United States: The Integrated Project Delivery Model: Why, What, And How To Decide If It Is Right For Your Project

As a response to an increasingly demanding market place, project delivery methods have evolved from the more traditional methods of design-bid-build, design-build, and construction-manager-at-risk into what is known as Integrated Project Delivery ("IPD"). In the typical construction contract, each party seeks to avoid and transfer risk to other parties. The IPD approach employs a different philosophy—the project participants accept and manage design and construction risks as a team. The pure IPD method often does this with a single, multi-party contract that is executed by the owner, general contractor, and designer. The team members to a multi-party contract share financial risks and rewards using a profit/incentive pool that is based upon measurable project-outcomes. Team members collaborate on how the profit and incentive pool is structured to ensure that each member is accountable for its contribution to the project outcome. The goal is to motivate each member in a way that encourages candid communication and accountability for overall design and construction.

When contractual relationships are properly structured, the IPD approach has repeatedly proven to reduce the number of requests for information, change orders, delays, disputes, and claims made at the project.1 The risk of those contingencies are collectively managed by the project participants, who prioritize the owner's objectives over protecting their bottom line. As discussed in this post, the IPD approach facilitates this end by directly linking project participants' financial incentives to the achievement of negotiated, agreed-upon, and measurable goals that tie back to the owner's objectives.

There are a number of ways to structure the IPD relationships to achieve that goal. The propriety of a given approach will depend on the type of project, team members' dynamics, and how the owner wants to manage project risks. Put another way, the IPD process and contracting structure can and should be tailored to the specific needs of a given project. It is important to note that the IPD model discussed below focuses primarily on the structure found in the American Institute of Architects ("AIA") C191 contract documents.2 ConsensusDOCS 3003 is another commonly used suite of IPD contracts. Suffice to say that one must first become familiar with how IPD generally works before deciding which of these approaches is best suited to one's construction project.

Unique Features of an IPD Multi-Party Contract

1. Structuring the Project Staffing

The project participants typically take a tiered approach to staffing the project. The AIA C191 requires each team member to assign staff to one of two project administration teams: the Management Team or the Executive Team. The Management Team plans and manages the day-to-day project activities of each member's project-implementation staff. The Executive Team oversees the Management Team and makes decisions that will have more significant impact on the project's budget, schedule, and quality. If the Management Team cannot unanimously resolve an issue, they escalate that issue to the Executive Team, which is then asked to unanimously resolve the issue. Issues that cannot be resolved by the Executive Team are referred to a third-party neutral whom the project participants agree upon ahead of time. The unanimous nature of their decision-making is key to the ensuring that each team member has an equal say unless they agreed otherwise at the beginning of the project.

2. Developing the Target Cost and Target Cost Design Proposal

The project's initial conceptualization and criteria development phases are the foundation of the IPD. They are foundational because those phases determine the project's performance goals such as the owner's final programming, quality, workmanship, schedule, budget, sustainability, and long-term maintenance requirements. The team generates a Target Cost and Target Cost Design Proposal that the owner then accepts, rejects, or asks be revised until they are acceptable. If they are eventually accepted, the team then collaboratively develops the detailed design and construction/implementation plan.

This structure highlights one of the central ways in which the IPD model differs from traditional delivery models; an IPD team uses the Target Cost Design Proposal to develop the project's final design. In other words, the cost dictates the design. On the other hand, the more traditional approach requires that the general contractor generate a cost estimate based on the design information available at that time. The traditional approach is ripe for cost overruns because the contractor is incentivized to submit a bid (often based on incomplete information) that is as low as possible, while leaving room to make up for shortfalls using exclusions, change orders, hidden contingencies, or any number of other mechanisms. The goal of the IPD is to eliminate those perverse incentives and reorient the focus to be on collectively containing the project's costs while achieving the project's goals.

3. Incentive Pool Development

The team members collaboratively develop how the incentive pool of funds will be structured. They also collectively decide how those funds will be allocated among the members based on pre-determined and agreed upon tangible goals. There a numerous ways that this can be done. Typically it involves setting goals that relate to the project's performance metrics such as quality, schedule, safety, changes, communications, business, and environmental issues.

Quantifying those goals can be done by pro-rating reward payments using targets related to, for example, the number of punch list items at the end of the project, requests for information, and change orders issued during the construction phase. Schedule-related metrics might include delivery speed such as achieving completion dates or construction pacing as measured by number of square feet completed per day. Project changes might be tracked on the basis of change-order- or request-for-information-processing times. The variables and how they are quantified is only limited by the team members' creativity.

4. Continuous Design Validation and Optimization

IPD is transparent and open book, allowing the team members to immediately coordinate value engineering and other cost-savings and design-optimization ideas whenever such opportunities arise. This is done using a Building Information Model ("BIM") that allows each team member to participate in design development. Using a BIM eliminates many, if not all, of the pitfalls associated with using multiple design-related drawings from multiple sources by seamlessly integrating and consolidating that information in real time. This is critical because one of the most common issues driving cost overruns and project delays is a lack of coordination between various trades and the design-drawings. This is especially true on complex, multi-trade projects such as health-care facilities or manufacturing plants.

Sophisticated BIMs now allow project participants to track in real time the numerous project-critical variables that include not only construction details but also schedule and cost data. When the latter two variables are included in a BIM, the BIM is described as a 4D or 5D model, respectively. That way, use of a BIM ensures design conflicts are discovered and resolved well in advance of the trades beginning their work in the field.

5. Joint Project Controls—Project Management Information Systems

The team members exercise joint control over decisions during the project's life span. The AIA C191 contract documents facilitate this using a responsibility matrix that breaks down the project decisions into various categories and subcategories for each stage of the project's life cycle. Such joint control is best managed within a web-based, centralized database that is often called a Project Management information System ("PMIS").

One way to think about this aspect of the IPD is that BIM organizes the physical structure's design-related information and PMIS organizes the project's administration-related information. PMIS is an efficient way to foster collaboration because administration-related information is entered once and is then scrutinized by everyone. The resulting scrutiny increases the likelihood that errors will be discovered sooner rather than later.

6. Liability Waivers

The team members agree to waive certain types of first-party claims to ensure candid contributions from each member without fear of reprisal. This is why the incentive pool is designed to reward the members for their contributions. The unique restructuring of each party's liability and risk profile can, however, create issues regarding an insurer's willingness to insurer the project. Insurers are slowly recalibrating their policies, but some are still uncertain about how to insure an IPD project. One way many IPD projects address the issue is to use an Owner Controlled Insurance Plan. IPD participants should consult with their insurance broker early in the process in order to give themselves sufficient time to secure the required insurance.

When Should One Consider Utilizing an IPD Contracting Model?

Even though the IPD approach has been in use for well over a decade, project participants often hesitate when asked to participate in a project that will use IPD. That hesitation is understandable. Not only is IPD new to many but, as discussed above, the approach is markedly different than how traditional construction-project contracts are set up. With the right type of project, prospective participants typically move past that hesitation once they learn more about how and why the IPD method works. However, the IPD model is better suited for certain types of projects than others.

Generally, an IPD model is well suited for projects that have the following characteristics: (i) complex construction that requires sophisticated multi-trade coordination such as health-care facilities, manufacturing plants, and infrastructure projects; (ii) sufficiently large (>$5M) to render the increased initial administrative/participation costs economical; (iii) where the team members have a high level of trust and willingness to collaborate; (iv) each team member is familiar with and can contribute to a BIM (and PMIS); (v) each team member has sufficient staff and can address issues in real time; (vi) the members have worked together in the past; and/or (vii) there is an opportunity for continued working relationships on subsequent projects. If a project has all or most of those factors, that project will be much better suited for an IPD contract.

This post briefly touches on some of the complex issues that must be considered and resolved when negotiating an IPD contract. There are other important issues that the project participants need to consider before committing to using such a model. However, with the right team whose members trust one another, IPD has proven to be a very effective delivery model; it dramatically decreases the risks that a project will be delivered late, over budget, and/or be lower quality than anticipated by the owner.


[1] See M. Asmar, et al., Quantifying Performance for the Integrated Project Delivery System as Compared to Established Delivery Systems, J. Constr. Eng. Mgmt., Vol. 139, Issue 11 (2013); D. Bilbo, et al., Comparison of Construction Manager at Risk and Integrated Project Delivery Performance on Healthcare Projects: A Comparative Case Study, Intern. J. of Constr. Educ. and Research, Vol. 11(1) (2015); H. Xie and H. Liu, Studying Contract Provisions of Shared Responsibilities for Integrated Project Delivery under National and International Standard Norms, J. Leg. Aff. Dispute Resolut. Eng. Constr., Vol. 9, Issue 3 (2017).

[2] American Institute of Architects, "Standard form multi-party agreement for integrated project delivery," AIA C191, and "General conditions of the contract for integrated project delivery," AIA A295; https://www.aiacontracts.org/contract-documents/18471-multi-party-agreement—-ipd

[3] https://www.consensusdocs.org/contract_category/collaborative/

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions