Integrated Project Delivery
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Accordingly, if the owner is to have any comfort in this area, it will require some tailored form of insurance.
Insurance products specifically designed to respond to the unique structure of an IPD contract are available.
However, these tailored policies tend to be (comparatively) expensive; the exact cost will of course depend
on size and complexity of the project, together with the insurer's assessment of the allocation of risk.
c. Collaborative contracting without a no blame, no disputes clause
Given these ramifications, some owners have adopted collaborative contract models without the no blame,
no disputes clause, or with a no blame, no dispute clause providing for broader exceptions than those
allowed for under the definition of wilful default.
Some will argue that the no blame, no disputes concept is an essential ingredient of the IPD approach.
Certainly, if the owner wants to achieve a high level of innovation from the NOPs (which necessarily involves
risk taking), then the inclusion of a no blame, no disputes clause will assist in achieving this objective.
However, there does not seem to be any reason why some of the benefits of the IPD model, such as the
ability of a carefully structured gainshare/painshare regime to align commercial interests and drive desired
behaviour, cannot be obtained (at least in part) without such a clause.
d. Limits of the no blame, no disputes clause
Even if a no blame, no disputes clause regime is incorporated into the contract structure, it will not have the
effect of preventing any and all liability from being incurred by the participants.
Most obviously, the no blame, no disputes clause only has effect between the participants, and cannot limit
any rights which third parties might have to bring a claim against one or more participants arising out of the
conduct of a participant. As with any contract, an IPD contract will only bind the parties to it. However,
many IPD contracts provide that uninsured liabilities to third parties will be treated as direct costs which the
owner must reimburse.
Even as between the IPD participants, there are some matters for which it is not legally possible to exclude
or limit liability. An example of this is liability which a project participant might incur to another project
participant under section 18 of the Australian Consumer Law, which prohibits corporations from engaging
in misleading or deceptive conduct. Liability under section 18 cannot be excluded or limited by contract. Nor
could one participant enforce a promise by another participant to waive any rights to commence proceedings
arising out of a contravention of section 18.
5.4 Issue resolution and the requirement for unanimity
As mentioned above, a unique feature of the full IPD model is the establishment of joint decision making
bodies, typically called a project board or a project leadership team, comprising representatives of the owner
and each NOP, and the requirement that all decisions be made by these bodies by unanimous agreement.
The project board is analogous to a board of directors and fulfils a high-level management and decision making
function. Important decisions concerning the IPD contract, such as whether adjustments should be made to the
remuneration regime following a major change to the scope of the works, are referred to the project board for
resolution. The project board is also required to consider and resolve any differences of opinion which cannot
be resolved within the integrated project team.
Whilst the establishment of such a body is not unique to IPD, the requirement for all decisions of the project
board to be made by unanimous agreement is. The requirement for unanimity means that each participant has
a right of veto, and if unanimous agreement cannot be reached, no decision is made. The full IPD model does
not include a deadlock breaking mechanism.
This arrangement is considered by many to be crucial to the success of the IPD approach. They argue that the
need to achieve unanimity to proceed (and the absence of a deadlock breaking mechanism) forces the parties
towards mutually acceptable solutions. The requirement for unanimity coupled with the no blame, no disputes
clause takes away the options of “I’ll do it your way, but I’ll claim it” or, “You’ll do it my way, and if you don’t
like it, claim it”.