Integrated project delivery puts owner, designer and builder under one agreement with a shared profit pool and few rights to claim against each other. It rewards leaders who are open with cost and quick to raise problems, and punishes the defensive habits conventional contracts teach. Hire for those behaviors first, and count credentials second.
A project executive with twenty years of good results has learned certain reflexes. Protect the contingency. Never show the owner the whole estimate. Put it in a letter. Those reflexes built a career, and under most contracts they are simply competence. Place the same person on an integrated project delivery job and each one becomes a small act of sabotage against a team whose profit now depends on nobody behaving that way.
What does integrated project delivery change for the people leading the job?
It changes what earns money. Under a multi-party agreement the builder’s fee, the designer’s fee and often key trade partners’ fees sit in one at-risk pool, paid out according to the final cost of the whole project. Most claims between the parties are waived. Winning an argument no longer pays.
The mechanics are worth stating plainly, because the hiring consequences follow from them. The parties agree a target cost. Their costs are reimbursed on an open book. Profit is held back in the pool. If the project finishes under the target, the saving is shared and the pool grows. If it overruns, the pool pays first. The final account stops being a negotiation, which changes what a builder needs from its commercial director.
The model exists because conventional contracts give each party a reason to keep what it knows to itself. A separate and older problem sits beside that one: a NIST study measured $15.8 billion a year in the cost of project data that did not move cleanly between systems and firms. Integrated agreements address the first problem by removing the commercial reasons for withholding. Repeat owners with long building programs, health systems above all, have been the main sponsors, and Census Bureau construction spending figures show how much health care building those owners commission each year.
How does the shared pool work in an integrated project delivery agreement?
Each party’s profit is placed at risk against the project’s final cost. Savings below the target cost add to the pool and overruns drain it, so every participant gains from another’s efficiency and pays for another’s error. That shared exposure is what makes the contract work.
Take a $200 million hospital expansion. Suppose the builder, the architect and four trade partners together put $12 million of profit into the pool. If the team finishes $6 million under the target cost and the agreement splits savings evenly with the owner, $3 million is added and the pool pays out $15 million. An overrun of $12 million would empty it.
Now consider what the pool does to a decision on site. The mechanical trade partner sees that a rerouted duct would save the electrician two weeks. Under separate subcontracts that is somebody else’s problem, and possibly a change order. Under the pool it is the mechanical contractor’s own money. Whether anyone says so depends on the people in the room. The executive from the opening paragraph would have written a letter reserving rights and waited for a reply. Here the letter costs the pool two weeks of an electrician’s time, a share of which is the executive’s own fee.
That is the real constraint on the model. The cost of a project is moved by hundreds of small choices, most of them made by people who do not think of themselves as making commercial decisions at all. An integrated agreement works when those people can see the money and are trusted to act on it. Leaders decide whether they can.
Which behaviors should the search screen for?
Openness with cost, speed in raising problems, and comfort being accountable for results they do not fully control. Technical ability is assumed at this level. What separates candidates is what they do with bad news, and whether they treat the designer and the trades as colleagues or as counterparties.
| Conventional reflex | Behavior the model needs | Interview probe |
|---|---|---|
| Guard the estimate | Share the full cost model with owner and designer | When did you last show an owner your real contingency? |
| Document to protect | Raise the problem the day it appears | Tell me about bad news you delivered early |
| Push risk down to trades | Bring trade partners into design decisions | Which sub changed the design, and how? |
| Win the change order | Solve it within the target cost | A problem you fixed that you could have billed |
| Manage your own scope | Spend your budget to save another party’s | When did your number go up so the project’s went down? |
Spending your own budget to save another party’s is the behavior to dwell on. Target value design, the working method inside most integrated jobs, asks each discipline to design to a budget and to trade money across boundaries when the whole benefits. Our note on a lean construction leader covers the related methods on the production side.
In the conversation itself, listen for a few things:
- How they describe designers. Contempt for architects is common and disqualifying here.
- Whether they have worked co-located. A shared project office changes how fast problems travel.
- Their view of the pool. Candidates who call it a gimmick will act accordingly.
- Real experience against labels. Many projects called integrated ran on a conventional contract with collaborative meetings. Ask which agreement was signed.
Owners who run these programs often choose the people before the firm. A health system in Nashville or Houston that has delivered several integrated projects will interview the proposed executive and superintendent at length, and may well prefer a second-ranked company that brings a first-ranked team. An owner who chose the people expects to hear first when one of them changes, in the order our note on a leadership change sets out.
When an integrated project delivery hire is premature
- You have no integrated project in sight. Hiring for a delivery model your clients are not buying builds cost. Design-build experience may serve the pipeline better.
- Your own executives will not open the books. One convert under a skeptical president does not last.
- The owner is new to it. An inexperienced owner returns to conventional habits under pressure, and your leader will be exposed.
- You expect the contract to do the work. It sets incentives. People still have to act on them.
Wage data for construction managers will not help much with the offer, since the people with real multi-party experience are few and usually tied to an owner’s program. Approaching them takes care, because their current project team would feel the loss at once. They are also employed and not reading job boards, the structural problem our note on job postings describes. Selah Talent Partners is built for a quiet approach: confidential executive search for mandates that cannot be publicly posted, for builders and owner-side teams across the United States. If an integrated pursuit is ahead of you, the employers page is the place to describe it.
A multi-party agreement is a statement of intent signed by companies. It is kept or broken by a handful of individuals in a shared office, in the first week something goes wrong. Choose them as if the contract did not exist.
Sources and further reading
- NIST study, National Institute of Standards and Technology, cost of inadequate interoperability
- Construction managers, Bureau of Labor Statistics, occupational wage data
- Construction spending, US Census Bureau, value of construction put in place