Construction Delay and Cost Overruns in Hong Kong Infrastructure Projects: Explanations and Their Remedies

香港基建工程延誤和成本超支﹕解釋及其解決方法

Student thesis: Doctoral Thesis

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Award date25 Feb 2021

Abstract

Infrastructure development is vital to the economic development and prosperity of a country. This can bring substantial economic benefits, i.e., improving the living environment or economic growth of a country. However, rapid growth in infrastructure development would create persistent problems such as project delays or significant cost overruns. Delays and cost overruns occur when projects fail to meet the agreed programme and budgetary target. When construction projects encounter considerable time and cost overruns, they will be failed to realise their intended benefits. Failure to complete on time will lead to an extension of time to complete the works and incur additional costs to the project; whereas cost overruns can lead to delays in project progress and further cost escalations, and reduce the efficiency of available economic resources, result in limiting the growth potential of the economy.

This is a global phenomenon, and the construction industry in Hong Kong is no exception to it. Many recent large scale infrastructure projects incurred major delays and cost overruns in Hong Kong, and the extent of the impact is usually significant. These projects are expecting delays of at least six months, and the average cost overruns range from a few billion to over HK$10 billion. The recurring failure in delivering projects within the budgeted time and cost highlights the drawbacks to the current knowledge and the need for a systematic and in-depth analysis of critical factors that are likely to affect the project success.

Earlier studies provided a better understanding of the problems associated with time and cost overruns and identified various causes in construction projects worldwide. However, most of the studies focused outside of Hong Kong. Although some countries may share common views on the major causes, there are also some country-specific conditions. This research attempts to fill the knowledge gap by carrying out an in-depth investigation of time and cost overruns in infrastructure projects in the context of Hong Kong. This research focuses on large-scale infrastructure projects as they attract a high level of public attention and political interest. Large-scale projects are defined as infrastructure projects that cost more than HK$10 billion, and infrastructures are referred to as fundamental structures needed for enabling productivity in the economy and provide services essential to enable, sustain, or enhance societal living conditions. In line with the current infrastructure development in Hong Kong, this research mainly focused on transport infrastructure projects.

This research adopted a triangulation research approach using a combination of research methods. Both quantitative and qualitative research methods were used to improve the reliability and validity of this study, including literature review, questionnaire surveys, interviews, and case studies. The results collected throughout this research identified the following key findings and provided possible explanations to them:

· Critical factors influencing cost and time performances in Hong Kong
· Critical success factors for infrastructure projects in Hong Kong

The findings of this research contributed to improving the current understanding of the underlying causes behind delays and cost overruns and their impacts on the infrastructure projects in Hong Kong. The results revealed that differing or unexpected site conditions during construction (unforeseen ground conditions, etc.); frequency variations, change orders, additional works, change in scope of work initiated by the client; poor site management and supervision, lack of supervision; underestimation of time for completion of projects/ unreasonable estimation and adjustment of the project cost; late handover of the site; slowness related to the decision-making process within each project team; poor project management; poor communication and coordination between parties; shortage of labours; and ineffective planning and scheduling of the project, improper construction methods implemented by the contractor were the most critical causes for delays and cost overruns based on the views of clients, consultants, and contractors.

Critical success factors are referred to as the main factors that contribute to project success. This research identified “risk identification and allocation”; “contractual motivation and incentives”; “constructability”; and “project manager’s competency/ experience” as the critical success factors specific for improving the time and cost performances and increasing the chances of implementing successful infrastructure projects in Hong Kong.

Recommendations for improving the problems were derived based on the research findings. The research findings enable the project managers to take proactive steps to manage these risks appropriately and achieve the project objectives of time, cost, and quality. This helps to improve the performances of future infrastructure projects in Hong Kong.

    Research areas

  • construction delays, cost overruns, causes, infrastructure development, Hong Kong