OVERCOMING THE DILEMMA OF EARLY PRICING: A STUDY AND ANALYSIS OF TARGET PRICING USING IPD APPROACH

摘要

From the earliest of times buyers of construction services have struggled with the best way to establish a fair price for construction work. Starting in the latter half of the 19th century owners increasingly sought fixed single prices, competitively bid, for their construction. This led to the growth of general contracting and the practice remained in force for over 100 years, until the owners once again intervened, tired of change orders, the opaqueness of the process and the constant disputes. They sought out new methods of pricing tied to new methods of project delivery. From the 1970's on experimentations led to various forms of construction management, to design-build and now more recently to radical methods of Integrated Project Delivery (IPD). All of these methods shared a common feature - the earlier involvement of contracting expertise with the purpose of having the builders as partners and advisors during the design phase. This was all very well but it created a pricing dilemma for the owners: how were they to be sure of obtaining a fair market price for their projects when the traditional providers of prices and those with the greatest knowledge of pricing, the general contractors, were now involved at a stage where designs were incomplete and any pricing given would be subject to numerous assumptions, hedged with conditions and often priced without competition. The aim of this research is to provide a brief overview of historical evolution of pricing and contracting methods, to investigate the challenges associated with early pricing in alternative delivery approaches, and to study and analyze if/how IPD addresses the challenge of obtaining and sustaining an early fair price for owners. To accomplish the goals, this research has conducted a literature review on early pricing practices, interviews with various institutional owners, general contractors, program managers, and lean institutes who have had experience with early pricing in alternative delivery methods and IPD approach.