Capital Project Solutions – May 2012

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The Challenges of Launching an IPD Project

Steve Higgs, Senior Vice President

Regardless of the delivey model used when launching a

major Capital Project, there will be a myriad of strategic

and tactical decisions required in order for the outcome of

the project to be considered a success. Developing a

realistic scope, schedule and budget should be the result

of these varied and often iterative decisions. With a

traditional methodology, these decisions are typically

made in a more siloed manner and are often largely

dependent on the culture of the organization and the

structure of the project delivery team. “Form follows

function” is as applicable to people systems as it is to the

facility solutions that are the output of the very Capital

Projects we aspire to complete on time and on budget.

While the Architecture, Engineering and Construction (AEC)

industry continues to define the Integrated Project Delivery

(IPD) Model, the promise of more value and better

outcomes continues to lure healthcare owners to test the

IPD waters. Since IPD is not utopia, focusing on the

challenges of launching an IPD Project can provide an

elightening and realistic road map for those considering

this approach.

The Speed of Trust

“The dynamism of trust is to act as a mediator, combining

past evidence and feeling in moving the individual or

organization towards a willingness to pursue a trusting

form of behavior towards another party,” stated Dr. Hedley

Smyth in his book Developing Client-Contractor Trust: A

Conceptual Framework for Management in Project Working

Environments.

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While trust is the basis for any successful project, it is

absolutely paramount for an IPD project. Since a higher

level of trust is required, the first step in launching an IPD

project is mostly introspective. Tough questions must be

asked of your leadership and board members to ensure

that IPD is a good fit. Begin by asking yourself the

following questions:

• Will IPD receive a warm embrace from the

leadership team?

• Are trust and patience a part of our organization’s

DNA?

• Is there a focus on continuous improvement across

the organization?

• Are we truly committed to improving processes or

following the buzz?

• Is the definition of project success a low bid?

• Are we siloed or collaborative?

• Do we fully understand and embrace IPD ideals as a

part of our organization’s values?

• Are we totally risk averse even when the reward can

be greater?

• Are there influencers in the organization that my

act as impediments?

Your answers to these questions should reveal your level of

readiness and willingess to move forward with an IPD

approach. If you are not ready to continue, “Stop, Do Not

Pass Go, Do Not Collect $200!” and proceed with your

typical delivery method.

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How to Select the Team

Team dynamics and the cohesiveness of organizational

cultures are crtitical to harnessing success. Setting the

proper structure begins with the team selection process.

Hiring the right team is the most important step you will

take!

Traditional methods of selecting a team are often

fragmented and inadequate. The decision to hire an

architect or construction manager is often based on a

response to an RFP (Request For Proposal) followed by an

hour long interview. Additionally, the team is usually hired

sequentionally, across the continuum of the project, and

molded into a team by virtue of the process. While this

process has become the norm, we should be asking

ourselves whether it acutally leads to the selection of the

most effective team?

The challenge of hiring the right team to administer,

design and construct a new facility utilizing an IPD

approach can be even

more daunting and thus

requires a shift in thinking.

In IPD, the “team” is

selected as opposed to

being formed over time.

Instead of issuing an RFP to

individual firms, a Request

for Integrated Team (RFIT)

is issued that includes design services (architectural,

engineering, civil, medical equipment, technology) and

construction management. Within the RFIT, the goals and

conditions of satisfaction, along with the behaviors that

must be met and displayed by the integrated team are

defined. The participants responding to the RFIT should be

allowed to “self select” in order to provide a joint and

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unified response. After narrowing the list or RFIT

responses to two or three Integrated Teams, consider

conducting a series of interactive workshops. This will

enable you to see the integrated team dynamics in action,

observe their chemistry and behaviors, as well as

understand if they would be a good cultural fit for the

organization.

Selecting a Contract

Developing the right contractual and risk model will go a

long way to undergirding the tenants of IPD and the

appropriate team dynamics. An Integrated Form of

Agreement (IFOA) can be the right platform, but it is much

different than a traditional AIA Architectural and

Construction Management Agreement. Getting through

the differences in contracting models will take time and

involve critical input from those in risk management, legal,

opertations, insurance, project managenent as well as the

integrated team themselves. Note that the IFOA intent is

to change the risk model, truly influence team behavior

and focus efforts toward the project outcomes as defined

by the owner. Listed here are a few model examples:

• Traditional Project Risk Model

“Conduit approach”

Push risk down

• IPD Approach to Risk

Mutual Waiver of Consequential Damages

Full Waiver of Subrogation

Mutual Indemnification and Hold Harmless

• Collaborative Risk Allocation

Development of risk sharing agreement

early

Limits risk and provides upside to maximize

the potential on the project

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Often, the very form of agreement is what stumps an

owner from moving fully forward with an integrated model.

If your organization wants to implement this type of

approach, but an IFOA is not an option, consider the

following:

• Collaborative language for standard

contract vehicles

• Add relational and process language to

standard contract vehicles

Always keep in mind that while an IFOA is powerful, trust

can never be contracted!

How to Maximize the Integrated Team

Hiring the right team is invaluable, but maximing the team

is even more important. Ultimately, the processes, norms

and behaviors outlined in the IFOA will create a platform

for the teams effectivenes. An investment in a robust

Project Initiation Process will yield great dividends. This

crucial phase should include the following major elements:

Establishment of the Project Governing Structure

Completion of a Team Alignment Workshop

Risk and Incentive session

o Determine final IFOA vehicle

o Evaluate and establish risk equations

o Determine incentive structure

Detailed Project Gap Analyis and Implementation

Plan

The implementation plan should include methods for

maximizing the use of lean tools and principles. These

tools should include 3D Modeling or BIM (Building

Information Modeling), Centralized Project Management

software, Last Planner Scheduling methods and a process

for measuring the project Conditions of Satisfaction.

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Through deliberate and periodic review, the baseline tools

and processes should be evaluated for their effectiveness,

making adjustments when necessary

Are You Ready to Launch an IPD Project?

The answer to that question obviously depends greatly on

your experience and comfort level with IPD? By starting

with trust and working in a methodical manner toward an

implementation plan developed by the right integrated

team, the initial challenges of an IPD project can prove to

be opportunities for success.

For more information on Project Launch and other Capital

Facility topics, visit KLMK’s Educational Insights.