A CRITICAL ANALYSIS OF RISK MITIGATION MEASURES FOR TARGET COST CONTRACTS IN CONSTRUCTION INDUSTRY

misbe2011 Tracking Number 70

Abstract A scarcity of empirical research has been observed on risk mitigation measures for those construction projects procured by guaranteed maximum price contracts (GMP) and target cost contracts (TCC) worldwide. This paper aims to seek and examine the risk mitigation measures associated with GMP and TCC (GMP/TCC) construction projects through an industry-wide empirical questionnaire survey launched in Hong Kong. Survey respondents were invited to delineate their levels of agreement on 18 individual risk mitigation measures identified from reported literature and in-depth interviews, and the views of client group were compared with those of contractor group. The survey results manifested that both the client group and contractor group are in general consistent in their views towards the risk mitigation measures for GMP/TCC contracts. However, the Mann-Whitney U Test revealed that they held different perceptions on 4 out of the 18 risk mitigation measures, and the findings may stem from different roles involved in the projects. The research findings are useful in providing industrial practitioners with valuable pointers towards effective risk mitigation measures of applying GMP/TCC schemes at an early stage of project delivery. Keywords: Guaranteed maximum price contracts (GMP), Target cost contracts (TCC), Risk mitigation measures, Construction industry, Hong Kong.