INTEGRATED PROJECT INSURANCE MODEL
THE FIRST IN A NEW GENERATION OF INSURANCE BACKED ALLIANCING
WHAT IS IPI?
Integrated Project Insurance Model (IPI) is a new product to the UK construction industry that unlocks the potential of Integrated Collaborative Working; delivering superior outcomes and creating value for all stakeholders. It has been jointly developed by IPInitiatives and Griffiths & Armour.
Martin Davis, a Cambridge classics graduate, started his career in procurement at the CEGB before joining Drake & Scull 31 years ago, eventually becoming Commercial Director and latterly Vice Chairman.
He was a member of the Joint Contracts Tribunal for the Building Contract, contributed to Sir Michael Latham’s report “Constructing the Team”, and was a Board member of Sir John Egan’s Movement for Innovation.
Since then he has promoted integration and collaboration of the construction industry, leading this initiative for the Strategic Forum for Construction.
He is a director of IPInitiatives and a Visiting Professor at Reading and Heriot-Watt Universities.
IPI provides an Independent Facilitator (IF) who works with the Client from the start to assist in establishing the need, clarify the drivers and determine the necessary skills and capabilities of the Advisory Team
Also provided through the IPI contract are a Technical Independent Risk Assuror (TIRA) and Financial Independent Risk Assurer (FIRA). ( For public sector clients, where external appointments are required and an OJEU process is to be followed it should be made clear that such an appointment is to assist in the selection process only. )
By virtue of the involvement of the IF, TIRA and FIRA, insurers have a close project relationship under the IPI Model. In essence they can have confidence based on independent expert advice that: the members of the IPT and their supply chains are suitable
they are adopting behaviours which will result in the efficient use of resources project solutions and target costs provide adequately for technical and financial risks a realistic and achievable project execution plan is being followed
outturn costs are necessarily incurred and they will receive early alerts to problems and potential overspends, and can participate in decisions over mitigation.
There have been many attempts to get fully Integrated Collaborative Working off the ground. To date this has been held back by the methods, contracts and insurances which have grown up to support traditional models but now act as a brake on change.
IPI is designed to sweep away these millstones, replacing them with an inclusive process to facilitate change and a single policy to replace the myriad of policies up and down the supply chain. The need to protect your business and keep issues to yourself is totally removed,
Integrated Project Insurance is an innovative insurance product which gives the IPI model its name. It collectively insures the client and all the other Alliance partners: consultants, specialists, manufacturers, construction managers and their supply chains. In particular it replaces liability-driven professional indemnity insurance (which requires proof of fault before responding) with financial loss cover where the outturn cost above the target cost plus pain-share is insured.
IPI which assembles the team right from the beginning has the support of Government, being one of three new procurement models identified in the 2011 Construction Strategy. www.gov.uk/government/collections/new-models-of-construction-procurement#integrated-project-insurance
IPI is has no more cost when compared to current insurance premiums and is expected to deliver capital cost savings of up to 20%. Review our case study from our first client running the trial project for Dudley College - Advance II
Listen to what Martin Davis has to say when interviewed by NBS on the link below.
Fragmentation in our industry means we repeat design discussions every time a new supplier or designer joins the team
Phil Heenan from the Cabinet Office who named IPI as one of the tree new procurement models in the Government's Construction Strategy said of IPI:
"As you are aware, each of the New Models of Construction Procurement was developed by industry and government working together to challenge ourselves on how we can best drive collaboration and release the efficiencies that we all believe are there for the taking.
The IPI approach takes things a stage further with its unique insurance arrangement that has its focus on insuring effect, rather than cause. The potential this has for changing ‘normal’ commercial behaviours towards creating a truly integrated team can’t be emphasised enough. It is radically different, but then we’re looking for radical improvements to project delivery”.
WHO SHOULD USE IPI?
IPI works with both public and private sector clients.
Public Sector OJEU compliance;
IPI has already procured a full alliance team
Using a common OJEU process for all that is based 50% on Skills and capabilities and 50% on ability to maximise outturn value at minimum cost and is fully compliant with EU and UK regulations.
IPT members can be brought in at any point as allowed by the Alliance Contract and supply chain are procured under IPI principals
Private and Commercial Clients;
Who doesn’t want….
Better outcomes which better meet the needs at a more affordable level
Both during and after delivery that is
More predictable, more focussed on the purpose and
Faster than usual
Stephen Bamforth is group chief executive of insurance broker Griffiths & Armour who have developed the IPI Model jointly with IPInitiatives.
Review his comments in the CIOB magazine and understand why the IPI Model is needed in the industry and why we both continue to promote it.
A quick reminder of the problem..
Most people believe they have all the cover they need because they and their suppliers have insurances across a range of risks.
But each of these policies cover the risks differently with different levels of excess and exclusion.
The result is you are probably paying for duplicate cover you will never need, or you are under insured but will only find out when you try to make a claim; whereas IPI covers all the risks once!
Equally the pace of change continues to ramp up
Organisations have become more fragmented and specialised to keep pace
Industry is attempting to rectify this through integration and collaborative working
Current methods, contracts and insurances are designed to ‘protect’ against [perceived] business risk
This reinforces the fragmentation
This is most evident in the “chasm” between design and construction