At present, few stakeholders have had the opportunity to design and construct projects using the Integrated Project Delivery (IPD) approach.
Many of them would nevertheless like to familiarize themselves with the underlying concepts and test the waters, without necessarily “taking the plunge.”
One of the options available to them is based on a well-known model: the CCDC-5B Construction Management Contract for Services and Construction.
Here is an example of how this type of contract can be structured to help you get acquainted with certain principles of a collaborative contract:
- The Construction Manager’s Fee is set at a fixed amount (Article A-5), all or part of which will be “at risk”;
- The salary or wage schedule established for the Cost of the Work is prepared in such a way to ensure that it does not include any built-in hidden profit (Article A-7);
- A contingency is added to the Class A Construction Cost Estimate to establish a Guaranteed Maximum Price (Article A-8.2);
- The rights to adjust the Guaranteed Maximum Price are limited, taking into account only those factors for which the parties have not established contingencies, , such as Change Orders or Change Directives (GC 6.2 and 6.3);
- The risks and opportunities associated with the Guaranteed Maximum Price (A-8.3) are determined as follows:
- The savings are shared between the parties (using a method consistent with the value of the Construction Manager’s Fee that is “at risk”);
- Overruns (at least those not subject to adjustment fees) are handled as follows:
- 100% by the Construction Manager, up to their “at risk” fee amount;
- Beyond that amount:
- The Project Owner covers the Cost of the Work (rates without built-in hidden profit);
- The Construction Manager receives no additional fees on these costs, or, if applicable, only a limited amount (e.g., to cover corporate overhead);
- The pre-construction phase should focus on identifying schedule or cost savings, and potentially including value-added enhancements (Schedule A1);
- The limits of liability may ultimately be set differently (Part 12), for instance, so that claims between the parties are limited to those that public policy would prevent from being waived (e.g., intentional or gross fault, loss of the work, etc.).
While this is not a full application of the Integrated Project Delivery model—as it would require the inclusion of other stakeholders, such as professionals—it is a good way to get your feet wet.