years after a problem is identified by the time such matters are resolved.  Not a very efficient system.]

Most if not all of today's IPD projects are being undertaken by recidivist clients--owners who build repeatedly and are looking for solutions to the repeated crises of construction.  Developers surely fall into this category.  But most of those projects are being constructed by long-time owners of their buildings, institutions like hospitals or universities.  Many development projects are "turn-key" in that they are sold quickly after leasing and completion, although the tide may be turning on this concept in our current time of tough credit and longer leases.  I suspect--without benefit of any evidence, of course--that there are some progressive developers out there, who are perhaps building green projects with long-term operational obligations, who might be willing to experiment with IPD.  They'll be in the vanguard, and would certainly accelerate the trend toward less contentious, siloed delivery that might be more profitable, less risky, and more fun.

If you know of such a project out there, please let me know.