Industrialised construction continues to gain momentum in Hong Kong

On 17 November 2022 Hong Kong SAR's Construction Industry Council (CIC) published a report recommending ways to increase productivity in the construction industry, among other improvements. The report (146-page/ 742KB) focusses on time, cost and quality. Another core theme of the report is productivity, which continues to suffer in Hong Kong SAR due to a combination of social and economic factors, such as an ageing workforce, rising costs, and failure to capitalise on opportunities offered by off-site manufacturing and digitalisation.

There are four focus areas in the report, and they are:

• shifting to high productivity construction: the focus being shifting to a controlled off-site manufacturing environment, including greater modularisation, and off-site production;
• driving innovation: to encourage development and implementation of new productive and sustainable products and methods;
• streamlining approval processes: through leveraging digital technologies;
• enhancing project management and procurement.

All focus areas include priority strategies. For each of the 13 strategies there is a description of how it relates to public and private sectors; a practical action plan with short-and medium-term actions, potential responsible parties and benefits; and local and international evidence as a reference, to support the strategy.

Priority strategies

Many of the strategies the CIC recommends relate to improvements to productivity and will be assisted by the industrialisation of construction.

Shifting to high productivity construction

The report recommends supporting and promoting two high productivity construction methods - Modular Integrated Construction (MiC) and multi-trade integrated mechanical, electrical and plumbing (MiMEP) – as well as developing a digital platform, to encourage the wider use of the two methods, and improving contract terms.

The shift to a controlled manufacturing environment, such as MiC and MiMEP, is an emerging global trend, with significant improvements in productivity being seen.

Hong Kong SAR has been implementing initiatives to improve productivity through off-site prefabrication and modular construction since the early 1980s. Recent initiatives including the Development Bureau (DEVB) technical circular (DEVB TC (W) No. 2/2020) and the chief executive’s Policy Address in 2020, as well as others, will accelerate the use of MiC and MiMEP on projects. The Hong Kong SAR will support users overcome initial cost barriers by introducing concessionary measures and offering financial subsidies. These approaches have worked well in Singapore and the UK.

A digital platform will help reduce the need for entirely bespoke designs and drive high-productivity construction. One of the challenges of developing a library in Hong Kong SAR is its relatively small market size, and CIC is leading an initiative to help the industry connect to supply chains in the wider Greater Bay Area.

Improving contract terms for public sector projects to promote wider adoption of MiC and MiMEP is now standard policy, including interim payment for off-site fabrication to enhance contractors’ cashflow.

Driving innovation

Innovation is a driving force for growth and can reduce reliance on labour-intensive construction and bottlenecks caused by a lack of skilled labour, while improving the productivity of the construction process.

The report recommends setting up a construction innovation platform to bring together academic and research institutes and solution providers. Three types of innovation projects will be promoted:

• specific research projects to address challenges raised by clients for current or upcoming projects;
• broader industry challenges faced in the local built environment;
• exploration of new innovations or technologies currently being used overseas.

Streamlining approval processes

The report recommends expediting approval processes including parallel submissions, data-driven reviews, and improving communication.

It recommends that a centrally managed data platform is set up to enhance project control and planning and using artificial intelligence. The platform will assist submissions throughout the whole construction cycle, e-inspection systems and roll out of spatial data requirements to the private sector.

Enhancing project management and procurement

The report recommends setting up an integrated project digital platform to collect, use and analyse data generated throughout the lifecycle of a project to deliver better project control and planning; professional training to attract more talent; and marketing benefits of early contractor involvement (ECI) in projects to improve design quality. There may be challenges adopting ECI: on the client side this can be seen as helping to identify early risk items and develop appropriate design solutions; but contractors fear additional cost and effort will not be compensated.

The Hong Kong SAR administration is focused on promoting digitalisation of public works project delivery. In the 2020-21 Budget Speech, the financial secretary announced that HK$100 million would be allocated to develop an integrated digital platform.

Continuation of ongoing initiatives

The CIC’s latest report is just another step in Hong Kong’s journey towards a more innovative construction industry. In December 2022, the Development Bureau of the Hong Kong SAR (DEVB), Centre of Science and Technology Industrial Development (CSTID), the Ministry of Housing and Urban-Rural Development of the People’s Republic of China and CIC hosted a Construction Innovation Expo, with the aim of promoting innovation.

Prior to the report’s issue, in the Hong Kong SAR’s chief executive’s  Policy Address 2022, it was reported the DEVB would set up a cross-departmental steering committee for coordinating high productivity construction methods such as MiC and streamlining approval processes.