Utilize Lean Integrated Project Delivery and IFOA to help resolve some of the industries contracting pain

The construction industry traditionally encounters numerous challenges related to contracts, such as ambiguity in contract documents, claims and disputes over principles, procedures, and performance variations, among others. To address these issues, Lean Integrated Project Delivery (Lean IPD) and Integrated Form of Agreement (IFOA) provide promising solutions when implemented correctly. These innovative methods are extremely pertinent for those preparing for the PMI Construction Professional (PMI-CP) exam, as an understanding of Lean principles and contract forms can significantly enhance project management efficiencies.

Lean Integrated Project Delivery (Lean IPD)

Lean IPD is a novel approach to design and construction. Contrary to traditional practices that often result in adversarial relationships and disputes, Lean IPD propels all project stakeholders (owner, main contractor, design professional, and trade contractors) to work together from project initiation. The primary aim is to remove waste and increase value for the customer by integrating individuals, systems, business structures, and practices.

• Collaboration: One of the main benefits of Lean IPD is enhanced collaboration. Parties come together to work on project design and construction planning from the onset, promoting reciprocal trust and respect.
• Shared risks and rewards: Lean IPD encourages parties to assume collective risk and rewards, resulting in higher motivation and performance.
• Elimination of waste: Lean IPD emphasizes sharp focus on value-adding activities while eliminating facets that don’t contribute to project value. This waste reduction ultimately leads to cost savings and efficiency.

Integrated Form of Agreement (IFOA)

IFOA is a multi-party agreement that encapsulates the Lean IPD philosophy. This legally binding contract aligns the project team towards a common goal right from the beginning by laying out defined economies of scale and incentives for all parties involved. Three core principles underpin IFOA:

1. Shared Risk: All parties share the risk proportionately, reducing finger-pointing instances and encouraging collaboration on problem-solving.
2. Shared Reward: IFOA contract sets up a project’s economic model such that all parties receive rewards proportionately to the project metrics.
3. Liability Waivers: Parties to an IFOA waive liability claims against each other, except in cases of willful negligence or default.

Combining Lean IPD and IFOA: An example

Envisage a construction project involving a building owner, an architect, a contractor, and multiple subcontractors. Under the traditional contractual setup, each party would enter a separate contract with the building owner, targeting individual objectives rather than the project’s success as a whole.

However, by adopting Lean IPD and IFOA, these parties can enter a singular contract that promotes the project’s success. This integrated agreement defines clear project goals, shared risks and rewards, mutual responsibilities, and communication expectations.

In conclusion, adopting Lean IPD and IFOA changes the narrative in the construction industry from adversarial relationships and wasteful practices to cooperative work and value maximization. This approach not only resolves the existent contract pain points but can also revolutionize the way the construction industry operates. Those preparing for the PMI-CP exam will benefit greatly by mastering these concepts and understanding how they can be effectively applied to transform project practices in the field.