Please use this identifier to cite or link to this item:
Title: Risk mitigation strategies for guaranteed maximum price and target cost contracts in construction : a factor analysis approach
Authors: Chan, JHL
Chan, DWM 
Chan, APC 
Lam, TIP 
Keywords: Construction industry
Factor analysis
Guaranteed maximum price contracts (GMP)
Hong Kong
Risk mitigation strategies
Target cost contracts (TCC)
Issue Date: Feb-2012
Publisher: Emerald Group Publishing Limited
Source: Journal of facilities management, 2012, v. 10, no. 1, p. 6-25 How to cite?
Journal: Journal of facilities management 
Abstract: Purpose – There is a lack of empirical research on risk mitigation strategies for those construction projects procured by guaranteed maximum price contracts (GMP) and target cost contracts (TCC). The paper aims to identify and analyse the risk mitigation strategies for GMP/TCC construction projects from the Hong Kong perspective.
Design/methodology/approach – A total of 94 industrial practitioners with both sound knowledge and abundant hands-on experience of the GMP/TCC methodology participated in an industry-wide empirical questionnaire survey to indicate their levels of agreement on those 18 risk mitigation strategies identified from reported literature and in-depth interviews which were later analysed by factor analysis.
Findings – The results of factor analysis revealed that the 18 individual risk mitigation strategies can be consolidated into seven underlying grouped factors: relational contracting and mutual trust; clear contract provisions and well-defined scope of works; involvement of contractor in decision making process; right selection of project team; third party review of project design at tender stage; standard contract clauses for GMP/TCC schemes; and fair treatment of contractor.
Research limitations/implications – Although both GMP/TCC contracts have been increasingly popular in the construction market of Hong Kong, not all of these projects have been equally successful and some of them have been exposed to very high risks or uneven allocation of risks. A detailed analysis and an implementation of recommended effective risk mitigation strategies are essential to the success of GMP/TCC schemes.
Originality/value – The research findings of this study are expected to help the decision makers to generate useful insights into risk mitigation strategies when administering GMP/TCC contracts at an early stage of project delivery and lay a solid foundation for further research on GMP/TCC in both local and international contexts.
ISSN: 1472-5967
EISSN: 1741-0983
DOI: 10.1108/14725961211200379
Rights: Journal of Facilities Management © 2012 Emerald Group Publishing Limited
Appears in Collections:Journal/Magazine Article

Files in This Item:
File Description SizeFormat 
PolyU IR Submission 2012_JFM_1.pdfPre-published version190.72 kBAdobe PDFView/Open
View full-text via PolyU eLinks SFX Query
Show full item record
PIRA download icon_1.1View/Download Contents


Last Week
Last month
Citations as of Jul 31, 2018

Page view(s)

Last Week
Last month
Citations as of Aug 14, 2018


Citations as of Aug 14, 2018

Google ScholarTM



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