An Analysis of Potential Misalignments of Commercial Incentives in Integrated Project Delivery and Target Value Design

Doanh Do1, Glenn Ballard2 & Iris D. Tommelein3

1M.S. Graduate, Civil and Environmental Engineering. 407 McLaughlin Hall, Univ. of California, Berkeley, CA 94720-1712, USA.doanhqdo@gmail.com
2Research Director of the Project Production Systems Laboratory at the Univ. of California, Berkeley.ballard@ce.berkeley.edu
3Research Director of the Project Production Systems Laboratory at the Univ. of California, Berkeley.ballard@ce.berkeley.edu

Abstract

The misalignment of commercial incentives of a project delivery system can lead to client dissatisfaction, litigation, cost overruns, and adversarial relationships amongst project participants. Started in 2005, the goal of Integrated Project Delivery (IPD) is to better align the commercial incentives of project participants in the AEC industry. Started in 2004, the goal of Target Value Design (TVD) is to steer the design and construction of the project to maximize customer value within project constraints. Recently, IPD and TVD have become more widely used in the United States’ AEC industry. In this paper, we ask the following question: What are the misalignments of commercial incentives that can occur with IPD and TVD? We identified misalignments on 6 IPD/TVD projects. Additionally, we used a creative brainstorming exercise to propose possible misalignments, which were not reported in the case studies. For AEC practitioners and owners, understanding the potential misalignments may help them avoid these problems on their projects.

Keywords

Target value design, integrated project delivery, relational contract, incentives

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Reference

Do, D. , Ballard, G. & Tommelein, I.D. 2015, 'An Analysis of Potential Misalignments of Commercial Incentives in Integrated Project Delivery and Target Value Design' In:, Seppänen, O., González, V.A. & Arroyo, P., 23rd Annual Conference of the International Group for Lean Construction. Perth, Australia, 29-31 Jul 2015. pp 277-286

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