Cut Costs with Integrated Project Delivery (IPD)

Keep everyone on the same page

Through an efficient, customized IPD process, stakeholders are able to keep everyone on the same page and focused on delivering an enhanced project outcome. Sikich leverages its IPD experience and talent to assist with the IPD process, streamlining construction, improving efficiency and cutting costs.

The IPD Experience

Under the traditional project management model, most construction projects are often rife with inefficiencies and waste caused by miscommunication, labor issues, and material, equipment and supply delays. This often results in costly downtime, overruns and missed deadlines. Integrated Project Delivery (IPD) is a unified system for managing the project delivery process. Its structure is designed to drive efficiencies and accountability across the entire project to resulting in significantly less waste and issues.

How It Works

The IPD method unites the key parties of a construction contract (owner, architect, engineer, construction manager, and the major subcontractors) who share a common goal. Together, they act as a single entity for the purpose of completing a successful project by sharing in both the profits and challenges. A small team comprised of a representative from each key party is formed and charged with monitoring the project from the very beginning of the planning phase to project completion.

This team collaborates to provide leadership and acts to increase project value, reduce waste, and optimize efficiency through all phases of design, fabrication, and construction – sharing the same goal and achievement: to deliver a superior project on time and at the lowest cost.

The IPD Difference: Capture Increased Cost Savings and Efficiencies

While the traditional model purports to deliver these same benefits, IPD’s approach and method throughout the lifecycle of the project produces shorter delivery times than traditional practices, and is well-suited for projects being done in the private sector or not-for-profit institutions.

  • Coordinated Planning – With early introduction to the design plans, the construction contractor can advise the IPD team of anticipated problems in the plan, suggest material improvements, plan for material acquisition and timing, and pre-plan the order of each phase of construction for optimal efficiency.
  • Delay Management – When the project is faced with potential delays, the concerns are brought before the entire IPD team to determine how best to handle them. This results in no finger pointing and a true team approach to finding the best outcome for the project to keep progressing. This removes the waste that arises from communication issues and challenges commonly experienced under the traditional model.
  • Financial Accountability – Vendors, contractors and others are often paid their costs for services when delivered. However, according to the terms of the project, the profit margin for the work is generally withheld from each member of the team until certain benchmarks are met. Often times, additional profitability can be realized when work is completed ahead of schedule and at or below the target cost for the project. Each member of the team has a compelling financial incentive to cooperate and keep the project owner’s best interests in mind throughout.
  • Focus on Cost Savings – When all parties are focused on extracting extra costs from delays, having work done by the right party, and even using each others’ equipment where otherwise they would not, the project can realize significant cost savings; and the parties can share in the additional profit – a significant benefit for all involved, particularly the project owner.

Benefits of CPA Verification is Integral to the IPD Process

Sikich acts as an independent third party to verify that all consultants and trade partners are operating in accordance with the IPD contract, offering peace of mind to both the consultants and the project owner that billing and rates are fairly and accurately managed. With our auditing knowledge and accurate financial review capabilities, Sikich plays an integral part in an IPD process through our unbiased, confidential advisory services:

  • Review initial contracts, including reimbursable costs, contingencies, and profit calculations
  • Ensure that all parties are invoicing at the correct labor rates – only at their cost without any profit built in (including items such as: base wage, payroll taxes, healthcare benefits, retirement benefits, and paid time off)
  • Review overhead rates to make sure they are reasonable – both before the project (and billing) begins and throughout the project
  • Sample the hours billed each month by all parties and ensure they are supported by the appropriate backup, such as timecards
  • Perform a final review of project costs and supporting documentation to assist in allocating the Incentive
  • Compensation Layer (ICL) payout at the end of the project

Sikich’s IPD advisory team would be happy to provide a comprehensive overview of the project management process, as well as how our CPA verification for IPD could benefit your next project. Contact your local Sikich advisor or visit us at www.sikich.com.

By | 2018-03-15T13:09:09+00:00 December 11th, 2017|Audit and Tax|0 Comments

About the Author:

Sikich LLP
Sikich is a leading professional services firm specializing in accounting, technology and advisory services. For over 30 years, Sikich has been helping clients focus on overall business growth and the components that result in building the bottom line. Sikich has more than 750 associates and has been ranked as one of the country’s 30 largest accounting firms and among the top one percent of all enterprise resource planning solution partners in the world.
This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice.

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