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News » International » Hong Kong tackles construction cost overruns » published 13 Jan 2016

Hong Kong tackles construction cost overruns

Hong Kong’s chief executive has ordered the establishment of a dedicated office to monitor and control the cost of infrastructure projects.

Express Rail Link is one of the projects experiencing cost overruns Above: Express Rail Link is one of the projects experiencing cost overruns

CY Leung has tasked the secretary for development to set up and lead the office to tackle escalating construction costs, which have resulted in several major projects experiencing significant cost overruns.

In his 2016 policy address today, Leung said that there is a need for the government to strengthen cost control. "The Government will soon roll out new measures in relation to public works projects to reduce unnecessary design and contractual requirements under a 'no frills' principle,” he said. “Such measures, including a holistic review of relevant guidelines, will embrace innovative design concepts and approaches without compromising technical and safety standards."

The government will put in place an indicative cost system for public works projects. Except for special circumstances and projects that have entered the design stage, the unit cost of all new government building projects must be lower than the benchmarks.

The works departments plans to enhance the standardisation of project design, promote mechanisation and construction by prefabrication, and adopt the guiding principle of “design for buildability” to reduce costs without undermining safety.

"Procurement and tendering of projects will be refined with the aim of lowering the risk premium included in the tender price and reducing the overall project cost,” said Leung. “The secretary for development will establish and lead a dedicated office to take forward the relevant work."

The government will, in collaboration with the Construction Industry Council, provide construction workers with a clear career ladder, boost skill and professional development, and attract new entrants to the industry. The council forecasts a shortage of up to 15,000 skilled workers in the construction industry for the next few years.

"While we will strive to provide training and attract local workers to join the industry,” said Leung. “There is still a genuine need to import workers to cater for our development needs, on the premise of according priority to local workers in employment and safeguarding their wage levels. The Government will review the effectiveness of the enhancement measures under the Supplementary Labour Scheme to ensure the sustainable development of the construction industry."



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This article was published on 13 Jan 2016 (last updated on 13 Jan 2016).

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