June 7, 2016 - Leslie P. King to present on Integrated Project Delivery at the Mason Contractors Association of Connecticut in Hartford, CT
Integrated Project Delivery — A new way to organize construction projects. Is it really an improvement?
June 7, 2016
Mason Contractors Association of Connecticut
Carbone's Restaurant, Hartford, CT
Integrated Project Delivery (also called “IPD”) is very different from traditional contracting. With IPD, all work is cost-plus, except for profit. All the subcontractors, including the Architect, are compensated without limit for hourly wages, insurance, equipment, materials, scaffolding, and so forth. Profit is conditional on meeting the budget. If the project comes in under budget, half the savings are divided among the project team as additional profit. But if the project goes over budget, the over-run is subtracted from everyone's profit. The subcontractors cannot possibly lose money, but they might not make money either.
It also means that each individual contractor’s profit depends on how well the other subs are doing their jobs, including the Architect. If the mechanical contractor goes way over budget, the mason will make less profit, or possibly none at all. If the Architect adds change orders that raise the cost, he risks losing his own profit, along with everyone else. Every week, each subcontractor's total expenses and percentage completion are posted in the trailer, for everyone to discuss. So if one contractor is going over budget, all the others know it.
Would anyone want to become involved in such an arrangement, where your own profit is tied up in everyone else’s performance? It is surprisingly popular among subcontractors. We will explain in more detail how IPD works, what is different about the contracts, and why subcontractors actually like it. And of course, we will discuss a few things that can go wrong.
Speakers are Leslie P. King, Esq. of Murtha Cullina LLP in New Haven, and Jonathan Leavitt, of Leavitt Associates, Inc. in Boston.