The engineering and construction industry regularly recognizes and laments the lack of productivity improvements, so one might conclude that there’s little reason for optimism. But capital project professionals, being creative creatures, continue to identify new models to improve project delivery, with the goal of optimizing capital expenditures. One model pushing the boundaries of collaboration as envisioned in 2002 is Lean Integrated Project Delivery (LIPD).
Lean IPD makes inroads
The principles of LIPD provide a framework for radically integrating the activities of all project participants: the owner, designer and construction partners. This model has been used for several years with ‘facilities’ projects in health care, commercial and hospitality industries, but is now making inroads in manufacturing industries, including pharma.
In its purest form, this model involves all primary parties signing a single multi-party contract with a common profit pool which is incentivized to focus the entire team on achieving critical project success factors. As all parties are signing a common contract, it generally takes each participant time to become
willing to enter into an agreement which involves some (but limited) risk without modifying terms and conditions. It’s possible to achieve many of the benefits of LIPD without going all the way to the multi-party contract (aka ‘Lean Lite’), but there are costs or unrealized benefits associated with those options. Ultimately, it’s the integration of the people, systems and contract that harnesses the talents and insights of all participants to optimize project results, increase value and maximize efficiency through all phases.
The early phases of LIPD projects move slowly as each partner is progressively selected by those previously chosen and the team works together to simultaneously build itself, fully scope and estimate the project, and create a culture focused on collective success. To the uninitiated, this can appear frustratingly slow and overly focused on the ‘soft stuff.’ But this is genuinely a go-slow-to-go-fast exercise and once the scope, budget and success criteria are established, the project is able to move with incredible speed.
Because the team built itself, all parties have equal knowledge of each other’s scopes and budgets, team members, design and delivery tools, and collectively-identified risks and opportunities. There’s nothing to gain at the expense of another teammate so trust issues are largely addressed.
Once the scope and budget are fixed and multi-party contract signed, the project is viewed as a design-to-cost exercise. All parties worked together to fully develop the scope, everyone is using the same BIM model, and there are incentives to reduce project cost, so the tendency for scope creep is greatly reduced. Target value delivery — one of the essential practices in LIPD — generates a creative tension which drives innovation and reduces costs.
Because this is a design-build team without subcontracting (at least at the principal level) the owner has a team with all the requisite skills without the cost of compounded fees. Additionally, because all parties worked together to develop the budget, there is reduced potential for redundant staffing, and project general conditions (facilities and equipment) are shared. As the project progresses, scope can be shifted from one party to another with greatly reduced change management friction. In the current hyper-resource con- strained environment, this feature has been incredibly valuable to projects which otherwise would have ground to a halt due to one partner’s inability to adequately staff the project.
While early project phase costs are not insignificant and the model is not appropriate for all project types, the LIPD model enables designers and constructors to break through many of the old constraints to capital proj- ect optimization. For owners, LIPD is a ‘contact sport’ that requires a greater level of senior staff engagement early in the project, but on the whole, fewer resources over the life of the project as the team becomes largely self-policing after the poly-party contract is signed. While there are no shortcuts, with practice, LIPD leads to better and more predictable outcomes.