Multi-party relational contracts are the premier vehicle for implementing Integrated Project Delivery on commercial construction projects. Because of laws governing public projects, the use of multi-party relational contracts has been limited to the private sector.
These laws mandate which delivery models a public owner can choose. Historically, the law mandated most public projects to use the conventional design-bid-build.
Recently these laws have expanded to make design-build available to public owners. The consensus is that design-build intrinsically shares some characteristics with IPD making it a potentially optimal alternative for an IPD contract. Instead of having multiple parties, this design build Agreement is between the owner and design-builder.
Other key IPD features available under a design-build contract are as follows:
- Core Group. This project management team could be comprised of the owner, lead contractor, and lead designer.
- IPD Team. The contract could specify how the IPD Team is formed.
- Design. The lead contractor and key trades would be deeply involved in the design.
- Lean Process. The contract could require the IPD Team to utilize lean processes.
- Risk/Reward Sharing. The contract could also provide for the IPD Team to share the risk of cost overruns and the rewards of cost savings.
Unlike traditional design-build contracts, the owner could not take a “hands off” approach. The owner would be deeply involved in the governance, design, and risk mitigation aspects of the project.
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