chapter  7
17 Pages

Risk assessment model for target cost contracts

Scholars have published a great number of academic papers on TCC and GMP which align the objectives of clients and contractors. Nonetheless, there has been limited research focusing on risk identification and assessment of these kinds of projects. In this chapter, the development of a risk assessment model for TCC and GMP arrangements will be described using factor analysis and the fuzzy synthetic evaluation method, based on the previous questionnaire survey (Chan, 2011), in order to arrive at a more objective risk assessment. An Overall Risk Index (ORI) of a project and risk indices of individual principal risk groups (PRGs) can be established using the model. The development of this model helps the project team understand how to achieve a successful TCC and GMP projects. This also provides a platform for evaluating the risk level of projects on the basis of objective proof instead of intuitive evaluations. The results shown in this chapter have been published in a journal article (D.W.M. Chan et al., 2011a).