April 13, 2022

IPD represents a small share of project delivery methods used in the United States, but there are advantages. Lean construction works most efficiently with an IPD agreement providing the contractual framework to collaborate.  A highlight recent study concluded that the business case for lean construction is compelling.  A recent AGC webinar outlining the study can be accessed here.

One, interesting aspect of IPD agreements is the prime-level parties are bound by the contract and share the risks and rewards.  Looking for fair contracts that yield better project results, while saving you time and money?  Check out ConsensusDocs 300 and 305 Lean and IPD Lean contracting tools. 

Two parties are typically signatories to a construction contract. For instance, an owner and a general contractor or an owner and an architect. A multi-party integrated project delivery (IPD) agreement, like the ConsensusDocs 300, is that the owner, design professional, and constructor all sign the same contract. Some refer to an agreement that includes at least these three parties as signatories, as an integrated form of agreement or “IFOA.” Signatory parties join the Core Team and are also part of the Risk Pool Plan, as further explained below. 

Signatory parties join the Core Team. The Core Team is the decision-making body for the Project’s delivery and consists of an authorized representative from each Party. While not required, additional signatories may be parties in a final negotiated ConsensusDocs 300 agreement. Typically trade contractors that make up a large share of the project costs and success, such as mechanical contractors, are potential signatories. Also, an engineering firm is another common signatory in a multi-party IPD agreement. Engineering firms are often consultants under contract with the architect for building projects.  

Signatory parties are also part of the Risk Pool Plan. Significantly, the ConsensusDocs 300 does not required to invite all Risk Pool Plan members to become signatory parties. The Risk Pool Plan becomes a means to share financial risk and rewards among the participants. The project’s success determines individual profit. Because a Risk Pool Plan is very project-fact specific, there is no one-size-fits-all standard. However, as a guide, ConsensusDocs has posted two different Risk/Pool Plan templates on the ConsensusDocs Guidebook page as illustrative examples. You may access these templates here.