Multiparty Contracts for Integrated Project Alliance (IPA)

The IPA model promotes a partnership approach where all decisions are made by consensus.

by Robert Theissen

Multiparty Contracts for Integrated Project Alliance (IPA) aim to optimize the collaboration of all construction participants to complete complex construction projects on time and cost effectively. They are based on partnership, trust, and transparency. The IPA model promotes a partnership approach where all decisions are made by consensus. Transparency is key: all relevant information is openly exchanged to enable well informed decision making.

The organizational structure includes several levels: The Strategic Management Team (SMT) is responsible for strategic decisions and adherence to IPA principles. The Project Management Team (PMT) coordinates daily project work and implements strategic decisions. Operational Project Teams (OPT) are responsible for the actual execution of construction work. The Project Council serves as an escalation instance for unresolved conflicts.

The project is divided into four phases: During the setup phase, the project is prepared, the tender is conducted, and the project organization is established. In the project definition phase, the reference construction scope and reference price are created, along with detailed planning. The construction phase involves the execution of construction work according to the agreed schedule and cost plan. In the warranty phase, the participants are responsible for rectifying defects after the completion of construction work.

The compensation system is designed to motivate participants to work efficiently and meet deadlines, consisting of three levels: First, actual costs are reimbursed based on a transparent open book practice. Second, general business costs and base profit are provided as a lump sum. Finally, a bonus-/malus system offers performance based compensation tied to adherence to cost and time targets.

The client retains fundamental rights, such as the right to make final decisions on essential matters and the right to terminate the contract freely. He can also instruct changes in performance which are generally unproblematic as they are compensated as actual costs. Only in the case of changes to functional performance goals or significant cost changes the reference price must be adjusted.

The fundamental principle of no shame, no blame promotes shared responsibility for project success and prevents mutual claims, although the responsible party is fully liable in cases of gross negligence or intent. Disputes should be resolved cooperatively, and if this is not possible within the project, an adjudication procedure can be conducted.

The multiparty contract (IPA) promotes close cooperation and transparent accounting to complete construction projects efficiently and successfully. Trust, transparency, and shared responsibility are the keys to success.

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published: Abfallwirtschaft und Energie, Band 2, 1|2025
Keywords: Logistics, Resource management, Germany