Construction is often cited for challenges in adopting new innovations, slow diffusion of innovations through the industry, and significant barriers to adoption for firms. These boundaries that divide firms by area of expertise, timing of involvement, and alignment with project goals offer little incentive for seeking innovative solutions, or may even penalize firms that pursue innovative solutions. The rise of multiparty contractual agreements have enabled discussion regarding means of increasing collaboration, decreasing the negative effects associated with fragmentation, and ultimately increasing the potential for innovation in the delivery of construction projects. This paper seeks to analyse the barriers associated with innovation in the construction industry and explore the opportunities for improving the adoption and diffusion of innovation through the use of multiparty Integrated Project Delivery (IPD) contracts. We seek to study these opportunities and barriers using the lens of innovative capacity, defined as the abilities and willingness of firms to engage in inter-organizational, collaborative and distributed novel activities. With projects viewed as multi-organizational instances of work, the use of these new contracts offer interesting new potential for collaboration and innovation. Insights from a case study IPD project are provided based upon a lessons learned workshop for a first time IPD owner with their signatory team members, facilitated by an IPD expert.