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What’s the Future of Integrated Project Delivery in Canada?

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Construction is somewhat like a group of people building a jigsaw.

You have someone who knows the picture and you have an edge expert, and someone who knows what a tree looks like. Now imagine the process of putting together the jigsaw. Firstly, the picture guy (project manager) asks the corner and edge expert (foundation contractor) to build the parameter of the jigsaw. Then the tree guy and his friends (sub-trades) pitch in to complete the work.

This well-established step-by-step process ensures that the foundations are built before the windows, that conduits are built before the fibre-optics are laid, and that carpets are laid before the furniture is delivered. However, what if the windows are pre-built? What if conduits are built off-site with built-in cabling? What if concrete floors are mirror-polished, negating the need for carpeting altogether?

Integrated Project Delivery (IPD) also involves the architect (the guy who designed the jigsaw). It takes a holistic approach to the total profit of the project, not simply the steps through which it is completed.

History of IPD

IPD was developed in San Francisco by health care providers who hit a crisis with the construction of medical facilities in the bay area. They needed a better way of building much needed medical facilities on time and within budget, which led to key construction personnel getting together to discuss the best way to meet the needs of the health care provider.

“The traditional tender process tries to optimize the individual scope of each trade contractor. The theory goes that if we optimize each individual part—and bring them all together—the whole will be optimized,” explains Tim Coldwell, Managing Director of Chandos Construction.

“But what if we optimize the whole? Maybe, it is better to allow some inefficiencies with the drywall scope as it has a larger positive effect on other trades in the project. The basic idea is to incentivize the team to optimize the whole instead of the parts.”

Virtual Organization

Ultimately, IPD brings together all parties who are responsible for design and development to determine the best ways to bring the construction to life. The project is defined by a group contract, which includes shared risks and shared rewards. Project partners typically include the owner, architect, consultants, general contractor and key trade partners.They all form a virtual organization to design and deliver the project. Each participant’s profit is separated from their cost base, and all the participants pool their profits at risk.

The team then embarks on what is called a validation study. It typically costs the client 1–2 percent of the hard costs. At the end of validation, the client gets a high degree of cost certainty. This is a major benefit of IPD; most other delivery methods typically require a spend of approximately 4 percent of hard costs to get to the same cost certainty.

According to Coldwell, “At the end of the validation process, you have an owner who is given cost certainty, a team that collectively says that it can deliver the project and is willing to put their profit at risk.”

Collaboration and Communication = Success

At this point collaboration, communication and an appreciation of the shared risk are key to the success of the project. The focus moves away from the profitability of the individual company, be it the architect, general contractor or sub-trade, and towards the shared pot. Decision making is based on what’s best for the project. This way, it is sometimes better to pay more for a component, for example, of sub-optimal design, production, or delivery because it’s better for the overall project.

All team members are brought together in one location to support collaboration. Architects, project managers, estimators, supervisors, and key people from all of the sub-trades ensure that issues are dealt with proactively and promptly for the mutual benefit of the project.

“We insist on co-location to promote rapid resolution of a problem,” Coldwell  says. “For instance, if there’s an issue with a duct clashing with a column, it’s not just the draftsperson who is involved. Superintendents, the architect, mechanical, and structural team members all huddle together to find a solution.”

“An issue can be rectified within 30 minutes whereas, in the traditional delivery method, it goes back and forth for weeks.”

Shared communication and honesty are critical to the success of the project. Coldwell explains that “the ability to forecast costs is key, so every month, the entire project team discusses costs in an open setting and forecasts a projected final profit.

“You get a sense of the complete transparency of costs and a mutual sharing of the ups and downs, so when there’s an issue, the whole project team jumps on it to find the best possible solution,” adds Coldwell.

Fast Growth of IPD Expected

What’s the future look like for Integrated Project Delivery in North America? Quite rosy, according to a study by the University of Minnesota. The report titled IPD: Performance, Expectations, and Future Use examined the use of IPD across North America and its propensity for future use. When compared to non-IPD projects, approximately 90 percent of the respondents rated their expectations of IPD better or significantly better.

“Growth of IPD in Canada will be quicker than the U.S. as Canada learns from the experiences in the U.S,” says Coldwell.

Approximately 150 integrated delivery projects are underway or have been completed in North America. Of those, there are nearly 30 IPD projects in various stages across Canada. Many of the Canadian projects are publicly funded. It allows for transparency where tax payers’ dollars are used, for instance when building schools or hospitals.

Coldwell adds, “IPD lends itself to projects with a high degree of complexity.”

The growth of IPD will be accelerated as government bodies, municipalities and private owners embrace IPD as a means of getting projects delivered on time and within budget.

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