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Title: Achieving better performance through target cost contracts - The tale of an underground railway station modification project
Authors: Chan, DWM 
Lam, TIP 
Chan, APC 
Wong, JMW
Issue Date: Apr-2010
Source: Facilities, 2010, v. 28, no. 5/6, p. 261-277
Abstract: Purpose – This paper aims to explore the implementation framework, project performance, underlying motives, perceived benefits, potential difficulties, as well as critical success factors, of adopting the target cost contracting (TCC) form of procurement, based on an in-depth real-life case study of a challenging underground railway station modification project in Hong Kong.
Design/methodology/approach – The case project was analysed by means of the related project documentation and face-to-face interviews with the relevant senior representatives from the client organisation.
Findings – The target cost-based procurement strategy generates a plethora of benefits throughout the whole delivery process of the project case, including the provision of cost incentives for the contractor to work efficiently, aligning individual goals of various contracting parties with the overall project objectives, achieving better value for money and more satisfactory overall project performance in terms of time, cost and dispute occurrence.
Practical implications – Although the selected TCC case study project is based in Hong Kong, the research findings and hands-on experience of the relevant industrial practitioners may be cross-referenced to other similar TCC projects in other parts of the world for international comparisons.
Originality/value – The paper provides some useful insights into assisting key project stakeholders in maximising the benefits, whilst minimising the detriments brought about by potential difficulties in launching the TCC scheme. It seeks more research evidence to evaluate the entire project delivery process, and capture the levels of success and lessons learned from previous TCC construction projects for generating best practice recommendations to achieve better construction performance.
Keywords: Target cost contracting
Procurement strategies
Gain-share/pain-share arrangement
Performance measurement
Case study
Hong Kong
Publisher: Emerald Group Publishing Limited
Journal: Facilities 
ISSN: 0263-2772
EISSN: 1758-7131
DOI: 10.1108/02632771011031501
Rights: Facilities © 2010 Emerald Group Publishing Limited.
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