Online from: 2002
Subject Area: Built Environment
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|Title:||Identifying the critical success factors for target cost contracts in the construction industry|
|Author(s):||Daniel W.M. Chan, (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China), Albert P.C. Chan, (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China), Patrick T.I. Lam, (Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China), James M.W. Wong, (Department of Civil Engineering, The University of Hong Kong, Hong Kong, China)|
|Citation:||Daniel W.M. Chan, Albert P.C. Chan, Patrick T.I. Lam, James M.W. Wong, (2010) "Identifying the critical success factors for target cost contracts in the construction industry", Journal of Facilities Management, Vol. 8 Iss: 3, pp.179 - 201|
|Keywords:||Contracts, Critical success factors, Hong Kong, Prices, Procurement, Target costs|
|Article type:||Research paper|
|DOI:||10.1108/14725961011058820 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors wish to extend their sincere thanks to all of those industrial practitioners who have kindly responded and contributed their valuable opinions and necessary project information in completing the empirical survey questionnaires adopted in this research study. The authors would also like to acknowledge with gratitude the financial support from The Hong Kong Polytechnic University to this research endeavour (HK PolyU Faculty Internal Competitive Research Grants Allocation 2004/2005 with Project Account Code: BRE-A-PG36). The work described in this paper was further supported by a grant from the Research Grants Council (RGC) of the Hong Kong Special Administrative Region, China (RGC Project No. PolyU 5107/07E). This paper forms part of a RGC funded research project entitled “Evaluating the key risk factors and risk sharing mechanisms for target cost contracting (TCC) schemes in construction” with several objectives sharing common background of study and research methodology. Moreover, the constructive comments and valuable suggestions from both the editor and the anonymous reviewers have improved the overall quality of this paper suitable for publication.|
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.
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