PolyU IR
 

PolyU Institutional Repository >
Building and Real Estate >
BRE Journal/Magazine Articles >

Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/3995

Title: An empirical survey of the motives and benefits of adopting guaranteed maximum price and target cost contracts in construction
Authors: Chan, Daniel W. M.
Chan, Albert P. C.
Lam, Tsun-ip Patrick
Wong, James M. W.
Subjects: Guaranteed maximum price
Target cost contracting
Motives
Benefits
Hong Kong
Issue Date: Jul-2011
Publisher: Elsevier
Citation: International journal of project management, July 2011, v. 29, no. 5, p. 577-590.
Abstract: In light of increasing project complexity, constraints on programme schedule and limited budget, there exists a strong call for changes in contracting procedures in construction. Both the Guaranteed Maximum Price (GMP) and Target Cost Contracting (TCC) approaches with a gain-share/pain-share arrangement have been advocated to achieve better value for money and more satisfactory project performance. This paper aims to review the prevailing practices of GMP/TCC in general, and explore the motives and benefits of implementing the GMP/TCC scheme in comparison with the traditional fixed-price lump-sum contract in particular. The research study is based on a comprehensive literature review and an industry-wide empirical questionnaire survey for evaluating the relative importance of motives and benefits associated with GMP/TCC in Hong Kong. The survey data collected from 45 valid completed questionnaires were analysed using the mean score ranking technique, Kendall's concordance test, Spearman's rank correlation test and one-way ANOVA test. The perceived benefits were measured and ranked from the perspectives of the client, contractor and consultant for cross-comparison. The survey findings indicated that the three most common motives of clients behind their decision of adopting GMP/TCC include: (1) to generate an incentive for contractor to achieve cost saving; (2) to develop better working relationship within the project team; and (3) to tap in contractor's expertise in design and innovation. The top three perceived benefits of applying GMP/TCC were found to be: (1) early settlement of final project account; (2) improved partners' working relationship under a partnering arrangement; and (3) capability of integrating contractor's expertise in building designs and innovations prior to construction. The research results are particularly essential in assisting key project stakeholders to realise the potential benefits derived from the use of GMP/TCC contracts and in generating more useful insights into alternative integrated contracting strategies for the construction industry, so as to drive for excellence in overall project performance.
Description: DOI: 10.1016/j.ijproman.2010.04.002
Rights: International Journal of Project Management © 2010 Elsevier. The journal web site is located at http://www.sciencedirect.com.
Type: Journal/Magazine Article
URI: http://hdl.handle.net/10397/3995
ISSN: 0263-7863
Appears in Collections:BRE Journal/Magazine Articles

Files in This Item:

File Description SizeFormat
PolyU IR Submission 2011_IJPM_1.pdfPre-published version457.76 kBAdobe PDFView/Open
Locate publisher version via PolyU eLinks



Facebook Facebook del.icio.us del.icio.us LinkedIn LinkedIn


All items in the PolyU Institutional Repository are protected by copyright, with all rights reserved, unless otherwise indicated.
No item in the PolyU IR may be reproduced for commercial or resale purposes.

 

© Pao Yue-kong Library, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Powered by DSpace (Version 1.5.2)  © MIT and HP
Feedback | Privacy Policy Statement | Copyright & Restrictions - Feedback