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Out-Law Analysis 4 min. read

The challenges for industrialising construction and the lessons Hong Kong can learn

Hong Kong corporate buildings

There is growing industry recognition of the imperative of industrialising construction but also of the challenges to its implementation.

That is clear from a recent event hosted by Pinsent Masons in the Hong Kong Special Administrative Region (SAR), and from the results of Pinsent Masons’ 2023 global infrastructure survey.

The infrastructure sector is experiencing a productivity and profitability crisis. Businesses are either loss making or at best operating on wafer thin margins. This brings consequential challenges around resilience and investment. Radical change is needed if the industry is to be able to respond effectively to the increasing pressures it is facing – from policymakers, regulators, investors, and employees – on issues such as decarbonisation, the wider ESG agenda, and green finance.

Industrialised construction is a set of integrated solutions aimed at radically improving productivity as well as transforming the construction industry into a modern global industrial sector. At the heart of industrialised construction is a common data platform and the integration of modern technologies that drive the transformation of construction processes and products through resilient industrial scale integrated supply chains.

Sector attitudes towards industrialised construction

The opportunities of industrialised construction were highlighted in the findings from Pinsent Masons’ 2022 and 2023 global infrastructure surveys, the latter of which ran from late 2022 to early February 2023 and attracted responses from contractors, consultants, and infrastructure asset owners and operators, as well as government, lenders, investors and technology providers. More than half of the respondents that participated in the survey were from businesses whose annual revenues exceed $1 billion.

Nicholas Turner

Nicholas Turner


Resistance to change should not be underestimated, regardless of any investment in technology. Construction companies need to provide a strong sense of purpose for the change and stress the benefits to the workforce

Among other things, the surveys found that industrialisation of the construction process is of strategic importance to 70% of construction contractors. Joint ventures or other partnering arrangements were identified as important to building skills and capabilities needed for the green transition and economy, while some infrastructure companies said they are planning a technology acquisition to drive industrialisation in their business.

Decarbonising the sector

Governments cannot meet their ‘net zero’ emissions targets unless they reduce carbon in both the construction of new assets and the operation and maintenance of existing assets. Industrialised construction can help reduce the amount of carbon being embodied in the construction of new infrastructure assets. In Hong Kong, the carbon footprint is currently around 40-45 million tonnes of Co2e per annum, with the most significant contributor being electricity generation and other significant contributors being transportation and waste. The process of construction amounts to about 1.5 million tonnes.

The Hong Kong government has implemented many policies and initiatives focused on reducing carbon produced from sites and increasing productivity of the construction process. These initiatives include the adoption of technology and modularisation of construction. Although it is realised that these will require costly investment up front, it will take time to design and implement the solutions and change attitudes, and alone technology is not the full answer to decarbonisation.

Skills are a vital enabler

Industrialised construction will require a new business model for the sector based on technology that will drive modern and efficient methods of construction, which in turn require a new generation of skills and people.

Our survey found that there is a need for heavy investment in skills – leadership, project management, and technical – over the next three years. Particular skills gaps in relation to data and technology, and offsite manufacturing capacity have been identified.

Attendees at our event agreed that the sector needs to appeal to a more diverse workforce – people of different gender, age, cultural background, skill sets and working environments are needed to stimulate innovation and the use of technology and data. However, growing the required skills organically is likely to be difficult for an industry that has found talent attraction to be one of the most significant challenges of recent times, which might explain why so many infrastructure businesses have told us that they are exploring partnerships or acquisitions.

Adopting and implementing new technologies also poses challenges for a construction industry that has an ageing workforce. Resistance to change should not be underestimated, regardless of any investment in technology. Construction companies need to provide a strong sense of purpose for the change and stress the benefits to the workforce. The purpose needs to feed through all stakeholders and layers of seniority.

The role for, and challenges around, data

Married with the right skills in the workforce, the use of technology and data sharing can help support the sector’s drive for greater productivity and efficiencies, and in turn help it deliver decarbonisation.

Data generated throughout the procurement, delivery and during the life of a built asset can be captured on integrated digital platforms where it can be stored in a standardised format and used to enhance the delivery of the design and delivery of built assets. However, understanding how data works, how to keep it safe, the value of it, and how it can unlock new opportunities has some way to go. 

Jennifer Wu

Jennifer Wu


Use of data and technology will be at the heart of efforts to industrialise construction processes – an initiative that is vital for industry to overcome the challenges facing it today

Formal agreements detailing what data is being shared and how it can be used data are needed, but our survey found that 80% of companies make limited or no use of them. This poses a barrier to collaborative working.

In our experience, data sharing agreements have been an enabler of collaboration in other sectors whilst also delivering appropriate protections in relation to the data at issue. The aerospace industry, for example, relies upon a completely collaborative alliance of suppliers to build aircraft. Data sharing is central to creating that collaborative supply chain. A robust data sharing agreement will give all parties confidence that they will be protected when sharing often very sensitive and often commercially sensitive data.

Use of data and technology will be at the heart of efforts to industrialise construction processes – an initiative that is vital for industry to overcome the challenges facing it today.

Lessons learned

Around the world, the sector is undergoing transformation and Hong Kong can benefit from the lessons learned in other jurisdictions and other sectors.

At our event in Hong Kong, there was broad agreement among attendees that all stakeholders and institutions such as the Construction Industry Council can play a significant role in understanding, learning and transferring experiences learned to support industrialised construction in Hong Kong.

Industrialised Construction
Transforming infrastructure performance needs a new approach. Industrialised construction can improve productivity and deliver efficient and low carbon infrastructure through digital and modern methods of construction. We investigate the opportunities and challenges.
Industrialised Construction
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