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

TitleDeveloping a fuzzy risk assessment model for guaranteed maximum price and target cost contracts in South Australia
Authors
KeywordsRisk assessment
Fuzzy synthetic evaluation
Guaranteed maximum price contracts
South Australia
Target cost contracts
Issue Date2014
PublisherEmerald Group Publishing Limited. The Journal's web site is located at http://www.emeraldinsight.com/f.htm
Citation
Facilities, 2014, v. 32 n. 11/12, p. 624 - 646 How to Cite?
AbstractPurpose – 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 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. Practical implications – 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. Originality/value – 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.
Persistent Identifierhttp://hdl.handle.net/10722/185759
ISSN
2015 SCImago Journal Rankings: 0.371

 

DC FieldValueLanguage
dc.contributor.authorChan, DWM-
dc.contributor.authorChan, HL-
dc.contributor.authorMa, T-
dc.date.accessioned2013-08-20T11:40:21Z-
dc.date.available2013-08-20T11:40:21Z-
dc.date.issued2014-
dc.identifier.citationFacilities, 2014, v. 32 n. 11/12, p. 624 - 646-
dc.identifier.issn0263-2772-
dc.identifier.urihttp://hdl.handle.net/10722/185759-
dc.description.abstractPurpose – 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 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. Practical implications – 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. Originality/value – 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.-
dc.languageeng-
dc.publisherEmerald Group Publishing Limited. The Journal's web site is located at http://www.emeraldinsight.com/f.htm-
dc.relation.ispartofFacilities-
dc.rightsThis article is © Emerald Group Publishing and permission has been granted for this version to appear here (please insert the web address here). Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.-
dc.subjectRisk assessment-
dc.subjectFuzzy synthetic evaluation-
dc.subjectGuaranteed maximum price contracts-
dc.subjectSouth Australia-
dc.subjectTarget cost contracts-
dc.titleDeveloping a fuzzy risk assessment model for guaranteed maximum price and target cost contracts in South Australia-
dc.typeArticle-
dc.identifier.emailChan, HL: jhlchan@hku.hk-
dc.description.naturelink_to_subscribed_fulltext-
dc.identifier.doi10.1108/F-08-2012-0063-
dc.identifier.hkuros217811-
dc.identifier.volume32-
dc.identifier.issue11/12-
dc.identifier.spage624-
dc.identifier.epage646-
dc.publisher.placeUnited Kingdom-

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