Integrated project delivery –
The devil you don’t know
By Bruce Harrison, McKercher LLP lawyer and partner, with assistance from Tyler Gray, student-at-law
Bruce Harrison, McKercher LLP.
In 2018, the Canadian Construction Documents Committee
bility provisions within CCDC 30, the risk/reward pool re-
(CCDC) released CCDC 30, a new standard form contract
quires parties to consider how much risk they are willing to
for integrated project delivery (IPD) construction. The IPD
bear in the performance of their obligations.
project model seeks to overcome weaknesses in traditional project structures that isolate design and construction from one another by promoting collaboration between project owners, designers, and contractors from project conception through the design stage and during construction. The stated goal of the IPD model is greater project efficiency by promoting collaborative and timely troubleshooting of potential project problems through the implementation of a shared risk/reward system.
The second provision in CCDC 30 that differs substantially from traditional contracts is found in the waiver and liability provisions which significantly reduce opportunities for parties to bring claims against one another in court. Here, the shared risk/reward structure results in the waiving of claims that would result from project delays or cost overruns as those are risks born by all contract parties. This significant alteration to the liability structure within IPD projects seeks to promote early communication of project challenges or
The main difference from a contract perspective is that the
errors between parties without fear that such communica-
core project parties (owner, consultant. general contrac-
tion will give rise to liability. Rather than parties protecting
tor, and major suppliers) each sign on to a central project
positions in fear of potential litigation, they can work to-
agreement. The design, scope of work, price, and perfor-
gether to collaboratively problem-solve and mitigate risk to
mance schedule are administered and controlled through
the overall project outcome more quickly and effectively.
this one single agreement.
The alteration of risk apportionment in CCDC 30 from tradi-
There are two key provisions in CCDC 30 that act in tandem
tional contracts is a key consideration for parties looking to
to support this increased collaboration. The first is the es-
use the IPD model. Effective collaboration will require early
tablishment of a risk/reward pool from project profits. The
involvement of all parties to the contract and a strong com-
primary parties to the contract place an agreed percentage
mitment to project-first thinking. This is a paradigm shift, so
of potential profits in a common pool that pays out at key
experience in collaborative approaches is certainly an asset
milestone dates and project completion. If the project is on-
for those looking to use IPD models. While there are some
time and on-budget, each signee receives their allocated
exceptions to the general waiver of liability, claims arising
profit from within the pool. Efficient performance presents
from project delay and cost overruns under CCDC 30 do
an opportunity to multiply profits, while poor performance
not give rise to individual liability. In order to effectively ap-
reduces potential earnings for all parties proportionate to
portion risk, parties making use of an IPD model will want
their role in the project. The structural goal of the risk/re-
to consider which parties will be obligated to sign onto the
ward pool is to tie individual profits to project success.
IPD contract. This will likely include the relative importance
The shared profits pool is also a significant risk apportionment mechanism under CCDC 30. Parties will want to de-
of the subcontractor supplier and the willingness of a participant to accept the risk of other’s performance.
termine how much individual profit is allocated to the risk
CCDC 30 offers a new perspective on traditional project
pool within the IPD contract. Varying proportions of profit
delivery where parties share risk and reward related to the
allocation may shift the burden of risk from one party to
performance – efficient or inefficient – of all participating
another. For example, where 100 per cent of profits are
parties. With substantive changes to waiver and liability pro-
shared, risk is apportioned equally among all parties. How-
visions, and significant potential deviation from traditional
ever, if less than 100 per cent of profits are allocated to the
risk apportionment, parties considering the use of an IPD
risk/reward pool, “shared risk” may land more heavily on
model should bear in mind past experience using this model
one party’s shoulders. When combined with waiver and lia
and the importance of a strong, collaborative team. s
60 PotashWorks 2021
