Integrated Project Delivery brings the owner, architect, contractor and often key trades into a single multi-party agreement. Instead of each party protecting its own contract, the team agrees on a target cost, puts some or all of its profit at risk, and shares in savings or overruns together. Decisions are made jointly, usually by a core group with representatives from each party, and many IPD agreements limit claims between the parties.
Why it matters
IPD tries to fix the incentive problem in traditional delivery, where every party benefits when another party eats the cost. It needs a lot of trust, open books, and shared tools like BIM and a common cost model. Without transparent cost data, the shared risk pool turns into a negotiation.
Worked example
Illustrative: a team sets a $48.0M target cost with $3.0M of combined profit at risk. If the job finishes at $47.4M, the $600,000 savings is shared per the agreement’s formula, on top of the profit pool. If it finishes at $48.9M, the $900,000 overrun reduces the shared profit pool first, before the owner absorbs further costs.
Common mistakes
- Signing an IPD agreement but behaving like a hard-bid team.
- Using separate cost systems so no one trusts the shared numbers.
- Leaving the risk/reward formula vague until the money is on the table.
How os.construction handles it
We’re building one shared cost and project record that multiple parties can view with role-based permissions, which is the kind of open-book data IPD depends on. It’s being designed with founding contractors.