Evaluating guaranteed maximum price and target cost contracting strategies in Hong Kong construction industryDaniel M Chan; Albert P C Chan; Patrick T I Lam; Edward W M Lam; James M W Wong
2007 Journal of Financial Management of Property and Construction
doi: 10.1108/13664380780001100
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.
The learning climate of an organisation and practitioner competenceDavid J Lowe; Martin Skitmore
2007 Journal of Financial Management of Property and Construction
doi: 10.1108/13664380780001101
The focus of this paper is on the influence of the learning climate in organisations on practitioner competence. Practitioners in the context of the paper are Chartered Quantity Surveyors, while competency is measured in terms of the accuracy of construction contract price forecasts. The results indicate that: The learning climate within quantity surveying practices is perceived to be supportive in terms of human support and to a lesser extent working practices, but less supportive in terms of staff development systems (specifically, the use of appraisal systems and the provision of resources and development facilities). The degree of accuracy of the subjects’ forecasts was found to improve as their perception of the overall learning climate, working practices, staff development systems and specifically items relating to the opportunity to introduce new skills, discussion of prob‐lems, working practices, provision of resources and the identification of needs increased. It is recommended that surveying organisations assess their ability to provide an ef‐fective learning environment and to address any deficiencies, especially in the provision of staff development systems, to improve individual forecasting performance. Further, they should consider introducing effective feedback mechanisms that require both the individual to critically reflect on their own performance and the organisation to provide effective constructive feedback on an individual’s performance.
Risk management practices of contractors: A case study of power station projects in EgyptAMR A G Hassanein; Halaa M F Afify
2007 Journal of Financial Management of Property and Construction
doi: 10.1108/13664380780001102
This research aimed at identifying the most significant risks relevant to construction contracts of two power station projects in Egypt. These were large scale, fast‐track projects where a multi‐package contracting plan was utilized. Further, the study investigated how risks were perceived and managed by a large sample of Egyptian and international contractors who participated in the execution of these two major projects. A checklist of risk categories was developed to aid contractors in their risk identification effort. The compilation of this checklist identified the following risk categories: 1) owner’s obligations; 2) interface with other contractors; 3) liability risks; 4) financial risks; 5) risks related to changes; 6) technical risks and 7) consortium risks. Research results identified a marked lack of consistency in the contractors’ risk identification effort. Contractors possessing past experience in Egypt were far better able to identify the relevant risks. On the other hand, local Egyptian contractors with vast experience in Egypt but limited project management experience were shown to lack the necessary expertise to properly identify risks and to take the appropriate exceptions. Furthermore, the results revealed that bidders do not include in their proposals their “true” lists of exceptions which represent genuine risks to them.