Under most multiparty contracts, the architect and contractor are paid on the basis of cost, plus some or all of their overhead and an agreed-upon profit, a percentage of which is at risk. The owner funds a contingency. If it is preserved, savings are shared with the team. If there is a cost overrun and the contingency is exhausted, team members fund it out of their collective profits up to limits set in the agreement. “We are asking the parties to strip profit out of their costs and tell us what it is,” says Lichtig.
IPD presents more risk for all parties. “If something goes terribly wrong, everyone’s hands are dirty,” says Brian Zeallear, senior associate with veteran IPD architect NBBJ, Seattle.