A care home project in Worcestershire that could have been the first UK construction project to use an innovative approach to insurance and liability is no longer trialling the method.
Integrated project insurance (IPI) is one of the three new procurement methods proposed under the 2011 Government Construction Strategy. A £7.6m trial project at RAF Lympstone for the MOD’s Defence Infrastructure Organisation is still progressing.
But midlands contractor Stepnell had championed the IPI approach on a care home scheme for one of its repeat clients, working with the same IPI specialists who are advising on RAF Lympstone.
Stepnell’s managing director Mark Wakeford had hoped to achieve sign up for the IPI approach in July or August, but a spokesman told CM that the project is now going ahead on a conventional basis, as “they cannot steer it through the client’s internal structures fast enough”.
IPI’s risk-pooling method involves the main contractor, client, lead design consultants and key subcontractors all collaborating on an agreed design and open-book costings.
The construction team then provides the client with a “fitness for purpose” warranty underwritten by an insurer, which is advised by technical and financial advisers.
"Unfortunately, the client wasn’t ready to work in the way that you need for a fully integrated approach – you have to agree what the business need is and the investment target, and commit to working out the solutions in accordance with that. It’s a disciplined way of cutting costs."
Martin Davis, Integrated Project Initiatives
The idea is that IPI reduces costs as it removes double-working and overdesign, for instance in the M&E and structural design, as designers and contractors are no longer fixated on the risk of claims on their professional indemnity policies or collateral warranties.
Don Ward, chief executive of Constructing Excellence, which has a monitoring role on the GCS procurement trials, was disappointed at the news.
“I was impressed Stepnell had got that far, private sector developers don’t tend to be innovators, so in some ways I’m not surprised they U-turned on it,” said Ward.
“It vindicates the strategy of getting a project in the public sector to pilot it, we need to get the DIO project up and running and objectively monitored as soon as possible, then [private sector] developers can take an informed view based on the evidence.”
Both the Stepnell and RAF Lympstone projects involve specialist consultant Integrated Project Initiatives, set up by former Emcor director Martin Davis, a long-term champion of IPI.
Davis told CM: “Unfortunately, the client wasn’t ready to work in the way that you need for a fully integrated approach – you have to agree what the business need is and the investment target, and commit to working out the solutions in accordance with that. It’s a disciplined way of cutting costs.”
Davis said his firm was discussing various other potential projects with clients, but was currently concentrating on the RAF Lympstone project. “Hopefully we’ll soon go to market to select the team. Once selected, it will sign an alliance contract to deliver the best project within the investment target, then the integrated insurance policy will be incepted,” he said.
