Empirical study of the risks and difficulties in implementing guaranteed maximum price and target cost contracts in construction

Over the past few decades, both the guaranteed maximum price (GMP) and target cost contracting (TCC) arrangements have been regarded as alternative integrated procurement strategies for clients to mitigate risks, minimize claims, integrate the diverse interests of a complex construction project, and offer incentives to provide value-added services. However, the adoption of GMP/TCC contracts may also generate significant risks and difficulties that merit considerable attention. This paper aims to provide a concise review of the potential pitfalls of the GMP/TCC scheme in general and identifies the key risk factors and potential difficulties associated with GMP/TCC in comparison with other procurement strategies in construction in particular via an empirical survey of clients, contractors, and consultants in Hong Kong. The survey data gleaned from 45 valid replies were analyzed using the mean score ranking technique, Kendall’s concordance test, and Spearman’s rank correlation test. The survey results indicated that “involvement of inexperienced or claim-conscious contractors in a project procured by a GMP/TCC contract” was considered to be the most significant risk factor; while “design development must keep pace with main contractor’s program for tendering the domestic subcontractors’ works packages” as the major difficulty in implementing GMP/TCC projects. The research findings derived from this study are particularly essential in assisting the contracting parties to mitigate the detriments brought about by potential risks or difficulties when embarking on GMP/TCC contracts. It has also generated valuable insights into developing effective recommendations for alleviating the barriers to GMP/TCC success for future construction projects.postprin

An empirical survey of the motives and benefits of adopting guaranteed maximum price and target cost contracts in construction

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.postprin

Achieving partnering success through an incentive agreement : lessons learned from an underground railway extension project in Hong Kong

Author name used in this publication: Linda C. N. FanAuthor name used in this publication: John F. Y. Yeung2008-2009 > Academic research: refereed > Publication in refereed journalAccepted ManuscriptPublishe

Cross-sectional analysis of critical risk factors for PPP water projects in China

© 2014 American Society of Civil Engineers. During the past decades in China, the traditional state monopoly has experienced difficulties in meeting the huge demand for new infrastructure and improvement in service levels, engendering the growth of different forms and degrees of private sector involvement. Since the 1990s, China has started experimenting with the public-private partnership (PPP) delivery method in the water supply sector. However, many problems stemming from unsuccessful risk management have been encountered in PPP applications that have eventually led to project failure. This paper aims to identify and evaluate typical risks associated with PPP projects in the Chinese water supply sector. A literature review, a Delphi survey, and face-to-face interviews were used to achieve these objectives. Finally, a register of 16 critical risk factors (CRFs) of water PPP projects in China was established. The findings revealed that completion risk, inflation, and price change risk have a higher impact on Chinese water PPP projects, whereas government corruption, an imperfect law and supervision system, and a change in market demand have a lower impact on the water supply sector. The findings can help project stakeholders to improve the efficiency of privatization in public utility service and provide private investors with a better understanding while they participate in the enormous Chinese water market through the PPP mode

Tracking of safety hazards and real-time-prediction model of safety risks on construction sites

2010-2011 > Academic research: refereed > Publication in refereed journalVersion of RecordPublishe

Final report of the Construction Industry Institute, Hong Kong research project on reinventing the Hong Kong construction industry for its sustainable development

Author name used in this publication: Andrew N. BaldwinAuthor name used in this publication: Y. H. ChiangAuthor name used in this publication: Joyce W. S. CheungAuthor name used in this publication: Joanne W. S. NgConstruction Industry Institute-Hong Kong Report, no. 132008-2009 > Academic research: not refereed > Research book or monograph (author)Other Versio

Ethical Considerations in Crowdfunding

publishedVersio

An experimental contingent valuation of users’ attitudes towards a Crowd Management System

201911 bcrcNot applicablePublished36 month

Cost-benefit analysis on smart meter projects : lessons from case studies

202008 bcrcOther Versionnul