Adapting the alliancing model

Here in the U.S., it appears that no major owner has taken the plunge by sponsoring a “pure” project alliance on the National Museum model. However, a number of owners have committed themselves to collaborative, single-contract project delivery systems, in which interests are aligned and risks are shared to a greater extent than in traditional contractual structures. One such owner is Sutter Health Care in California, which has been using a multiparty “integrated agreement” for its $6.5 billion building program.

The project alliancing method teams contractor and consultant early on, and provides them with financial incentives for meeting project goals.

Drafted by Sacramento attorney Will Lichtig, the Sutter agreement seeks to promote collaboration and project success through such methods as early assembly of a core group consisting of the owner, architect, and contractor and an integrated project team jointly selected by the core group; joint management and decision making by the core group; establishment of contingencies and incentive pools shared by both designers and constructors; and application of “lean construction” principles developed and advocated by the Lean Construction Institute. The LCI is a nonprofit group which aims to apply techniques learned in manufacturing to help streamline construction.

While it doesn’t eliminate disputes and liability through a “mutual release” such as that found in the National Museum alliance agreement, the Sutter agreement provides for the establishment of a multitiered system of risk sharing for both negligent and non-negligent design errors and omissions. A “deductible” for paying such costs is funded by one of the contingencies, above which the designer is responsible up to a prenegotiated cap, without proof of negligence. Above these combined amounts, proof of negligence is required.

Many of the principles of the Sutter agreement have been adapted and refined in an integrated contract developed by the U.S. offices of the architectural firm NBBJ. Tom Owens, a principal and general counsel at NBBJ, describes the Sutter and NBBJ forms as “alliancing lite.” Owens says, “They go about as far in the direction of project alliancing as they reasonably can in the current U.S. marketplace.” He freely offers the NBBJ form to owners, architects, and others at www.nbbj.com/access/ intdeldraftnbbj.doc.

An integrated contractual approach is being used for a project at the University of Wisconsin that will house the public Wisconsin Institute for Discovery and the private Morgridge Institute for Research. Madison, Wisconsin, attorney Kevin Delorey says that the drafting team started out with something similar to the Sutter form, but over the course of contract negotiations “has departed substantially from that form.” As more information becomes available about this innovative project, it may set a new standard for IPD.

Other owners are putting their toes in the IPD water by developing common project conditions that are intended to be incorporated into separate design and construction contracts. This approach is being taken by Yale University and the Hammes Company, a large health-care development consultant. While these documents are intended to coordinate project relationships and reduce disputes, they don’t adopt as many of the IPD principles identified in the AIACC report as the Sutter and NBBJ contract forms do.

Integrated project delivery has captured the attention of both the AIA and Associated General Contractors, which are each planning to issue some kind of IPD contract materials within the coming year. According to AIA Documents Committee chair Tim Twomey, “the task group charged with developing the AIA’s materials is looking carefully at current examples of IPD contracts, like the project alliance, Sutter, and NBBJ documents, to be sure that whatever is issued by the AIA benefits from the experience of current approaches.”

Changing the system

It may ultimately come to pass that integrated project delivery will transform the contentious, litigious, and notoriously inefficient American construction industry, and that it will provide a safe contractual environment for collaboration and the sharing of information through BIM. While some hold out the hope that project alliancing will help to create such a paradise, others are working on more conventional approaches that will move in that direction but can be more easily applied, tested, and learned from in today’s marketplace.