Early adopters endorse IPI as the better procurement model
Insurance backed alliancing is a way of working that turns standard approaches to delivering a project on their head. Architect, contractor, and other agents all commit fully to collaboration, communal problem solving, and the sharing of risk and profit. At its core is an innovative procurement model: Integrated Project Insurance (IPI).
This is being used by Derby Museums in their £17m remodelling of Derby’s Silk Mill into the Museum of Making. Bauman Lyons are the Project Architect and their Director, Irena Bauman, says the process has been a revelation, chiefly in its creation of a team that genuinely works together.
Bauman is unequivocal in her enthusiasm for IPI, having found it led to a refreshingly collaborative approach and successful project outcomes. The whole design team, the main contractor, key specialist suppliers and sub-contractors are all appointed together to develop the design and deliver the project to a target price that is jointly calculated.
All team members have to contribute to any cost overruns, though this is capped at an agreed point above which the IPI’s cost-overrun insurance comes into play. Equally, all share in any cost savings if they deliver the project for less. Team members therefore have a strong incentive to meet or even exceed the original target.
This alliance fosters cooperation even when things go wrong, with the entire team working together to solve problems. Blaming one party or leaving them to sort out an issue on their own is simply not provided for in the contract.
Alongside Bauman, the other key members of the project team will be sharing their experiences of IPI at Smart Practice: New Ways of Working, the RIBA’s annual conference on innovation in practice on 1 October 2019 in 66 Portland Place, London. The contractor, Speller Metcalfe, and client, Derby Museums, will provide their own perspectives while the legal team will explain IPI’s implications for liability: a 360-degree view of the process.
Bauman highlights the way IPI prompted designer and contractor to develop designs for better buildability, bringing significant cost and time savings at construction stage.
"Working so closely with contractors we received insights into the actual building process that architects rarely get. This means no aborted work: what we design will be built."
Bauman does concede that agreeing the initial target price was a challenge, partly because team members are so used to pricing work according to a rigid budget stated by the client.
Each party can opt to take on greater or lesser degrees of risk and reward, and Bauman Lyons opted for a relatively modest measure of potential risk and gain. Bauman jokes that they would have struggled with the idea of a large profit, instinctively wanting to plough any spare money back into the design.
Another key monetary aspect of the IPI model is cash flow. Team members are paid monthly and advance payments are allowed to cover projected expenditure.
IPInitiatives is a consultancy that developed the insurance-backed alliancing contract.
They were retained on the project as an adviser and enabler, a role Bauman regards as essential in stopping people from slipping back into 'conventional' ways of working. To satisfy the insurer, the project is continually monitored by independent financial risk and technical risk assessors.
The Museum of Making is due to complete a year from now. Bauman is impressed by how well the model has worked for the project, even though IPI was originally developed with new builds in mind, and the broader spectrum of design decisions that entails.
"I would love to use IPI on a large new-build project," Bauman enthuses. "One of the things we observed is that the alliancing process is really suited to architects and their training in problem-solving. From a delivery point of view, it has made me never want to do a traditional project again."
Tickets for RIBA Smart Practice: New Ways of Working are now on sale, with early bird tickets available until 31 July 2019.
Thanks to Irena Bauman, Director, Bauman Lyons.
Text by Neal Morris. This is a Professional Feature edited by the RIBA Practice team. Send us your feedback and ideas
RIBA Core Curriculum Topic: Procurement and contracts.
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Posted on 4 July 2019.