...by a contractual agreement between “a minimum of the owner, design professional and builder, where risk and reward are shared and stakeholder success is dependent on project success.”
IPD relies on early involvement of key participants, collaborative decision-making and control, liability waivers among key participants and jointly developed and validated project goals, according to AIACC’s “Integrated Project Delivery: Case Studies,” a 59-page report issued in January that studied six projects.
Other highly desirable elements of IPD are mutual respect and trust among participants, collaborative innovation, intensified early planning, open communication within the team, use of building information modeling (BIM) by multiple parties, collocation of teams, transparent financials and use of lean principles of design, construction and operations. The report is available as a free download at www.aia.org/ipdcasestudies.
Five different “flavors” of the model contracts also present a problem. Lawyer Will Lichtig, a shareholder with McDonough, Holland & Allen, Sacramento, wrote the first one, in 2005, as general counsel for Sutter Health, Sacramento. Sutter, a system of non-profit hospitals, is an IPD pioneer.
Lichtig’s integrated form of agreement (IFOA) was adopted by the Lean Construction Institute (www.LCI.org) and other hospital systems. Lichtig explains his version of IPD in a 105-page report called “Managing Integrated Project Delivery,” published by the Construction Management Association of America. It is available for free at www.cmaanet.org.
Most multiparty contracts have what Lichtig calls “happy” language. For example, IFOA says, “The parties shall work together in the spirit of full cooperation, collaboration and mutual respect.”
The behavior clause gives the owner and other players leverage to boot a nonperformer off the team. But the happy language is derided. “Such words are not only useless but naive and illusory,” says Michael De Chiara, co-founder of lawyer Zetlin & De Chiara, New York City.
Even Simpson advises parties to leave “soft and fluffy language” out of the contract. “It’s not about trust—it’s about process,” he says. “If the process is set up properly, trust will follow.”
Dysfunctional
A big issue is that insurance and multiparty contracts currently don’t mix. Liability insurance traditionally has been underwritten and triggered on a basis of claims and fault. But signers of most IPD contracts promise, in writing, not to sue each other or point fingers, which can render liability insurance “dysfunctional and inoperative,” says David Hatem, a lawyer for design professionals with Donovan Hatem, Boston, who also works with Lexington Insurance Co., Boston.
Article 8.1 of the AIA C191 multiparty contract includes a waiver of claims and liability and lists a group of limited exceptions. Another model, AIA C195, sets up a “special purpose entity” for a project that effectively eliminates...
