A comparative study of the benefits of applying target cost contracts between South Australia and Hong Kong

This paper aims to identify and analyze the key benefits of adopting Guaranteed Maximum Price and Target Cost Contracting (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 main reason for such a comparison is that both Hong Kong and Australia share similar practices in the construction industry in terms of tender documentation and project delivery. The Mann-Whitney U Test indicated differences in perception between the two groups of respondents on the majority of the identified benefits. The differences may be attributed to the different pace of development, the application of the GMP/TCC form of procurement, and the implementation of the partnering approach between Australia and Hong Kong. The paper discusses the application of target cost contracts in construction, defines TCC and GMP, and identifies the pricing structures of GMP and TCC.
member content locked

Become a PMI member to gain access

or Join

Advertisement

Advertisement

Related Content

  • PM Network

    Reformat and reboot member content open

    By Hendershot, Steve The annual cost of failed U.S. government IT projects is estimated to be as high as US$20 billion. Why haven't well-funded government IT projects experienced success? Find out what measures are…

  • EVM--a disciplined approach to project management member content open

    By Terrell, Michael S. | Singleton, Cindy J. Earned value management (EVM) is a system of project controls based on a structured approach to planning, cost control, and schedule performance measurement. EVM is not the objective of project…

  • Earned value management member content open

    By Heinlein, J. W. | Craig, Christopher | Perotti, John | Pearson, Megan | Wooten, Teressa | Balderson, Lucas Growing pressure on federal budgets creates the strategic imperative to increase the transparency of the performance of agencies' mission-critical investments, as well as heighten their realized…

  • How to make earned value work on your project member content open

    By Lukas, Joseph A. Earned value analysis (EVA) appears to be a compelling technique to use on projects to better understand and manage performance. Companies embracing earned value prepare procedures and may provide…

  • Right on time, right on money--personal experience member content open

    By Klein, Tom One of the most effective ways to learn about the challenges and dynamics involved in managing projects is to study cases of implementing actual projects. This paper examines the author's experience…

Advertisement