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Integrated Project DeliveryGetting Under the Hood

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Does Project Delivery Matter?

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Is Normal Normal?(or Dysfunctional)

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If You Could Start from a Clean Slate…

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An IPD Example:SMC Castro Valley

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Overview @ 70% Completion

• Expected Cost $255 Mill ion• Authorized Cost $225 Million• 30% Schedule Compression (and 6 weeks

ahead)• $5.8 Million Contingency (only $2.2 used)• 26 Owner Originated Changes (<1%)• 333 RFIs (Normal 3,000)• Intense Use of BIM• Full Budgeted Profit• No Compromises to Program

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Performance Metrics

• Scope Installed EXACTLY as Modeled– Mechanical 99%– Plumbing 99%– Electrical 71%– Framing 79%

• Rework baseline actual

– Mechanical 7% 0.5%– Plumbing 10% 0.5%– Electrical 10% 8.5%– Framing 5% 0.5%

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Productivity Improvements

Baseline Planned Actual ProjectedMechanical 100% 105% 116% 120%Plumbing 100% 100% 107% 110%Electrical 100% 114% 105% 107%Framing 100% 122% 120% 121%

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Note: Baseline productivity based on contractors’ own historic productivity on similar projects.

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IPD Structure

Microstructure

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Macrostructure

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Multiparty Integrated Agreement

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IPD: A Closer Look

Compensation Goals

• Fair Return for Efforts• Opportunity for Increase Profitability• Align Interests of Parties• Stimulate Creativity and Effort• Reduce Waste• Buffer Cost Overruns• Transparency and Accountability

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Compensation Principles

• Profit based on Group Outcome– Project– Subgroup

• Profit and Cost Separated– No incentive to increase work– No disincentive to moving work to best capable– Fixed Fee on Variable Costs

• Transparent Costs– Accountable and Auditable

• Profit at Risk Sufficient to Buffer Overruns17

The Art of Compensation

• Amount At-Risk• Metrics for Increasing/Decreasing

– Shared Savings Percentage• Targets

– When Should They Be Set– Benchmarking and Validation

• Cashflow• Buffering

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Compensation Design

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2 Party Milestone Distributions

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Multi-variable Risk/Reward

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Multi-variable Risk/Reward

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Milestone Distribution Matrix

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• Percentage of Profit Distributed at Milestones• If Preconditions Met• Distribution Percentages Vary Between Team

Members• Portion of Profit Held to Final Distribution

Other Quantitative Factors

• Schedule• Safety

– Lost days– Reportable Accidents

• Plan Percent Complete• RFI/Change Order Reduction• Energy Performance

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Qualitative Factors

• Project Quality– Index Projects– 3rd Party Review

• Team Self-Reviews• Owner Satisfaction• Added Value List

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Changes to Target Cost (HB)

• No Change Orders, Except– Owner Elected Changes (changed scope)– Owner Directives (unilateral changes)– Differing Site Conditions– Changes in Laws and Regulations– Owner’s Suspension or Termination

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Project Decision Flow(HB/C191)

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Waiver or Limitation?

• No claim unless exception to waiver

• No insurance for waived claims*

• No litigation for waived claims.

• Claims allowed, but damages limited

• Insurance for claims because not waived

• Litigation to enforce claims likely

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Waiver of Claims Liability Limitation

* Some waivers have exception forinsured claims. (AIA C-191, some HB)

Liability Waivers (HB)

• Waiver of ALL Liability Among IPD Parties, Except:*– Willful Default– Warranty Claims– Project Performance– Allocation of Third Party Claims– Owner Directives– Non-payment by Owner– Termination or Suspension Costs– Indemnification Obligations– Failure to Procure Required Insurance– Insured Claims?*All projects have custom negotiated provisions that may differ from this description.

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Insurance Developments

• Most IPD Projects use Traditional Insurance Products– Contractor/Trades should have Contractor’s

Professional Liability• A few multi-insurer integrated programs

– MaineGeneral• Integrated Policies being developed

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IPD Teams

IPD Groups

• Committee– Small– Deciding, not Doing

• Group– Any size– Limited Synergies

• Team– Interactive– Synergistic– Creative

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Advantages of Teams

• Creativity• Knowledge• Decision Accuracy• Engagement• Alignment and Coordination

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Teams Can Be Worse!

• Overhead• Communication Complexity• Groupthink• Groupshift• Social Loafing• Bystander (Genovese) effect

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Team Composition

• Skills– Technical Expertise– Problem Solving/Decision Skills– Interpersonal Skills

• Diversity– Experience & Knowledge– Creative Tension

• Size (5-9)– Small = efficient = 4 or 5– Large = creative <=12– Smallest team necessary

• Personality– Collaboration (1/3 not collaborative)– Command and Control– Firm Culture

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Team Organization

• Cross-Functional Teams– Interdisciplinary– Systems or Areas

• Discrete Whole– Cost, Scope and ? Responsibility

• Design, Construction, Cost, Schedule, Commissioning

• Duration– R&D Teams 4 year peak– Package work to teams, not teams to work

• Teams within Teams• External or Internal Coordination

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Team Management

• Bootcamp– Trust– Interpersonal Skills– Management (Lean) Skills

• Physical Proximity (Co-location)– Trust– Velocity of Communication– Quality of Communication– Break from Individual Corporate Cultures

• Visual Management• Decision Making• Coordination• Mentoring

– Scope– Interpersonal Skills/Disputes

• Specific Goals

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Agile and Scrum

• Cross-functional teams• Self-Organizing teams

– No leader– Daily Scrum– Mentor (scrum master)

• Time-Boxing (sprints)• Face to Face Communication• Simplicity-the Art of Maximizing the Amount of

Work NOT done.• Continuous Attention to Technical Excellence• Regular attention to continuous improvement

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Motivation is Largely Within

• Pay for Performance may be Detrimental– Pay inequities are detrimental

• Work Structure– Whole and Identifiable Task– Freedom and Autonomy– Adequate Resources– Positive Purpose– Challenge– Imposed or Selected Goals

• Authentic Leadership– Competent, ethical, and compassionate

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Creativity

• 3 Component Model– Expertise– Creative Thinking Skills– Inherent Interest

• Diversity• Open Communication• Moderate Conflict

– Task and Process, but never Personal• Active Mood• Moderate Challenge

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IPD Projects

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IPD Resources

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• IPD: A Working Definition (AIACC, 2007)• IPD: A Guide (AIA/AIACC, 2008)• Negotiating an IPD Agreement (Hanson Bridgett, 2011)• IPD Case Studies (AIA/AIACC, 2010)• IPD Case Studies (AIA 2011)• Managing Integrated Project Delivery (CMAA, 2010)• IPD For Public and Private Owners (NAFSA, COAA,

APPA, AIA, AGC, 2010)• Comparison of IPD Agreements (Hanson Bridgett, 2010)• IFOA Executive Summary (Hanson Bridgett, 2010)• Project Alliancing Practitioner’s Guide (Government of

Victoria , 2006)

www.hansonbridgett.com/practices_industries/IPD_BIM.php

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www.ipd-ca.net

www.aia.org/ipd

www.consensusdocs.org

www.leanconstruction.org

www.bimforum.org

www.hansonbridgett.com

IPD Resources

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