What are the key elements of a successful IPD contract?

1 Mutual goals and objectives

A successful IPD contract should establish mutual goals and objectives for the project, such as quality, scope, budget, schedule, sustainability, and performance. These goals and objectives should be aligned with the owner's vision and values, and shared by all the project participants. They should also be measurable and verifiable, and serve as the basis for decision making, incentives, and dispute resolution.

2 Early stakeholder involvement

Another key element of a successful IPD contract is the early and continuous involvement of all the stakeholders, including the owner, the design team, the contractors, the consultants, the suppliers, and the end-users. By engaging them from the pre-design phase, you can leverage their expertise, input, and feedback, and foster a culture of trust, transparency, and teamwork. You can also identify and address potential issues, risks, and opportunities, and optimize the design and construction process.

3 Shared risk and reward

A successful IPD contract should also define how the project risks and rewards are shared among the project participants. Typically, an IPD contract creates a risk pool that covers the contingency, overhead, and profit of the participants, and allocates a portion of it to each party based on their contribution and performance. If the project exceeds the target cost, the risk pool is reduced accordingly. If the project meets or beats the target cost, the risk pool is distributed as an incentive. This way, the participants are motivated to collaborate and innovate, and to avoid claims and disputes.

4 Integrated project team

A successful IPD contract should also establish an integrated project team (IPT) that consists of representatives from each project participant. The IPT should have a clear governance structure, roles and responsibilities, communication protocols, and decision-making authority. The IPT should also have access to the project information and data, and use collaborative tools and methods, such as Building Information Modeling (BIM), Lean Construction, and Last Planner System. The IPT should work as a single entity that delivers the project as a whole, rather than as separate silos that focus on their own interests.

5 Open book accounting

A successful IPD contract should also adopt an open book accounting approach that allows the project participants to share and verify the project costs and financial information. This approach enhances the transparency and accountability of the project, and enables the participants to monitor and control the project budget and cash flow. It also facilitates the adjustment and reconciliation of the target cost and the risk pool, and the distribution of the incentives and savings.

6 Continuous improvement

A successful IPD contract should also encourage and support the continuous improvement of the project performance and quality. This can be done by setting up feedback loops, performance indicators, benchmarking systems, and lessons learned sessions. These mechanisms can help the project participants to identify and implement best practices, innovations, and solutions, and to learn from their successes and failures. They can also help to foster a culture of learning, adaptation, and excellence among the project participants.