IPD + Lean, A Marriage Made in Heaven

15 Feb 2017

A recently completed research report studies ten projects that all used multiparty agreements and Lean practices¹. The conclusion? Integrated Project Delivery (IPD) motivates teams to collaborate and Lean provides the means to achieve it. IPD is sometimes seen as onerous and complex because it demands that owners and project teams negotiate contract terms such as the shared risk/reward pool and terms of fiscal transparency.

Our research team found that the time and energy spent on negotiations was an investment that paid off in forming the foundation for mutual trust and respect, key elements of successful collaboration. All the IPD teams in the report demonstrated a remarkable degree of “project first” or “team first” attitude, sometimes anchored by the shared financial terms, oftentimes inspired by the owners’ goals. As a result, we concluded that IPD sets the stage for teams to be highly motivated to collaborate and also produces the foundation of positive team culture. In these conditions, Lean practices provide the means for the teams to effectively collaborate. Universally, teams found pull planning to be extremely valuable. One contractor observed that initial resistance to the time required to participate in pull planning quickly evaporated as schedule savings of days and weeks resulted. Plus/Delta was cited as a tool that provided great value for a relatively small investment of time. Many teams reported that the Lean tools yielded metrics on reliability or accountability that became sources of friendly competition and tangible means to track how they were progressing towards goals.

Our research team was particularly interested in how owners fared using IPD and Lean. Certainly IPD required a higher level of involvement by the owner than traditional delivery models. However, the return on this investment seems to be high levels of owner satisfaction in project outcomes across all three measures of schedule, budget and quality. Eight of the ten owners were likely or extremely likely to use IPD again as a project delivery method for a similar project. All ten owners consider the building outcomes exceeded their expectations even though not all projects met the original budget or schedule. Notably, several of the owners were able to add significant scope to their projects, using project saving generated by the team to upgrade or add wish list items.

The projects in the study voluntarily responded to our call for participation and therefore we can’t assume they are representative of all projects that use IPD. However, the teams were candid about the challenges they faced, one architect commented that, “without the IPD agreement, I guarantee that this team would be in litigation.” In another project, a trade partner observed that an unresolved technical situation could have brought the project to a stop but Lean practices and the IPD culture allowed them to continue to progress until the situation was resolved. In this case the team preserved their schedule goals in spite of the delay. Our research team observed that if IPD and Lean provided the foundation of positive team culture that led to “team first” attitudes, it also endowed the teams with resilience to overcome challenges that would ordinarily disrupt the project.

Like many research efforts, the study raises as many questions as it answers. We added to the growing body of knowledge on IPD and Lean by contributing to the gap in understanding about how and why IPD and Lean are effective. However, there are intriguing questions that require future study such as the slight correlation among teams with high levels of Lean effectiveness report lower than average complexity even when the research team considered the project of average or high complexity. One hypothesis we would like to verify is that team members perceived the project to be straightforward because of the clear actionable goals established while using Lean practices.

Another research questions we would like to study further is to see if there is an optimal proportion of team members in the risk/reward pool compared to the project size or overall project team. Lastly and perhaps most importantly is the goal to establish industry-wide metrics to advance. Our research team was hoping to find some consistency of metrics among the teams. While we found several examples of effective metrics, the variation did not form a clear set of metrics that could be adopted. This remains a goal and may be accomplished if we better understand the effectiveness of particular metrics and create widespread buy in among industry partners.