The IPD Contract: What It Covers And Why It Matters
Healthcare projects are among the most complex in construction, with many stakeholders and external forces that can make it a challenge to ensure development progresses smoothly, on budget and on time. Adopting integrated project delivery (IPD), which joins major stakeholders in a mutual contract tying them to shared success, can be the answer to guaranteeing superior collaboration for both large and small hospitals.
Across project types, it’s essential for stakeholders to sign a contract to ensure the IPD approach will maximize teamwork and diverse expertise while focusing on the project objective. This binds their commitment to the team and establishes an upfront framework for how best to achieve overall project goals.
While it may seem like a basic principle of doing business, signing an IPD contract creates a culture of collaboration between companies in the interest of being customer-focused and working together toward the common goal. Though IPD is most commonly associated with large projects, it can also be effective for smaller-scale hospitals, too.
For example, on an intensive care unit (ICU) renovation project at The George Washington University (GWU) Hospital in Washington, D.C., seven organizations signed an IPD agreement, including the owner, construction manager, architect, interior designer, mechanical design-builder, electrical design-builder, and millwork trade partner. The contract confirmed they all shared an equal voice, leading to transparency and predictability.
A contract helps to unify stakeholders with varied backgrounds to arrive at shared objectives together from the start as they collectively weigh in on budgeting, scheduling, and identifying constraints and solutions.
On the GWU project, team members and end users came together to define “conditions of satisfaction”—common team objectives. Collectively, they crafted 10 of these statements, ranging from improving workflows in the ICU to eliminating noise from adjacent spaces to construction. With a model for cooperation, the players were more willing to innovate to reach their goal by establishing mutually beneficial goals.
Additionally, a contract financially ties stakeholders together, making it in their best interest to put competing interests aside for the common goal. At GWU, the owner, Universal Health Services, accepts all risks for project cost, but all members are part of a risk pool plan and any savings from the target budget will be shared among participants.
In any situation where risk and reward is shared, there can be challenges to consider when committing to the contract. Not all team members are prepared for the complexity of IPD delivery core tenets, especially when it comes to collaboration and equality. Furthermore, it’s critical for all stakeholders to agree that the project comes before self-interest, otherwise the path toward the common goal can become derailed. Success also depends upon the owner leading by example by demonstrating strong commitment to accountability.
Signing an IPD contract, regardless of project size, can ensure that stakeholders are devoted to the best possible outcome. By putting all partners on the same level, financially and creatively, the commitment to the IPD approach breeds an innovative, timely, and cost-effective delivery process that advances hospital construction.