A Comparative Study of the Benefits of Applying Target Cost Contracts between South Australia and Hong Kong

Abstract

This paper aims to identify and analyze the key benefits of adopting Guaranteed MaximumPrice and Target Cost Contracts (GMP/TCC) over and above the traditional lump-sum contractual arrangement through an empirical questionnaire survey conducted in South Australia and compared with the findings in Hong Kong. The Mann-Whitney U Test indicated differences in perception between the two groups of respondents on the majority of the identified benefits. The study has provided an in-depth understanding of the perceived benefits of the GMP/TCC scheme, hence leading to a wider application of those alternative integrated procurement strategies in both regions for reference by the construction community at large.

Guaranteed maximum price (GMP) contracts in practice

“…The following open-ended questions were asked to convey a general idea of the information solicited, while the interviewees were encouraged to (1) What is the implementation mechanism or current practice framework adopted for the GMP methodology? (2) What are the motives behind the decision to implement GMP instead of traditional fixed-price lump-sum contract? (3) What are the major benefits and difficulties in adopting GMP?…”

Identifying Critical Dispute Causes in the Construction Industry: A Cross-Regional Comparative Study between China and the UK

“…In addition, Kendall's concordance analysis was conducted to measure the level of agreement of different respondents in one single group (i.e., from China or the U.K.) on their rankings. If the Kendall's coefficient of concordance (W) carries a predefined significance level of 0.05, a reasonable degree of consensus on the rankings of items is indicated (Chan et al, 2012). If the number of items is greater than 7, the chisquare value should be applied as a near approximation instead (Chan et al, 2012).…”

“…If the Kendall's coefficient of concordance (W) carries a predefined significance level of 0.05, a reasonable degree of consensus on the rankings of items is indicated (Chan et al, 2012). If the number of items is greater than 7, the chisquare value should be applied as a near approximation instead (Chan et al, 2012). If the actual chisquare value equals or is greater than the critical value of chi-square, it indicates that there is a significant degree of agreement on dispute causes within the Chinese and U.K. groups, respectively.…”

“…The Mann-Whitney U test is a non-parametric test used to determine any statistically significant differences of the same variable ratings among two independent groups. The rule is that if p value is less than the pre-defined significance level of 0.05, the null hypothesis which states that there are no significant differences in the ratings of the same item between two groups of respondents will be rejected (Chan et al, 2012). Quartile analysis adopted from Osei-Kyei et al ( 2019) was employed to ascertain the most different and similar dispute causes in terms of importance perceived by the respondents.…”

“…To fill this knowledge gap, China and U.K. were used as cases for empirical study to identify and assess significant dispute causes in construction projects through comparative analyses. Crossnational comparative studies have been widely conducted in the field of construction management (e.g., Chan et al, 2012;Osei-Kyei et al, 2019), which can facilitate achieving deeper understanding by suggesting novel perspectives (Gharawi et al, 2009). Identifying the critical dispute causes and understanding their differences and similarities in cross-national construction industries provides an enhanced and broader view on the dispute causes, which facilitates enhancing dispute management for construction projects in cross-regional contexts.…”