How Integrated Project Delivery reduces costs, waste and time for construction jobs

At the Green Building Festival, Jen Hancock gave a presentation on how her company, Chandos, delivered a net zero building commercial project to the client, four months early, under budget. To deliver a building under budget is rarely heard of, but throw in net zero while delivering a completed project four months early, and now you’re into territory that is pretty much uncharted in the construction industry. I contacted Jen after the presentation because I wanted to find out more about how they accomplished this feat. Chandos isn’t like other construction companies and this is immediately evident when you see that Jen’s title is the Director of Innovative Construction. How many firms have that title on their roster?

I asked her if she’d been busy presenting this project to other conferences and she said, “I’ve been really busy presenting this concept — the way we built the Mosaic Centre has overshadowed, to some degree, the fact that it’s a net-zero building.” It should be noted that Chandos and The Mosaic Centre are located in Edmonton, AB, where temperatures can dip into the -30Cs in the winter months, so building a net-zero building is a huge accomplishment. In fact, it is the most northern commercial net-zero building in North America.

The method of building that Chandos used to build the Mosaic Centre is called Integrated Project Delivery (IPD). In 2012  Chandos’ CEO went to a session to hear how DPR, a major US construction firm, constructed their buildings. They were using Lean Construction methods and IPD to build and he was convinced that it was something Chandos could do as well. When Chandos was hired to build the Mosaic Centre, they recognized that the project would be a good one to inaugurate IPD and Lean as the Mosaic Centre’s owners were already practicing Lean in a knowledge setting.

Lean manufacturing has been around for awhile, originating with Toyota. The focus of the manufacturing system is to create value for the customer by eliminating waste within the system. Lean construction adopts similar principles, focusing on creating customer value, eliminating excess waste to decrease time and materials to complete a job. Customer value is about getting the right information at the right time – which may or may not be about physical waste. For instance, on one job site, they noticed that the placement of porta-potties was several minutes walk away from where some of the trades were working. By placing porta-potties on the same floors where trades were working, they were able to cut down significantly on time lost.

Jen defined IPD as design work integrated with the design partners (including owners and operators), user groups, and trade partners. As the Mosaic Centre was the first project where they implemented IPD, there was a steep learning curve along the way. “We didn’t know what we didn’t know,” Jen says. “We brought our trade partners in later than we should have. We had started doing design drawings in May but didn’t bring trade partners until August. In the end, we brought DPR in to help with a two-day session to help us learn.”

One of the things that came out of process during the design phase was the focus on building a net-zero building. “The owners were going down the Living Building Challenge path and aiming to achieve LEED Platinum. They also really wanted to build to Net-Zero. There were members of our team who initially thought this would be almost impossible, but the team rallied to design and construct to hit that vision.” Jen also mentioned that green features are the first things to be eliminated when the budget max is reached but their  philosophy has always been to figure out how to achieve what the client wants within their budget.

IPD: Collaboration instead of silos

IPD has some unique aspects to it that run contrary to the way the construction industry is used to working. In a typical job, there is the design phase, the estimating and tendering phase and then the build phase. Generally, each of the parties involved knows when their part is needed and will participate and do their job when the time comes. IPD, however, demands that more time is invested in the design phase, with as many stakeholders as possible involved including the trades, estimators, and end-users. “There is a huge time commitment up front,” says Jen. “Most of the trades aren’t used to being involved that early in the process. But once they see the value they can add to a job, the light goes on and they buy into the process.”

I asked if getting buy-in from everyone involved in the process was hard. Jen admitted that IPD isn’t for everyone. “It’s hard for some people to change the way they do things, there is a certain loss of control over the job that some people aren’t comfortable with. But generally, when the trades realize that they have input into the schedule, they feel empowered and more invested.” In fact, one of the trade contractors admitted that if all of his jobs were like that one, he’d love going to work every day. “Generally, once they’ve tried this way of building, it’s hard for them to go back to the traditional way of building.”

Hiring your team:

Using the IPD process requires hiring your team differently too. Because it’s a collaborative delivery model, the culture of each company involved must have buy-in to the IPD concept.  It must be an equal relationship between trades and design team with both respecting the value that each brings to the table.

IPD Financial Structure

The financial structure of an IPD project is different than a traditional build. It is designed in a way that teamwork between all companies  involved in the building becomes essential for success. Instead of lumping together cost and profit and submitting a quote for a job, a company will quote on his costs of labour, materials, etc., and then add the profit piece on top of this. Each company involved in the job will do the same. The project owner will cover all the costs and the profit. However, if there is an error in any part of the job, it comes out of the profit portion of the job and all trades and sub-trades share in the loss. On the other hand, if a trade discovers a method for reducing costs, all companies share in the saved expenses.  Jen gave me an example of how this works using the mechanical team on the Mosaic job. They were ready to install the HVAC system but the framing for the mechanical room hadn’t been done. The company suggested they do it in order to keep the job on time and on budget and they did an outstanding job. “If that had been a standard job, the HVAC guys would have had to wait until the framing was completed. It would have slowed the whole job down.”

She noted other forms of collaboration on the Mosaic job, as well as a second job where they built a school in Red Deer. One of the trades was having difficulty with forecasting its costs. One of the other companies pitched in and helped this company with its forecasting. Areas in which companies are weaker, are highlighted in this kind of arena, but so is the motivation of team members with the necessary skills to help them. The scope of jobs also changes; trades are no longer responsible only for their share. They help out where others may be falling behind. Risks are controlled better than in a traditional setting. Jen used a rowboat example: a one-person boat will get to the other side, but an 8 person boat will get there faster and better if they are coordinated in their efforts.

Drawbacks of IPD

A lot of time and effort is invested in the front-end of an IPD project, which first-time participants may see as a negative . However, that time invested pays off during the construction phase which is completed much faster than for a conventional job. It’s really about a shift of time allocation rather than additional time added to the overall budget.

From the owner’s perspective, an IPD process requires that someone who can make important decisions be involved in the design at the very beginning and continue through until the project is finalized. Not all companies or institutions can afford to dedicate that kind of manpower to a project. Further, especially in government settings, the person responsible for attending the design meetings may not always have the authority to make the necessary decisions on the spot and may have to take suggestions to a committee, which could hold up the design phase as well. Finally, the trades aren’t used to devoting the necessary time involved for these projects either and may feel that it isn’t worth their time investment if they can’t see it on the construction end.

Benefits of investing in the design phase

One of the benefits of investing time in the design phase is the limited number of change orders during construction. Because of the pay structure, it’s in every company’s best interest to get the project designed before ground is broken — this includes the owners as well. In the case of the Mosaic Centre, there were no change orders once construction began — almost unheard of in construction. In the case of a second IPD project in Red Deer, there was one change order, which was due to a code change that had happened during construction.

Is IPD Common in Canada?

According to Chandos’ website, it is the leading firm in IPD delivery and design in Canada. One of its mandates, in fact, is to help change the way construction is done in Canada. To that end, Chandos helped establish the Integrated Project Delivery Alliance a non-profit group with the mission of educating the construction industry, developers and owners of the benefits of IPD, and how to do it. The IPDA has commissioned two studies by the University of Minnesota to research the positive benefits to using the IPD method of construction.

To date, Jen says that there are about five other firms that she knows of practicing IPD across the country.

If implemented properly, IPD combined with Lean Construction has the potential benefits of decreasing time spent on construction jobs, minimizing construction waste while preserving profit for companies. It means construction firms can move onto other jobs faster creating more value for themselves as well as their customers. While initially there is a steep learning curve versus how construction is traditionally done, it is a method that should be embraced by builders, owners and developers alike as the benefits are huge.

Jen Hancock is the Director of Innovative Construction at Chandos