Improving construction industry efficiency with IPD

Learning objectives

• Understand the limitations of a traditional delivery model and how it contributes to inefficiencies in the construction industry.
• Learn the basic concepts and advantages of an integrated project delivery (IPD) team.
• Identify the value that the consulting engineer provides in an IPD model.

From an owner’s standpoint, the delivery model for construction projects has remained relatively unchanged throughout the last several decades. The traditional delivery models (TDMs) available have been design-bid-build (DBB) or design-build, both of which follow a very linear design process. Under a traditional method, the owner has heavy involvement early in the process by helping define project requirements, but the owner then passes the leadership to the designers and builders who assume the responsibility and risk throughout the next stages of the process. With the process moving down this linear path, silos naturally occur, collaboration is often minimized, and the opportunity for project improvements and modifications becomes increasingly limited as the design and construction process progresses.

Other common delivery methods that should be noted include construction manager at risk (CMAR) and construction manager (CM). Under CMAR, the construction manager is committed to deliver a project within a guaranteed maximum price and schedule. Under the CM delivery method, the construction manager acts as an agent directly to the owner and acts in his or her best interest. The CM provides guidance and recommendations on the project-delivery process, but has no financial obligation to the project budget. As part of the CM method, the owner takes on the responsibility of holding subcontracts and assumes the risk of cost and schedule.

The overall lack of change in the delivery model has left the construction industry’s efficiency-in terms of output versus input-relatively flat over several decades. During this same time, other sectors such as retail and manufacturing have been disrupted by technological advances and Lean principles that have resulted in drastic productivity and efficiency improvements-nearly double that of the construction industry for the same period. According to McKinsey & Co., this lag in construction productivity costs the global economy $1.6 trillion per year. Poor communication, lack of standardization, and noncollaborative contracts are among the common causes cited for this lack of productivity within the industry.

The productivity gap within the construction industry is well-known, and many groups are looking for solutions by using newer technology, modifying operations, and engaging in shared-risk contracts, among other approaches. One such solution, which has shown promising results in improving the productivity gap and overall project outcomes, is the adoption of an integrated project delivery (IPD) model. Under this model, many of the causes attributed to lack of productivity in the construction industry are addressed to improve project outcomes.

Contractually integrated team

IPD was developed based on the construction industry’s need for a more collaborative delivery method. The goal of the IPD model is to facilitate projects with more efficiency, lower costs, higher quality, more effective use of resources, and a balanced risk and reward among all team members. IPD accomplishes this through two key actions:

• The assembly of a multidisciplined team at the start of the project. Although IPD is an owner-driven process, it relies on a partnership between the owner, design team, and contractors to collaborate early in-and throughout-the design process to make major project decisions. This early, extensive planning, when done effectively under a collaborative effort, can lead to substantial savings in cost and schedule, along with improved building performance.
• Contractually tying the integrated team together by aligning their compensation with project success. Several types of contracts may be used by an IPD team to align their compensation with project goals as well as establish important metrics for defining their success. These contract types include multiparty (owner/designers/contractor) and poly-party (owner and entire risk/reward team).

By contractually binding team members to common project goals and sharing the same risk and reward, a collaborative approach will innately be formed in which team members’ behaviors will be geared toward the overall success of the project.

Among the many differences between the IPD model and traditional methods is compensation for individual team members, which is not directly tied to project success in a TDM (see Figure 1). This lack of financial connection between team members often leads to decisions being made based on what is best for the individual team member rather than what is best for the overall project. The IPD model’s combination of assembling an integrated team early in the process and then tying the team together contractually with financial implications fosters behaviors that drive productivity and quality throughout all stages of project completion.

To ensure that an IPD model is successful, it is critical to establish an integrated team that is committed to forming a collaborative approach. Often, the IPD team is broken into two groups, known as the primary participants and the key supporting participants. The primary participants consist of the owner, architect, consulting engineers, construction manager, and any other individuals who may have a substantial involvement and responsibility throughout the project. They typically are the entities who are bound together through a contractual relationship. The key supporting participants are often subconsultants and subcontractors who are also integrated into the team early in the process, but they may only have a contractual agreement with one of the primary participants.

Responsibilities for primary team members vary by project, but they are expected to be the group that collectively defines the project goals and project metrics, ultimately defining the success of the project. Common key documents include the owner’s project requirements (OPR) and the basis of design (BOD). Both documents serve as a roadmap to define project quality and expectations. Primary team members also are responsible for establishing the decision-making methods and processes that the group will use to move the project forward. Ultimately, no matter the makeup of the primary or key supporting participants, it is important to establish an atmosphere that promotes trust, accountability, and communication.

The early assembly of the multidisciplined team at the beginning of an IPD not only cultivates collaborative efforts and desired behaviors, but also has a significant impact on the overall cost, schedule, and quality. This is best understood when comparing the design progression of a traditional delivery method with IPD. Figure 2 overlays the MacLeamy Curve with the design progression for a TDM and IPD. The MacLeamy Curve, in simple terms, shows that a project becomes costlier to change as it becomes further developed. Under IPD, the early assembly of a collaborative team helps to facilitate design decisions early on, thus allowing for the ability to make changes with less impact on cost. This concept is self-evident to many in the design and construction community, and when adopted as a core principle of IPD, it can have a major impact on the project outcome.

Role of the consulting engineer

The IPD model’s dependence on the formation of multidisciplined teams, collaboration, and establishing shared risk provides consulting engineers with many opportunities to contribute their knowledge and expertise throughout the project lifecycle. Several of the most valuable contributions include energy efficiency/sustainability, lifecycle cost analysis, and standardization/modularity.

Energy efficiency/sustainability. The highest results for an energy-efficient and sustainable design are achieved in a collaborative effort in which the owner, designers, and contractors are engaged early in the process and work closely together from project conception to activation. Under the traditional delivery model, often the aggressive energy goals are established early in the process and agreed upon by the team. Then, following the traditional design process, the team members work alongside each other and perform within their areas of expertise, ultimately moving toward achieving this energy goal. Some collaboration occurs along the process, but there is never a clear understanding of who owns the success or failure of meeting the energy goals. Everyone has some involvement, but no one has clear ownership.

If the operational energy goals are not met, is it the engineer’s responsibility because they designed the chilled-water plant? Is it the fault of the architect, who specified the glass-shading coefficient? Or is it the failure of the contractor who installed the curtain-wall assembly? Furthermore, what happens during value engineering when a reduction in both the roof’s R-value and air handling unit’s aspect ratio are accepted as cost-savings measures? Does the team go back to its previously agreed-upon energy goals? In any building construction, there is a complex interaction of systems that impacts cost, schedule, and operational efficiency.

Under an IPD, leadership often is led by the team member most capable, based on experience, knowledge, and their specific discipline. The engineer, as part of the collaborative team, has the responsibility to be a leading voice in working through the complex interactions of the systems to ensure that project-sustainability goals are addressed and maintained throughout the project. He or she collaborates with other IPD team members to focus on optimizing the whole, as opposed to individual pieces, throughout the project.

Lifecycle cost analysis.

A key IPD tool for early collaboration and front-loading of major project decisions is a lifecycle cost (LCC) analysis to determine the total cost of ownership for specific systems. The LCC analysis starts at initial site selection and building orientation and continues through project completion. The consulting engineer can lead the integrated team in developing a process and procedure that allows the group to make good decisions. With the complexity of systems and variables that impact lifecycle cost, one of the most common methods used in IPD to evaluate systems is multidisciplinary optimization (MDO), first developed in the aerospace industry. With the advances of computing power, the MDO method allows the aerospace industry to incorporate all relevant disciplines simultaneously rather than optimizing each system sequentially. By optimizing systems simultaneously, certain disciplines or a combination of disciplines can be isolated or altered to determine their impact on the total cost of ownership or other defined objectives.

Under an IPD, the consulting engineer can use MDO and lead the integrated team in developing an energy model, assisting with the building information model (BIM) and evaluating project budgets. Using the strength of today’s computing power, the integrated team can develop several different building options to achieve the defined BOD and OPR while optimizing the total cost of ownership.

Standardization/modularity. Under an IPD, the engineer needs to understand that the intent of the integrated approach is not to reduce the design importance, but rather to improve the design efforts. This is most evident in the project’s approach toward standardization and modularity of building components. Working closely with the construction-team members, the consulting engineers and other designers can evaluate design concepts at their conception to determine features that reduce construction time and improve quality. Taking the time to identify repetitive design features or systems that can be prefabricated offsite can lead to substantial savings in cost and time. Examples of standardization that the collaborative team can address early in the process to increase efficiency include toilet groups, patient headwalls, infrastructure utility racks, and central utility plant layout (see Figure 3).

Looking ahead

Developing the trust and innovation that are integral to IPD makes these types of projects very rewarding. The partnerships that IPD encourage between the owner, architect, engineer, construction manager, and trade partners truly benefit the project outcomes in ways that are measurable and real. Worksite environments, problem-solving, innovation, communication, first costs, total cost of ownership, and the team approach to project delivery are all improved when IPD is done right.

On a larger scale, by integrating a multidisciplinary team early in the design process and binding them contractually for performance measures that define project success, the construction industry can move further toward closing the productivity gap.

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