Speaking with the industry

Integrated Project Delivery Models (IPD) in Civil Engineering

Innovative Forms of Project Execution Conquer the Construction Industry: Maximilian Budau from KIT Explains IPD

A trend from abroad is also becoming more and more present in the German construction industry lately: Integrated Project Execution (IPA for short). As a research associate at KIT, Maximilian Budau is involved in research projects that explore and accompany the successful implementation of IPA projects. He joined KIT in 2017 as a trained civil engineer and intends to complete his PhD on IPA shortly. During his studies, the innovative approach was not yet very present, however, Budau notes how the topic has recently gained relevance: 

"The whole topic had been on the market for some time, driven by individual players and by developments abroad. There were always exchanges about it at various conferences with universities and interested parties from the construction industry. In 2018, the time had come when a first builder decided to try out the approach in a pilot project. And that was an initial spark that led to others trying it as well."

Abroad, this delivery model is mainly known as Integrated Project Delivery (IPD) or Project Alliancing. It is most widespread in the USA, Australia and England, where it was used earlier than in Germany. 

IPA briefly explained

Integrated project management affects several levels of construction projects. It is not just a matter of changing the remuneration model of a construction project, but fundamentally rethinking the processes and structures, emphasizes Budau: 

"At IPA, they're trying to move away from a lot of 'it's always been done this way' concepts and use a holistic approach to create economic incentives to achieve project goals."

Through collaborative planning, time windows in execution are to be better coordinated in order to keep costs as low as possible. In addition to economic efficiency, other areas are also addressed: Projects are to be organized in such a way that innovative methods and tools such as lean construction and digital solutions are increasingly integrated. Furthermore, IPA requires a cultural change within organizations, as the collaboration of all project participants is put in the foreground. To enable this, it is necessary to create legal foundations that promote it. The contracts that form such a legal basis are usually multi-party contracts and include as many project participants as is appropriate for the project from the outset. This is intended to increase planning security and avoid conflicts in the course of the project. Since key stakeholders are part of the contract, the focus is on the overall success of the project.

Framework conditions for successful implementation 

Once the decision has been made to implement a project with IPA - which usually starts with the client - it is a matter of clients training themselves accordingly. Then suitable companies must be found that are open to this approach. Processes may need to be adapted and the opportunity to share information created. This is to minimize friction points during the course of the project. This also affects all other organizations that are involved. If IPA is not introduced holistically, a minimal solution can quickly emerge that is neither goal-oriented nor effective. However, IPA is often not yet fully implementable at present, the expert tells us: 

"In the end, it's still an experiment in many cases because we're still at the very beginning."

Before the trend towards IPA emerged in Germany, it was assumed that German procurement law did not permit this method. However, when a solution was found in Finland in an Alliance project for carrying out such projects in compliance with procurement law, the first builders here also made the attempt. The so-called "TeamBuilding Initiative", in which several companies from the construction industry were involved with IPA, ultimately led to the first projects being carried out using it. The implementation of the projects is supported by IPA coaches. It is particularly important that all the companies involved have appropriate opportunities to work together and exchange data. Maximilian Budau talks about initial experiences: 

"We thought a lot about the issue of joint costing when we did a project. The idea of IPA is that you can share data quite easily. But that only works if the companies have appropriate software and the authorization to share certain data in the first place."

These are not the only prerequisites for successful implementation. Data exchange must not only be made possible by appropriate processes, there must also be a certain level of trust. The basis for successful IPA projects is to create transparency between all participants already in the planning phase. Maximilian Budau divides this trust into two stages. First, there must be a basic trust between the parties, based on previous experience or first personal impressions. Once this basic trust has been established, targeted control measures can be taken during the course of the project to check whether the trust is justified and not being exploited. One such measure is the use of external auditors to determine whether the companies can provide their services within the specified scope and whether appropriate cost estimates have been made for them. There is also the possibility of agreeing an exit option based on transparent criteria. This gives all partners the incentive to work with realistic cost estimates in order to meet the client's targets. In the event of unjustified cost estimates, an exit option would enable the trades to be put out to classic tender and reallocated after planning.

In addition, the project must have a certain complexity so that IPA can exploit sufficient potential for improvement. For projects with simple requirements or small project volumes, the implementation process would currently still be too costly to offer corresponding added value. 

"This comprehensive IPA approach has already shown that it's particularly useful for complex projects. If you have a lot of different stakeholders, it's a certain size, or it has other difficulties, it can be very beneficial to get partners involved early."

IPA means higher costs for planning on paper at the beginning of a project, but leads to fewer complications afterwards, which would usually result in additional costs for supplements. Through better planning, there is an optimization of the entire project process. The higher costs at the beginning mainly affect the executing companies, which have to provide personnel earlier. However, if you have a project that involves a lot of risks, this investment is worthwhile and can be covered by the risk budget that is often calculated for such projects. 

Experience abroad shows clear advantages 

The fact that builders show a willingness to try out a completely new approach on their own initiative is not necessarily typical - this is demonstrated time and again in the various field reports on our blog. With IPA, however, there are clearly identifiable advantages, knows Maximilian Budau: 

"Of course, one hopes for economic advantages, because this is an experience abroad. Here, too, one has initial experience that the planning phase does not become more expensive overall despite greater effort at the beginning, and at the same time one has greater schedule and cost certainty at an early stage. In the first completed IPA project in Germany, we came in under budget. I also noticed myself that it's much more fun to work on an IPA project."

The fun factor can be crucial, especially in times of acute shortage of skilled workers. In addition, good cooperation is important for sustainable business relationships. If there is a lot of conflict between clients, planners and contractors, it also becomes difficult to find subcontractors. Although the situation abroad cannot be completely compared with the German market, Budau is certain that IPA is promising when applied correctly: 

"I'm convinced that if you do IPA right, for systemic reasons alone, it will result in projects that are cost and schedule stable."

Project partners with whom Budau has worked were also of this opinion. The fact that the approach often involves working in co-locations, i.e. shared workspaces, means that decisions can be made more quickly. In addition, it is fundamentally more about community, as all parties are in the same contract and thus share opportunities and risks. Success is shared just as much as loss, creating a sense of togetherness that is less prevalent in traditional construction projects. By involving the contractors in the planning at an early stage, they can point out possible collisions or optimization potential in the execution right from the start of the project, which leads to a smooth process in the end. 

Whereas the traditional approach is to think in terms of service phases, IPA is more concerned with identifying and exploiting potential for improvement in the process. This in turn contributes to greater schedule reliability.  

Awarding without classic price competition 

One change associated with the early involvement of the contractors is the elimination of traditional price competition. The fact that the contractors are already involved in the planning phase means that there is no classic bidding and therefore no comparison of several bids. Instead, it is primarily a competition for competence. To ensure that appropriate cost approaches are nevertheless used, external experts can be called in to check these approaches. In addition, experienced builders or project managers can assess whether cost approaches are economically appropriate. In addition, all parties to the contract can see the costs. This transparency in turn strengthens trust. A contract of this kind dispenses with familiar hierarchies in which the client is above all else, but creates cooperation between the parties involved at eye level. 

IPA, lean, digital 

When people talk about IPA, they usually also talk about lean construction. Both approaches can be simplified through digitization. Maximilian Budau sees IPA as a way to challenge existing systems and improve the exchange of data. This data is also about BIM. Budau also talks about digital tools that simplify the exchange of data: 

"Digital planning, data exchange, these are all important topics that need to be and can be better addressed through IPA because the processes have been regulated differently. My ideal vision of IPA would be to do everything digitally that is reasonably possible digitally, without neglecting the importance of personal communication and personal relationships."

The trend in the construction industry is towards collaboration, favored by digital solutions and in some ways forced by current and future challenges. Integrated project delivery can be seen as an approach to meet these challenges and, just like digitalization in general and lean construction methods, is gaining attention and relevance.

Published by

Berit Behler


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