...claims. Section 3.8.2.1 of ConsensusDOCS 300, written and endorsed by 23 construction industry groups, provides a check-box option that might be considered a waiver of claims and/or liability, says Lichtig.
There is a belief among teams delivering “true” IPD projects that there are reduced risks that historically have produced disputes. Still, a contract that makes an owner unable to access insurance is a big mistake, says Lichtig.
That’s why, until there are IPD insurance products, the IFOA has a limitation of liability, which maintains insurance. Parties can pursue claims for conduct below the standard of care, says Lichtig.
But forms that allow claims of any kind “subvert the salutary objectives of IPD in maintaining a no-claim environment,” says Hatem. “Participants become incentivized to make claims.”
Developing insurance products in the no-claim and no-fault IPD environment requires a fundamental change in the underwriting approach to conventional liability insurance. “Most insurers want no part of it,” says Hatem.
Lexington and Schinnerer & Co., an underwriter for CNA, have been trying to crack this nut for several years. Both expect to solve it with project-specific policies, which can be complicated. Schinnerer’s product likely will debut by July.
IPD vets caution that IPD, which has complicated team governance, is appropriate only for savvy owners. Most projects are led by an executive group that functions as the project’s board of directors and typically includes, at minimum, representatives of the owner, architect and contractor. The group makes decisions by consensus, but typically the owner reserves the right to break an impasse.
A senior management team made up of parties from each firm represented in the executive committee is usually supporting the executive committee. At the operating level, IPD teams are typically organized into discipline-based groups.
Under most multiparty contracts, the architect and contractor are paid on the basis of cost, plus some or all of their overhead and an agreed-upon profit, a percentage of which is at risk. The owner funds a contingency. If it is preserved, savings are shared with the team. If there is a cost overrun and the contingency is exhausted, team members fund it out of their collective profits up to limits set in the agreement. “We are asking the parties to strip profit out of their costs and tell us what it is,” says Lichtig.
IPD presents more risk for all parties. “If something goes terribly wrong, everyone’s hands are dirty,” says Brian Zeallear, senior associate with veteran IPD architect NBBJ, Seattle.
Some object to tying their fortunes to others. “You don’t necessarily need to take responsibility for other people’s mistakes,” to work collaboratively, says Robert Hazleton, vice president of steel contractor Herrick Corp., Stockton, Calif.
Structural engineer Jon D. Magnusson, chairman and CEO of Magnusson Klemencic Associates, Seattle, says, “Quality firms have cultures of collaboration that achieve IPD’s goals without the complications of a multiparty contract.”
Mortenson Construction, Minneapolis, agrees that a multiparty agreement is not essential for collaboration, or what it calls integrated delivery. ID is “not a contract method but a process and operational framework that can be realized under many contract types using early team selection,” says Derek Cunz, Mortenson’s general manager. “We have integrated with design partners under construction management-at-risk [CMAR] and design-build [DB] agreements, using virtual design and construction [VDC] and BIM to dramatically improve outcomes.” Cunz recommends using traditional base agreements, along with an umbrella agreement that defines the team integration process, incentives and rules of engagement.
In a paper coming out in about a month and sponsored by the National Association of State Facility Administrators (NASFA), three levels of what is dubbed “collaborative project delivery” are described. Only level three, or “required”...
