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, DWM 
Chan, APC 
Lam, TIP 
Wong, JMW
Keywords: Guaranteed maximum price
Target cost contracting
Motives
Benefits
Hong Kong
Issue Date: Jul-2011
Publisher: Elsevier
Source: International journal of project management, July 2011, v. 29, no. 5, p. 577-590 How to cite?
Journal: International journal of project management 
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.
URI: http://hdl.handle.net/10397/3995
ISSN: 0263-7863
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.
Appears in Collections:Journal/Magazine Article

Files in This Item:
File Description SizeFormat 
PolyU IR Submission 2011_IJPM_1.pdfPre-published version457.76 kBAdobe PDFView/Open
Access
View full-text via PolyU eLinks SFX Query
Show full item record

SCOPUSTM   
Citations

16
Last Week
0
Last month
0
Citations as of Jun 4, 2016

WEB OF SCIENCETM
Citations

10
Last Week
0
Last month
1
Citations as of Nov 28, 2016

Page view(s)

486
Last Week
0
Last month
Checked on Dec 4, 2016

Download(s)

595
Checked on Dec 4, 2016

Google ScholarTM

Check

Altmetric



Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.