Monday, August 8, 2016

What Insight Into Commercial Construction Can We Gain by Looking at the Industry's Assessment of Integrated Project Delivery (IPD)?

Whether we’re talking about real estate, eminent domain or construction, important distinctions exist with commercial property, in terms of use, zoning, legal issues and project size and scope and more. Trends in demographics, technology, environmental concerns and economic fluctuations affect the entire construction industry, but the commercial market has unique challenges. Commercial builders have to move quickly to adapt and keep up with the times, moving in a different space, one where larger trends and subtle influences are important factors to determining how goals should be set and met. While a discussion about something as expansive as the commercial construction industry can seem abstract, industry professionals are aware that a large part of their work is managing risk, which is a very real objective. What tools do commercial developers have to mitigate risk and maximize efficiency? One approach gaining steam in commercial construction is IPD, Integrated Project Delivery. A brief discussion of IPD follows here.

What is IPD?

Integrated Project Delivery (or "IPD") is a project management method that emphasizes collaboration and communication over a more common “oppositional” approach –  IPD has been described as a “shared risk/reward model”.  It’s also an approach that requires participants to come into a project as early as possible, and then stay on, rather than a more traditional approach where a project comes together in a more piecemeal fashion. IPD arose out of a need to implement a project management approach that could be more cost-efficient, less wasteful and a better way to manage risk, during a challenging time for the industry.

What Makes IPD Different?

It shouldn’t come as a surprise to any commercial developer, or anyone who runs a business of any kind, that working relationships are an important factor in the successful resolution of projects, large and small. In the construction industry however, because the investments of time and resources are so large, sharp divisions have traditionally existed between parties in order to control risk on all sides. IPD challenges this approach on the basis that cooperation is a more effective method to meeting goals, including timing and budgetary considerations. While IPD offers a framework for closer collaboration, there is a perceived difference in “natural” business relationships that we are used to seeing arise among participants in a project or working in the same industry. When examining IPD, more of a top down approach, the roles of each party appear less rigid. In the construction industry, most have come to the understanding that the key to a successful project may be found in a course of action that aims to reduce claims and disputes. In terms of carrying out a plan, we’re accustomed to relationships that develop organically as a result of working side-by-side, but while protecting the interests of the parties with traditionally defined roles. IPD, as the name implies, offers a more integrated approach. Integrated Project Delivery seems to fly in the face of how we are used to seeing risk management in construction. There is certainly hesitation among those in the industry that new modes of project management are riskier precisely because roles are less sharply defined.

What are the realistic implications of IPD for the Construction Industry?

As one could infer, IPD is very closely connected to the rise of technology in general, and as it applies to construction and design in particular. The idea that collaboration could be achieved in a meaningful way on a construction project of any size is dependent on easy and quick access to information. The ability for various parties to work towards one goal rather than their own portion of the job is made possible by mobile apps and design programs that were created with the purpose of providing a “big picture” to participants with current data available to all who may need it. As I’ve written previously on this blog, construction is an industry that could take more time than others to adopt new technology, so there are some potential barriers to new developments such as IPD, to the extent that its place in the industry is tied to the acceptance of other technological advancements.  Although IPD does appear to offer the construction industry some important benefits, concerns about drastic changes to familiar systems and methodology loom large. In other words, because of the nature of the industry, construction responds to attempts to increase productivity and lower costs with a measured approach, for fear that the opposite may happen.  As usual, it appears that with IPD, as with most new ideas in construction, we’ll be taking it slow.

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