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Title: Identifying the critical success factors for target cost contracts in the construction industry
Authors: Chan, DWM 
Chan, APC 
Lam, TIP 
Wong, JMW
Issue Date: Jul-2010
Source: Journal of facilities management, 2010, v. 8 no. 3, p. 179-201
Abstract: Purpose – The paper aims to present a succinct review of guaranteed maximum price (GMP) and target cost contracting (TCC) concepts and features in general, and to identify the critical success factors for procuring GMP/TCC contracts from the Hong Kong perspective in particular.
Design/methodology/approach – By means of an empirical questionnaire survey geared towards industrial practitioners with direct hands-on GMP/TCC experience, the opinions of various contracting parties including clients, consultants and contractors were solicited, analysed and compared in relation to GMP/TCC success factors.
Findings – Experienced practitioners shared the unanimous perception that: reasonable share of cost saving and fair risk allocation; partnering spirit from all contracting parties; right selection of project team; well-defined scope of work in client's project brief and early involvement of contractor in design development, are the most essential ingredients for the successful implementation of GMP/TCC scheme.
Research limitations/implications – Although the research study is based in Hong Kong with a limited sample size, the survey findings and hands-on experience of the relevant industrial practitioners may be cross-referenced to other similar investigations in other parts of the world for international comparisons.
Originality/value – The research study has provided some useful insights into assisting key project stakeholders in determining important successful ingredients when launching GMP/TCC scheme. Such an identification of critical success factors would be valuable in formulating effective practical strategies to improve overall project performance, create win-win opportunities for contracting parties and mitigate the occurrence of construction disputes/claims. It also attempts to seek more research evidence to capture the levels of success and lessons learned from previous GMP/TCC construction projects for generating best practice recommendations for future implementation.
Keywords: Guaranteed maximum price
Target cost contracting
Procurement strategies
Critical success factors
Hong Kong
Publisher: Emerald Group Publishing Limited
Journal: Journal of facilities management 
ISSN: 1472-5967
EISSN: 1741-0983
DOI: 10.1108/14725961011058820
Rights: Journal of Facilities Management © 2010 Emerald Group Publishing Limited
Appears in Collections:Journal/Magazine Article

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