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31 Constr. Law. 17 (2011)
Negotiating an Integrated Project Delivery Agreement

handle is hein.journals/conlaw31 and id is 121 raw text is: CONTRACT FORMS AND CONTRACT DRAFTING Negotiating an integrated Project Delivery Agreement B v Hoilvard W. Ashera, A Integrated project delivery (IPD) approaches design and construction from a fundamentally different per- spective. Negotiating an IPD agreement also requires a fresh perspective, unfettered by traditional contracting concepts. In many instances, the contract negotiator must unlearn rules that have worked well but are not Howard W. Ashcraft, Jr. functional or relevant to an integrated project. Moreover, negotiating an IPD agreement is not an act separate from the project itself. The negotiation process is the IPD team's first collaborative effort and will deeply influence its abili- ty to collaborate effectively as the project unfolds. This article provides a practical approach to IPD con- tract negotiation that draws upon IPD principles to guide the negotiation process. Te discussion assumes that the parties are signing a single, multiparty agreement. Other approaches are possible, including individual but inter- locking agreements and separate, singie-purpose enti- ties (typically a separate legal entity jointly owned by at least the owner, designer, and builder). But the multiparty agreement is simpler, less prone to inconsistency, and the approach most frequently used. Moreover, the process of jointly negotiating a multiparty agreement deepens each party's understanding of the other's interests. And when executed, the multiparty agreement expresses each party's com itment to jointly defined goals. For these reasons, the multiparty agreement is the preferred form for IPD projects. Although this preference is reflected in the dis- cussions below most of the information is relevant to ne- gotating any form of an IPD agreement. AproachnIP Negotiation Collaborative Negotiation Negotiation is not about contract language. It is about fiding and defining the intersection of the parties' inter- ests. Finding the common interests and getting the deal Howard W Ashcraft, Jr. is a partner of Hanson Bridgett LLP in the firm's San Francisco office. He is also a Fellow of the American College of Construction Lawyers, a steer- ing committee memer of the American Institute ofArchi- tects California Council's Integrated Project Delivery Taskforce, and aiformer member of the Governing Com- mittee of the AA Fom on the Construction Industry right is the first step in negotiation. But in too many in- stances, contract language is exchanged before the key business issues are addressed, thus diverting attention away from the fundamental issues. Worse, the exchange of contract language may lock in terms that work against the parties' needs or preferences. The better practice is to follow the rule, Deal first, language second. In fact, the best process begins with determining what outcomes the parties want to achieve, followed by iden- tifying the processes and behaviors needed to achieve those outcomes, and then devising the structures needed to support the desired processes and behaviors. Processes include tools such as building information modeling or lean2 design and construction. Behaviors include commu- nication, collaboration, creativity, alignment, and effort. By starting with the desired outcomes, the contract struc- ture is tightly aligned with the project objectives. Unless mind-sets are changed, negotiating an IPD con- tract may be difficult and frustrating because effort will be wasted on the wrong issues. One solution is to have an IPD workshop before any negotiation takes place. The workshop covers what IPD is, why it works, and how it differs from traditional project delivery approaches. The workshop creates a common level of understanding, al- lowing the parties (and their counsel) to focus on the is- sues that will make their IPD agreement successful. Col- laborative negotiation is accelerated if the parties have a common understanding of IPD principles and why improving an IPD agreement with traditional contract language may actually undermine the IPD agreement and the party's own interests. A skilled facilitator with actual IPD experience can streamline the negotiation process and improve the outcome. The negotiations themselves should begin with an open discussion of each party's legitimate interests and concerns, which should be documented to guide later ne- gotiations. The goal of the IPD agreement is to create a project where all participants benefit by its success and are equally motivated to avoid its failure. This cannot be ac- complished if the parties' interests are hidden or ignored. The next step is to define the principal elements of the commercial terms and record them in a key terms sum- mary. It should be compared to the guidance document developed previously to assure consistency with the par- ties' self-defined interests. Because it is short and spare, the key terms sumary reveals the fundamental points in the parties' agreement with a clarity that may be lost in the detail of a completed contract. The final step is to create a contract that fully expresses the agreement documented in the key terms sumary. A 17

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