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AVANORTH Home
**Industry News**·May 24, 2026· 4 min read
# **Integrated Project Delivery (IPD): A Collaborative Approach**
Integrated Project Delivery aligns the interests of owner, designer, and builder through shared risk, shared reward, and early collaboration. IPD projects consistently deliver better outcomes than traditional methods.
**AVANORTH Team**
AVANORTH Construction
The traditional construction project delivery model (design-bid-build) creates inherent conflict. The designer designs without input from the builder on cost or constructability. Bidding selects the lowest price, incentivizing contractors to find ways to increase revenue through change orders. The owner is caught between designer and builder, managing disputes. The result: adversarial relationships, cost overruns, schedule delays, and litigation. Integrated Project Delivery (IPD) was developed to solve these problems by fundamentally changing the economic incentives and organizational structure of the project team.
---
## How IPD Differs from Traditional Delivery
| Aspect | Design-Bid-Build (Traditional) | IPD (Integrated) |
| --- | --- | --- |
| Contract | Separate contracts: owner-designer, owner-builder | Multi-party agreement: owner, designer, builder (and often key trades) share one contract |
| Selection | Designer by qualifications, builder by low bid | Designer and builder selected by qualifications and culture fit; early involvement |
| Risk | Each party manages own risk; disputes over who bears cost of problems | Shared risk: cost overruns reduce everyone's profit |
| Reward | Fixed fee or lump sum; no incentive to save the owner money | Shared reward: cost savings increase everyone's profit |
| Collaboration timing | Builder not involved until after design is complete | Builder and key trades involved from early design |
| Decision-making | Hierarchical (designer decides design, builder decides means and methods, owner decides disputes) | Consensus-based through the Project Management Team (representatives of all parties) |
| Liability | Each party liable for own errors; litigation common | Liability waiver among core team members (no suing each other) except for willful default |
---
## The IPD Structure
### Multi-Party Agreement
The foundation of IPD is a single contract (often based on ConsensusDocs 300 or AIA C191) signed by at least three parties: owner, architect, and builder. Many IPD projects also include key trade contractors (mechanical, electrical, structural) as signatories.
### Financial Structure
1. **Cost of the work:** All direct project costs (labour, materials, subcontractors, equipment) are reimbursed at actual cost. There is no markup on cost of the work.
2. **Overhead and fee:** Each party receives a defined fee to cover their overhead and normal profit. This is the "at-risk" portion.
3. **Profit pool:** A shared profit pool funded by the difference between the target cost and the actual cost. If the project is under budget, the profit pool grows and is shared among all parties according to a pre-agreed formula. If the project is over budget, the profit pool shrinks and all parties earn less.
> **Key Insight:** In IPD, every dollar saved on the project increases everyone's profit, and every dollar wasted reduces everyone's profit. This aligns incentives completely. The builder is incentivized to help the designer find cost-effective solutions. The designer is incentivized to listen to the builder's constructability advice. The owner benefits from a team that is genuinely working together to optimize the project.
---
## Early Involvement Benefits
### Builder Input During Design
- **Constructability:** The builder reviews design details and identifies problems before they become expensive field changes
- **Cost certainty:** Real-time cost feedback during design allows the team to make informed decisions about scope and specifications
- **Scheduling:** The builder helps sequence the design to align with procurement lead times and construction phasing
- **Trade input:** Key trade contractors (mechanical, electrical) participate in design, ensuring their systems are coordinated and optimized
### Measurable Results
| Metric | Traditional Delivery | IPD | Improvement |
| --- | --- | --- | --- |
| Cost vs. budget | Average 10-15% over budget | Average on budget or under | 15-25% better cost performance |
| Schedule vs. planned | Average 20% late | Average on time or early | 20-30% better schedule performance |
| Change orders | 5-10% of contract value | Less than 2% of project cost | 60-80% fewer changes |
| RFIs (requests for information) | Hundreds to thousands per project | Fraction of traditional | Problems resolved in design, not construction |
| Litigation | Common (10-30% of projects) | Virtually eliminated | Mutual liability waiver |
---
## Challenges
1. **Culture change:** IPD requires trust and transparency. Parties accustomed to adversarial relationships may find it difficult to share financial information openly.
2. **Owner commitment:** The owner must invest more time in the early phases and participate actively in decisions throughout the project.
3. **Insurance:** Traditional professional liability insurance is designed for separate parties. IPD-specific insurance products exist but are not universal.
4. **Team selection:** IPD success depends heavily on the people involved. Selecting team members who are collaborative, transparent, and committed is critical.
> **AVANORTH Collaboration:** We believe in collaborative project delivery. While full IPD contracts are still more common on large institutional projects, we apply IPD principles to every project: early involvement with the design team, transparent cost reporting, value engineering throughout design, and a focus on the project outcome rather than individual interests. When teams work together with aligned incentives, the results speak for themselves.
#IPD #project-delivery #collaboration
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