Insurance Backed Alliancing projects under the IPI model

Introduction

Martin Davis member of the New Models of Construction Procurement (NMCP)  Working Group and the Integrated Project Insurance (IPI) mentor describes the  Integrated Project Insurance model (IPI) coupled up with Insurance Backed Alliancing as a framework which encourages and empowers project teams to work together.

According to Davis in 2010, the conservative Coalition was very supportive in implementation of the IPI model.

At the time the Minister, the chief construction adviser Paul Morell a former senior partner of Davis Langdon, working with Martin Davis, Sir Michael Anthony Latham and Sir John Eden started the implementation of the Insurance Backed Alliancing IPI framework. [1]

Since then there was a period of diminished support from U.K. Government, although recent pledge to “Build, Build, Build” announced by Boris Johnson and promise of investment of £5bn towards developing the infrastructure of the U.K. gives hope for improvement. [2]

Procurement frameworks

Figure 1 – Boris Johnson at Advanced II Dudley College site sitting on Dumper truck which was used to clear out the site for the Institute of Transformational Technologies at Dudley College project. [3] 

The IPI is not the only new procurement framework introduced by Constructing Excellence and the Cabinet Office, recent new Models of Construction Procurement include:  

  1. Cost Led Procurement (CLP)
  2. Integrated Project Insurance (IPI)
  3. Two Stage Open Book (2SOB)

All the models support the objectives of the Government Construction Strategy 2016-2020 and industrial strategy Construction 2025.

The authors of a paper titled ‘The definition of alliancing in construction as a Wittgenstein family-resemblance concept’ claim that even though the characteristics of alliancing have been widely discussed since the late 1990s, there is still no consensus on the precise and comprehensive meaning of the alliancing  concept [4] 

A report issued to Cabinet Office in 2019 supports this claim, despite that the IPI, has been nominated as one of the preferred alternative procurement routes in the government’s 2011-15 construction strategy [5], the report by the NMCP Working Group reveals a lack of awareness and interest in the New Models from the majority government Departments.

Generally, they appear to misunderstand what Two Stage Open Book and Cost Led Procurement are, and do not even consider IPI. [6]

Alliancing and Integrated Project Insurance

Managing insurance processes in the construction industry has been discussed for many years. The need to align the insurance policies of customers and project teams within a single insurance policy is not a new concept. The Integrated Project Insurance (IPI), where the client and the project team work together on single insurance, offer an alternative solution to the existing insurance frameworks available for the construction industry with it’s constrained ability to pass on risks along the supply chain. [7]

There are limited resources in academia and industry concerning the IPI model; thus, the author has interviewed the IPI mentor Martin Davis to explore the subject further.

Currently, the IPI procurement method has been used only on three projects

  1. Advance II at Dudley College, successfully concluded in 2018 and a detailed research report and case studies were published.
  2. Derby Silk Mill – Museum of Making, due to be completed in 2021
  3. Institute of Transformational Technologies at Dudley College, details of the projects not published, first case study completed, second case study draft started [1]

The Derby Silk Mill – Museum of Making, project has started as a traditional project which has been converted to a “hybrid” alliance contract at RIBA 3 stage of the project

The hybrid version of the framework was due to late engagement and the insurer’s reluctance related to the new procurement method and due to perceived flood risks.

However, the use of an owner-managed insurance policy[8] allowed to retain the essential “no blame/no claim” and gain/pain-share mechanisms.

Two case studies are available for the Derby Silk Mill – Museum of Making [9] [10]

According to Martin Davis, an imminent update is due which will include the exciting insight of how the Alliancing has handled the COVID-19 crisis, and the issues related to benchmarking and definitions of strategic brief aimed to improve project management process measurement.

What happens next?

The whole idea of IPI is not to concentrate on insurance, but on collaborative work, hence the attention should be directed onto Alliancing

It is a framework where the project risk is insured, not the liability; this is in contrast to conventional policies.

The aim is to create an environment in which the team remains cooperative even when something goes wrong, helping to eliminate the blame culture with the need of proving guilt removed by the application of the insurance method.

In one multi-party contract, the appointing party waive the right to sue any member of the integrated project team – except for deliberate fraud, which Graham De Roy (Construction Consultant) believes is a revolutionary. [11]

The ideas such as opportunity & risk register used at Derby Silk Mill – Museum of Making project managed as a “live” record which focused, not on the recording, but on the action, encourages honesty, builds up trust and collaboration.

This approach helps to overcome conflict avoidance by speaking the truth in service of growth for both the project and the people, i.e. prevent teams being trapped in pointless meetings where participants are afraid to say honestly. [12]

The IPI model is an enabler for fair payments on all stages of the project as opposed to traditional procurement methods where at the early stages Architects often work under clients assumption on this speculative work being unpaid [13]

By using the pain/gain share component incentivizes all to control or reduce the scope, and stimulate the project work without losing sight of the task teams individual interests. Under the Insurance Backed Alliancing framework, the project team strive to build a team and move forward as a team, not as an individual or group of individuals, but as an organization [14] 

The IPI Insurance Backed Alliancing is a promising procurement framework with a lot of potentials; the structure needs Government and Industry support to take off and be used at a broader scale.


[1]        M. Davis and J. Wityk, “Insurance Backed Alliancing – the IPI Model and BIM in practice Interview.” Nov. 12, 2020.

[2]        Prime Minister’s Office, “PM: Build, Build, Build – GOV.UK,” Jun. 30, 2020. (accessed Nov. 17, 2020).

[3]        Dudley College of Technology, “Prime Minister pledges huge programme of government spending in major announcement at Dudley College of Technology.” (accessed Nov. 17, 2020).

[4]        J. F.Y. Yeung, A. P.C. Chan, and W.M. Chan Daniel, “The definition of alliancing in construction as a Wittgensteinfamily-resemblance concept,” International Journal of Project Management , Apr. 2007. (accessed Nov. 12, 2020).

[5]        M. Thompson, “IPI not PII for realistic collaboration | RIBAJ,” Feb. 19, 2019. (accessed Nov. 10, 2020).

[6]        NMCP Working Group, “New Models of Construction Procurement,” Jan. 2019. Accessed: Nov. 12, 2020. [Online].

[7]        K. Vernau, “Integrated Project Insurance – collaboration is the name of the game – The Joint Contracts Tribunal,” 2015. (accessed Nov. 10, 2020).

[8]        J. Houghton, “The Integrated Project Delivery Model: Why, What, and How to Decide if it is Right for Your Project | The Construction Seyt,” 2019. (accessed Nov. 10, 2020).

[9]        D. Museums, “New delivery model: IPD Trial project: Derby Silk Mill – Museum of Making: Case Study 1.” Accessed: Nov. 12, 2020. [Online].

[10]       D. Museums, “New delivery model: IPD Trial project: Derby Silk Mill – Museum of Making: Case Study 2.” Accessed: Nov. 12, 2020. [Online].

[11]       N. Morris, “Integrated project insurance professional feature,” 2019. (accessed Nov. 10, 2020).

[12]       C. Voss and T. Raz, Never Split the Difference: Negotiating as if Your Life Depended on It, 01 ed. Random House Business, 2017.

[13]       M. Milton, “Can collaborative working contracts fix construction?,” Sep. 19, 2019. (accessed Nov. 12, 2020).

[14]       D. D. Gransberg, E. Scheepbouwer, and M. C. Loulakis, Alliance Contracting – Evolving Alternative Project Delivery. Washington, D.C.: Transportation Research Board, 2015.

1 thought on “Insurance Backed Alliancing projects under the IPI model”

  1. It’s great to see such engagement by a specialist electrical contractor with the radical transformation opened up by Insurance Backed Alliancing. The opportunities to win a seat alongside the client on the alliance board and “walk the talk” on live projects will arise as further pilot projects come available, and IPInitiatives, as delivery vehicle for the pilot projects, will ensure these are notified through the Electrical Contractors’ Association. Great initiative, Jarek

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