Contracting for Integrated Project Delivery

HOWARD W. ASHCRAFT is a Partner at Hanson Bridgett LLP and Associate Fellow at Oxford’s Saïd Business School. A leading authority on Integrated Project Delivery, he has structured more than 150 IPD projects across North America and internationally. Ashcraft is a member of the National Academy of Construction, Fellow of the American and Canadian Colleges of Construction Law, and recipient of the Lean Construction Institute’s 2022 Pioneer Award for advancing collaborative project delivery.

• About the Author xContributing Authors xiList of Contributors xivAcknowledgments xvIntroduction xviPART 1 Preparing for IPD 1CHAPTER 1 What Is IPD? 31.1 Introduction 41.2 Business Model 51.3 Contract Structure 71.4 Enabling Behaviors 91.5 IPD and Other Collaborative Project Delivery Methods 111.6 IPD or IPD'ish? 12CHAPTER 2 Is IPD Right for My Project, Organization, and IPD Team? 152.1 Overview 162.2 Choosing a Project Delivery System 162.3 Is IPD Right for My Project? 172.4 Is IPD Right for My Organization? 192.5 Is IPD Right for the Team? 21CHAPTER 3 Preparing and Training the Owner 233.1 Introduction 233.2 Preparatory Work: Engaging the Owner 243.3 Owner Training 26CHAPTER 4 Developing the Contract Structure 294.1 Introduction 294.2 Form or Custom Contracts? 304.3 Contract Options 31CHAPTER 5 Procuring and Engaging the IPD Teamside 355.1 Outreach 355.2 Procuring the Team 365.3 IPD Procurement Process 37CHAPTER 6 The IPD Contracting Process 436.1 Contracting Process 43PART 2 Negotiating the IPD Contract 47CHAPTER 7 Changing the Mindset 497.1 Changing the Mindset: The IPD Business and Legal Model 507.2 Changing the Mindset: Multiparty Agreements 517.3 Changing the Mindset: A Language Action Perspective 527.4 Changing the Mindset: Project Success Instead of Damage Control 53CHAPTER 8 Negotiating a Multiparty Agreement 558.1 Multiparty Negotiation Principles 568.2 Current Multiparty Negotiation Flow and Processes 588.3 Commercial Negotiations 608.4 Insurance 61PART 3 The IPD Contract in Detail 63CHAPTER 9 The Relationship of the IPD Parties 679.1 Project or Program? 689.2 Polyparty (Many Parties) or Multiparty (3 Parties)? 68CHAPTER 10 IPD Governance 7110.1 Overview 7110.2 Voting Systems 7310.3 Project Neutrals 76CHAPTER 11 IPD Compensation 7711.1 Compensation Principles 7711.2 Incentives and Risk/Reward 83CHAPTER 12 Target Setting and Gates 8912.1 Overview 9012.2 Two Target Systems 9012.3 Early Profit Setting, Later Target Cost Setting 9112.4 Phase/Gate Systems 9212.5 Qualitative Assessment Systems 9312.6 Incentive Caps 9312.7 Incentive Lessons Learned 93CHAPTER 13 Changes and Escalation 9513.1 Changes Overview 9513.2 Change Management Processes 96CHAPTER 14 Risk Management 10514.1 Introduction 10614.2 Commercial Risk Management 10614.3 Validation 10614.4 Legal Risk Management 110CHAPTER 15 Insurance and Bonding 11715.1 Overview 11715.2 Level 1: Smaller, Simpler Projects 11815.3 Level 2: Moderately Large and Complex Projects 11915.4 Level 3: Comprehensive Insurance Programs 11915.5 Bonding 120CHAPTER 16 Common Issues from a Collaborative Perspective 12316.1 Warranty 12316.2 Intellectual Property 12416.3 Confidential Information 127PART 4 IPD (and Alliances) Globally 143CHAPTER 17 Australia and New Zealand 14517.1 Overview 14617.2 What is Alliancing in the Australian/NZ Context? 14717.3 What are Alliancing's Advantages and Constraints, and Where/When to Use this Approach? 15317.4 Where is the Evolution of Alliancing Going? 15417.5 Concluding Comments 156CHAPTER 18 Integrated Project Delivery in Canada 15718.1 Canadian IPD: Setting the Stage 15818.2 Alliance: An Early Collaborative Contract Influence 16018.3 Primary IPD Canadian Influencers 16118.4 Catalysts to IPD Adoption 16218.5 Canadian IPD Differences 16318.6 Canadian Firsts in IPD 16518.7 The Future of Canadian IPD 166CHAPTER 19 Integrated Project Delivery/Alliancing in Finland 16919.1 Overview 17019.2 What is an Alliance in Finland? 17119.3 The History of the Finnish Alliance Model 17419.4 The Current Status of Alliancing/IPD in Finland 17719.5 A Brief Overview of Estonia's Alliance Projects 17919.6 Benefits and Challenges of the Alliance Model 18019.7 Where are Alliance Models and the Construction Industry Headed? 181CHAPTER 20 Integrated Project Delivery (IPA) in Germany, With a View to Switzerland and Austria 18320.1 Introduction: IPA in Germany and D-A-CH Context 18420.2 History 18520.3 IPA Projects in Germany 18620.4 Public-sector Focus and Procurement Law 18720.5 Characteristics and Contractual Terms 18820.6 The Future of IPA in Germany 19120.7 Austria 19220.8 Switzerland 19220.9 Summary 194CHAPTER 21 Collaborative Project Delivery in South America: Peru, Chile, Brazil, and Colombia 19521.1 Introduction: Context and Motivation for Integrated Project Delivery (IPD) in South America 19621.2 Country-level Trajectories of IPD Development in South America 20021.3 Case Studies and Field Evidence of Collaborative Delivery 20421.4 Cultural, Legal, and Institutional Enablers and Barriers to IPD in South America 21921.5 Bridging Digital Transformation and Contractual Integration in South America 22321.6 Toward a Regional Framework for IPD Implementation in South America 22721.7 Overall Conclusion—Integrated Project Delivery in South America 233CHAPTER 22 Collaborative and Relational Contracting in UK 23722.1 Introduction 23822.2 Early History of Project Alliancing in the 20th Century 23922.3 Twenty-first Century Use 24122.4 IPI/IBA (Integrated Project Insurance/Insurance Backed Alliancing) 24222.5 Project 13 24422.6 Concerns About Using IPD/PA in the UK 24422.7 Current Position of IPD and Project Alliance Contracting in the UK 24522.8 Why is the UK Reluctant to Use IPD and Project Alliances? 24622.9 Conclusions and Recommendations 247PART 5 Future Work: Improving IPD 261CHAPTER 23 Future Considerations 26323.1 Future Work: Communal vs. Individual Responsibility 26323.2 Future Work: Phase-based Leadership Organization 26723.3 Future Work: Aligning Compensation with Value 26723.4 Future Work: Deepening the Supply Chain 27023.5 Future Work: Artificial Intelligence 274PART 6 Research and Theoretical Underpinnings 277CHAPTER 24 IPD Performance 28124.1 Summary of IPD Efficacy Research 28324.2 Discussion 284CHAPTER 25 Alliancing and IPD 28925.1 Comparison of Alliancing and IPD 289CHAPTER 26 Theoretical Underpinnings 29126.1 Relational Contracting 29226.2 The Power of Analogies 29526.3 Common Pool Resources 29626.4 Complexity 298Part 6 - Appendix 302Comments on IPD by Respondent Type 302Glossary + Abbreviations 315References 327Index 345