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Compensation Structure and Contingency Allocation in Integrated Project Delivery

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2013 ASEE Annual Conference & Exposition


Atlanta, Georgia

Publication Date

June 23, 2013

Start Date

June 23, 2013

End Date

June 26, 2013



Conference Session

Construction Industry Issues in the Classroom

Tagged Division


Page Count


Page Numbers

23.312.1 - 23.312.12



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Paper Authors


Mei Liu Polytechnic Institute of New York University

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Mei Liu received a B.S. in Civil Engineering in 2001 and a M.S. in Structural Engineering in 2006 from Shandong University, China. From 2001 to 2003, she served on the faculty at Shandong University. Since 2009, she has been a PhD candidate in Construction Management at Polytechnic Institute of NYU. Her research interests include Building Information Modeling (BIM) Implementation in construction, project delivery system and Integrated Project Delivery (IPD).

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F. H. 'Bud' Griffis Polytechnic Institute of New York University


Andrew J Bates Polytechnic Institute of New York University

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Professor Andrew Bates is an experienced senior construction manager with a proven ability to plan, direct and complete construction and engineering projects safely, on time and within budget. His ability to communicate, motivate people and devise successful action plans in both small and large organizations has allowed him to thrive in high stress, fast-paced work environments requiring multi-tasking and immediate decision making skills. Since 2009, Mr. Bates has been passing his knowledge and experience onto students in the Civil Engineering Department at Polytechnic Institute of New York University in subject areas of Strategic Planning, Infrastructure Planning, Construction Planning, Risk Analysis and Risk Management. Prior to joining the faculty at NYU Poly, he was a Professor at the United States Air Force Academy in Colorado Springs where he taught Introduction to Engineering, Air Base Design and Performance, Construction Project Management, Project Management and Contract Administration and Software Applications for Civil Engineers. During his four years there, he was the Deputy for Plans and Programs and the Construction Division Chief for the Department of Civil and Environmental Engineering.
As a retired U.S. Air Force Major, Mr. Bates has compiled an impressive leadership portfolio which includes many achievements. As the Deputy of Plans and Programs at the Air Force Academy he was responsible for long range planning and budget issues for the Academy’s Civil and Environmental Engineering Department. He also worked directly for the Dean of the Faculty as an Owner’s Representative on three $15M phases on the 1.2M SF academic building renovations. During those renovations he submitted change orders on the end-users’ behalf to correct design omissions and errors as well as incorporate changes resulting from changes to end-user mission requirements, he monitored construction schedules and continually communicated progress to all appropriate stakeholders, and designed a construction lay down area with the Army Corps of Engineers and the contractor and coordinated alternative traffic flow with emergency response and facility personnel.

Mr. Bates’ career in the Air Force provided experience with several Department of Defense construction projects where he was able to refine his leadership and construction management skills. He planned, resourced, and executed the design-build of over thirty construction projects involving airfield pavements, base facilities, maintenance and repair ranging from $25K to $180M. He wrote project statements of work, performed periodic design reviews, developed feasibility reports, schedule updates, executed the change-order process, and validated progress payments. He also conducted inspections to ensure zero violations of environmental and OSHA standards. All of these projects required refinements of the skills he acquired while completing his B.S. in Civil Engineering at the USAF Academy and his M.S. in Civil Engineering at the University of Colorado in Boulder

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Compensation Structure and Contingency Allocation in Integrated Project DeliveryAbstract Integrated Project Delivery (IPD) as a delivery method fully capitalizes on an integratedproject team that takes advantage of the knowledge of all team members to maximize projectoutcomes. IPD is currently the highest form of collaboration available because all three coreproject stake holders: owner, architect, and contractor; are aligned through an aligned purpose.Compared with traditional project delivery approaches such as Design-Bid-Build (DBB),Design-Build (DB), or CM at-Risk, IPD is distinguished in that it eliminates the adversarialnature of the business by encouraging transparency, open communication, honesty andcollaboration among all project stakeholders. The team is aligned with the same goals andobjectives. The team also appropriately shares the project risk and reward. If the projectcomplete on time and in budget, it is a success. But if the project overruns the budget, is it afailure? Sharing reward is easy, while it is hard to fairly share a failure. So the compensationstructure and the contingency in IPD are very different from those in traditional delivery methodsand they are expected to encourage motivation, inspiration and creativity of all project stakeholders to achieve project success. This paper investigates the compensation structure in IPD and provides a method todetermine the right level of contingency allocation to reduce the risk of cost overrun. This paperalso proposes a method where contingency could be used as a functional monetary incentivewhen established to produce the desire level of collaboration in IPD. Based on the compensationstructure scenario discovered, a probabilistic contingency calculation model was created byevaluating the random nature of changes and various risk drivers. Case studies are presented todemonstrate the application of the model. The model can be used by the IPD team to forecast theconfidence to prevent the cost overrun and equip the IPD team with confidence to really enjoythe benefits from the collaborative team work.Keywords: Integrated Project Delivery (IPD), Compensation Structure, ContingencyAllocation, Monetary Motivation

Liu, M., & Griffis, F. H. B., & Bates, A. J. (2013, June), Compensation Structure and Contingency Allocation in Integrated Project Delivery Paper presented at 2013 ASEE Annual Conference & Exposition, Atlanta, Georgia. 10.18260/1-2--19326

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