How do you select partners for your IPD project? In traditional delivery models, a formal bidding process is used to select partners for a project. Typically, the owner or general contractor will send out a set of documents with instructions to bidders, who will then propose exactly what is on the drawings. However, this method can result in change orders down the line when items that were not on the drawings are added to the project.
Integrated project delivery (IPD) uses a different approach. The general contractor and major trades are brought on board before the project is fully designed. This raises the question of how to select partners when there isn't much to price yet. The most common way to do this is to prepare a request for qualification (RFQ) or a request for proposal (RFP). However, instead of making the selection based on a lump sum price for the entire job, a combination of the team, approach, and business terms is evaluated.
Focus on collaboration
When evaluating the team, it is important to consider the experience and qualifications of the general contractor and major trades. The approach should focus on collaboration and early involvement of all team members, including the owner and designers. Finally, the business terms need to be fair and equitable for all parties involved. By selecting partners based on these criteria, an IPD project can benefit from early collaboration and a team approach, resulting in a smoother and more efficient project delivery process.
If you are searching for partners to work with, it is important to approach it as if you are building a virtual company with individuals who have various roles in design, construction, and other specialities. When considering who to bring onto your team, it is essential to take into account their mindset and philosophy. To achieve this, you can employ similar processes to hiring employees, asking situation-based questions to evaluate their characteristics rather than their knowledge of a specific subject.
Grit, tenacity, and personality count
The key traits to look for in potential partners are grit, tenacity, and the willingness to speak up, even if their opinion is unpopular. It is also important to evaluate whether they have the ability to back up their opinions with facts or if they give up easily. In addition, you will want to find someone who is willing to invest energy into the project over a long period.
When assessing personality, you can ask questions such as, “Tell me about a time when you accomplished something difficult”, or “What is your proudest achievement?”
These questions allow you to see how potential partners have exhibited the desired skills in the past.
It is also crucial to evaluate whether a potential partner will listen to multiple opinions and make decisions based on input from others. Avoid working with individuals who are too dictatorial in their approach, as this won’t work well in a team-based, integrated project delivery approach.
Another question to ask is “Tell me about a time you made a mistake and how you dealt with the impact”. This will give you an idea of how the person does under stress and whether they take responsibility for their actions or whether they resort to blaming others around them.
Image: Dave Lowe via Unsplash
Evaluate the project approach
In addition to assessing the people you will be working with, it is important to evaluate the project approach. The three most significant factors are scheduling, budgeting, and refining the scope.
In terms of scheduling, it is important to bring a collaborative process to integrate the trades into the project’s timeline. You can use a pull plan approach to work out high-level milestones and phases while involving all participants. Avoid building a schedule at one time and rolling it out in an email without input from partners. Does your leadership see builders as trade partners with valuable input and experience or are they just “subcontractors” who are expected to follow orders?
For budgeting, you want to ensure that the team is forecasting ahead and not just repricing every set of drawings when they are issued. Consider working with a conceptual estimator who can provide real-time feedback when evaluating structural systems, for example. Using a target-value-design system can also be helpful. Most team members don’t understand the difference between pricing design vs providing feedback on how design affects cost. This is a valuable skill set if you can find a team member who does this well!
Finally, it is important to evaluate whether the contractor or trade is willing to work with you in an open-book format to help you drive to a target budget. Avoid working with quote order takers who don’t provide much input or feedback beyond the cost of the project.
The last piece of the equation in hiring contractors is business terms. While the price may
not be the main focus, and we are not necessarily taking the lowest bidder, financials do matter, and there should be some competitiveness in them. As a client, you may want to ask for overhead and profit percentages and percentages for insurance, including liability insurance. By adding up all the markups, you get the overall percentage that the general contractor wants.
Team and project approaches are essential
For trades, it is usually just overhead and profit, but you still need to add up those markups to get the overall percentage they are looking for. By estimating the cost of the job multiplied by that percentage, you can get a rough idea of the overhead and profit they would make. You will then compare that between teams, and if one team has a 1% higher fee, but a significantly better team and project approach, you may choose to go with that team despite the slightly higher fee.
I also recommend paying attention to whether the contractor is going to add a sub-guard, which is often half a percent to more than a percent added to the job cost. Make sure to put that in the contractor’s fee expectation, and don’t just think of it as an additional percentage markup charged on the job. Subguard is protecting the contractor, not the owner. It is part of the contractors job to evaluate and select firms that won’t go out of business during the project.
Ask for a resource-loaded work plan
Asking for a resource-loaded work plan can give you an idea of how many people a company thinks they need to manage the job. Some companies will load up the project team with what they think it takes to run the job, while others are much leaner in how they staff them. You need to figure out what the right fit is for your project.
You can get an idea of the overall cost structure of the company you are hiring by looking at the rates they charge for their people. Some kind of best-value analysis can help you compare rates and projected general conditions for each company and figure out who is the best fit based on their approach, team, and cost.
Implement snowballing as best practice
Finally, you can progressively hire team members, also known as snowballing. This involves starting with one person from one firm–a designer or builder, for example–working with the owner to hire somebody else. Once the next firm is on board, those two firms participate with the owner to select the next partner. By doing this, you build a team where everyone has ownership of who is joining the team and why they were selected.
In summary, don’t just pick the low price; consider the overall fit of the team, their cost structure, and their approach to the project when choosing team members in an IPD environment.
Feature image: Jimmy Nilsson via Pexels
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James is an expert in the set-up and structure of large, complex capital projects using Lean and Integrated Project Delivery to drive highly reliable results.
He has negotiated IPD contracts and delivered over $650M in complex healthcare projects as an Owner's Representative with multiparty contracts, aligned team incentives and collaborative delivery models.