Editorial | Cut red tape to reduce costs of construction in Hong Kong

Hong Kong is a showcase of civil engineering marvels built with exceptional efficiency. However, such work is increasingly beset with spiralling costs and occasional delays.

Officials must strive to keep construction costs at a reasonable level or the city’s competitiveness will be undermined.

A year-long government review of contributing factors to the problem identified ageing workers, low productivity, risk premiums because of the procurement approach, high design standards and lengthy approval processes, according to a Development Bureau paper submitted to the Legislative Council.

It has long been accepted that Hong Kong construction costs are the highest in Asia. For instance, the current average daily wage of a local construction worker, about HK$1,270 (US$160) as of March this year, is about 70 per cent more than that earned by counterparts in Singapore, and three times higher than labour in Shanghai, Guangzhou and Shenzhen. But officials said the wages were reasonable considering the city’s high cost of living.

The problem of ageing workers is also said to have a direct bearing on overall productivity, resulting in longer construction periods. For example, the number of working hours required in Hong Kong is 270,000 man-days per HK$1 billion, which compares with 195,000 in London and 245,000 in Singapore on similar projects.

The government previously came under fire after construction costs on a highway to ease traffic congestion in Sha Tin surged from an estimated HK$1.1 billion in 2006 to HK$7.16 billion earlier this year.