In Plain English
Quick Answer
A team-based delivery method where owner, architect, and contractors share risks, rewards, and decisions from the very start.
Definition
Definition
Integrated Project Delivery (IPD) is a collaborative project delivery method that contractually aligns the interests of the owner, architect, and key contractors through a multi-party agreement with shared risk and reward tied to project outcomes. IPD maximizes collaboration using BIM, colocation, and lean construction principles to achieve superior performance in cost, schedule, and quality. All key parties are involved from early design.
Context
Why It Matters in Bidding
IPD fundamentally changes how estimators work because pricing happens collaboratively and openly rather than through sealed competitive bids, with target costs set early and trade contractors helping refine scope during design. Because profit is pooled and tied to hitting shared cost and schedule targets, estimating accuracy directly affects every party's payout, raising the stakes on transparent, validated numbers over protective contingency padding.
Example
Example
On a $40M hospital, the GC, architect, and mechanical and electrical subs sign a multi-party IPD agreement and place their fees in a shared pool, so when the team value-engineers the chilled-water system below the target cost, the savings are split among all signatories.
See Also
Related Terms
FAQ
Questions Contractors Ask
How is bidding different under IPD versus design-bid-build?
There is no sealed competitive bid. Owners select IPD partners on qualifications and collaboration ability, then the team builds the price together through open-book validated estimating against a jointly set target cost. Trade input shapes scope during design rather than after drawings are complete, reducing change orders and rework downstream.
What is a shared risk-reward pool in IPD?
Signatory parties place their profit at risk in a common pool. If the team beats target cost and milestones, members share the savings; if it overruns, the pool absorbs losses before owner money is touched. This aligns incentives so no single party wins by protecting only its own scope.
When does IPD make sense for an owner?
IPD suits complex, fast-track, or highly technical projects where early trade coordination and BIM clash detection deliver real value, such as hospitals, labs, and large institutional work. It requires an experienced, collaborative owner and partners comfortable with open-book accounting; it is poorly suited to simple, well-defined projects where low-bid competition is cheaper.
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