Integrated project delivery (IPD): A new era of project coordination

What are IPD-projects?

Integrated project delivery (IPD) is a cooperative project execution model whose main objective is to optimize the efficiency and quality of results of construction projects. At its core, IPD provides for the early integration of all key project participants - clients, planners and contractors - into a multi-party contract (alliance contract).

This integrative approach promotes the establishment of a collaborative project culture characterized by transparency, joint definition of objectives and consistent risk sharing. The aim is to substantially minimize project risks and significantly increase the probability of successful project completion.

The DVP (German Association for Project Management in the Construction and Real Estate Industry e. V.) has published a position paper on the role of project management in IPD projects, the content of which served as the basis for this blog post and which has been quoted from several times. For further information visit

https://dvpev.de/projektmanagementleistungen-in-kooperativen-projektabwicklungsmodellen/

How do IPD projects differ from normal construction projects?

The difference between IPD projects and conventional construction projects is primarily manifested in the structure of the cooperation and the distribution of risks and opportunities. While traditional projects are often characterized by a sequential project process with a strict separation between planning and execution phases, IPD emphasizes the integral and partnership-based cooperation of all parties involved from the initial phase onwards.

Early involvement of alliance partners: IPD projects are characterized by the early involvement of all key stakeholders in the project preparation phase. This enables simultaneous processing of planning and execution aspects and optimizes coordination between the trades.

Common project goals (conditions of satisfaction): The focus shifts from optimizing individual interests to maximizing the overall success of the project. The “Conditions of Satisfaction” (CoS) serve as parameters for defining and measuring the success of the project.

Integrated risk sharing (painshare/gainshare): A key feature of IPD is the symmetrical distribution of risks and opportunities among the alliance partners. This “painshare/gainshare” principle promotes open communication, the proactive identification of problems and the development of joint solution strategies.

Maximum transparency: IPD projects are characterized by a high degree of transparency with regard to project information, decision-making processes and financial transactions. This creates trust and enables informed decision-making by all parties involved.

These fundamental differences result in a significant change in project culture and internal project dynamics compared to traditional construction projects.

Admittedly, you need to let everything “sink in” for a while before a basic understanding emerges. Let's try to explain it in simple terms using the process of a project:

1. Initially, the project begins like any other. On the client side, the task definition, the specification, must be drawn up, a process that takes place before the actual start of planning (requirements analysis). If the client cannot perform this task alone - we have explained the content and importance of this task in this article (https://pmmr.eu/en/blog/how-to...) - then external support from a project management office is required. From the point of view of project coordination, the constellation in the project preparation phase is the same as in conventional project management. There is a bilateral contractual relationship between the client and project coordination. A multi-party contract cannot yet play a role because no other players are involved up to this point. On the contrary, their selection depends on the results of this phase.
2. Once the main task has been defined, planning capacity must be integrated into the project. This means that there is at least one other party, the general planner. However, since you want to get the know-how of the implementation companies into the project at an early stage, the missing party, namely the general contractor, is brought on board at an early stage in addition to the general planner. This allows parts of the execution to begin comparatively early, which can help with the schedule.
3. But is it possible to engage an implementation company so early on, which actually needs an exact and therefore finished service description and which can actually only offer once a tender has been generated on the basis of a finished plan? How can market prices be achieved in this way?
4. This is precisely the special momentum of a multi-party contract. The partners are not selected according to the price of an offer, but according to their suitability for the task. In the first phase, comparable to LPH 2 and in some cases also LPH 3, the parties agree on a project objective in terms of content, costs and deadlines. All parties are now obliged to follow this objective. All further steps are carried out in an open-book process so that an overview of the real costs is available at all times.
5. All parties regard the project goal as a realistically achievable project goal. In order to meet the mark, the main parties (BP and JV) participate in the painshare/gainshare remuneration system; comparable to a bonus/manus regulation. This means that all partners benefit if the project target is achieved or, even better, underachieved. In this way, market ignorance is compensated for. Various interests of individual contracting parties are subordinated to the common interest without any party being disadvantaged.

This is undoubtedly an idealistic approach, but in our view it has a momentum that promises success and requires a high degree of partnership and trust. The aforementioned DVP position paper writes of a “cultural change”. Big words. From our point of view: justified words.

Looking back on many years of project coordination experience, the “slightly” older among us are experiencing déjà-vu. Haven't we had this before? Yes - at least in a similar way; in the days when commercial enterprises still handled their projects with the “house and yard company” and the contract was concluded with a familiar handshake. Planning was carried out with the planning team of the future general contractor, who offered his own planning. This offer, initiated by the project manager, was then checked for market conformity by an external office that was close to the awarding authority. In this way, you were always close to the market (perhaps not to the last cent) and still had a trusted and reliable partner (usually not to be paid with money). These models have disappeared because they are not compatible with the compliance rules of many companies or because the merciless buyer management of processes has often no longer understood the benefits of such solutions.

Now the solutions are back, albeit with a different contractual constellation. In our opinion this is a very positive development, even if a lot of details need to be clarified.

The role of project coordination in IPD projects

Project coordination also plays an essential role in the context of IPD projects. Nevertheless, the role of the project coordinator is undergoing a transformation. The project coordinator does not act primarily as a representative of the client, but instead takes on a supporting role for the entire alliance in order to ensure the overarching project objectives are met.

The core tasks of project management in IPA projects include:

• Supporting the project management team (PMT): The project coordinator assists the PMT in coordinating and controlling the project. This includes preparing the basis for decisions, moderating coordination processes and monitoring the progress of the project.
  
• Establishment and management of project processes: The project coordinator plays a key role in defining, piloting, implementing, monitoring and updating project processes. This includes the implementation of methods such as lean construction and building information modeling (BIM).
• Ensuring communication and documentation: The project coordinator ensures an effective exchange of information between the alliance partners and the comprehensive documentation of all relevant project events and decisions.
• Proactive risk management: The project coordinator supports the identification, analysis, evaluation and management of project risks and opportunities. This includes the development of risk minimization strategies and the establishment of a “painshare/gainshare” mechanism.
• Monitoring costs and deadlines: The project coordinator is responsible for the continuous monitoring and control of project costs and deadlines to ensure that the defined project objectives are met

Where does the role of the project coordinator fit into this execution model? Does he remain autonomous in an exclusive contractual relationship with the client or does he become part of the IPD team?

In our view, there is no doubt about this for the project preparation phase. At this stage, there are actually only the main players in project coordination - the client's project management and the external project coordination support. The players in the multi-party contract have not yet been added. So contractually everything remains the same. The project coordinator is commissioned by the client. Of course, there are also other contract planners in this phase. These include, for example, factory and logistics planners, planners of the basic IT structure, ground surveyors, surveyors, inverse experts, etc. As we understand it, these players do not become parties to the multi-party contract.

At the moment when the multi-party contract is actively practiced - i.e. at some point during LPH 2/3 of the HOAI - there are several options to choose from:

• The project coordinator becomes part of the “alliance” ...
• or it is provided by the client.

Conclusion

IPD projects undoubtedly represent a paradigm shift in the construction industry, with the potential to raise efficiency, transparency and the overall success of construction projects to a new level.  For project coordination offices, this development means adapting to an expanded and modified role.  In addition to traditional skills in cost, schedule and quality management, skills in the areas of collaboration, process management and mastery of integrated project management are coming to the fore.   

For many years, we have lived by the conviction that we are not “above” the team, but work “with” the team to ensure the success of the project.  This attitude of partnership is particularly important in IPD projects, where cooperation and trust are the cornerstones of success.   

With our expertise and our commitment to a collaborative project culture, we are ideally equipped to support you in the successful realization of your IPD projects.