February 2024
by Ryan Craaybeek, Solutions Consultant Director
When considering the factors affecting project cost outcomes, much focus centers on external factors: supply chain bottlenecks, weather events, equipment allocation and defects, economic conditions, and geopolitical situations.
That’s certainly part of it. But we need to expand that focus to include “early and often” project stakeholder collaboration.
That’s the idea behind integrated project delivery (IPD).
IPD: From Competition to Cooperation
Adoption of IPD is growing among construction organizations — and for good reason.
IPD is a highly efficient way to manage a capital project. What makes it unique is that it uses a formalized structure to define and foster stakeholder relationships based on trust and collaboration to improve outcomes for the whole project. On paper, it’s a contract arrangement, but in practice, IPD is an integrated, cross-functional team approach to project management.
It starkly contrasts with the familiar siloed approach to building capital projects, in which each individual or team focuses solely on their own tasks and is bound by individual contracts. It’s like going from “What’s in it for me?” to “What’s in it for the team and project cost outcomes?”
There are two main ways integrated project delivery impacts construction cost management:
1. Promotes Collaboration Across the Project Stakeholder Landscape
Structured as a multiparty agreement or contract at the beginning of a project, IPD sets up a small-scale organization that functions as a single unit from before construction starts, up to and including turnover. That organization involves a vertical and horizontal spectrum of construction professionals: owners, design engineers, consultants, general contractors and subcontractors.
The contract details their roles, responsibilities and liabilities, giving everyone clarity around these critical elements and creating a level playing field where everyone’s role, expertise and input matter.
Decisions are consensus-driven. Financial risks and liabilities are shared, and so are rewards and profits. Incentivizing collaboration ensures everyone is collectively invested in and working toward the project’s success overall rather than being focused solely on their specific task or component.
With tighter collaboration and communication across the entire project ecosystem, there’s less confusion over who’s responsible for what, less need to submit change orders that modify the already agreed-upon contract, and fewer mistakes that could result in profit-nipping delays or rework.
2. Encourages Data Utilization Among Participants
All participants produce data and use it to drive different outputs to make better decisions. But data and systems have traditionally been siloed, much like project teams, adding to the challenges that have sent project cost outcomes spiraling out of control.
IPD remedies both. Along with the integration of key stakeholders through a team approach, it also encourages the integration of data and systems — all in support of jointly optimizing project outcomes.
This is where careful technology choices matter. Cloud-based cost management software that connects data, systems and people makes the most sense.
With everyone linked together through such a purpose-built solution, real-time data exchange and collaboration can happen based on current information, including costs.
How Does an IPD Benefit Project Cost Management?
No one can overestimate what integrated project delivery can do for controlling capital project costs.
Transparency. IPD emphasizes transparency, facilitating collaboration from the start. Participants have shared insight into and agreement on costs, financial risks, compensation, goals and expectations. Advanced cost management software further strengthens IPD’s core focus on integration by breaking down silos between people and information and enabling the free flow of data and collaborative input. Such transparency instills trust and accountability and also significantly improves cost certainty at the outset.
Accelerated decisions and actions. With open communication lines and real-time data at everyone’s fingertips, identifying possible cost issues becomes significantly faster, allowing for well-considered, collaborative responses. Leveraging project data and the team’s collective expertise facilitates consensus-driven actions to mitigate risks, create contingency plans, and navigate bottlenecks efficiently. This collaborative approach also streamlines everyday decisions for RFIs and change orders, further reducing cost impacts.
More cost control and cost certainty. IPD makes costs more predictable. Having inclusive input on costs from the diverse experiences and perspectives of the stakeholder team right from the beginning results in a more realistic estimate and a shared understanding of what it will take to achieve it. Additionally, with the share risk/reward aspect of IPD, the team is incentivized to be more proactive in making the most informed decisions — supported by real-time project data — that keep costs in check so everyone can benefit financially, making cost certainty more of a reality.
Toward Better Outcomes with IPD
Ultimately, it’s still about optimizing cost management to meet established outcomes. Adopting the IPD approach infuses a team- and data-driven environment into capital projects that ensures those outcomes are achieved.
The technology chosen to support this can make all the difference. Implementing a cloud-based cost control solution, like that from Contruent, can accommodate the needs of all participants while streamlining collaboration and decision-making throughout the project lifecycle. To learn more, contact us today or request a demo.