Integrated Project Delivery (IPD) Contracts Get Multiple Parties on the Same Page Literally

IPD represents a small share of project delivery methods used in the United States, but there are advantages. Lean construction works most efficiently with an IPD agreement providing the contractual framework to collaborate.  A highlight recent study concluded that the business case for lean construction is compelling.  A recent AGC webinar outlining the study can be accessed here.

One interesting aspect of IPD agreements is the prime-level parties are bound by the contract and share the risks and rewards.  Looking for fair contracts that yield better project results, while saving you time and money?  Check out ConsensusDocs 300 and 305 Lean and IPD Lean contracting tools.

Two parties are typically signatories to a construction contract. For instance, an owner and a general contractor or an owner and an architect. In a multi-party integrated project delivery (IPD) agreement, like the ConsensusDocs 300, the difference is that the owner, design professional, and constructor all sign the same contract. Some refer to an agreement that includes at least these three parties as signatories, as an integrated form of agreement or “IFOA.” Signatory parties join the Core Team and are also part of the Risk Pool Plan, as further explained below.

Signatory parties join the Core Team. The Core Team is the decision-making body for the Project’s delivery and consists of an authorized representative from each Party. While not required, additional signatories may be parties in a final negotiated ConsensusDocs 300 agreement. Typically trade contractors that make up a large share of the project costs and success, such as mechanical contractors, are potential signatories. Also, an engineering firm is another common signatory in a multi-party IPD agreement. Engineering firms are often consultants under contract with the architect for building projects.

Signatory parties are also part of the Risk Pool Plan. Significantly, the ConsensusDocs 300 does not require all Risk Pool Plan members to become signatory parties. The Risk Pool Plan becomes a means to share financial risks and rewards among the participants. The project's success determines individual profit. Because a Risk Pool Plan is very project-fact specific, there is no one-size-fits-all standard. However, as a guide, ConsensusDocs has posted two different Risk/Pool Plan templates on the ConsensusDocs Guidebook page as illustrative examples. You may access these templates here:

Related Resources

AGC’s Lean Construction Forum is focused on growing the implementation of lean practices in the construction industry by providing educational opportunities and developing a community where anyone with an interest in lean construction can come together to engage in a dialog on best practices, share information, and participate in a broad, coordinated effort to promote and define the use of lean concepts and processes within the construction industry. You can find useful webinars and Toolbox Talks as well as join the forum here:  AGC has an IPD page here: The business case for lean one-pager can be found here: Lean Construction One-Pager.

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