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Chan, D M, Chan, A P C, Lam, P T I, Lam, E W M and Wong, J M W (2007) Evaluating guaranteed maximum price and target cost contracting strategies in Hong Kong construction industry. Journal of Financial Management of Property and Construction, 12(03), 139–50.

  • Type: Journal Article
  • Keywords: Guaranteed maximum price; Hong Kong; Interview survey; Procurement strategies; Target cost contracting
  • ISBN/ISSN: 1366-4387
  • URL: https://doi.org/10.1108/13664380780001100
  • Abstract:
    Guaranteed maximum price (GMP) and target cost contracting (TCC) with a pain-share/gain-share arrangement have been adopted to integrate the construction delivery process and motivate service providers to seek continuous improvements in project outcomes. However, there is still a lack of research evidence to evaluate the levels of success and lessons learned from these innovative procurement strategies. Based on the analysis of a series of in-depth interviews on the perceptions of various relevant experienced industrial practitioners, this paper aims to explore the key attributes of GMP/TCC including the underlying motives, perceived benefits, potential difficulties, critical success factors, key risk factors involved and optimal project conditions for adopting GMP/TCC. The research findings are useful in assisting key project stakeholders in minimising the detriments brought about by potential difficulties in and maximising the benefits derived from implementing GMP/TCC concepts. The study is also significant in contributing to new knowledge and practical information of GMP/TCC applications and implementation, in both a national and international context.