Integrated Project Delivery (IPD) provides incentives to key members of the design and construction team for meeting the owner’s goals. On every IPD project, the primary goal is achieving cost savings so the total expended is less than the owner’s allowable costs.
To achieve savings, the IPD Team establishes an expected cost at the project’s beginning. The expected cost must not exceed the owner’s allowable cost. The IPD Team then agrees on a lower number as a target cost. Its purpose is to provide a savings target, which can be achieved by the elimination of waste in design and construction.
If savings are achieved, these are usually split between the owner and the IPD Team based on an established allocation. For some IPD Teams, cost savings is the only metric by which incentives are awarded. Others, however, use additional metrics for achieving incentives.
Additional metrics should be aligned with the owner’s goals. Achieving or improving on the schedule is used where the final completion date is of high importance. Quality metrics can also be part of the equation. On at least one project, these metrics included achieving the following: a final punchlist of 20 or fewer items, fewer than three contingency draws of $100,000 or more, and a post-occupancy review satisfaction rating in excess of 90%. The key takeaway is that incentives should be fashioned in a way that maximizes achievement of the owner’s goals.
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