Integrated Project Delivery Getting Under the Hood

Does Project Delivery Matter?

Is Normal Normal? (or Dysfunctional)

If You Could Start from a Clean Slate

An IPD Example: SMC Castro Valley

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 Plumbing Electrical Framing Mechanical Plumbing Electrical Framing 99% 99% 71% 79%
baseline actual

Rework

7% 10% 10% 5%

0.5% 0.5% 8.5% 0.5%

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Productivity Improvements

Baseline Mechanical Plumbing Electrical Framing 100% 100% 100% 100%

Planned 105% 100% 114% 122%

Actual 116% 107% 105% 120%

Projected 120% 110% 107% 121%

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

IPD Structure

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Microstructure

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Macrostructure

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Multiparty Integrated Agreement

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IPD: A Closer Look

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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 Overruns

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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

Percentage of Profit Distributed at Milestones If Preconditions Met Distribution Percentages Vary Between Team Members Portion of Profit Held to Final Distribution
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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 Owners Suspension or Termination

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Project Decision Flow(HB/C191)

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Waiver or Limitation?

Waiver of Claims No claim unless exception to waiver No insurance for waived claims* No litigation for waived claims.
* Some waivers have exception for insured claims. (AIA C-191, some HB)

Liability Limitation Claims allowed, but damages limited Insurance for claims because not waived Litigation to enforce claims likely

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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 Contractors Professional Liability

A few multi-insurer integrated programs

MaineGeneral

Integrated Policies being developed

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IPD Teams

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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

Diversity

Technical Expertise Problem Solving/Decision Skills Interpersonal Skills Experience & Knowledge Creative Tension Small = efficient = 4 or 5 Large = creative <=12 Smallest team necessary Collaboration (1/3 not collaborative) Command and Control Firm Culture
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Size (5-9)

Personality

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

Physical Proximity (Co-location)

Trust Interpersonal Skills Management (Lean) Skills

Visual Management Decision Making Coordination Mentoring

Trust Velocity of Communication Quality of Communication Break from Individual Corporate Cultures

Specific Goals

Scope Interpersonal Skills/Disputes

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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
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 Practitioners Guide (Government of Victoria , 2006)
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www.hansonbridgett.com/practice s_industries/IPD_BIM.php

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IPD Resources

www.ipd-ca.net www.aia.org/ipd www.consensusdocs.org www.leanconstruction.org www.bimforum.org www.hansonbridgett.com

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