Ted Garrison's April 2013 Report

TED GARRISON'S APRIL 2013 REPORT

Integrated Project Delivery

Earlier this year, Garrison Report #2013-1 provided eight questions that contractors and designers should ask themselves regarding strategy. If you haven’t read that report, I strongly suggest you review it before reading this one. While many companies within the construction industry have adopted innovative approaches to their businesses, it is still true that virtually every contractor and designer could further improve its performance and profitability by putting to use the practices found in Construction 3.0™ Strategies. To assist in this effort, the Garrison Reports #2013-3 through #2013-6 will discuss each of the four critical practices that make up Construction 3.0™ Strategies. These four practices and their scheduled reports are as follows:

• Blue Ocean Contracting (TGR #2013-3)
• Integrated Project Delivery (TGR #2013-4)
• Lean Construction (TGR #2013-5)
• Best-Value Procurement (TGR 2013-6)

Integrated Project Delivery (IPD)
Why is IPD so important? For one thing, IPD is totally compatible with Blue Ocean Contracting because it enables contractors to delivery unique solutions that maximize the value to their clients, therefore eliminating their competition. But what is IPD?

The American Institute of Architects defines IPD as “a collaborative project delivery approach that utilizes the talents and insights of all project participants through all phases of design and construction.” While AIA’s definition is OK, it’s not complete. The Integrated Project Delivery Collaborative of Ocoee, FL., which developed the process in the ’90s and trademarked IPD in 2005, states that with honest, unfiltered information, an owner can be educated to make the right decisions, not a price decision.

They further state, “IPD has taken Design Build to a whole new level. Our designers and builders are a single team of stakeholders who take ownership of the project with you from the start. Each IPD team member is accountable for the performance of the other team members and shares in the overall project responsibility. We have developed a relational contact that allows our team members to share costs and profit and eliminate multiple mark-ups. Our methods incentivize the best ideas and lower costs. Your priorities are understood and incorporated every step of the way. The industry’s top professionals seamlessly integrate your ideas into reality. We have consistently delivered a better project, under budget, on schedule, with less risk and conflict.”

I like to define client as “someone under the protection of,” and that last sentence in the above paragraph is about just that — the partnership of designers and contractors collaborating to protect the client from all risks and conflict while delivering a superior product.

Many people use the term IPD, but unless you are getting all of the above, you are getting what IPD Collaborative says is only an IPDish project delivery approach. The IPD Collaborative admits that the process has evolved over the past two decades. While this report can’t cover all the details and lessons learned by them, you can go to their website at http://ipdfl.net to learn more about the details of the IPD process. In particular, see the Case Studies under the Our Work tab for specific examples of how extraordinary value was provided at no additional cost or schedule to owners.

In fact, I conducted three NCS Radio interviews with three of the principles of the IPD Collaborative about how IPD works and the benefits for owners. You can listen to what Todd Andrew, president of Andrew General Contractors, Inc.; John Elsea, president of Peninsula Engineering; and Joe Territo, president of Territo Electric said by going to the following links:

Todd Andrew
John Elsea
Joe Territo

Why does IPD work? By shifting accountability for performance to the design/contractor team as a unit, they have an incentive to find the best solutions. Most waste in the construction industry is not in the individual tasks, but between the tasks. IPD attacks that waste by eliminating much of the duplication of effort so common in the construction industry. This is achieved by ensuring that the right people are involved in the project, which is something that will be discussed in greater detail in the upcoming report on best-value procurement. The other major contribution to eliminating waste is a more effective management of the supply chain, which studies on lean construction have identified as one of the biggest waste factors in the construction industry. By bringing everyone together on the project from the beginning, the process eliminates the silos that are so common in the construction industry. For years, management experts have been advocating the tearin g down of the walls between departments and between the company and its vendors, yet the construction industry practices have maintained these barriers with a large negative impact on efficiency, resulting in higher costs and longer design and construction times.

IPD creates an environment where lean construction can flourish. As already stated, it helps reduce waste, but it also increases the reliability of planning. Reliable planning reduces risk for both the design/construction team and the property owner.

I asked Joe Territo during one of his presentations on IPD if the concepts of IPD could be helpful to contractors that are forced to compete in the design-bid-build arena. His response was yes. However, he added that his organization doesn’t participate in design-bid-build projects because the benefits to them and, of course, to their client are so much greater when IPD is applied to the entire design and construction process. My point is that if contractors are forced to compete on design-bid-build projects, by improving the collaboration between the general contractor and its subcontractors and between subcontractors, the project could be made more efficient and more profitable for the contractors involved while delivering best value for the owner.

Do you need to get involved in IPD right now?
My answer to that question is an emphatic yes! Harvard professor Clayton Christensen talks about what he calls “disruptive innovation.” This refers to an innovation that creates a new market and disrupts the existing market. An example in construction is the sustainability movement. When the movement started out, almost any contractor could participate. Eventually, contractors need to be LEED accredited. Finally, to even bid on a LEED project, contractors had to prove they had successfully completed LEED projects of similar size and type. If your company waits until this point in the cycle, your company may suddenly find itself on the outside. Since you would not have a track record, you might find it difficult to find owners willing to allow you to participate.

In my opinion, IPD is going to work the same way. Once it reaches a tipping point, if you are not on board, you will be left behind. So you need to get started immediately. Start with smaller projects, if necessary, but get started learning the process. Ed Anderson says you can’t learn to ride a bike without getting on the bike, and it’s no different with IPD. You will not learn it by reading a book or attending a seminar; you need to start practicing it. Maybe more important, you need to start building the necessary relationships because without them, you will not have IPD.

Next month I will explore Lean Construction.


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