Boldt's Kievit says a way to get around too-aggressive preconstruction pricing is to let trade partners know that it's their job to lose, if real prices don't match estimates. "If you play nice in the sandbox, we will award you a contract," he says.
The onus is on the owner to work out fair terms and assemble good partners, agree all. Team selection is quality or best-value based. If an owner has a relationship with a specific party, it may start with that party and select others that are compatible. At times, an owner will shortlist entire teams or architect-CM combinations.
UHS prefers to select one partner first and then the rest. For all picks, Bennett pays close attention to how candidates run their own organizations. He looks for "genuine indicators" that firms are lean, collaborative and technically proficient and use prefabricated components.
Expensive Insurance
With IPD, lines can blur between design and means and methods. Initially, there were no insurance products to cover entire integrated teams with regard to professional liability. That has changed.
"Zurich was the first to jump in" with an integrated project-insurance program, says Keith Jurss, senior vice president for construction with insurance broker Willis North America. "It's a good product, but it can be expensive," he adds.
Professional liability coverage protects the integrated team from claims by third parties and, through rectification coverage, protects the integrated team from project deficiencies, without the delay and expense associated with assigning liability to a single party.
"These are early days in the evolution of project insurances applicable to IPD because coverage is still founded securely in the concept of liability and duty of care," says Mike Hastings, managing director of broker Marsh USA Inc.'s construction practice. Underwriters don't have the history to look at projects and say IPD actually works, he adds.
Consequently, IPD policies have retentions from 25% to 50% of the profit pool, which pays out the retention. That scares some away from IPD policies.
Hastings predicts that within 10 years, there will be a "truly" integrated project insurance program that combines elements of builders risk, general liability and professional liability policies.
Even with the many success stories, most owners are either afraid of IPD, not equipped to manage it or not interested. A recent study's aim was to develop an owner's guide to IPD's best practices. It turned into a guide to maximize integrated delivery because only four of 204 respondents had ever executed a multiparty IPD project.
For IPD-like jobs, Alberici advises clients to attach a collaborative project charter, with Lean processes and behaviors, to the contract. Alberici did this for St. Mary's Health Center in Jefferson City, Mo., where the owner wanted the "legal protection of the AIA CM-at-risk agreement and the relationships and processes of an IFOA," says Gunn.
