As building projects become increasingly complex, architects, engineers, contractors, and owners have considered integrated project delivery (IPD) as a way to share information, practices, and talent to help deliver a project on time and within budget. The trend has mirrored the emergence of technologies such as BIM as well as an effort to improve efficiencies and meet benchmark sustainability goals. A specialized legal structure is critical to implementing IPD successfully, according to Howard W. Ashcraft Jr., 60, a partner in the San Francisco law firm Hanson Bridgett and head of its construction practice. Ashcraft drafts IPD contracts for projects across the country, whether they cost $1 million or $1 billion, and for a wide range of building types. Ashcraft spoke with architect about how to craft a legal document for an IPD project—and how to manage the relationships that come with it.
IPD can connect fragmented design and construction industries. The building process is divided into many responsibilities, and at times, people responsible for different roles—contractors, subcontractors, and design consultants—don’t communicate. “Designers don’t want to cross the line. Contractors will say, ‘I’m not a design person,’ ” Ashcraft says. At a time when the construction industry is trying to be leaner, new approaches are merited. IPD represents a way to bring different minds to bear on one problem—a virtual organization with a different business and legal structure that engages all the participants. “With IPD, design is an equal partner at the table with the owner and contractor. That wasn’t necessarily the case before,” Ashcraft says.
Don’t be afraid.
“At the start of a project, I always interview the key parties to flesh out their concerns and basic goals. I want to know what scares them,” Ashcraft says. “I provide information about the advantages and disadvantages of IPD and try to figure out what their common interests are.” The next stop is a workshop or a boot camp to talk about microstructures—that is, how the design and information will flow. “I develop a business structure that matches this team and their project. We align the goals and terms of a contract with their circumstances.”
Unlearn to learn.
People bring their own experiences and checklists to drafting contracts, but they aren’t always relevant in the context of IPD, Ashcraft says. You can end up negotiating the wrong thing. And you have to define what sort of metrics, subjective and quantitative, will be used. Another thing to deal with is the issue of owner satisfaction: how to get maximum value out of the budget. Any defect in the design can drive up cost, which makes the contract a better ally of the designer. “On my checklist is how to set the target cost and validate that in a way that gives a team putting their profit at risk some comfort,” he says.
Change is possible.
IPD projects can be better planned than traditional ones, but problems can come up, he says. The owner can change his or her mind, or an obstacle may interfere with construction. Construction or design problems that emerge risk a project’s profitability. So remember that IPD can be altered throughout the project’s life span. Even if IPD projects are leaner or BIM-enabled, there is room for improvement. “We always want to ask the question, ‘Can we improve it on the fly as things change and develop?’ ” Ashcraft asks. “It’s not so much the contract itself that we change but the numbers.”
“Never engage in IPD with people who you think are unethical,” Ashcraft says. “Some people are just not amenable to collaborations. They want to take personal advantage of a situation. They can cause damage to a project, and you don’t want them on your team.” The best way to suss out a bad fit is during negotiations over the agreement, before a project commences. Once the project starts, people who don’t work out or can’t perform as expected will nevertheless have to be replaced—every once in a while, someone gets voted off the island. But “you can replace someone, and it won’t jeopardize the entire project,” he says.
“When a project is completed, we have a close-out process,” Ashcraft says. “If it’s a really big project, we conduct an audit to make sure the numbers have lined up correctly. We calculate the bonus, if it came in below cost, and the final profit is paid out to the team. Then we have a big party.”
Not for everybody.
IPD can be applied to any project—but the benefits and gains are not always the same, he says. It’s very popular for large projects such as healthcare facilities and hospitals, due to their multiple systems and rapidly evolving technology. For a parking structure, a pretty straightforward project, design/build will do just fine. “Or with a warehouse. Who cares?” Ashcraft asks. “But when a project requires higher levels of flexibility and certainty, and when it’s more complex and the opportunity for misfortune is higher, then it’s better managed through IPD.”