Integrated Project Delivery, Part Two: Legal Issues

By Joe Dirik

In this issue, Dirik covers some of the legal issues implicated by Integrated Project Delivery. Attention should be paid to these legal issues if you decide to use IPD on a future project.

In my last column, I wrote about a relatively new project delivery method – Integrated Project Delivery. The method focuses on an improved design process using Building Information Modeling tools as well as changes in the contract form and the way participants collaborate, share risk and work together. The approach changes the paradigm from the traditional design-bid-build to a collaborative “shared project model.

Dirik is a member of the litigation and construction groups at the Dallas office of Fulbright & Jaworski LLP. He may be contacted at jdirik@fulbright.com.

Arguably, BIM blurs the recognized lines between design and construction. Contractors are traditionally responsible for means and methods; architects and engineers for design. BIM relies on information furnished by contractors. This creates a potential problem because architects and engineers perform services based on a standard of care. How should they rely on information furnished by other parties in the BIM process? The contract should clearly identify roles and allocate risks and responsibilities.

To realize the maximum benefit from BIM, the owner, designers and contractors must freely share data. The contract should address ownership of the collective data and how to protect it. Proprietary and confidential information will likely be shared among the IPD team. Parties should address this in the IPD contract. Licensing issues are important when utilizing subcontractors’ and suppliers’ data in BIM.

An IPD approach has a greater chance of succeeding if the parties have contractual obligations to increase collaboration and reduce or eliminate the traditional areas of friction between owner, designer and contractor. The AIA and ConsensusDOCS developed three contract models for IPD projects.

Under the first, C195-2008, the AIA’s “Special Purpose Entity” contract, the owner, designer and contractor/construction manager share risks and rewards by working together from the beginning to achieve mutually agreed-upon performance and cost goals. In this agreement, the three parties form a limited liability company with each a company member. The single purpose of the company is to plan, design, construct, and commission the project. The key elements include mutual, unanimous decision making; mutually agreed-upon target cost; mutually established performance goals; cost-based compensation; and most important, a waiver of claims against each other.

The second model is based on AIA’s transitional agreements, B195-2008, an owner-architect agreement; A195-2008, an owner-contractor agreement with a guaranteed maximum price amendment; and A295-2008, a shared “general conditions” document, with focus on increasing the benefits of BIM while utilizing the familiar, owner-architect relationship and a fixed-price contracting model. The general conditions document includes the terms and conditions for the architect’s design services and the contractor’s pre-construction services. The transitional agreements establish the owner’s, architect’s and contractor’s respective duties and describes in detail how the parties will work together.

In my last column I briefly discussed the third model, the ConsensusDOCS 300 tri-Party Collaborative Agreement. The ConsensusDOCS approach is not based on a “pure” form of alliance or relational contracting. The owner, lead designer and contractor sign the same contract and create a core team with redefined responsibilities and financial rewards and reallocated risks. The goal is to better align the interests of all project participants on measurable performance targets. Senior representatives of the three parties directs the ConsensusDOCS project. When consensus cannot be reached, however, the owner retains the ability to make a determination in the best interest of the project.

ConsensusDOCS has created its form 301 BIM Addendum. This modifies contract definitions of “Contract Documents,” and provides for orderly management of electronic information and the establishment of IT protocols. It defines the role and responsibilities of the “Information Manager” and establishes a “BIM Execution Plan.” The BIM Addendum prescribes a framework for recognizing and licensing intellectual-property rights. For example, contractors may have intellectual property rights in the project. The BIM Addendum resolves the BIM designer-contractor dilemma by drawing clear lines between the designer and contractor roles by creating design and construction models so that the efforts of the designer and contractor retain a separate identity. The design model serves as the functional equivalent of two-dimensional construction documents while the construction model is the equivalent of shop drawings and other information useful to construction.