In an August 2012 survey conducted by the Construction Management Association of America, the types of contract format most prevalent in the vertical construction market were found to be as follows:
This last contract format, IPD, was one of a series of revised contracts released by the American Institute of Architects (AIA) in the period 2007–2009. An entirely new category of contracts, ConsensusDOCS®, also evolved around this time; these contracts were written and endorsed by a coalition of thirty-eight leading construction industry organizations, including the Associated General Contractors of America (AGC).
These contracts stress collaboration among all parties to the design and construction process, and invite the owner, architect, general contractor, and key subcontractors to work together, sharing their expertise and knowledge, to develop project goals beneficial to all. Although a complete reading of each of these IPD contracts is necessary to obtain the full concept of Integrated Project Development, a brief look at several of these AIA and ConsensusDOCS® contracts will provide project executives, project managers, and project superintendents with the basics of this collaborative movement.
The Six Principles of Integrated Project Delivery
1. Involve all participants in project development and execution as soon as possible in the programming process.
2. Identify the prime technologies to be incorporated into the project—Building Information Modeling (BIM), Sustainability, Green Criteria, Schedule, Economic Performance—across the project’s life.
3. Develop detailed budgets early on to allow for more rapid assessment of design decisions. This budget or cost assessment is made available to all key parties for review and comment.
4. Develop performance goals, including a method for measuring and monitoring performance.
5. Develop project incentives dealing with costs, schedule, and quality; determine how these incentives will be distributed to each party, and obtain approval of each party in accepting risks and rewards.
6. Link the Preliminary Schedule, which is developed early on, to the project’s development model and adjust the schedule accordingly.
Let’s now look at selected key provisions of these Integrated Project Development documents.
- AIA Document A195-2008™: “Standard Form of Agreement Between Owner and Contractor for Integrated Project Delivery IPD)”
- AIA Document A295-2008™: “General Conditions of the Contract for Integrated Project Delivery”
- Document C191-2009™: “Standard Form Multi-Party Agreement for Integrated Project Delivery”
AIA Documents B195™ and A195™. These contracts between Owner and Architect (B195) and Owner and Contractor (A195) establish an Integrated Project Delivery system. AIA A195-2008™ provides the business terms and conditions for the owner-contractor agreement, whereas AIA B295-2008™ provides the General Conditions for the IPD, setting forth the contractor’s duties and obligations for each of the phases of the project, along with the duties and obligations of the owner and the architect. AIA A195 is based upon a Guaranteed Maximum Price agreement.
The following diagram reflects the contract relationship document between A295, A195, and B195 (contract between Owner and Architect for an IPD project).
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Other articles in AIA C195™ provide for incentive compensation for a portion of the differences between Actual and Target Costs. All parties can participate in establishing Goal Achievement Compensation, determining the amount and the method of compensation when all project goals have been achieved.
The following excerpts from AIA Document A295™, AIA Document A191™, and AIA Document C191™ are reproduced with permission of the American Institute of Architects, 1735 New York Avenue, N.W., Washington, D.C. 20006.
AIA Document A295™. AIA A295™ defines the IPD approach, which is reflected in many of its several articles. Let’s start with Article 1—General Provisions: Article 1.1—Purpose—The Owner, Architect and Contractor have agreed to plan, design and construct the Project in a collaborative environment following the principles of Integrated Project Delivery and to Utilize Building Information Modeling [italics added] to maximize the use of their knowledge, skills and services for the benefit of the Project. The Architect and Contractor will deliver the Project in the following phases, which may overlap: Conceptualization, Criteria, Design, Detailed Design, Implementation Documents, Construction and Closeout. Article 1.3.13—Integrated Project Delivery: Integrated Project Delivery [is an] approach that integrates people, systems, business structures and practices into a process that collaboratively harnesses the talents and insights of all participants to reduce waste and organize efficiency through all phases of design, fabrication and construction. Article 4.2.3—The Contractor shall provide estimating services throughout the design of the Project … provide estimates of the total cost to the Owner to construct all elements of the Project designed or specified by the Architect and shall include contractor’s general conditions costs, overhead and profit (Contractor’s Estimate). The Contractors’ Estimate shall not include the compensation of the architect, the cost of land, rights-of-way, financing, contingencies for changes in the Work, or other costs that are the responsibilities of the Owner. The Contractor’s Estimates shall increase in detail and refinement as the Architect progresses with the preparation of the Criteria Design, Detailed Design and Implementation Documents.
AIA Document C191™-2009 Standard Form Multi-Party Agreement for Integrated Project Delivery . This document, as the excerpts that follow indicate, is one possible agreement between the Owner, Architect and Contractor. The relationships among all parties are shown in the diagram below and the following articles provide the flavor of the collaboration the documents seek to create.
Article 1.1.2—The Parties intend to establish a Target Cost for the Project and to amend this Agreement to incorporate the Target Cost. To the extent that the Actual Cost is less than the Target Cost, the Parties shall share in any savings realized in accordance with the terms of this Agreement. To the extent the Parties have agreed to Project Goals, they shall be set forth in Target Criteria Amendment and the Parties shall be compensated for achieving the Project Goals as specified in this Agreement.
Article 2 of Document C191™, entitled “Management of the Project,” creates a Project Executive Team. This team, comprised of representatives of the owner, architect, contractor, and “additional parties, if any,” is designated to plan and manage the project, but not on a day-to-day basis. This function is relegated to a Project Management Team, composed of owner, architect, and contractor representatives who provide the same roles as they would in a typical construction project: the owner’s rep acting as a bridge between architect and contractor by approving payments, reviewing changes in scope, etc.; the architect providing architectural services commensurate with that profession; and the contractor performing the “Contractor’s Work.” These three representatives, once again, do not supervise each other’s employees.
Article 4 includes some provisions unique to the collaborative nature of this multi-party agreement:
Article 4.2.4—Compensation for Labor Costs When Actual Costs Exceed the Target Cost.
When Actual Costs for the Project exceed the Target Cost, as adjusted under the Contract Documents, the Owner’s obligation to reimburse the other Parties’ Labor Costs shall be as follows:
[1] The Owner shall reimburse the Parties for all Labor Costs in accordance with Section 4.2
[2] The Owner shall not be required to reimburse the other Parties for any further Labor Costs incurred.
[3] Other (identify)
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