Identification of the Critical Success Factors for Maintenance Contracts with Target Cost Contracting

Abstract

Contract and procurement type as well as their key success factors influence the success of the construction projects. Target cost contracting and maintenance contracts are widely used in the construction industry. This paper aims at identifying the critical success factors for maintenance contracts, in particular those adopted a target cost approach. Two online questionnaire surveys have been applied to a sample consisting of industrial practitioners who had experience in the area of the study. The first survey aimed to establish new critical success factors that were not identified in the literature. The second survey asked the targeted industrial practitioners to rank the identified factors by their level of criticality. The experienced practitioners shared the opinion that the following factors were the most critical to the success of a maintenance contract adopting a target cost approach: correct / accurate (rates/norms) and the ability to review these during the length of the contract; good robust system in place for the collection of information such as labour and materials; high accuracy in relation to cost forecasting; understanding the amount of administration work that is required within a maintenance contract; incentive clause within the contract, so that the contractor has an incentive to reduce cost, while being awarded for increasing profit margin.