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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.

This paper aims to investigate the operational mechanism, project performance, motives behind, benefits, difficulties and success factors of adopting the guaranteed maximum price (GMP) scheme based on a real‐life case study of Chater House, an international Grade A private office project in Hong Kong.

The case project was analysed by means of the related project documentation and a series of face‐to‐face interviews with the relevant senior project representatives.

All the interviewed key project stakeholders perceived that the GMP contract helped achieve competitive price, value for money and superior quality of products as well as provided stronger incentives to innovation and cost saving. The case study revealed that the overall success of this GMP project was underpinned by several key attributes.

The paper provides solid groundwork for client bodies and contracting organisations to develop a best practice framework for implementing successful GMP schemes in future construction.

Companies faced with the challenge of undertaking large or small‐scale development projects in the United States, be it in connection with the relocation of their headquarters or the upgrading and renovation of their existing facilities, may lack a true understanding of the many project delivery alternatives available, as well as the pros and cons associated with the various delivery methods from the perspective of quality, cost and schedule controls, risk management, legal liability and other similar criteria. This paper is written in the hope of enabling corporate real estate executives to make an informed decision.

This paper aims to develop a fuzzy risk assessment model for construction projects procured with target cost contracts and guaranteed maximum price contracts (TCC/GMP) using the fuzzy synthetic evaluation method, based on an empirical questionnaire survey with relevant industrial practitioners in South Australia.

A total of 34 major risk factors inherent with TCC/GMP contracts were identified through an extensive literature review and a series of structured interviews. A questionnaire survey was then launched to solicit the opinions of industrial practitioners on risk assessment of such risk factors.

The most important 14 key risk factors after the computation of normalised values were selected for undertaking fuzzy evaluation analysis. Five key risk groups (KRGs) were then generated in descending order of importance as: physical risks, lack of experience of contracting parties throughout TCC/GMP procurement process, design risks, contractual risks and delayed payment on contracts. These survey findings also revealed that physical risks may be the major hurdle to the success of TCC/GMP projects in South Australia.

Although the fuzzy risk assessment model was developed for those new-build construction projects procured by TCC/GMP contracts in this paper, the same research methodology may be applied to other contracts within the wide spectrum of facilities management or building maintenance services under the target cost-based model. Therefore, the contribution from this paper could be extended to the discipline of facilities management as well.

An overall risk index associated with TCC/GMP construction projects and the risk indices of individual KRGs can be generated from the model for reference. An objective and a holistic assessment can be achieved. The model has provided a solid platform to measure, evaluate and reduce the risk levels of TCC/GMP projects based on objective evidence instead of subjective judgements. The research methodology could be replicated in other countries or regions to produce similar models for international comparisons, and the assessment of risk levels for different types of TCC/GMP projects (including new-build or maintenance) worldwide.

Guaranteed maximum price (GMP) contracts are becoming an increasingly popular contract solution; however, many projects experience higher levels of risk and exceed predetermined GMPs, failing to accomplish the main motive behind the concept. Thus, the study identified a risk management process for GMP projects.

The study adopted a quantitative approach consisting of three Delphi rounds. The collected data were analysed using statistical data analysis tools.

The study identified 17 highly significant risk factors in GMP projects and determined their levels of severity. Subsequently, risk allocation amongst the client, contractor and consultant and strategies to handle the most significant risk factors were determined. The study identified poorly defined scope and design changes as the most critical risks in GMP projects. Moreover, strategies such as clearly defining the project scope, preparing precise documentation, early involvement of the contractor and using a partnering approach can be deployed to reduce the risk in GMP projects. Each risk has to be assigned to the party who can best manage it, depending on its nature.

The study addresses the literature gap pertaining to risk management of GMP contracts by identifying its overall process, including the identification of significant risks based on the severity levels; risk allocation amongst the client, contractor and consultant; and identification of risk handling techniques suitable for each significant risk factor. The study contributes to the industry by identifying a systematic risk management process to implement GMP projects successfully within the stipulated time, cost and quality.

There is a lack of empirical research on risk mitigation strategies for those construction projects procured by guaranteed maximum price contracts (GMP) and target cost contracts (TCC). The paper aims to identify and analyse the risk mitigation strategies for GMP/TCC construction projects from the Hong Kong perspective.

A total of 94 industrial practitioners with both sound knowledge and abundant hands‐on experience of the GMP/TCC methodology participated in an industry‐wide empirical questionnaire survey to indicate their levels of agreement on those 18 risk mitigation strategies identified from reported literature and in‐depth interviews which were later analysed by factor analysis.

The results of factor analysis revealed that the 18 individual risk mitigation strategies can be consolidated into seven underlying grouped factors: relational contracting and mutual trust; clear contract provisions and well‐defined scope of works; involvement of contractor in decision making process; right selection of project team; third party review of project design at tender stage; standard contract clauses for GMP/TCC schemes; and fair treatment of contractor.

Although both GMP/TCC contracts have been increasingly popular in the construction market of Hong Kong, not all of these projects have been equally successful and some of them have been exposed to very high risks or uneven allocation of risks. A detailed analysis and an implementation of recommended effective risk mitigation strategies are essential to the success of GMP/TCC schemes.

The research findings of this study are expected to help the decision makers to generate useful insights into risk mitigation strategies when administering GMP/TCC contracts at an early stage of project delivery and lay a solid foundation for further research on GMP/TCC in both local and international contexts.

The purpose of this paper is to develop a fuzzy risk assessment model for construction projects procured with target cost contracts (TCC) and guaranteed maximum price (GMP) contracts using factor analysis (FA) and fuzzy synthetic evaluation method, based on an empirical questionnaire survey with relevant industrial practitioners in Hong Kong.

A total of 34 key risk factors (RFs) inherent with TCC/GMP contracts were identified through an extensive literature review and a series of structured interviews. A questionnaire survey was then launched to solicit the opinions of industrial practitioners on risk assessment of such RFs.

The most important 17 principal RFs after the calculation of normalised values were selected for undertaking FA. Five principal risk groups (PRGs) were then generated in descending order of importance as: design risks, pre‐contract risks, economic and financial risks, lack of experience in TCC/GMP procurement process and post‐contract risks. These survey findings also reveal that design risks may be the major hurdle to the success of TCC/GMP projects in Hong Kong.

An overall risk index (ORI) associated with TCC/GMP construction projects and the risk indices of individual PRGs can be generated from the model for reference. An objective and reliable assessment can be achieved. The model provides a solid platform to measure, evaluate and reduce the risk levels of TCC/GMP projects based on objective evidence instead of subjective judgments. The research methodology could be replicated in other countries or regions to produce similar models for international comparisons and the assessment of risk levels for different types of TCC/GMP projects worldwide.

The paper aims to present a succinct review of guaranteed maximum price (GMP) and target cost contracting (TCC) concepts and features in general, and to identify the critical success factors for procuring GMP/TCC contracts from the Hong Kong perspective in particular.

By means of an empirical questionnaire survey geared towards industrial practitioners with direct hands‐on GMP/TCC experience, the opinions of various contracting parties including clients, consultants and contractors were solicited, analysed and compared in relation to GMP/TCC success factors.

Experienced practitioners shared the unanimous perception that: reasonable share of cost saving and fair risk allocation; partnering spirit from all contracting parties; right selection of project team; well‐defined scope of work in client's project brief and early involvement of contractor in design development, are the most essential ingredients for the successful implementation of GMP/TCC scheme.

Although the research study is based in Hong Kong with a limited sample size, the survey findings and hands‐on experience of the relevant industrial practitioners may be cross‐referenced to other similar investigations in other parts of the world for international comparisons.

The research study has provided some useful insights into assisting key project stakeholders in determining important successful ingredients when launching GMP/TCC scheme. Such an identification of critical success factors would be valuable in formulating effective practical strategies to improve overall project performance, create win‐win opportunities for contracting parties and mitigate the occurrence of construction disputes/claims. It also attempts to seek more research evidence to capture the levels of success and lessons learned from previous GMP/TCC construction projects for generating best practice recommendations for future implementation.

The major aim of study was to determine the chicken meat producer's optimal selling times.

The method used for this purpose was Wald, Benefit and Regret criterions of Game Theory. The transformed Wald, Benefit and Regret linear programming models were solved to find the optimal solution. The data consisted of monthly chicken meat prices received by producers between 2000‐2007, which were obtained from the Poultry Meat Producers and Breeders Association.

The optimal solutions of Wald and Benefit criteria showed that June was the best selling month for chicken meat producers in Turkey. August was found to be the optimal selling month according to the Minimum regret criterion. In light of the Maximum criterion it was concluded that the producers would be at highest regret positions with 98.28 percent in event of selling in November.

The results found in this study could be an indicator for individual chicken producers for a more competitive bargaining power when they make a contract with chicken meat production and marketing firms.

A “pre‐project peer review” (PPPR) is conducted by a construction company or CM‐at‐risk firm to mitigate or reduce project risks prior to committing to a guaranteed maximum price (GMP) or lump sum. The purpose of this paper is to find out the common PPPR practices that may affect the outcome of a GMP/lump sum contract and to provide guidelines to the construction industry for PPPR implementation.

A survey was administered to the top 400 construction companies listed by Engineering New‐Record that also includes the top 100 construction management firms. The closed survey method was used. Respondents were asked to select from multiple answers to each question. The survey preparers worked on the predetermined answers carefully to ensure that respondents are comfortable with their selections. For some questions, respondents were allowed to provide their own answers in addition to the selection.

Even though conducting formal PPPRs is not common practice in the industry, the results confirm the necessity and importance of this process in GMP or lump sum contracts. The other findings provide information about the current practices related to PPPR implementation. For example, more companies prefer conducting PPPRs on an informal basis; the PPPR team in most companies is composed of professionals in the local office with day‐to‐day responsibilities; the cost of PPPRs is included in the budget as part of overhead; and finally, a follow up process to PPPRs is conducted by many companies and is considered to be a critical by even those companies that do not conduct PPPRs.

A literature survey indicates that there are no published studies related to PPPRs. The study reported in this paper fills this gap.