Weigh the pros and cons of IPD and BIM

There's been a lot of talk in the construction industry lately about integrated project delivery (IPD). IPD is a collaborative approach to construction projects that can help reduce costs, eliminate errors and delays, minimize waste, enhance efficiency and generally make projects more successful and profitable. IPD usually goes hand-in-hand with building information modeling (BIM), a technology that facilitates collaboration.

In theory, IPD and BIM have huge potential. But, in practice, neither has been widely adopted. Why? Because they require a dramatic change in mindset. Owners, architects and contractors must embrace a more collaborative relationship - a challenge in an industry in which these relationships are often adversarial. In addition, IPD contracts may raise thorny legal and risk management issues.

How IPD works
With an IPD arrangement, the owner, architect, general contractor - and, possibly, major subcontractors and suppliers - enter into a mutual contract. In some cases, the contract calls for parties to establish and co-own a single-purpose entity (SPE), often structured as a limited liability company. The parties collaborate from the earliest stages of the project, agreeing on project goals, target costs and allocation of responsibilities, risks and compensation.

Typically, the parties waive liability claims against one another (except for willful misconduct) and make decisions by unanimous consent, subject to arbitration or another dispute resolution mechanism. If successful, IPD enables parties to streamline schedules, control costs, reduce risks, minimize or eliminate change orders, and share the rewards of a more profitable project.

Role of BIM
BIM technology creates 3-D or even 4-D models that facilitate collaboration by enabling parties to view the completed project from different angles and to better understand spatial relationships between building components. BIM also incorporates specific materials and building information into the early stages of the design process and allows the parties to see how changes will affect the project as a whole.

By helping parties resolve design conflicts and other issues before construction begins, these models offer significant benefits, including higher quality, greater speed and productivity, and lower costs.

Handle with care
IPD and BIM technology may become the standard delivery method for construction projects. But if you're contemplating adopting this approach, proceed with caution.

IPD contracts must be drafted carefully to ensure they achieve the proper balance of risk and reward among the parties. And IPD arrangements - particularly SPEs - may raise licensing and other legal issues, as well as liability concerns that aren't covered by traditional insurance policies. So consulting your financial, legal and insurance advisors is a must.