Integrated Project Delivery (IPD) What are the Risks?

Generally, the biggest risk to the firm is not its professional liability exposure to the owner, the “team” or third-parties but its ability to manage its cash flow.  IPD forces design firms to risk their profit and while the constructors who also are part of the Risk/Reward Team have more to lose, they usually have more control over the factors that can cause the loss.  The gambling of profit and the delay of incentive compensation often cause design firms that are not structured to perform as part of an IPD team to take on a business risk that could jeopardize their viability.

That, of course, depends on how the firm is structured, what the “allowance” permissible is for the design services, how the “base target cost” is determined, and what constitutes a “chargeable cost” for calculating the cash disbursements.  So most of the IPD risks are business and not professional liability risks.

Both the AIA and ConsensusDocs have published standard IPD contracts.

Nahom A. Gebre, Esq., P.E.

Risk Management Attorney

Victor O. Schinnerer & Company, Inc.

Two Wisconsin Circle

Chevy Chase, Maryland 20815-7022

  1. 301-951-5408 / fax. 301-951-5496

Integrated Project Delivery IPD

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