Clive Lawrence MBA, SCMA, CCCA, CCME, PMP
Jerry Crawford PMP, PQS, GSC
Integrated Project Delivery - an overview of its purpose and promises 1. Background: Project delivery in the North American construction industry has been facing a series of challenges and opportunities over time. Some of the challenges that the industry faces include: • Declining Labour Productivity: Labour productivity index as reported by Statistics Canada (Anon., 2016) shows that productivity in the construction industry rises at a slower rate than the national rate. Between 2010 and 2014, labour productivity for the Construction sector increased 0.8% per year on average. In comparison, labour productivity for the wider Canadian Economy increased 1.2% per year. CLICK HERE to return to Table of Contents
• Narrow Margins: The typical margin of a construction company averages around 5%, therefore construction companies have very little room for error and must negotiate terms and conditions to protect, if not to increase, this margin through change orders. • Low Collaboration and Conflicts between the Stakeholders: Traditional project delivery strategies such as Design-Bid-Build have a reputation of strictly allocating scope and risks among the owner, the engineer and the contractor. The traditional methods also rely extensively on competitive bidding, which pushes down margins and hard-codes the contractual allocation of scope and risks.
• A highly diversified industry with many players: There were 138,795 employers in the Canadian construction industry up to November 2014 according to Statistics Canada. These companies have vastly different capacities, capabilities and geographic focus. • Rising Capital Costs: Many projects experience rising costs which negatively impact the initial cash flow projections that justified the project in the first place. Some of the factors which account for this include: unrealistic expectations with respect to cost, schedule, approval time and productivity; inaccurate quantities, low attention to access and
Spring 2017 | www.ciqs.org | CONSTRUCTION ECONOMIST | 19
