procurement risk design
International Journal of Project Management 29 (2011) 751 – 763 www.elsevier.com/locate/ijproman Risk ranking and analysis in target cost contracts: Empirical evidence from the construction industry
Daniel W.M. Chan a , Albert P.C. Chan a , Patrick T.I. Lam a ,
John F.Y. Yeung b , Joseph H.L. Chan a,⁎ a Department of Building and Real Estate, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China b College of International Education, School of Continuing Education, Hong Kong Baptist University, Hong Kong, China
Received 29 December 2009; received in revised form 26 July 2010; accepted 17 August 2010
Abstract
The construction industry is often characterized by the traditional adversarial working relationships between contracting parties. There has been a strong call for applying target cost contracts to align the interest of owners and contractors together. By doing so, it aims to achieve a win–win situation under a partnering arrangement within the construction industry. Even though a multitude of research studies have been undertaken on target cost contracts (TCC) or guaranteed maximum price (GMP) contracts, not many of them have focused on the risk management and analysis of these procurement strategies. This paper aims to identify, rank and compare the key risk factors encountered with these forms of procurement based on an empirical questionnaire survey geared towards the clients, contractors and consultants in Hong Kong. Despite the limited number of completed TCC and GMP (TCC/GMP) construction projects in Hong Kong, the chosen sample was perceived to be truly representative of the survey population. A four-level data analysis framework was applied in this paper, including descriptive statistics, Kendall 's concordance test, Spearman 's rank correlation test and Mann–Whitney U test. The research findings showed that the client group, contractor group and consultant group are in general agreement on the impact of
Daniel W.M. Chan a , Albert P.C. Chan a , Patrick T.I. Lam a ,
John F.Y. Yeung b , Joseph H.L. Chan a,⁎ a Department of Building and Real Estate, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, China b College of International Education, School of Continuing Education, Hong Kong Baptist University, Hong Kong, China
Received 29 December 2009; received in revised form 26 July 2010; accepted 17 August 2010
Abstract
The construction industry is often characterized by the traditional adversarial working relationships between contracting parties. There has been a strong call for applying target cost contracts to align the interest of owners and contractors together. By doing so, it aims to achieve a win–win situation under a partnering arrangement within the construction industry. Even though a multitude of research studies have been undertaken on target cost contracts (TCC) or guaranteed maximum price (GMP) contracts, not many of them have focused on the risk management and analysis of these procurement strategies. This paper aims to identify, rank and compare the key risk factors encountered with these forms of procurement based on an empirical questionnaire survey geared towards the clients, contractors and consultants in Hong Kong. Despite the limited number of completed TCC and GMP (TCC/GMP) construction projects in Hong Kong, the chosen sample was perceived to be truly representative of the survey population. A four-level data analysis framework was applied in this paper, including descriptive statistics, Kendall 's concordance test, Spearman 's rank correlation test and Mann–Whitney U test. The research findings showed that the client group, contractor group and consultant group are in general agreement on the impact of
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