IPD: Hospital Board’s New Clothes?

Posted on March 18, 2011

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Integrated Project Delivery:  everyone says they do it, and then quickly scramble to learn about it when a client wants it implemented. For companies that work in an integrated manner already, Integrated Project Delivery (IPD) is old news.  Several firms were doing it before it had a name, which is why I often say Haskell does integrated project delivery in the non-capitalized ipd, genericized way because the more formal, “IPD” is actually less beneficial to owners.

How?  Sure, IPD is the trendy choice in the design and construction market now. But along with that newness comes hidden traps. As with any new invention, the product has not been tested. For IPD, it is the wild, wild West—there is no industry standard. For the risk managers reading this, that sentence ought to send chills down their spine.

What does ‘no industry standard’ mean? It means there is no commonly accepted definition for the service. It means there is no clear expectation for performance of the team members or what the owner is to receive. It means there is no professional organization standing behind the product or service. It means the legal arrangement has not been tested in court. It means that dispute resolution and contractual language are in a very nascent, embryonic stage. To most insurers, this makes it very difficult to define, quantify and manage risk.

Hospitals want teamwork, shared communication and the apparent cost, quality and other benefits that IPD touts. As I heard recently from a prospect:  “I want the advantages of IPD without the tri-party contract.”  So why not choose design-build (DB), or more specifically Integrated Design-Build (IDB)?

Design-build has a tested industry standard. It has a commonly accepted definition of service. It spells out clear expectations for team and owner. It has an industry organization, the Design-Build Institute of America (DBIA), standing behind its product and service. Its legal arrangement has been tested in court. Its disputes and contractual language are highly evolved and have established case law. Insurers like products that have scope and history to define, quantify and manage risk.

Design-build has been around for over fifty years, has its own standard contract templates (DBIA and AIA), and puts less risk on the owner in its contract language.

Trendy is ok when there is nothing at stake, but when millions of dollars (and your job) are on the line, who has the luxury of risking his project outcome on the untested? Revisit the Hans Christain Andersen tale, “The Emperor’s New Clothes”, and make sure IPD is not your Board’s ‘New Clothes’.

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