An Overview

Forces Driving Change

The design and construction industry, essentially unchanged for well over a century, is looking at a future significantly different than its world today. A range of forces are at work; new tools, methodologies and roles are influencing and shaping fundamental cultural and business shifts. We stand in the early stages of an accelerating, pervasive and positive transformation.

Industry culture and methodologies evolve in response to a wide range of factors. Significant forces influencing design and construction today include the following:

1. Waste and lack of productivity
2. Technological evolution (software)
3. Owner demand for value

Waste and Lack of Productivity

• A U.S. Bureau of Labor Statistics study shows that productivity of the construction industry has decreased since 1964 while all other non-farm industries have increased by almost 200%.
• A 2004 study by the National Institute of Standards and Technology (NIST) shows that lack of software interoperability costs the industry almost $16 billion annually.
• A 2004 Construction Industry Institute / Lean Construction Institute study suggests that as much as 57% of time, effort and material investment in construction projects does not add value to the final product, as compared to a figure of only 26% in the manufacturing world.

The construction industry is well positioned to find and eliminate waste.

Technological Evolution

• Software for the design and construction industry has become able to manage an enormously wide range of complex data, and at the same time, has become simpler to use.
• Building Information Modeling (BIM) capable packages can deliver benefits to stakeholders in every part of the construction process.
• Younger professionals are coming into the industry with new tech-savvy skills and are comfortable with new tools.

Current construction industry research shows that Building Information Modeling (BIM) is the inevitable technology for construction operations.

Owner Demand for Value

Owners are becoming increasingly focused on demanding more value. They are aware of waste and productivity issues, technological advancements and are demanding change.

The need for consideration of new project delivery methods is driven by the reoccurrence of numerous problems related to the current delivery methods available. Many owners share the frustrations associated with the traditional methods and repetitively experience many of the same problems as other institutions and corporate construction projects. A rise in the number of projects completed utilizing alternative delivery methods demonstrates owner dissatisfaction with the traditional Design-Bid-Build process.

These forces are leading owners to change how project teams behave. If owners want change, if they want teams to behave differently, if they want collaboration, if they want teams to be integrated…they have to find new ways to make these things happen.

Integrated Project Delivery (IPD) provides owners a fresh alternative approach to the way they are contracting their projects and incentivizing their project teams to collaborate.  The unique IPD form of contract involves more than just two parties to the agreement. It is a multi-party contract that allows multiple parties to all agree to a common set of terms and expectations, or in other words, the “goals and priorities” of the owner and the project.

At a minimum, the owner, its architect and its contractor all sign the single agreement, and in some cases, other members of the project team that are deemed to be critical to the project success are also brought into the multi-party agreement. The agreement itself outlines how risks are shared and how compensation is tied not to an individual party‘s performance, but rather the team‘s performance on the overall project.

Integration of project teams has proved to yield better results. Whether through the use of a multi-party IPD contract or under alternative project delivery methods such as Pure Construction Management, these new approaches to old practices are emerging to help change the way owners get more value out of their investments in capital assets.

Key elements that make IPD an effective project delivery choice for the construction industry:

• Based on the principles of trust and mutual respect
• Mutually beneficial and rewarding to all parties
• Collaborative decision-making at all levels
• Early involvement of key project participants
• Early goal definition and intensified planning
• Open communication between all parties
• Value Analysis and Engineering by all parties throughout design and construction

 

The following table excerpted from Integrated Project Delivery: A Guide (2007, AIA and AIA California Council) suggests some of the ways in which IPD differs from traditional project delivery:

 

Traditional Project Delivery		Integrated Project Delivery
Fragmented, assembled on “just-as-needed” or “minimum-necessary” basis, strongly hierarchical, controlled	Teams		An integrated team entity composed of key project stakeholders, assembled early in the process, open, collaborative
Linear, distinct, segregated; knowledge gathered “just-as-needed;” information hoarded; silos of knowledge and expertise	Process		Concurrent and multi-level; early contributions of knowledge and expertise; information openly shared; stakeholder trust and respect
Individually managed, transferred to the greatest extent possible	Risk		Collectively managed, appropriately shared
Individually pursued; minimum effort for maximum return; (usually) first-cost based	Compensation / Reward		Team success tied to project success; value-based
Paper-based, 2 dimensional; analog	Communications / Technology		Digitally based, virtual; Building Information Modeling (3, 4 and 5 dimensional)
Encourage unilateral effort; allocate and transfer risk; no sharing	Agreements		Encourage, foster, promote and support multi-lateral open sharing and collaboration; risk sharing