Joseph H.L. Chan

Preferred risk allocation in target cost contracts in construction

Purpose – The purpose of this paper is to identify the party most preferred to take the risks associated with the target cost contracts and guaranteed maximum price contracts (TCC/GMP) in the Hong Kong context.Design/methodology/approach – An empirical questionnaire survey was conducted with the relevant industrial practitioners to solicit their preferences of risk allocation in TCC/GMP construction projects in Hong Kong.Findings – The survey findings indicated that risks on tender documentation and project design are better borne by clients, while construction related risks are perceived to be taken by contractors. The research findings are consistent with other similar studies on risk allocation in construction projects in general.Practical implications – This paper has developed a preferred risk allocation scheme for the delivery of future TCC/GMP projects, taking Hong Kong as an example. It can serve as a useful guide for decision makers to determine an optimal risk allocation at the planning stage of...

Developing a fuzzy risk assessment model for guaranteed maximum price and target cost contracts in construction

Purpose – 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.Design/methodology/approach – 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.Findings – 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 r...

Risk mitigation strategies for guaranteed maximum price and target cost contracts in construction : a factor analysis approach

Purpose – 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.Design/methodology/approach – 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.Findings – 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...

BluePoint: a bluetooth-based architecture for location-positioning services

Mobile computing has induced a class of killer applications recently by extending the paradigm of parallel and distributed computing across a mobile environment. A very important class of applications involves the location-awareness of a mobile user. Two major issues must be addressed to deliver appropriate services to mobile users. One is the availability of a good location-positioning system and the second is an infrastructure that enables the positions to be tracked for the perusal of user applications. In this paper, we propose the BluePoint architecture that allows mobile user locations to be managed effectively and transparently. This is realized through a middleware for the application developers, shielding the applications from the distribution and heterogeneity of the underlying communication networks and the locating infrastructures. The middleware offers a set of location-based support functions and high-level APIs to the application programmers. Other useful components are built around the architecture. We built a prototype of BluePoint, with some sample applications set in the context of a hospital environment. In this paper, we will focus on the middleware-based architecture of BluePoint, providing services which are integrated seamlessly to the user applications. Services provided in the middleware include Location Information Management, Location Information Retrieval, Location Event Notification and Access Control on Mobile Units.

Developing a fuzzy risk assessment model for guaranteed maximum price and target cost contracts in South Australia

Purpose – 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. Design/methodology/approach – 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. Findings – 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 de...

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

This article aims to identify and analyze the key benefits of adopting Guaranteed Maximum Price 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.

Pilot Case Study of New Engineering Contracts (NECs) in Hong Kong—Joy or Tears?

The New Engineering Contract (NEC) is regarded as a series of standard contracts which promotes the execution of good project management principles and practices under a spirit of mutual trust and co-operation. This paper aims to illustrate the background knowledge and project performance of the first trial construction project procured with the New Engineering Contract Version 3—Engineering and Construction Contract (NEC3 ECC) in Hong Kong through a case study investigation. Various key performance indicators of the project were determined via documentary analysis and a series of in-depth interviews with the senior representatives of the key project stakeholders. Useful insights can be generated according to the hands-on experience derived from this trial project to the potential users of NEC3 ECC in the construction industry from other countries, in particular those where NEC3 ECC has not yet been adopted. The case study findings would benefit both the construction academics and industrial practitioners in elucidating the project performance of a real-life case study of applying NEC3 ECC in the East, providing more empirical evidence in the growing body of knowledge and developing a strong basis for future research such as an international comparison of project performance of NEC3 ECC construction projects between the East and the West.