INTEGRATED PROJECT DELIVERY AN EXAMPLE OF RELATIONAL CONTRACTING

1. INTEGRATED PROJECT DELIVERY AN EXAMPLE OF RELATIONAL CONTRACTING

2. Two types of contracts • transactional where exchanges are made for goods and services • relational contracts where the relationship “takes on the properties of ‘a minisociety with a vast array of norms beyond those centered on the exchange and its immediate processes

3. WE IDENTIFIED FOUR MAJOR INTRENSIC PROBLEMS WITH THE TRADITIONAL CONTRACTUAL APPROACH (based on transactional contracts)

4. Problem 1 Good ideas are held back

5. Problem 2 Transactional Contracting limits cooperation and innovation

6. Problem 3 Inability to fully coordinate the project

7. Problem 4 The Pressure for local optimization

8. APPROACHING THE SOLUTION • Could we organize ourselves to function as a single company with unified goals and objectives? Could independent design firms and construction companies actually find a way to integrate project delivery?” To use the earlier analogy, was there a way to take all of these rubber balls and connect each to the other so that they could all move in the same direction. A new set of questions suggested the new approach:

9. Everyone please shut your eyes and dream with me

10. A new process which we called Integrated Project Delivery (IPD) was taking shape.

11. IPD • A project delivery method in which the interests of the primary team members are aligned in such a way that the members can be integrated for optimal project performance.

12. SHAPING THE TEAM • We first incorporated a company called integrated project delivery as a sub S. Corporation • Think of a joint venture established to deliver design build projects using integrated project delivery • Or, we have team member led IPD project

13. Two Principles govern our Team relationship • With an IPD project, whether joint venture or team member led , all PTMs are responsible for all provisions of the prime contract with the Client. • Primary Team Members share the risk and profit for total project performance.

14. The Prime Contract • A single contract binds the IPD team to the client. The prime contract may be any one of a number of standard forms that are available and spells out the commercial terms and defines the scope, schedule and cost of the project. One entity signs the prime contract. (Team Member or JV)

15. The Team Member Agreement • Each Primary Team Member (PTM), including the one who holds the prime contract, then enters into a single “partnering agreement ” with the other PTM's

16. Key Partnering Agreement provisions: • The PTMs each agree to be bound together accepting full responsibility for all of the terms and conditions of the prime contract, sharing together in the cost and profit in accordance with a pre-established formula. Each member is reimbursed for all verifiable direct costs that he incurs. Profit is calculated at the project level at the end of the project and divided based on the formula. • Each of the PTMs provides a certificate of insurance in the form and amounts as indicated in the prime contract. • Each PTM agrees to open their books pertaining to this project to the other PTMs and to the Client.

17. Key Lean Principle Employed local optimization leads to sub-optimal project performance

18. Mountain Climbers • If one PTM makes a mistake each PTM will pay for it • Cost reductions anywhere are shared among those in the Partnering Agreement and with the Client • An overrun on the project will reduce the gross profit available for distribution

19. Executive commitment

20. Team Positions established

21. Unity at the job site

22. Team pay distribution

23. The impact of IPD On the design process • Team members bring forward best ideas early • Value engineering takes place at the beginning of the project • Effective solutions can be devised when there is no concern over which entity will pay for them • Lean design now possible

24. Dispute resolution • Dispute resolution is handled by discussion and agreement between the PTM’s. • Instead of looking to the contract to settle disputes as in transactional contracting we can invoke the power of the relationships

25. GOVERNING THE RELATIONSHIP

26. EXAMPLES OF SUCCESS • We have completed four successful IPD projects and have been awarded a five-year continuing services contract for design build work for Orlando Utilities Commission, an enthusiastic Client from a prior IPD project.

27. The Last Planner™:

28. Shared Manpower Electrical made use of manpower from other trades to pull wire

29. Problem Resolution Second roof hatch added when first was partially masked by large conduit

30. Handling Major Changes to the Work Cooling tower manufacturer changed at last moment

31. Work Across Traditional Boundaries VFD best bought by electrical contractor

32. Recovering From Oversights Elevation detail missing from drawing

33. Avoiding Redundant Effort and Expense • Core drilling • Vertical chases • Concrete placement • Fire protection (safeing) • Clean up • Excavation

34. Enhancements to Job Site Safety • Uniform compliance to all safety requirements • Cost shared by team

35. Spending More to Save More • Engineer prepares drawings at mechanical’s office • There were produced as shop drawings

36. Sharing Rental Equipment • No need to track who used equipment or for how long

37. Early Fundamental Design Decisions Support Construction Elevation of top of footers determined by team

40. GC Goes the Extra Mile Backfill done in two steps to help electrical installation

43. Cooperation across trades Pipe support points pre fabricated by steel fabricator

45. Function Over Form in Design Column spacing determined by mechanical contractor

48. Coordinate Design With Schedule Column cross sections selected to meet mill schedule