HKCA Public Policy Research Project Fund 2009 - Final Report

Policy Changes to Avoid Boom and Bust of the Construction Cycle
- thereby improving working opportunities and the quality of the construction workforce
KP Yim, YM Fan, Linda Fan, Paul Fox, Vincent Ng

2011
Policy changes to avoid boom and bust of the construction cycle

thereby improving working opportunities and the quality of the construction workforce
Ir KP Yim, Ir YM Fan, Ir Dr Linda Fan, Dr Paul Fox, Dr Vincent Ng
Funded by
Hong Kong Construction Association Funding Scheme for the Public Policy Research/Project 2009
March 2011
Reported by Association of Engineering Professionals in Society Ltd and Department of Building and Real Estate, The Hong Kong Polytechnic University
Funded by Hong Kong Construction Association
March, 2011, Hong Kong
Copyright
All rights reserved. No part of the publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without the prior written permission of the authors.
Disclaimer
While the authors and the publisher believe that the information and guidance given in this work are correct, all stakeholders must rely upon their own skill judgment when making use of it. Neither the authors nor the publisher assume any liability to anyone for any loss or damage caused by any error or omission in the work, whether such error or omission is the result of negligence or any other cause. Any and all such liability is declaimed. Please note that the comments of the study are only the views of the research team in their academic and professional pursuit and do not necessarily represent the opinion of the institutions or individuals interviewed.
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Acknowledgements
We would like to express our deepest gratitude to all the interviewees who have kindly spent their precious time for our interviews and provided us with most valuable insights during the interviews with them during this study. They have offered their help without hesitation and their expert knowledge in the subject matter is most valuable to this research project. Without them, this project study simply could not be accomplished. Our sincere thanks are also to those who have made their effort to complete and return to us the 145 questionnaire surveys. Their views, comments and suggestions contributed significantly in guiding us to carry out the analysis, particularly in the chapters of the Conclusions and Recommendations. We would like to thank the Association of Engineering Professionals in Society (AES) who selected us to take up this project study, and have supported us throughout. Last, but not least, we express our thanks to the Hong Kong Construction Association (HKCA) who have generously given their financial support to enable the successful commissioning and completion of this report.
KP Yim, YM Fan, Linda Fan, Paul Fox, Vincent Ng The Research Team
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Table of Contents
Foreword Ir Dr. the Hon Raymond C.T. Ho Foreword Prof. Geoffrey Q.P. Shen Acknowledgements Table of Contents Executive Summary
Page iii iv v vi xi
Chapter 1 Introduction 1.1 1.2 1.3 1.4 1.5 1.6 The Project Background to the Study Project Objectives Project Approach and Scope Project Progress and Activities Project Report
1 2 3 4 5 6
Chapter 2 Review of Past Research Studies 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Introduction Definitions and Selection of Key Concepts Factors that Cause Boom and Bust to the HK Construction Industry Effect of the Bidding System on the Workforce Quality Factors to improve workforce quality Issues concerning the attractiveness of the industry Summary of Literature Review 7 8 13 16 18 21 23
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Chapter 3 Methodology 3.1 3.2 3.3 3.4 3.5 3.6 Introduction Project Objectives & Data Sources Data Collection & Processing Methods Independent, Dependent and Control Variables Statistical Analytical Methods Concluding Remarks 24 25 29 31 33 34
Chapter 4 Macro-economic Data Analysis 4.1 4.2 4.3 4.4 4.5 Introduction Time Lag Analysis Visual Inspection Time Lag Analysis Pearsons Correlation Coefficients MRA & HRA Results Summary of Findings 35 36 68 77 83
Chapter 5 Questionnaire Survey Analysis 5.1 5.2 5.3 5.4 5.5. Introduction Problems during Boom & Bust Times Personal Experience during Boom Times Personal Experience during Bust Times Summary of Findings
88 89 94 97 100
Chapter 6 - Interview Data Analysis 6.1 6.2 6.3 6.4 Introduction Capturing the Data from the Interviews Analysis of the Responses Summary of Interview Responses in Relation to the Study Objectives 103 104 116 121
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Chapter 7 Discussion, including Forum Responses 7.1 7.2 7.3 7.4 7.5 7.6 7.7 Meeting with the Objectives Scope of Improvements in Hong Kong Construction Industry Labour Shortages Ageing Workforce Attract Young People to Join the Industry Training Avoid the Future Down Turn Period as Far as Possible 122 122 122 122 123 123 123
Chapter 8 Conclusions and Recommendations 8.1 8.2 8.3 8.4 8.5 8.6 Opportunities in Greater Pearl River Delta (GPRD) To Strengthen and Provide the Training Facilities Attracting Young People to Join the Industry A Long Term Construction Planning Policy Bust Doesnt Necessarily Come After the Boom Recommendations 124 125 125 126 126 129 131
Reference
Figures Figure 2.1 Characteristics of Boom & Bust in the HKCI Figure 2.2 Independent & Dependent Variables for Statistical Analysis Figure 2.3 Independent by Broad and Detailed End-Users Figure 4.1 Real Gross Value of Construction Works by Trade Construction Sites (1983Q1 to 2010Q2) Figure 4.2 Real Gross Value of Construction Works by Trade Construction Sites (1984Q1 to 2010Q2) Figure 4.3 Real Gross Value of Construction Works by Trade Locations other than Sites (1983Q1 to 2010Q2) Figure 4.4 Real Gross Value of Construction Works by Trade Locations other than Sites (1984Q1 to 2010Q2) Figure 4.5 Real Gross Value of Construction Works by Trade (1983Q1 to 2010Q2) Figure 4.6 Real Gross Value of Construction Works by Trade (1984Q1 to 2010Q2)
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9 14 15 39 39 41 41 43 43
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Figure 4.7 Real Gross Value of Construction Works by Broad End-Use group Buildings (1983Q1 to 2010Q2) Figure 4.8 Real Gross Value of Construction Works by Broad End-Use group Buildings (1984Q1 to 2010Q2) Figure 4.9 Real Gross Value of Construction Works by Broad End-Use group Structures (1983Q1 to 2010Q2) Figure 4.10 Real Gross Value of Construction Works by Broad End-Use group Structures (1984Q1 to 2010Q2) Figure 4.11 Real Gross Value of Construction Works by Broad End-Use Group (1983Q1 to 2010Q2) Figure 4.12 Real Gross Value of Construction Works by Broad End-Use Group (1984Q1 to 2010Q2) Figure 4.13 General vs Construction Unemployment (1982Q1 to 2010Q2) Figure 4.14 General vs Construction Unemployment (1983Q1 to 2010Q2) Figure 4.15 General vs Construction Unemployment Rate (1982Q1 to 2010Q2) Figure 4.16 Construction Employment in Construction Sites (Building vs Civil Engineering (1982Q2 to 2010Q2) Figure 4.17 Construction Employment in Construction Sites (Building vs Civil Engineering (1983Q2 to 2010Q2) Figure 4.18 Construction Employment in Construction Sites (Public vs Private Sector (1982Q2 to 2010Q2) Figure 4.19 Construction Employment in Construction Sites (Public vs Private Sector (1983Q2 to 2010Q2) Figure 4.20 Real Wage Index of Construction Workers in Public Sector (1985Q4 to 2010Q2) Figure 4.21 Real Salary Index A of Construction Managerial & professional Employees (1983Q2 to 2010Q2) Figure 4.22 Real Salary Index B of Construction Managerial & professional Employees (1983Q2 to 2010Q2) Figure 4.23 Money Supply M1, M2, & M3, Hang Seng Index, Tael Gold, GDP & GDP Construction (1982Q1 to 2010Q2) (Seasonally Unadjusted) Figure 4.24 Money Supply M1, M2, & M3, Hang Seng Index, Tael Gold, GDP & GDP Construction (1982Q1 to 2010Q2) (Seasonally Adjusted) Figure 4.25 Consumer Price Index (1982Q1 to 2010Q2) Figure 4.26 Tender Price Index (1982Q1 to 2010Q2)
45 45 47 47 49 49 52 52 53 55 55 56 57 59 61
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Tables Table 4.1 Summary of Time Lag Relationships amongst GVCWs Table 4.2 Summary of Time Lag Relationships amongst Employment Table 4.3 Summary of Time Lag Relationships amongst Wage/Salary Indices Table 4.4 Summary of Time Lag Relationships amongst Control Variables Table 4.5 Summary of Stochastic Time Lag Relationships between Dependent Variables and Control Variables Table 4.6 Summary of Stochastic Time Lag Relationships between Dependent Variables and Independent Variables Table 4.7 Summary of Stochastic Time Lag Relationships between Independent Variables and Control Variables 37 50 58 63 69 72 75
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Executive Summary
The excessive fluctuations imposed on the construction industry over many decades have led to a culture of risk avoidance and in turn to a lack of stability in employment relations for manual workers, and consequential lack of training, lack of adequate skills, lack of pride in ones occupation, poor image and lack of interest from youngsters in joining the industry. In Hong Kong the industry faces a huge increase in the construction workload coming on stream over the next five years. A better understanding of these aspects and their interrelationship can lead to measures which help the industry to be more stable, more responsive, more efficient, more competitive, more attractive and more sustainable. This leads us naturally to adopt the following objectives of the study. The FOUR objectives of this Project identified for study are to: Investigate and analyze the factors that cause boom and bust to the Hong Kong construction industry; Assess the opportunities in improving the quality of the construction workforce in the next decade in Hong Kong; Investigate and analyze the effect of the volatile contract price fluctuation on the quality of the construction workforce and construction industry; and Assess the present situation of the shortage of young people to join the construction industry, and to recommend ways of improvements in attracting them to join the industry, in readiness for the major construction projects in Hong Kong over the next decade
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1. Scope of Study The first part of the research is a literature survey to understand the key concepts relevant to the problem perceived. This is followed by (a) capture of relevant macroeconomic statistical data for analysis; and (b) capture of opinions from selected experienced construction stakeholders on issues relating to Hong Kong construction enterprises. The methods for opinions collection are elicited through a questionnaire survey as well as through interviews. Both of these sets of responses were captured. Our approach and scope focus on the policies suggestions that are recommended to government and the industry leaders for their decision making for the future long term sustainability of the industry. 2. Review of Past Research Studies The key theoretical concepts and background to the research study have been presented in Chapter 2. Many of the studies from overseas indicate that Hong Kong needs to embrace a much wider set of concepts than has been the norm. This chapter collected information to gain the knowledge; capture of relevant statistical data for analysis; capture of opinions from construction stakeholders on issues relating to Hong Kong construction enterprises to anticipate the construction projects boom in the next decade, and how to avoid the bust following by the downturn due to the change in economic circumstances or collapse of some favourable expectations. 3. Methodology The research approaches are outlined in Chapter 3. The first part details the data sources collected both primary and secondary data for the research approaches adopted for each project objective. Primary data is collected by use of questionnaire survey and in-depth personal interviews whilst secondary data is the macro-economic data used as Macro-economic Indicators. After processing the macro-economic indicators, the second part defines the independent and dependent variables and delineates the data processing methods. The third part relates the statistical analytical methods to each project objective. The final part provides a summary of this section.
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4. Macro-economic Data Analysis The time lag analyses by visual inspection by referring to the graphs and by using the Pearsons Correlation Coefficients. Then the multivariate Multiple Regression Analysis and Hierarchical Regression Analysis results together with the statistical interpretations in relation to the phenomenon of the Hong Kong construction industry for the past 30 years of boom and bust are analyzed and reported the details in Chapter 4. In analysis, the control variables are powerful in predicting the Employment and Unemployment Indicators. The higher the GDP is, the lower the construction unemployment and unemployment rate. At the same time, the greater the Money Supply M2, the Hang Seng Index and Tael Gold Bar are, the lower the general and construction unemployment. However, the greater the Money Supply M1 and M3 are, the higher the construction unemployment and general unemployment respectively. Money Supply M1, M2 and M3 therefore do not exhibit salient time lag among them, which is contradictory to common initiation. The control variables are also powerful in predicting the Real Wage Index. The greater the Construction GDP is, the higher the Real Wage Index of all major trade workers. The greater the Money Supply M1 is, the higher the Real Wage Index of most major trade workers. At the same time, the greater the Money Supply M2 is, the higher the Real Wage Index of several major trade workers. However, the greater the Money Supply M3, Hang Seng Index and Tael Gold Bar are, the lower the Real Wage Index of all major trade workers. On the other hand, various construction spending components are not as powerful as the control variables.
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5. Questionnaire Survey Analysis Chapter 5 reports the results of various statistical data analyses of the questionnaire survey with 145 respondents of construction professionals. The primary data collected personal attributes including the employment, management level and overseas experience. The respondents have been asked views on 8 problems during boom and bust times and 18 questions on personal experience during boom and bust times. The employed construction professionals are more optimistic than the self-employed ones when they faced the problems during boom and bust times. Both self-employed and employed construction professionals have significantly different views to nearly all problems they faced during boom and bust times except for the problems of economic efficiency and work safety. The construction professionals working in developer are the most optimistic when they faced problems whilst those working in localized foreign contractor are the most pessimistic during boom and bust times. The construction professionals at different management levels tend to be optimistic towards certain problems during boom and bust times rather than being optimistic to everything during boom and bust times. The junior management is the most optimistic towards quality of work output, work performance reliability, reluctance to invest in training and reluctance to innovate but the most pessimistic towards economic efficiency, work safety, difficulties in recruiting young people and reluctance to invest in business/organization. However, both middle and senior management are neither the most optimistic nor the most pessimistic towards the problems they faced during boom and bust times. The construction professionals with moderate overseas work experience are the most optimistic when they faced problems whilst those with well overseas work experience are the most pessimistic during boom and bust times.
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6. Interview Data Analysis The interviewees opinions form a very significant part to this research study. The respondents identified: 6.1 Nine factors that cause boom & bust in the Hong Kong construction industry Governments total investment in public works per year (and this should not fluctuate too much year on year); The HKCI should regulate itself based on a good understanding of industry capacity and a long-term plan for workload. Law should be introduced if necessary; Maintenance work; Social needs of projects (new railways, hospitals, etc) given priority, then other needs Local manpower resources available (2 respondents mentioned this); Availability of training capacity in training institutions; Economic benefits of projects; Private sector demand should be included in picture; Better understanding of what we have already. 6.2 Six areas of opportunities in improving the quality of the workforce The need for training Employment conditions needed to be improved Development of a professional culture at all levels was generally overlooked. Innovation was mentioned by about half of the stakeholders and revolved around prefabrication / precast. Globalisation was mentioned by about half of the stakeholders, and usually in the context of importation of labour/professional skills. Quality of Working Life (QWL) was mentioned by 3 stakeholders but only in passing. They stressed that this was particularly acute because of the age profile of the existing workforce, with many workers in their 50s likely to retire in the next 10 years. 6.3 No possible linkages between volatile contract price fluctuation on the quality of the construction workforce; and Almost universal agreement that there is a shortage of young people to join the construction industry, and this is a significant problem.
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7. Discussion, including Forum Responses The synthesis is brought together in Chapter 7. This also incorporates further data captured in our Industry Forum organized on 31 August 2010 by inviting the construction stakeholders, academics, government officials and labour union representatives to air their views and discussed the issues, where they responded to our interim findings as presented by all members of our research team. The chapter aims to explore the scope for improvements in Hong Kong construction industry, in particular, the phenomenon of the changes in the workload from boom to bust and back again, are well-known, yet difficult for the industry to deal with on its own. Key issues are highlighted in discussion, including labour shortages; ageing workforce; attracting young people to join the construction industry; training; and avoiding the future down turn period. 8. Conclusions and Recommendations The final chapter draws the threads of the whole study together. Chapter 8 addresses the critical issues with a view to making recommendations on how to avoid the future bust, to refrain from following the boom and bust cycle of the construction industry in Hong Kong. The Government should look into the issues and to even out and lengthen the construction time of those infrastructure projects which do not fall into the critical path of the long term strategic public works programme by: Postponing those non-critical mega projects to smoothing the possible boom and bust cycle of the construction industry Providing sufficient medium and small projects to ensure a smooth flow of provision of works for the local construction industry in a sustainable manner The Hong Kong construction enterprises should use their competitive edge to take advantage of the opportunities in the wake of the rapid recovery since the financial crisis in 2008, by working out a strategically long term construction plan by: Improving the training to meet the construction needs; Improving the employment conditions Improving unattractive image of the industry and raise the social status of the construction workers Improving the quality of working life.
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Chapter 1 Introduction
1.1 The Project - HKCA Funding Scheme for the Public Policy Research/Project
In December 2009 Hong Kong Construction Association (HKCA) awarded Association of Engineering Professionals in Society Ltd (AES) to carry out the project study on Policy Changes to avoid boom and bust of construction cycle thereby improving working opportunities and working quality of construction work force which is funded by the HKCA Funding Scheme for the Public Policy Research/Project 2009. In March 2010 AES invited and requested the Department of the Building and Real Estate (BRE) of the Hong Kong Polytechnic University (HKPolyU) to form a collaborative research team between the AESs experienced senior members and the BREs academic staff and research fellows. The Research Team comprise five members, they are: AES Members Ir K. P. Yim Ir Y. M. Fan Academic Staff and Research Fellows of the Department of BRE, HKPolyU Ir Dr. Linda C. N. Fan Dr. Paul W. Fox Dr. Vincent C.W. Ng
The Collaborative Research Team During the forum discussion on 31-8-2010 at the Excelsior Hotel
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1.2
Background to the Study

The nature of construction industries worldwide is one based largely on projects that are initiated by public sector and private sector clients. In market economies, such as Hong Kong, the contracting side of the industry responds to the client stakeholder needs, but has little control over how big and how fast the orders come in. It is widely accepted that if any place, Hong Kong being no exception, gets the supply of construction projects wrong, too many or too few, either many projects will suffer delays and/or extra expense, or the whole construction workforce experiences loss of income/skills. This, in turn, impacts the wider community. For example, after a boom period the industry may have raised its costs to unacceptable levels for many clients. Likewise, quality and efficiency may deteriorate, leading to problems of costly maintenance in later years. Whereas, after a bust period, the industry may have lost large numbers of skilled people and collectively the remaining survivors may not have the capacity to respond to new demands. The community at large then will experience excessive delays in the supply of new facilities and infrastructure, which may be essential to efficiency and competitiveness in other economic sectors. Thus a more stable provision of construction projects is a desirable condition that needs to be attained, and the government has more influence than most, in this respect. This research study seeks to address and tackle the problems arising from boom and bust in the industry workload: labour shortage on one hand, unemployment on the other; those needing training or re-training to cope with the construction supply boom; unstable construction prices, and measures to maintain and improve the quality of construction deliverables under all constraints. All these factors underline the need to focus on Hong Kong construction industrys working patterns, which should not be prone to the sudden boom-and-bust of construction cycles. By means of adjustments to the supply of workload, the basic healthy conditions of the construction industry as a whole can be ensured sustainable over the medium term. This research is important right now, as the industry faces a huge increase in the construction workload coming on stream over the next five years. Top-level policy makers within Government may not be aware of the consequences of the decisions they have made in this respect. At the same time, the excessive fluctuations imposed on the industry over many decades has led to a culture of risk avoidance and in turn to a lack of stability in employment relations for manual workers, and consequential lack of training, lack of adequate skills, lack of pride in ones occupation, poor image and lack of interest from youngsters in joining the industry. A better understanding of these aspects and their interrelationship can lead to measures which help the industry to be more stable, more responsive, more efficient, more competitive, more attractive, and more sustainable. This leads us naturally to the objectives of the study. This Project takes the opportunity to address the problems envisaged, and to focus on the underlining factors so that the industry would not be prone to the sudden boomand-bust of construction cycles. By these means, the basic conditions of the construction industry as a whole can be ensured sustainable at least over the medium term.
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1.3
Project Objectives
The following objectives have been identified for study: (1) Investigate and analyze the factors that cause boom and bust to the Hong Kong construction industry; (2) Assess the opportunities in improving the quality of the construction workforce in the next decade in Hong Kong; (3) Investigate and analyze the effect of the volatile contract price fluctuation on the quality of the construction workforce and construction industry; and It is noticeable that if population growth rates are declining, which is the case in Hong Kong, the percentage of the total population who are economically active tends to increase because of a smaller proportion of persons below employment age. That upward influence is getting worse by the tendency for younger persons to delay entry into the industrys work force and older persons to withdraw earlier. This Project also studied the objective of: (4) Assessing the present situation of the shortage of young people to join the construction industry, and to recommend ways of improvements in attracting them to join the industry, in readiness for the major construction projects in Hong Kong over the next decade
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1.4
Project Approach and Scope

The research team first carried out a literature survey to understand the key concepts relevant to the problems perceived. This was followed by (a) capture of relevant macro-economic statistical data for analysis; and (b) capture of opinions from selected experienced construction stakeholders on issues relating to Hong Kong construction enterprises. We elicited stakeholder views both through a questionnaire survey as well as through interviews. Both of these sets of responses were captured, bearing in mind that most industry stakeholders anticipate the construction projects boom in Hong Kong in the next decade, and are rightly concerned about how to avoid the bust following the downturn, due to the change in economic circumstances or collapse of some favourable expectations. The study provides findings that address the critical issues, identifying factors that trigger the upturns and downturns of the construction industry, and makes recommendations on how to avoid the future boom and bust cycle of the construction industry in Hong Kong. Our approach and scope is not so much with the technical minutiae of statistics of numbers of people needed, but more with the policies need to guide decisions by government and industry leaders for the future health and long-term sustainability of the industry.
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1.5
Project Progress and Activities

A series of regular research meetings were held in bi-weekly basis between January and May 2010 to discuss items on how to start the research work for the project, how to identify, what are the objectives that can be mapped with the project scope, how to describe and what are the project deliverables, how to set the project timeline and the key milestones, what are the high level requirements and expectations, how to make the practicable assumptions, what are the constraints and would there be any new change requests that may modify the project scope. The following describes the project scope. On Thursday 31 August 2010 the research team briefed and presented the Interim Report on the Policy changes to avoid the boom and bust of construction cycle thereby improving working opportunities and working quality of construction work force to about 100 AES Members and their guests at the Excelsior Hotel, Causeway Bay, Hong Kong. After the briefing and presentation, it was followed by the discussion amongst the attendees. The forum was attended by the contractors, consultants, government officials, academia and labour union representatives. The forum facilitated the exchange of views amongst the attendees and the guests. The comments and opinions collected in the forum discussion have been consolidated, addressed and incorporated in the Final Report of the project study. On Monday 4 October 2010 AES held their Council Meeting at World Trade Centre Club, Causeway Bay, Hong Kong. Before their meeting, the research team briefed and presented the Interim Report to about 40 AES Council Members who did not attend the forum discussion before on 31 August 2010. The comments made and questions raised have been addressed and incorporated in this Final Report. The research team completed an Interim Report of the project study by end of October 2010. A copy of the Interim Report was delivered to AES for their comments and for their subsequent submission for the attention of HKCA.
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1.6
The Project Report

The final Project Report consists of eight chapters.
Chapter 1 is the Introduction reported the collaborative Project funded by Hong Kong Construction Association. Chapter 2 is the Review of Past Research Studies presented the key theoretical concepts and background to the research study. Chapter 3 is the Methodology outlined the research approaches adopted for achieving the respective project objective including sampling, data collection, data processing, independent and dependent variable construction, and data analysis methods. Chapter 4 is the Macro-economic Data Analysis together with the statistical interpretations in relation to the phenomenon of the Hong Kong construction industry for the past 30 years of boom and bust are reported. Chapter 5 is the Questionnaire Survey Analysis reported the results of various statistical data analyses of the questionnaire survey with 145 respondents of construction professionals. Chapter 6 is the Interview Data Analysis consolidated the information obtained, analyzed the results and reported the findings of 9 interviews. Chapter 7 is the Discussion, including Forum Responses. The synthesis of the results of the various separate analyses is brought together in this chapter. Chapter 8 is the Conclusions and Recommendations, which finally draws the threads of the whole study together and examines its implications in the conclusions and recommendations.
The supplementary information required for the carrying out the research study of this project, such as the survey questionnaires, samples, interview questions, interview result details, relevant statistical data and the references of the literature, are appended at the end to form the overall Project Report.
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Chapter 2 Review of Past Research Studies

2.1 Introduction
This review covers the theoretical frameworks relevant to the objectives both from studies of overseas construction industries as well as studies in Hong Kong. Following on from this introduction, we set out the definitions we are using for the key concepts. Wherever possible we make use of established definitions, but in the case of the concepts of Boom and Bust we have found the existing definitions neither sufficiently clear nor comprehensive. Thus we have developed our own, based on our understanding of the way these terms are used in common usage, and we explain the reasons why. The subsequent sections of the review cover the four main objectives to establish: Key factors that influence the industry workload; Key factors that influence the quality of the workforce; Possible linkages of the contract bidding system and the volatility of contract prices upon the quality of the workforce; and Issues concerning the attractiveness of the industry to new recruits.
The final section summarises the review.
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2.2
Definitions and Selection of Key Concepts

In this study, we define the construction industry as comprising those organisations involved in design, production, alteration, renovation, maintenance, facility management, demolition and re-cycling of building and civil engineering works, including the supply of resources. It includes all internal and external stakeholders who in some way or another promote the industrys policies, procedures, practices and culture (Fox et al 2008). There are many definitions of Boom and Bust, but few of them convey the problems which arise at the peaks and troughs of the cycle. One definition that does indicate these problems is: A type of cycle experienced by an economy characterized by alternating periods of economic growth and contraction. During booms an economy will see an increase in its production and GDP. During busts an economy will see a fall in production and an increase in unemployment. (Investorwords 2010) Many of these definitions arise from studies of business cycles and when applied to the construction industry these, in turn, influence property cycles and construction cycles. Our focus is on the latter concept and we thus interpret boom and bust in this context. Since construction is a project based industry, this characteristic influences the way the process of boom and bust is experienced, and also how to respond to the phenomenon. Any investigation of the nature of boom and bust will lead to a complementary concept of industry capacity. As one of the pioneers in applying economic theory to the construction industry, Hillebrandt (2000) refers to the capacity of the industry, which she defines as the maximum output which is attainable by the industry, within the limits of conditions considered acceptable at the time. We take a slightly different definition and consider that the capacity of the industry is something which has both maximum and minimum values. Thus Hillebrandts definition of maximum output we regard as the industry working at maximum capacity. We also recognise it can be working at a lower level, or minimum capacity. How do we define these two levels? In the case of maximum capacity, we agree with Hillebrandts assertion that the supply of resources is the ultimate determinant of capacity(Hillebrandt 2000:191). She lists four factors which influence capacity: the amount of a given resource in use to produce the current output of the industry; the amount of the resource lying idle awaiting the demand for its use from the construction industry; the extent to which the resources will increase in the time span under consideration on the assumption of no change in intentions or policy,
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on the assumption of effort being directed to increasing of the resource and taking into account the cost of increasing its availability; the extent to which the resource can be saved by substitution of some other resources and the cost of such substitution. (Hillebrandt, 1975: 34) At maximum capacity, the industry is already using all the key resources available to it, and there are no spare resources lying idle if demand further increases. At this point, any further increase in demand turns a sustainable healthy boom level to an unsustainable unhealthy boom, where the shortages of resources lead to a rapid increase in costs as competing clients/projects bid up the prices to unhealthy levels (unsustainable levels). This is point c on the chart (Figure 2.1).
Title: Characteristics of Boom & Bust in the HKCI

Importation of people Shortages (materials, manpower, training capacity) Increased costs Increased accident rate Lower productivity
Training time
Max. capacity
b
The old norm
c Boom
a
Re-training time The new norm
Capacity of HKCI
(after Hillebrandt 2000: 191)
Bust
Min. capacity
Time
Capacity early warning level
2013
Loss of people Reduced training Reduced skills Lower recruitment Lower morale
Permanent lower workload leads to lower capacity max. and min.
Figure 2.1 Characteristics of Boom & Bust in the HKCI
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However, prior to this unhealthy level, we first identify normal conditions where the workload is within the normal boundaries (shown as point a). Variations in the workload arise through different mixes of work type, so that $1 million spent on new work would produce a different demand for labour resources compared to the same money spent on maintenance work the latter requiring a higher labour input. We also identify a level (shown as point b), where the demand has reached a point where some resources are already stretched, or are not available, and the project stakeholders can take remedial action by training extra workers, or purchasing new machines from non-established sources or the design /methods of work can be changed to avoid using the resource that is problematic. In this case, the whole industry can still function and provide service to its clients, but at greater cost, or with some inconvenience. This level of demand we identify as the capacity early warning level. This is also the start of the boom phase, but it is still healthy because the industry overall can still meet its project goals, although there will be hot spots of resource shortages appearing. Thus we define the start of a boom as the point when the demand exceeds the early warning level of capacity and available resources. Beyond this point, there are many problems arising within this boom phase, including: Shortages of various resources of labour, materials, and plant; Associated increased costs; Project delays; Increase in unqualified /untrained / inexperienced / imported labour; Loss of efficiency; Increase in accident rate; Reduction in training (people cannot afford the time to attend training); Lowering of quality of output (as people rush to complete work); Lower quality of working life (QWL) as people work long hours; Increased stress and other heavy workload problems; Insufficient training capacity.
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Likewise, at times of industry workload being lower than its minimum capacity it enters a bust phase, with the following associated problems: Unemployment and /or under-employment; Loss of trained and experienced people (both temporary and permanent loss); Loss of income for labour; Insufficient profit for businesses to be viable (sustainable); Loss of training (too little income to pay trainees, or for self-employed to take time off seeking for work); Loss of skills through insufficient use; Lowering of morale in industry, lowering of motivation; Lowering of image of industry to newcomers, especially youngsters who see no job security for a career choice in the industry; Lowering of recruitment to industry.
The construction workforce includes the whole variety of people engaged in the industry, whether they use manual, technical or professional skills directly on site, or prior to site work in design, research & development, or after site operations in maintenance and management of constructed facilities. The term construction workforce is used interchangeably with the term construction labour, or simply labour. Within this definition, when referring to manual workers, we class them as skilled labourers/workers, semi-skilled labourers/workers or unskilled/general workers. When we refer to working opportunities, we mean the opportunity to engage in work full-time or part-time and paid directly as employees or paid as self-employed contract staff/workers for a package of work duties. The definition is intended to include all types of employment conditions. The quality of the construction workforce is already defined by the government in terms of the qualifications held by industry participants. Each member of the industry possesses certificates of training completed and educational attainment both in general education level achieved as well as specialist education in construction or construction-related subjects. A more comprehensive view of quality may not rely only on levels of achievement by individuals. It might be more broadly defined by considering the breadth of experience of individuals as well as how they relate within teams (Clarke 1992, GB DETR 1998, HK CIRC 2001), such as
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Work experience outside of Hong Kong; Work experience outside of the construction industry ; having a sense of ethics in what and how they do their work ; Belonging to a network of similar people through membership of an association /institute which fosters their sense of belonging, of contributing to the common good, of leading change within their field of experience, and of being accountable to their peers ; Flexibility to adapt to change, creativity leading to innovation, and motivation to improve their knowledge and skills ; and Willingness to work with others as members of a team towards common goals.
In construction, the individual works on many different projects throughout a working career. Thus, the ability to work together with strangers in teams in unfamiliar surroundings is part of the normal pattern. The set of skills needed for efficiency, safety, quality, team work, flexibility, adaptability and integrity, even for an unskilled labourer, require aptitudes of a far higher level than those needed in manufacturing industry, where the tasks are simpler, safer, and in a fixed location every day with controlled climate and familiar layout. Whilst these additional measures of quality of the workforce are important, for the purposes of this study, we will rely more on the easily obtainable measures of education / training attained through recognized certificates.
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2.3
Factors that Cause Boom and Bust to the HK Construction Industry

The literature relating to bust and boom of construction cycles is well established and extends over at least 4 decades. Some of the earliest studies were those of the University of London University College when a group of economists led by Professor Turin attempted to view the behaviour of whole construction industry using economic theory (Turin 1975). Hillebrandt was one of the economists recruited by Turin when the Unit for Building Economics was set up, and she later published several seminal texts which helped readers to understand the issues that the UK construction industry faced (Hillebrandt, 1984, 1985; Hillebrandt et al 1995). These principles were found to be applicable to the construction industry in many other countries as well, and we can thus recognise that these are applicable to Hong Kong. She asserts that all demand is affected, though in different degree, by the ups and down of the economic cycle and by actions of government, either directly as a client of the industry, or by the way in which it runs the economy. (Hillebrandt 2000:5) A recent study by Wong (2006) looked at manpower planning in depth. He drew upon the work of Agapiou (1996) who had completed a doctoral study ten years earlier, based on the UK construction industry. Wong investigated manpower demand forecasting both from an industry level as well as at project level, using Hong Kong data. At the industry level, he recognised that existing forecasts were unsatisfactory and that too little research had been done in this area. He compared four different approaches: Time-Series projection; Bottom-up; Top-down; and Labour Market Analysis. Of these he found that a Top-down approach was both good in static situations where a snapshot at a single point in time was needed, and also excellent in dynamic situations where changes over time took place. Thus, overall, a Top-down approach was best. Based upon economic theory, it has advantages of reliability, and the ability to deal with what if scenarios. The key variables used for this type of analysis include macroeconomic ones such as GDP, sectoral output, unemployment rate, productivity, interest rate, and wages. Given the prominent role of the government, we have decided to use variables from government statistics to analyse the demand and response to demand. Figure 2.2 shows the key variables that we have included. The main Independent variable is the Gross Volume of Construction Works (GVCW) which includes demand arising from both public and private sector clients. Figure 2.3 shows the various ways in which this overall amount of investment in buildings and facilities is further sub-divided into various sectors, either according to work on Construction Sites/ Other locations; or by Building/Civil engineering. Referring again to Figure 2.2, it also shows how the government may influence demand through direct investment (GVCW) as well as through indirect means. The indirect variables are indicated as Moderating or Control variables on the chart, and include such items as:
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Money supply M2; Money supply M3; Best Lending Rate; Hang Seng Index; The Consumer Price Index (CPI); and The Tender Price Index (TPI).
Finally, concerning the Dependent variables these include: Employment / Unemployment (as well as Importation of Workers); and Salaries & Daily Wages, (further subdivided according to Skilled/Unskilled Workers, and Short/Long Organisation Tenure).
Independent & Dependent Variables for Statistical Analysis

Importation of Workers
Independent Variable
Time Lag of x months. Influenced by Control Variables
Dependent Variable
Employment / Unemployment
GVCW
Salaries & Daily Wages
Control variables
Moderating Variables
Money Supply M2 Money Supply M3
Skilled Worker Unskilled Worker
Short Organisation Tenure (Temporary)
Best Lending Rate
Long Organisation Tenure (Permanent)
Hang Seng Index
CPI TPI
Figure 2.2 Independent & Dependent Variables for Statistical Analysis
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Independent Variables by Broad & Detailed End-users
GVCW for Construction Site by Broad Trade Group
By Broad End-user Group
By Detailed End-user Group
GVCW Buildings GVCW for Construction Sites by Broad Trade Group

GVCW on Construction Sites
Site Formation & Clearance
GVCW Structures & Facilities

GVCW on Locations other than Sites
Piling & Related Foundation Works
Architectural Superstructures
Civil Engineering
Figure 2.3 Independent by Broad and Detailed End-Users
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2.4
Effect of the Bidding System on the Workforce Quality

In Hong Kong, the dominant procurement system for building work in both public and private sectors is through competitive tender (Drew 1994:35; Oo 2007:41). The HK CIRC Report (2001: 1) identified the shortcomings in the industrys operations and quality of its products as follows: Construction activities are labour-intensive, dangerous and polluting; Built products are seldom defect-free; Construction costs are comparatively high; The industry is very fragmented and is hindered by an adversarial culture; Many industry participants adopt a short-term view on business development, with little interest in enhancing their long-term competitiveness; There is a tendency to award contracts to the lowest bidders and delivery programmes are often unrealistically compressed; Accountability is undermined by non-value-adding multi-layered subcontracting and lax supervision; An inadequately trained workforce also impairs the industrys ability to adopt new technologies and to cope with new challenges.
The Grove Report (Grove 2000) also observed that some clauses regarding ground conditions in the Government General Conditions of Contract for public sector work placed unreasonable risks onto Main Contractors such that it deterred genuine and responsible contractors whilst allowing weaker but more gambler-oriented contractors to obtain contracts. The effect is that the winning tenderer will either be the gambler or the low guesser. Frequently this will be the thinly financed, low asset contractor who has little to lose. It is not in Government's interest to attract this calibre of contractor, nor to discourage highly competent, conservative contractors. (Grove Report Para. 12.10). Chiang et al (2001) found a contrast between the civil engineering sector and building sector of the HKCI in terms of the competitiveness. Whilst the former sector required technological and capital resources which imposed a strong barrier to entry to the market, the private building sector was very easy to enter, as it needed only low technology using traditional methods. Consequently the latter sector
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competed intensely on cost reduction rather than technology improvement, leading to poor construction safety and product quality. Generally profit margins are razor thin, and are only squeezed through the exploitation of lower layer subcontractors. Competitiveness based on cost reduction is not sustainable, as it creates no enduring competitive edge. The authors concluded that the government, being both a major client and a regulator, could be more active in promoting the overall competitiveness of indigenous local contractors in Hong Kong. Although the stabilization of construction demand can motivate local contractors to improve quality, the implication is that international contractors in complex projects could only grow more competitive. The authors warn that the industry must not become too dependent on government initiatives, so from a policy perspective, this is a fine point of balance. A very recent paper (Chiang and Cheng 2010) adds further to this discussion by arguing that the interim payment mechanism has induced a low barrier to entry and helped perpetuate the vicious circle of labour intensiveness of building construction, exploitation of labour-only subcontracting, proliferation of small subcontractors and intense rivalry between firms. Our interpretation of this part of the review is that such conditions, in attracting and encouraging the gambler attitude, only increase the competitive nature of the business environment, and make it difficult to sustain a strong profitable business. This in turn affects the funds available for long term planning, investment in improvement of the business, and the recruitment, retention of staff, and adequacy of salaries/wages/ employment packages, staff development and training. In other words, the realities of the overly-competitive bidding system lead to the poor quality of the workforce. Finally, we highlight that too much emphasis on measures to stabilise the overall industry workload may lead to neglect of more important policies. Wong et al (2010) argued that the industry needs to have a comprehensive strategic plan to develop the industry in a sustainable manner. Four key strategic directions were identified: (1) (2) (3) (4) Formulation of an industry-specific long-term vision and policy; Development of favourable factor conditions and resources; Fostering of a best (better) practice culture; and Enhancement of technical competencies.
Each of these strategies links to the development of the quality of the workforce. In turn, this highlights the need for improved levels of training, and thus the need for long-term stable employment conditions.
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2.5
Factors to improve workforce quality

Dainty et al (2005) studied the skills crisis in the UK construction industry, and first reviewed the existing theoretical foundations of the topic, noting that the sectors labour market is based on the concepts of informality and flexibility. During their own qualitative data collection, they found 3 key themes of significance in the industry-wide labour market characteristics. These are: Skills requirements and impacts - every employer interviewed believed there to be a skills crisis with too few skilled workers, and a low level of skills. Overall, 10 distinct issues were found through interviews with contracting firms, including Client demands and expectations; Impact of new technology and work practices; The ageing workforce; Geographical mobility; Remuneration and reward; Self-employment and the impact of labour market regulation; Workforce quality; Specific skill requirements; Multi-skilled workers; and Supervisory, professional and management skills.
Recruitment and retention issues were seen as a huge problem by most employers. Strategies to deal with it included six areas: Advertising; Agency recruitment; Self-employment and informal recruitment practices; Image of the industry; Workforce diversification; and Employee turnover and retention.
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Training and qualifications were seen as doubtful in value by two thirds of respondents. Others were committed to training and its benefits. Six areas were highlighted: New entrant trainees; The qualification and training structure; Training provision and availability; Training and developing the existing workforce; Government-sponsored training schemes; and Funding for training.
Overall, Dainty et als conclusions are that the calculations of numbers of skills needed are a starting point for identifying skills shortages. However, the crucial concern was that the quality of skills available is a more urgent focus. A tendency to blame clients and avoid responsibility was observed, but a different mindset by management was needed to solve the problems. This, together with better coordination between training providers, employers, and regulatory bodies would address the skill needs and provide a basis to lobby for policy changes. Many of the issues faced in Dainty et als study are common to the Hong Kong situation. This, we assert, is arising from the similarities in the structural, institutional and cultural characteristics between the two construction industries. The lack of quality of skills available in sufficient numbers which Dainty et al have highlighted points to the need to provide a structured framework for various levels of skills. Such a National Qualifications Framework (NFQ) are found in a number of countries / administrative region, including the UK and Hong Kong. Young (2003) discusses these at length and recognises their importance, whilst giving examples of how difficult it has been to implement them successfully. The impasse motivated him to explore some of the deeper social, political and economic issues in his paper.
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The Government of HKSAR, through the Vocational Training Council (VTC) have implemented such a framework in Hong Kong, as from 2004. The new Qualifications Framework (QF) covers qualifications of academic, vocational and continuing education and training, and is intended to meet the following needs: Better equip and improve the Hong Kong society to face change; Ensure Quality Assurance of training programmes; Ensure relevance of training programmes; Provide a platform for arranging and ordering various programmes and qualifications to ensure their standard and quality; and thus Enable individuals to pursue further studies for their own career development.
Given the lack of quality of skills which Dainty et al have highlighted, it would seem obvious that the QF should provide a ready solution. However, despite the rollout of the QF framework since 6 years, the only construction- related area of application is in property management. Otherwise, the construction industry has not adopted QF, and has no plans to do so.
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2.6
Issues concerning the attractiveness of the industry

The final area of focus of this study concerns, perhaps, the most important issue facing construction industry employers. Although it is presented here as a separate issue, its very nature links it with all the previous research objectives. It is not only a major concern of the Hong Kong construction industry, but it is of significance to national construction industries worldwide. It is not just one issue, but a multidimensional, multi-related set of issues. In terms of its common nature worldwide, the poor attractiveness of the construction industry starts with a simple understanding that beauty is in the eye of the beholder. It is a view from the outside, looking in, and by this, we mean the image that the industry presents to the outside world. In order to understand the nature of the image of the industry, the International Labour Office (ILO) of the United Nations conducted a survey and published their results in 2001 (ILO 2001). The characteristics of informality and flexibility are mentioned in the conclusion, and, like Dainty et al, remind us again of the often casual employment relationship between employer and worker. The paper asserts that the construction industry in most countries is fragmented and employment terms have become based more on outsourcing. This raises concerns about job security, health, safety as well as skill formation. The image of the industry has suffered to the point where it is often difficult to attract new recruits, while the shortage of skills is threatening the quality of the products and possibly also, in the long term, the quantity of employment. The big issue facing the sector is how to raise the image of the industry and make construction more attractive to young people. This is not just a question of finding a good public relations consultant. There are real issues here that have to be addressed. (ILO 2001:43) In the eyes of the ILO, the way forward is seen through three main courses of action:
(1) Continuation and Enhancement of the Subcontracting System Subcontracting is seen as essential to enabling the flexibility needed to cope with the way workload demands are received. However, the employment relationship needs to be more stable and permanent to ensure proper protection of labour rights and access to training enjoyed by permanent employees in other sectors.
(2) Highlight priority areas for action including: New role for trade unions and other pressure groups; Extension of social security to all, including insurance cover for sickness or unemployment, and retirement benefits;
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Promotion of health and safety; Training & skill formation through training the trainers the creation of a class of master craftsmen, and opportunities for lifelong learning and a career path; Skills testing and certification.
(3) Use levers for change, by dealing with pressures from consumers, environmentalists, and other groups. The construction industry must solve its own problems and not be too dependent on government or other stakeholders. The public sector clients can do much to promote desirable change.
Apart from job security, safety and health issues, other areas concerning the attractiveness of the industry to potential new recruits relate to the conditions of the workplace in terms of stress, burnout, and work-life balance. Research has looked at these concepts for over twenty years in general terms (Altroni & Paxon 1988; White & Keith 1990) looking at working hours, shift work and effects on the quality and stability of marital relations. Some studies in construction industries overseas have been completed over the past ten years (Lingard & Francis 2002, 2004; Lingard et al 2007; Lingard et al 2008; Walker et al 2001). Australian experience shows that construction industry workers work long and irregular hours, and as a result experience a higher level or work-to-family conflict and burnout than office-based workers (Lingard et al 2008). Studies in Hong Kong confirm that similar negative factors make the industry an unattractive place to work. For example, Ip (2009:110) related three reasons why both workers and prospective entrants disliked the industry: (The) industry downturn had led to low wages and unemployment. Stress induced by job instability and lowered income had led a few experienced interviewees to consider leaving the industry for good; Low occupational status and harsh work conditions including omnipresent danger, a rough,, confrontational culture, and long work hours deter youngsters from entering the trade. Youth with a low educational attainment prefer to enter other service industries which may offer career advancement options despite lower pay, and Lack of foreseeable, future growth in local industry and clear career advancement paths also contribute to low worker morale. The final kiss of death view on the industrys attractiveness is captured in Ips statement: During interviews, workers of all cohorts overwhelmingly concurred that they would not encourage their children to enter the industry.
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2.7
Summary of Literature Review

The review has covered all the key concepts that we consider important to the study objectives. We have needed to derive our own definitions of some concepts, such as Boom and Bust, and whilst we would prefer to use existing definitions, we found that some of them did not fully describe what we observe in the real world. The review is not an in-depth and exhaustive exercise, but we have tried to keep it brief, relevant and up-to-date. The problems being experienced by the Hong Kong construction industry are not unique. There are similar examples from many industries around the world, both from developing and developed countries. However, it is clear that there are not many examples of successful solutions to the problems commonly experienced. Despite this knowledge, there are several pointers as to where possible solutions may lie. The data collection and analysis that we describe in the following chapters should be interpreted in the light of the framework we have discovered through this review.
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Chapter 3 Methodology
3.1 Introduction
The section outlines the research approaches adopted for achieving the respective project objective including the sampling, data collection, data processing, independent and dependent variable construction, and data analysis methods. In order to achieve a rigorous verification of the project objectives, both primary and secondary data sources are delineated with robust statistical analyses to be performed upon each data set. With a view to the different algorithms of the data sets, specific data processing methods are also detailed so as to show how the elements of practicability, reliability and validity of the research methodology are triangulated and balanced. Furthermore, common and well-known robust statistical analytical methods are also detailed and tailor-made to the processed data sets so that the statistical interpretations and inferences are able to be generalized and easily understood by the public at large. The first part of this section details the data sources for the research approaches adopted for each project objective. The second part defines the independent and dependent variables and delineates the data processing methods. The third part relates the statistical analytical methods to each project objective. The fourth part provides a summary of this section.
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3.2
Project Objectives & Data Sources

Both primary and secondary data sources are collected for the following project objectives: (1) Factors causing boom and bust to the Hong Kong construction industry (2) Quality improvement of the construction workforce in the next decade in Hong Kong
3.2.1
Primary Data Sources Questionnaire Survey Primary data sources from the questionnaire survey with respondents targeted at construction professionals are used. The questionnaire is attached in Appendix B, which comprises the following questions:
(1) Personal information Question No. 1 to 3 about the employment status, management level and overseas work experience
(2) Problems during boom and bust times Question No. 4 and 5 define the problems encountered by the organizational unit where the respondents are situated as follows: a) Unit economic efficiency b) Unit work safety c) Unit quality of work output d) Unit work performance reliability e) Reluctance to invest in training f) Difficulties in recruiting young people g) Reluctance to invest in business or organization h) Reluctance to innovate
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(3) Personal experience during boom and bust times Question 6 and 7 define the personal experience of the respondents as follows: a) I changed employer b) I changed project c) My role on projects changed d) My colleagues changed frequently e) Change in my work reliability f) Change in my workload and work hours g) Change in quality of my work output h) Change in my remuneration package i) My personal development opportunities j) Change in my training opportunities k) Change in my safety and health risk l) Change in my work experience m) My enjoyment, fulfilment and meaningfulness of work n) Change in a sense of pride in my work o) My work-life balance p) My stress experienced q) Change in my ethical behaviour at work r) Change in my commitment to lifelong learning
3.2.2
Secondary Data Sources Marco-economic Indicators In addition to the primary sources from the questionnaire survey, which serves the purpose of a cross-sectional snapshot of the attitudes and experiences of the respondents for the time being, secondary data sources from various government publications are gathered and processed in order to reflect the long-term picture and repetitive and abrupt phenomenon for the past 30 years of the Hong Kong construction industry. The secondary data sources are summarized in Appendix C, which comprises the following data sets:
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(1) Gross Value of Construction Works (GVCW) reported in the Quarterly Survey of Construction Output from 1983Q1 to 2010Q2, which includes the following categories (See Appendix C1 for details): a) Construction Sites vs. Locations other than Sites b) Private Sector vs. Public Sector c) General Trades vs. Special Trades d) Buildings vs. Structures & Facilities
(2) Employment Indicators and Salary Indices reported in the Hong Kong Monthly Digest of Statistics, which includes the following categories (See Appendix C2 for details): a) General Unemployment & General Unemployment Rate (1983Q1 to 2010Q2)1 b) Unemployment & Unemployment Rate in Construction Sites (1998Q3 to 2010Q2) c) Number of Establishments, Persons Engaged & Vacancies in Construction Sites (1983Q1 to 2010Q2)2 d) Average Daily Wages of Workers Engaged in Public Sector Construction Projects as Reported by Main Contractors (1985Q1 to 2010Q2) e) Salary Index for Managerial and Professional Employees in Building & Construction (1983Q2 to 2010Q2)3 f) Nominal Salary Index A and B by Occupational Group by Occupation (1983Q2 to 2010Q2)4
(3) Financial Indicators & Inflationary Factors reported in the Hong Kong Monthly Digest of Statistics, which includes the following categories:
Data prior to 1983Q1 neglected in order to align with the availability of the GVCW data sets from 1983Q1 to 2010Q2. Ibid. Data became available since 1983Q2 on a yearly basis. Ibid. 27
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a) Money Supply M1, M2 and M3 (1983Q1 to 2010Q2)5 b) Best Lending Rate (BLR) (1983Q1 to 2010Q2)6 c) HIBOR (1984Q4 to 2010Q2) d) Hang Seng Index (1983Q1 to 2010Q2)7 e) Tael Gold Bar (1983Q1 to 2010Q2)8 f) Gross Domestic Products (1994Q2 to 2010Q2) g) Construction Industry GDP (2001Q2 to 2010Q2) h) Composite CPI (1990Q3 to 2010Q2) i) CPI(A) to (C) (1983Q1 to 2010Q2)9
(4) Tender Price Index published by various construction cost consultants and government departments, which includes the following indices: a) RLB Tender Price Index (1983Q1 to 2010Q2)10 b) DLS Tender Price Index (1983Q1 to 2010Q2)11 c) ASD Tender Price Index (1983Q1 to 2010Q2)12 d) Housing Department Tender Price Index (1983Q1 to 2010Q2)13 e) Highways Department Tender Price Index (1996Q1 to 2010Q2) f) CEDD Tender Price Index (1996Q1 to 2010Q2)
Data prior to 1983Q1 neglected in order to align with the availability of the GVCW data sets from 1983Q1 to 2010Q2. Ibid. Ibid. Ibid. Ibid. Ibid. Ibid. Ibid. Ibid. 28
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3.3
Data Collection & Processing Methods
3.3.1
Questionnaire Survey The survey using the questionnaire in Appendix B is conducted by distributing the questionnaire through various arenas including invitation by emails, HKCA webpage, etc., through HKCA corporate members to their employees, etc. With the thankful help of the respondents, 145 returned questionnaires are usable. Most of the questionnaires are fully completed whilst the partially completed questionnaires are used to the extent where the particular questions are fully completed in order to maximize the datasets. The datasets from the completed questions are denoted as categorical variables for Question No. 1a and 1b, continuous variables on a 3-point Likert Scale for Question No. 4 and a 5-point Likert Scale for Question No. 6 and 7. Neither decomposition nor combination is performed upon the datasets.
3.3.2
Macro-economic Indicators Since the GVCWs are only available from 1983Q1 onwards, all indicators and indices with different base years are converted to 1983Q1 prices in general. Inflationary factors including various Consumer Price Indices and Tender Price Indices are converted to 1983Q1 prices as follows:
(1) Consumer Price Indices a) The base year of the CPI(A), CPI(B) and CPI(C) is fixed at 1983Q1. b) Since the Composite CPI is only available from 1990Q3 and CPI(A), CPI(B) and CPI(C) comprise 90% of the Composite CPI, the Composite CPI from 1983Q1 to 1990Q2 are constructed by using 50% CPI(A), 30% CPI(B) and 10% CPI(C), with base year fixed at 1983Q1.
(2) Tender Price Indices a) The base year of the RLB, DLS, ASD and Housing Department TPI is fixed at 1983Q1. b) Since the Highways Department and CEDD TPI from 1996Q1 onwards, the TPI from 1983Q1 to 1995Q4 are constructed by following the geometric trend of the ASD TPI, which is the most relevant comparable for the time being.
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c) A new TPI, Private Sector TPI, is constructed by averaging the RLB and DLS TPI, which account for almost 90% market share of the construction cost consultancy in the private sector. d) A new TPI, Public Sector TPI, is constructed by averaging the ASD, Housing Department, Highways Department and CEDD TPI, which account for over 90% GVCW in the public sector. e) A new TPI, Public/Private Sector TPI, is constructed by applying the GVCW proportions of the public and private sector in construction sites in combining the Private Sector TPI and Public Sector TPI.
(3) Various GVCWs are converted to 1983Q1 prices by using the corresponding new TPI as follows: a) Construction Sites Private Sector GVCW is deflated by the Private Sector TPI. b) Construction Sites Public Sector GVCW is deflated by the Public Sector TPI c) Locations other than Sites General Trades and Special Trades GVCWs deflated by the Public/Private Sector TPI. d) Construction Sites Buildings GVCW is deflated by the Public/Private Sector TPI e) Construction Sites Structures & Facilities GVCW is deflated by the Public Sector TPI
Public Sector Average Daily Wages of Works are converted to the Nominal Wage Indices with base year at 1983Q1. Real Wage Indices are constructed by deflating the Nominal Wage Indices by the CPI(B). The base year of the Nominal Salary Index A and B is fixed at 1983Q1. Real Salary Index A and B are constructed by deflating the Nominal Salary Index A and B by the CPI(C). Financial Indicators are not deflated because they are conventionally assumed to be the prime drivers of inflationary factors.
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3.4
Independent, Dependent and Control Variables

After processing the macro-economic indicators in Section 3.3.2, each indicator is classified either as Independent Variable, Dependent Variable and Control Variable for subsequent robust statistical analyses. Since the project objective is to investigate the factors that are affecting boom and bust in the Hong Kong construction industry and the boom and bust are best reflected by the wage and salary levels and employment and unemployment status, the Dependent Variables therefore include:
(1) (2) (3) (4) (5) (6) (7)
General Unemployment and General Unemployment Rate Construction Unemployment and Construction Unemployment Rate Employment in Construction Sites Public vs. Private Sector Building vs. Civil Engineering Real Wage Indices Real Salary Indices
Various GVCWs are initiatively assumed to be the prime drivers of these Dependent Variables and are therefore taken to be the Independent Variables:
(8) (9) (10) (11) (12) (13) (14) (15) (16) (17)
Construction Sites Private Sector GVCW Construction Sites Public Sector GVCW Locations other than Sites General Trades GVCW Locations other than Sites Special Trades GVCW Construction Sites Buildings Residential Projects GVCW Construction Sites Buildings Commercial Projects GVCW Construction Sites Buildings Industrial & Storage Projects GVCW Construction Sites Buildings Service Projects GVCW Construction Sites Structures & Facilities Transport Projects GVCW Construction Sites Structures & Facilities Utilities & Plant Projects GVCW
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(18) (19)
Construction Sites Structures & Facilities Environment Projects GVCW Construction Sites Structures & Facilities Sports & Recreation Projects GVCW
Other than the Independent Variables driving the boom and bust times of the Hong Kong construction industry, certain Control Variables are inserted in order to reflect the effect of the macro-economic environment:
(20) (21) (22) (23) (24)
BLR and HIBOR Money Supply M3 (naturally logged) Hang Seng Index (naturally logged) Tael Gold Bar (naturally logged) GDP and Construction GDP (naturally logged)
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3.5
Statistical Analytical Methods
3.5.1
Time Series Analysis & Time Lag Analysis In order to align with the format of the GVCW datasets, all variables are converted from either monthly or yearly basis to quarterly basis by using geometric means. However, there may be seasonal effects impacting the time series of the 27-year datasets. With a view to eliminating the possible seasonal effects, the Pearsons Method is applied to the time series of the Independent, Dependent and Control Variables so that the seasonally adjusted variables are used for subsequent statistical analyses. Graphs are produced for the visual inspection of the time lag relationships between various GVCWs, Real Wage Indices and Real Salary Indices. Other than the visual inspection, the Pearsons Correlation Coefficients are also used for indicating these time lag relationships in a robust manner. A time lag from 16 quarters lead to 16 quarters lag is used to investigate the time lag relationships. The exact time lag between any two variables is indicated by the maximum Pearsons Correlation Coefficients among the 37 time lag scenarios. However, since there may be certain situations where the coefficient value continuously goes up or goes down across the 37 time lag scenarios, no time lag relationship is concluded between any two variables if this situation is encountered.
3.5.2
Multivariate MRA & HRA Both multivariate Multiple Regression Analysis (MRA) and Hierarchical Regression Analysis (HRA) are used for testing the impact of each Independent Variable and Control Variable on the Dependent Variables. Both modeling approaches provide regression analysis for multiple Dependent Variables by one or more Independent Variables. In particular, HRA is a multi-stage strategy that investigates variables occurring at multi-levels of analysis. Null hypotheses about the effects of the Independent Variables on the means of various groupings of a joint distribution of the Dependent Variables are tested with tests of significance using Fishers F-distribution. Each set of the Independent Variables is included in the regression equation at different level of analysis. At Model 1 analysis, the Control Variables are included into the regression equation:
2 Yk = + Ci X Ci with RC
(1)
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where Yk is the kth Dependent Variable, is the intercept, Ci is the coefficient for the Control Variables. Independent Variables are included in the regression equation at Model 2 analysis:
2 Yk = + ci X Ci + Di X Di with RD 1C
i i
(2)
where Di is the partial regression coefficient for the Independent Variables. The contribution to the prediction power of Model 2 regression equation by the addition of 2 2 2 2 2 Independent Variables is the difference between RD 1C and RC , i.e. RD = RD1C RC . Change in F-Statistics and R2 values in Model 2 against Model 1 helps show the effects of the set of the Independent Variables. Partial regression coefficient is used to show the effect of each Independent Variable. An Independent Variable is considered as significant if the value of goes to the predicted direction and significant at 0.05 level.
3.6
Concluding Remarks
After processing the datasets of the secondary data sources by using the time series analysis, graphs are produced in Chapter 4 for the time lag analyses by visual inspection and Pearsons Correlation Coefficients and statistical relationships between the Independent, Dependent and Control Variables are investigated by either MRA or HRA. Questionnaire survey results are studied by using either MRA or HRA in Chapter 5. Data analysis of nine interviews of nine leading persons in the construction industry is presented in Chapter 6.
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Chapter 4 Macro-economic Data Analysis

4.1 Introduction
The section reports the time lag analyses by visual inspection and Pearsons Correlation Coefficients amongst pairs of the macro-economic indicators and the multivariate Multiple Regression Analysis (MRA) and Hierarchical Regression Analysis (HRA) for the groups of the Dependent Variables, i.e. employment and unemployment situations, and Real Wage Indices and Real Salary Indices, and the Independent Variables, i.e. various GVCWs, and the Control Variables. The first part of this section briefs the time lag analysis by visual inspection by referring to the graphs produced for the seasonally unadjusted datasets of the macro-economic indicators. Graphs are also produced for the seasonally adjusted datasets in order to show the smoothing effects of the Pearsons Method. The second part details the time lag analysis from another angle by using the Pearsons Correlation Coefficients. The third part reports the MRA and HRA results together with the statistical interpretations in relation to the phenomenon of the Hong Kong construction industry for the past 30 years of boom and bust. The fourth part provides a summary of this section.
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4.2
Time Lag Analysis Visual Inspection

Subsequent to the classification of the macro-economic indicators into the Independent Variables, Dependent Variables and Control Variables in Section 3.4, a time lag among pairs of each group of variables exists and this section is delegated to the visual inspection of such time lag relationships. As a usual tool for visual inspection for this purpose, graphs for each of the following subgroups of variables are produced with certain annotations in order to indicate the time lag from the perspective of visual inspection: (1) Independent Variables (Seasonally Unadjusted & Adjusted Time Series) GVCW Construction Sites Public Sector vs. Private Sector GVCW Locations other than Sites General Trades vs. Special Trades GVCW Construction Sites Buildings Residential, Commercial, Industrial & Storage vs. Service GVCW Construction Sites Structures & Facilities Transport, Utilities & Plant, Environment vs. Sports & Recreation (2) Dependent Variables (Seasonally Adjusted Time Series) Unemployment - General and Construction Unemployment Rate - General and Construction Construction Employment in Construction Sites Real Wage Index Real Salary Index A Real Salary Index B (3) Control Variables (Seasonally Unadjusted & Adjusted Time Series) Money Supply M1, M2 and M3 Hang Seng Index Tael Gold Bar Overall GDP Construction GDP (4) Inflationary Factors (Seasonally Adjusted Time Series) Composite CPI CPI(A), CPI(B) and CPI(C) Tender Price Index
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GVCW Type Public Sector vs. Private Sector
Seasonally Unadjusted Half-Cycle Time Public Sector 11.75 years Private Sector 12.25 years Time Lag Peak/Boom Public Sector led by 1 year Bottom/Bust Public Sector led by 1.5 years Half-Cycle Time General Trades 2.75 years Special Trades 2.25 years Time Lag Peak/Boom Special Trades led by 1 year Bottom/Bust Special Trades led by 1.5 years
Seasonally Adjusted Half-Cycle Time Public Sector 11.25 years Private Sector 8.5 years Time Lag Peak/Boom Public Sector led by 1.75 years Bottom/Bust Private Sector led by 1 year Half-Cycle Time General Trades 2 years Special Trades 3 years Time Lag Peak/Boom Special Trades led by 1 year Bottom/Bust No time lag Half-Cycle Time Construction Sites 12.25 years Locations other than Sites 1.75 years Time Lag Peak/Boom Construction Sites led by 0.5 years Bottom/Bust No time lag Half-Cycle Time Residential 8 years Commercial 11.75 years Time Lag Peak/Boom Commercial led Residential by 1.75 years Bottom/Bust Residential led Residential by 2.5 year Half-Cycle Time 16 years in general
General Trades vs. Special Trades
Construction Sites vs. Locations other than Sites
Half-Cycle Time Construction Sites 6 years Locations other than Sites 2 years Time Lag Peak/Boom Construction Sites led by 4.5 years Bottom/Bust Construction Sites led by 0.5 year
Residential vs. Commercial
Half-Cycle Time Residential 8 years Commercial 12.25 years Time Lag Peak/Boom Commercial led Residential by 1.75 years Bottom/Bust Residential led Residential by 2.5 year
Transport vs. Utilities & Plant vs. Environment vs. Sports & Recreation Buildings vs. Structures & Facilities
Half-Cycle Time 16 years in general
Half-Cycle Time Buildings 10.25 years Structures & Facilities 12.75 years Time Lag Peak/Boom Structures & Facilities led by 1.5 years Bottom/Bust No time lag
Half-Cycle Time Buildings 8 years Structures & Facilities 12.25 years Time Lag Peak/Boom Structures & Facilities led by 3 years Bottom/Bust Buildings led by 1.25 years
Table 4.1 Summary of Time Lag Relationships amongst GVCWs

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4.2.1
Independent Variables Figure 4.1 to 4.12 show the graphs for the seasonally unadjusted and adjusted time series for various GVCWs in order to indicate the smoothing effects of the Pearsons Method. Table 4.1 summarizes the time lag relationships for both seasonally unadjusted and adjusted time series shown in Figure 4.1 to 4.12. (1) Public and Private Sector GVCWs Figure 4.1 compares the seasonally unadjusted time series of the Public and Private Sector GVCWs. Public Sector GVCW, which is an indicator of the government spending in the construction industry, attained its peak in the 1996Q4 and then went downwards, albeit fluctuating, from HK$4.5B in the 1996Q4 to its bottom, i.e. HK$1B, in the 2008Q3. On the other hand, Private Sector GVCW, which is on the other hand an indicator of the developer spending in the construction industry, reached its peak, i.e. HK$4.9B, in the 1997Q4 and had fluctuated between HK$3.2B and HK$4.9B for 5 years until the 2002Q4 before it went straight to its bottom, i.e. HK$1.8B, in the 2010Q1. By looking at the recent peak-bottom time frame, the half-cycle times for the government spending and developer spending in the construction industry are 11.75 years and 12.25 years respectively. Moreover, the government spending led the developer spending by 1 year as indicated by the time difference in reaching the peak and the former also led the latter by 1.5 years in reaching the bottom. Although the extents of time lag are different as indicated by the peak and bottom, both time lags suggest that the government spending is leading the developer spending. Figure 4.2 depicts the seasonally adjusted time series of the Public and Private Sector GVCWs. The smoothed time series show that the government spending peaked in the 1996Q3 and bottomed in the 2007Q4, i.e. half-cycle time is 11.25 years. On the other hand, the half-cycle time for the developer spending is 8.5 years, i.e. from the 1998Q2 to the 2006Q4. Unlike the seasonally unadjusted time series in Figure 4.1, the government spending led the developer spending by 1.75 years in reaching the peak whilst the latter led the former by 1 year in touching the bottom in Figure 4.7 after taking into account the smoothing effect of the Pearsons Method. The government spending is leading the developer spending in the peak by using both seasonally unadjusted and adjusted time series but the former may or may not lead the latter in the bottom. This implies that the government spending is a leading indicator of the developer spending in the peak but not in the bottom, i.e. there may be another driver behind the time lag relationship between the two types of spending. Further investigation of this observation is highly recommended.
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Figure 4.1 - Real Gross Value of Construction Works by Trade Construction Sites (1983Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Unadjusted)
6,000 5,000 4,000 3,000 2,000 1,000 0 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 Figure 4.2 - Real Gross Value of Construction Works by Trade Construction Sites (1984Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Adjusted) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Private Sector Public Sector Private Sector Public Sector
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(2) General Trades and Special Trades GVCWs Figure 4.3 shows the seasonally unadjusted time series of the General Trades and Special Trades GVCWs. General Trades GVCW, e.g. fitting out works, reached its peak, i.e. HK$3.2B, in the 2006Q4 and its bottom, i.e. HK$2.3B, in the 2009Q3, with a half-cycle time of 2.75 years. Special Trades GVCW, e.g. spending in building services refurbishment, peaked in the 2005Q4 with HK$1.2B and bottomed in the 2008Q1 with HK$0.8B, i.e. the half-cycle time is 2.25 years. The latter therefore led the former by 1 year at the peak and 1.5 years at the bottom. Both time lags conclude that the Special Trades GVCW is leading the General Trades GVCW. This implies that the spending in building services, which is more localized and usually triggered as a matter of technical urgency, e.g. functional obsolescence, regular check and maintenance, etc., usually leads and comes with the spending in general refurbishment involving fitting out works. Figure 4.4 depicts the seasonally adjusted time series of the General Trades and Special Trades GVCWs. The smoothed time series of the General Trades GVCW peaked in the 2006Q4 and bottomed in the 2008Q4 with a half-cycle time of 2 years. On the other hand, the smoothed Special Trades GVCW attained its peak in the 2005Q4 and its bottom in the 2008Q4 with a half-cycle time of 3 years. Special Trades GVCW therefore led the General Trades GVCW by 1 year in reaching the peak and bottomed at the same time. Both seasonally unadjusted and adjusted time series suggest that the spending in building services maintenance and/or refurbishment is leading the spending in general renovation works. However, this time lag relationship is not obvious at the bottom of both GVCWs. Same as the time lag relationship between the Public and Private Sector GVCWs, there may be a third driver behind the time lag relationship between the General and Special Trades GVCWs, which deserves further investigation.
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Figure 4.3 - Real Gross Value of Construction Works by Trade Locations other than Sites (1983Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Unadjusted)
3,500 3,000 2,500 2,000 1,500 1,000 500 0 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 Figure 4.4 - Real Gross Value of Construction Works by Trade Locations other than Sites (1984Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Adjusted) 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 General Trades Special Trades General Trades Special Trades
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(3) Construction Sites and Locations other than Sites GVCWs Figure 4.5 compares the seasonally unadjusted time series of the Construction Sites and Locations other than Sites GVCWs. Construction Sites GCCW combines both Public and Private Sector GVCWs whilst the Locations other than Sites GVCW is the sum of the General and Special Trades GVCWs. Construction Sites GVCW, i.e. spending in new construction works, reached its peak, i.e. HK$8B, in the 2001Q4 and its bottom, i.e. HK$3.5B in the 2007Q4, with a halfcycle time of 6 years. Locations other than Sites GVCW, i.e. spending in refurbishment and renovation, touched its peak, i.e. HK$4B, in the 2006Q2 and its bottom, i.e. HK$3B, in the 2008Q2, with a half-cycle time of 2 years. The former therefore led the latter by 4.5 years at the peak and 0.5 year at the bottom. Although the extents of time lag at the peak and bottom are greatly different, both of them suggest that the spending in new construction works is leading the spending in refurbishment and renovation. Figure 4.6 compares the seasonally adjusted time series of the Construction Sites and Locations other than Sites GVCWs. The smoothed Construction Sites GVCW shows a much longer half-cycle of 12.25 years, i.e. with the peak in the 1996Q3 and the bottom in the 2008Q4. On the contrary, the Locations other than Sites GVCW peaked in the 2007Q1 and bottomed in the 2008Q4 with a half-cycle time of 1.75 year, which is similar to the seasonally unadjusted time series in Figure 4.3. Although the half-cycle time is somehow different from the unsmoothed times series, the spending in new construction works is again leading the spending in refurbishment and renovation at the peak. Since the former only led the latter by 0.5 year at the bottom by using the seasonally unadjusted time series and no time lag is detected for the seasonally adjusted time series at the bottom, both seasonally unadjusted and adjusted time series give the same conclusion. However, same as the time lag relationships between the respective components of the Construction Sites and Locations other than Sites GVCWs when the bottoms are investigated, the ambiguous time lag relationship between the Construction Sites and Locations other than Sites GVCWs at the bottom may indicate a third driver behind the two and requires further investigation.
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Figure 4.5 - Real Gross Value of Construction Works by Trade (1983Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Unadjusted)
25,000
20,000
15,000
Construction Sites Locations other than Sites
10,000 Total Value 5,000
0 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 Figure 4.6 - Real Gross Value of Construction Works by Trade (1984Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Adjusted) 25,000 20,000 15,000 Construction Sites Locations other than Sites 10,000 Total Value 5,000 0 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2
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(4) Construction Sites GVCW in terms of the Residential, Commercial, Industrial & Storage and Service GVCWs Figure 4.7 shows the seasonally unadjusted time series of the various components of the Construction Sites GVCW in terms of the Residential, Commercial, Industrial & Storage and Service GVCWs. Both Industrial & Storage and Service GVCWs fluctuated for most of the time for the past 27 years between HK$0.1B and HK$0.9B. On the other hand, the Residential and Commercial GVCWs had much bigger swing since 1997. Residential GVCW reached its peak, i.e. HK$4.4B, in the 1999Q3 and its bottom, i.e. HK$1.2B, in the 2007Q3 with a halfcycle time of 8 years. At the same time, Commercial GVCW peaked at HK$1.4B in the 1997Q4 and bottomed at HK$0.4B in the 2010Q1 with a half-cycle time of 12.25 years. This shows that the latter led the former by 1.75 years at the peak but the former led the latter by 2.5 years at the bottom, i.e. the former has a much shorter half-cycle time than the latter. With a view to the town planning practices in Hong Kong, each district is very often designated as either residential or commercial district in terms of its economic and social functions. Generally speaking, the spending in residential and commercial developments cannot be easily theorized by looking at their time lag relationships. It is particularly shown in this case that both the half-cycle times and time lags at the peak and bottom indicate that both Residential and Commercial GVCWs belong to two different markets and their time lag relationships may or may not have a causal relationship or third driver linking up them behind. Figure 4.8 depicts the seasonally adjusted time series of the various components of the Construction GVCW in terms of the Residential, Commercial, Industrial & Storage and Service GVCWs. The smoothed Residential GVCW similarly peaked in the 1999Q4 and bottomed in the 2007Q4 with a half-cycle time of 8 years. At the same time, the Commercial GVCW also reached its peak in the 1998Q1 and its bottom in the 2009Q4 with a half-cycle time of 11.75 years. Both seasonally unadjusted and adjusted time series therefore give similar conclusions for the time lag relationships between the Residential and Commercial GVCWs.
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Figure 4.7 - Real Gross Value of Construction Works by Broad End-Use Group Buildings (1983Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Unadjusted)
5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1
Figure 4.8 - Real Gross Value of Construction Works by Broad End-Use Group Buildings (1984Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Adjusted) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Industrial & Storage Service Residential Commercial
Residential Commercial Industrial & Storage Service
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(5) Structures & Facilities GVCW in terms of the Transport, Utilities & Plant, Environment and Sports & Recreation GVCWs Figure 4.9 compares the seasonally unadjusted time series of the various components of the Structures & Facilities GVCW in terms of the Transport, Utilities & Plant, Environment and Sports & Recreation GVCWs. Structures & Facilities GVCW by definition in Hong Kong is solely contributed by the Public Sector and is therefore one of the components of the Public Sector GVCW. All the four Structures & Facilities GVCW components do not exhibit any salient time lag relationships among them but they generally attained their peaks in 1993Q4 and reached their bottoms in 2009Q4 with a half-cycle time of 16 years. This is similar to the trend of the Public Sector GVCW in Figure 4.1, which peaked in the 1997Q4 and bottomed in the 2010Q1 with a half-cycle time of 12.25 years. Figure 4.10 shows the seasonally adjusted time series of the various components of the Structures & Facilities GVCW in terms of the Transport, Utilities & Plant, Environment and Sports & Recreation GVCWs. The smoothed times series of various components of the Structures & Facilities GVCW also show the same half-cycle time of 16 years, i.e. with the peak in the 1993Q4 and bottom in the 2009Q4. Both the seasonally unadjusted and adjusted time series suggest that the Structures & Facilities GVCW components, which share over 90% Public Sector GVCW, are leading the other minor Public Sector GVCW components. Moreover, this also exhibits that the Structures & Facilities GVCW as the major component of the Public Sector GVCW is the one that is actually leading the Private Sector GVCW, which can best reflect the general town planning direction of the government and the investment strategy of the developers.
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Figure 4.9 - Real Gross Value of Construction Works by Broad End-Use Group Structures (1983Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Unadjusted)
3,000 2,500 2,000 1,500 Environment 1,000 500 0 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 Figure 4.10 - Real Gross Value of Construction Works by Broad End-Use Group Structures (1984Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Adjusted) 3,000 2,500 2,000 1,500 Environment 1,000 500 0 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Sports & Recreation Transport Other Utilities & Plant Sports & Recreation Transport Other Utilities & Plant
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(6) Buildings GVCW Figure 4.11 compares the seasonally unadjusted time series of the Buildings GVCW, i.e. the gross GVCW of the Residential, Commercial, Industrial & Storage and Service GVCWs shown in Figure 4.4 and those of Structures & Facilities GVCWs, i.e. the gross GVCW of the Transport, Utilities & Plant, Environment and Sports & Recreation shown in Figure 4.5. Buildings GVCW reached its peak, i.e. HK$6.3B, in the 1998Q2 and then went downwards in a more or less straight manner to its bottom, i.e. HK$2.2B, in the 2008Q3, with a half-cycle time of 10.25 years. On the other hand, Structures & Facilities GVCW attained its peak, i.e. HK$4B, in the 1995Q4 and then fluctuated up and down until it reached its bottom, i.e. HK$1.8B, in the 2008Q3, with a half-cycle time of 12.75 years. Government spending in terms of the Public Sector GVCW can at the same time be represented by the Structures & Facilities GVCW whilst the developer spending in terms of the Private Sector GVCW can also be reflected by the Buildings GVCW. While the Public Sector GVCW led the Private Sector GVCW by 1 year at the peak and 1.5 years at the bottom for seasonally unadjusted time series, the Structures & Facilities GVCW is found to have led the Buildings GVCW by 1.5 years at the peak and no time lag is observed at the bottom. This suggests that the government spending in both terms of the Public Sector and Structures & Facilities GVCWs is leading the developer spending at the time the peak is attained. However, the time lag relationship between the government spending and developer spending at the time the bottom is reached again remains ambiguous and undetermined. Figure 4.12 shows the seasonally adjusted time series of the Buildings and Structures & Facilities GVCWs. The smoothed Buildings GVCW attained its peak in the 1998Q4 and its bottom in the 2006Q4 with a half-cycle time of 8 years. On the other hand, the Structures & Facilities GVCW reached its peak in the 1995Q4 and its bottom in the 2008Q1 with a half-cycle time of 12.25 years. The government spending in terms of the Structures & Facilities GVCW hence led the developer spending in terms of the Buildings GVCW by 3 years at the peak but the latter led the former by 1.25 years. This resembles the seasonally adjusted time series of the Public and Private Sector GVCWs shown in Figure 4.7 where the government spending led the developer spending by 1.75 years at the peak but the latter led the former by 1 year at the bottom. In other words, the gross government spending in terms of the Public Sector GVCW and its major component in terms of the Structures & Facilities are leading the developer spending in terms of the Private Sector GVCW and its major component in terms of the Buildings GVCW when comparing their peaks. However, ambiguous time lag relationship between the government spending and developer spending is observed when comparing their bottoms. Despite this, the relatively short and interchanging time lag between the two types of spending at their bottoms suggests that certain noise may exist when these GVCWs are
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approaching their bottoms. In other words, a short fluctuating period may be a normal phenomenon when both government spending and developer spending are reaching their bottoms. The cyclical patterns at the peak and the bottom are therefore driven either by two sets of different factors or by the same set of factors exhibiting similar cyclical patterns. Further investigation is highly recommended.
Figure 4.11 - Real Gross Value of Construction Works by Broad End-Use Group (1983Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Unadjusted)
18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 Figure 4.12 - Real Gross Value of Construction Works by Broad End-Use Group (1984Q1 to 2010Q2) (Deflated by TPI (1983Q1 = 100); Seasonally Adjusted) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Buildings Structures & Facilities Total Value Buildings Structures & Facilities Total Value
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Employment Indicators General Unemployment vs. Construction Unemployment
Seasonally Unadjusted Half-Cycle Time General Unemployment 4.5 years Construction Unemployment 5 years
Seasonally Adjusted Half-Cycle Time General Unemployment 5.5 years Construction Unemployment 4.75 years Time Lag Peak/Boom General Unemployment led by 1 year Bottom/Bust General Unemployment led by 0.25 year Half-Cycle Time General Unemployment Rate 5.25 years Construction Unemployment Rate 5.25 years Time Lag Peak/Boom No time lag Bottom/Bust No time lag
Time Lag Peak/Boom General Unemployment led by 0.25 year Bottom/Bust General Unemployment led by 0.75 year General Unemployment Rate vs. Construction Unemployment Rate
Not Applicable
Civil Engineering Employment vs. Building Employment
Half-Cycle Time Public Sector Civil Engineering Employment 13.25 years Public Sector Building Employment 8.5 years Private Sector Building Employment 11.5 years Time Lag Peak/Boom Public Sector Civil Engineering Employment led Private Sector Building Employment by 1.75 years. Private Sector Building Employment led Public Sector Building Employment by 1.75 years Bottom/Bust Public Sector Building Employment led Public Sector Civil Engineering Employment and Private Sector Building Employment by 1.25 years
Half-Cycle Time Public Sector Civil Engineering Employment 12.75 years Public Sector Building Employment 7 years Private Sector Building Employment 11.25 years Time Lag Peak/Boom Public Sector Civil Engineering Employment led Private Sector Building Employment by 1.5 years. Private Sector Building Employment led Public Sector Building Employment by 1.5 years Bottom/Bust Public Sector Building Employment led Public Sector Civil Engineering Employment and Private Sector Building Employment by 2.75 years Half-Cycle Time Public Sector 11.75 years Private Sector 1 year Time Lag Peak/Boom Public Sector led by 1.75 years Bottom/Bust Public Sector led by 1 year
Public Sector Construction Employment vs. Private Sector Construction Employment
Half-Cycle Time Public Sector 11.75 years Private Sector 11.5 years Time Lag Peak/Boom Public Sector led by 1.25 years Bottom/Bust Public Sector led by 1 year
Table 4.2 Summary of Time Lag Relationships amongst Employment
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4.2.2
Depending Variables (1) Employment Figure 4.13 to 4.19 show the seasonally unadjusted and adjusted time series of the employment, including the general and construction unemployment, and the employment in the Construction Sites for both Public and Private Sector. Table 4.2 summarizes the time lag relationships for both seasonally unadjusted and adjusted time series shown in Figure 4.13 to 4.19. General Unemployment and Construction Unemployment Figure 4.13 depicts the seasonally unadjusted time series of the General Unemployment and Construction Unemployment. General Unemployment started to rise from nearly 40,000 in number in late 1980s and fluctuated upwards to its peak, i.e. 300,000, in the 2003Q2 and then went straight downwards to its bottom, i.e. 120,000, in the 2007Q4, with a half-cycle time of 4.5 years. On the other hand, the Construction Unemployment started to drop from its peak, i.e. 65,000, in the 2003Q3 in a fluctuating manner to its bottom, i.e. 20,000, in the 2008Q3 with a half-cycle time of 5 years. In other words, the former led the latter by 0.25 year at the peak and by 0.75 year at the bottom. Both time lags suggest that the General Unemployment is leading the Construction Unemployment. Figure 4.14 shows the seasonally adjusted time series of the General Unemployment and Construction Unemployment. The smoothed General Unemployment reached its peak in the 2003Q1 and its bottom in the 2008Q3 with a half-cycle time of 5.5 years. At the same time, the Construction Unemployment peaked in the 2004Q1 and bottomed in the 2008Q4 with a half-cycle time of 4.75 years. This indicates that the General Unemployment led the Construction Unemployment by 1 year at the peak and by 0.25 year at the bottom. Both seasonally unadjusted and adjusted time series therefore conclude that the General Unemployment is leading the Construction Unemployment.
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Number
100,000 150,000 200,000 250,000 300,000 100,000 50,000 150,000 200,000 250,000 300,000 50,000 0
Number
Figure 4.14 - General vs Construction Unem ploym ent (1983Q1 to 2010Q2) (Seasonally Adjusted)
Figure 4.13 - General vs Construction Unem ploym ent (1982Q1 to 2010Q2) (Seasonally Unadjusted)
52
General Construction
1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 General Construction
1982Q1 1982Q4 1983Q3 1984Q2 1985Q1 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4
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General and Construction Unemployment Rate Figure 4.15 compares the seasonally adjusted General and Construction Unemployment Rate. Despite the fact that the General Unemployment is leading the Construction Unemployment in numbers, both General Unemployment Rate and Construction Unemployment Rate peaked in the 2003Q2 and bottomed in the 2008Q3 with a half-cycle time of 5.25 years. There is therefore no time lag between the General and the Construction Unemployment Rate. When unemployment in terms of numbers and rates are put together, the construction workforce is shown to have lost jobs at the same pace as the general public but recovered at a slower pace than other industries.
Figure 4.15 - General vs Construction Unem ploym ent Rate (1982Q1 to 2010Q2) (Seasonally Adjusted)
20.0% 18.0% 16.0% 14.0%
Percentage
12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1982Q1 1982Q4 1983Q3 1984Q2 1985Q1 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4 General Construction
53
March 2011
Construction Employment in Construction Sites Figure 4.16 shows the seasonally unadjusted time series of the Construction Employment in Construction Sites in terms of the Public and Private Sector. Since the civil engineering employment in the Public Sector bears a very different nature against the civil engineering employment in the Private Sector because the government spending dominates the whole civil engineering market, it is more meaningful to focus on the civil engineering employment of the Public Sector and the building employment of the Public and Private Sector. Amongst the three types of construction employment, the civil engineering employment of the Public Sector attained its peak first, i.e. 27,000 in number, in the 1996Q2 and had a big swing between 10,000 and 22,000 and reached its bottom, i.e. 9,500, in the 2009Q3 with a half-cycle time of 13.25 years. The building employment of the Private Sector then reached its peak, i.e. 44,000, in the 1998Q1 and again had a big swing between 27,500 and 44,000 and touched its bottom, i.e. 27,500, in the 2009Q3 with a half-cycle time of 11.5 years. The building employment of the Public Sector reached its peak the latest, i.e. 29,000, in the 1999Q4 and then went straight downwards to its bottom, i.e. 7,000, in the 2008Q2 with a half-cycle time of 8.5 years. Same as the observation that the major component of the government spending in terms of the Structures & Facilities GVCW is leading the other minor components of the government spending and the major components of the developer spending in terms of the Buildings GVCW, the civil engineering employment of the Public Sector led the building employment of the Private Sector by 1.75 years at the peak, which in turn led the building employment of the Public Sector by 1.75 years at the peak. In other words, the civil engineering employment led the building employment by 3.5 years in the Public Sector at the peak. On the other hand, the building employment in the Public Sector led both civil engineering employment of the Public Sector and building employment of the Private Sector by 1.25 years at the bottom. In other words, the latter two employment types bottomed at the same time. Despite the fact that the leading role of the building employment of the Private Sector seems to be contradictory to the general town planning direction of the government, the unexplained time lag relationships amongst the three employment types at their bottoms resemble the mixed situations of the Public and Private Sector GVCWs at their bottoms. The different cyclical patterns at the peaks and bottoms may be driven by other factors, which deserve further investigation.
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March 2011
Figure 4.16 - Construction Em ploym ent in Construction Sites (Building vs Civil Engineering) (1982Q2 to 2010Q2) (Seasonally Unadjusted)
50,000 45,000 40,000 35,000 Public Sector Building Public Sector Civil Engineering Private Sector Building Private Sector Civil Engineering
Number
30,000 25,000 20,000 15,000 10,000 5,000 0
50,000 45,000 40,000 35,000 Public Sector Building Public Sector Civil Engineering Private Sector Building Private Sector Civil Engineering 15,000 10,000 5,000 0 1983Q2 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2
Number
30,000 25,000 20,000
1982Q2 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1 Figure 4.17 - Construction Em ploym ent in Construction Sites (Building vs Civil Engineering) (1983Q2 to 2010Q2) (Seasonally Adjusted)
55
March 2011
Figure 4.17 compares the seasonally adjusted time series of the Construction Employment in Construction Sites in terms of the Public and Private Sector. The smoothed civil engineering employment of the Public Sector reached its peak in the 1996Q4 and its bottom in the 2009Q3 with a half-cycle time of 12.75 years. The building employment of the Private Sector on the other hand peaked in the 1998Q2 and bottomed in the 2009Q3 with a half-cycle time of 11.25 years. The building employment of the Public Sector then touched its peak in the 1999Q4 and its bottom in the 2006Q4 with a half-cycle time of 7 years. Similar to the seasonally unadjusted time series, the smoothed civil engineering employment of the Public Sector led the building employment of the Private Sector by 1.5 years at the peak, which in turn led the building employment of the Public Sector by 1.5 years at the peak. The smoothed civil engineering employment hence led the building employment of the Public Sector by 3 years at the bottom. When the bottoms are looked at, the building employment of the Public Sector again led both civil engineering employment of the Public Sector and building employment of the Private Sector by 2.75 years at the bottom. In other words, the latter two employment types bottomed at the same time. This indicates that the civil engineering employment of the Public Sector is leading the other two employment types in the bottom for both seasonally unadjusted and adjusted time series.
Figure 4.18 - Construction Em ploym ent in Construction Sites (Public vs Private Sector) (1982Q2 to 2010Q2) (Seasonally Unadjusted)
100,000 90,000 80,000 70,000
Number
60,000 50,000 40,000 30,000 20,000 10,000 0 1982Q2 1983Q1 1983Q4 1984Q3 1985Q2 1986Q1 1986Q4 1987Q3 1988Q2 1989Q1 1989Q4 1990Q3 1991Q2 1992Q1 1992Q4 1993Q3 1994Q2 1995Q1 1995Q4 1996Q3 1997Q2 1998Q1 1998Q4 1999Q3 2000Q2 2001Q1 2001Q4 2002Q3 2003Q2 2004Q1 2004Q4 2005Q3 2006Q2 2007Q1 2007Q4 2008Q3 2009Q2 2010Q1
Public Sector Private Sector Total Employment
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March 2011
Figure 4.18 summaries the seasonally unadjusted Construction Employment in Construction Sites. When both building and civil engineering employment are put together, the construction employment of the Public Sector attained its peak, i.e. 47,000, in the 1996Q4 and its bottom, i.e. 18,000, in the 2008Q3 with a half-cycle time of 11.75 years. On the other hand, the construction employment of the Private Sector reached its peak, i.e. 46,000, in the 1998Q1 and its bottom, i.e. 29,000, in the 2009Q3 with a half-cycle time of 11.5 years. The construction employment of the Public Sector hence led the Private Sector by 1.25 years at the peak and by 1 year at the bottom. These two findings suggest that the construction employment of the Public Sector is leading the Private Sector, which is in line with the finding that the government spending is leading the developer spending Figure 4.19 shows the seasonally adjusted Construction Employment in Construction Sites. Same as the seasonally unadjusted time series, the smoothed construction employment of the Public Sector reached its peak in the 1996Q4 and its bottom in the 2008Q3 with a half-cycle time of 11.75 years. Similar to the seasonally unadjusted time series, the smoothed construction employment of the Private Sector peaked in the 1998Q3 and bottomed in the 2009Q3 with a half-cycle time of 11 years. In other words, the construction employment of the Pubic Sector therefore led the Private Sector by 1.75 years at the peak and by 1 year at the bottom. The smoothed construction employment again confirms that the government spending is leading the developer spending.
Figure 4.19 - Construction Em ploym ent in Construction Sites (Public vs Private Sector) (1983Q2 to 2010Q2) (Seasonally Adjusted)
90,000 80,000 70,000 60,000 Public Sector Private Sector Total Employment
Number
50,000 40,000 30,000 20,000 10,000 0 1983Q2 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2
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March 2011
(2) Real Wage Index Figure 4.20 to 4.22 compare the Real Wage Index for the construction workers employed in the Construction Sites of the Public Sector and the Real Salary Index A and B for the construction managerial and professional employees. Table 4.3 summarizes the time lag relationships shown in Figure 4.20 to 4.22.
Wage/Salary Indices Real Wage Index vs. Government spending
Seasonally Adjusted Half-Cycle Time Real Wage Index 4.25 to 6.75 years Time Lag Peak/Boom Government spending led by 5.5 to 7 years Bottom/Bust No time lag
Real Salary Index A vs. Government spending
Half-Cycle Time Real Salary Index A 2.75 to 7 years Time Lag Peak/Boom Government spending led by 3.5 to 6 years Bottom/Bust Real Salary Index A led by 2.5 years
Real Salary Index B vs. Government spending
Half-Cycle Time Real Salary Index B 2 to 8.5 years Time Lag Peak/Boom Government spending led by 4.5 to 9.75 years Bottom/Bust Government spending led by 0.25 to 2 years
Table 4.3 Summary of Time Lag Relationships amongst Wage/Salary Indices
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March 2011
Figure 4.20 shows the Real Wage Index of the construction workers employed in the Construction Sites of the Public Sector. After deflating the Nominal Wage Index by the CPI(B), which covers the normal income range of the daily paid construction workers employed for new construction works, the Real Wage Index of the following major trade workers is included in Figure 4.20: Concretor, Bricklayer & Drainlayer Rebar Fixer Formworker Scaffolder Plasterer Painter Leveller Electrical Fitter General Labour
Figure 4.20 - Real Wage Index of Construction Workers in Public Sector (1985Q4 to 2010Q2) (Deflated by CPI(B) (1983Q1 = 100)
250 Concretor, Bricklayer & Drainlayer 225 200 Rebar Fixer Formw orker Scaffolder Plasterer 150 125 100 75 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4 Painter Leveller Electrical Fitter General Labour
Index
175
59
March 2011
After the gross government spending, i.e. Public Sector GVCW, had reached its peak in the 1996Q3 to 1996Q4 and its major component, i.e. Structures & Facilities GVCW, had attained its peak in the 1995Q4 in Figure 4.1, 4.6, 4.7 and 4.12, the civil engineering and building employment of the Public Sector remained at the peak until the 1996Q4 and 1999Q4 respectively in Figure 4.16 and 4.17. The Real Wage Index of most of the major trade workers continued to increase until the 2002Q2 to 2003Q3 in Figure 4.20. This suggests that, when the government spending begins to fall from its peak, the capital intensive phase gradually migrates to the labour intensive phase of the construction projects, e.g. from the completion of the structural works to the full swing wet/dry trade installation. In other words, the labour content becomes dominating the government spending when it is going downwards. The Real Wage Index therefore continues to increase for some time until the completion of the construction projects with a time lag of 5.5 to 7 years even after the government spending reached its peak.
Unlike the pattern at the peak of the government spending, the Real Wage Index fell sharply downwards by around 30% to its bottom in the 2007Q4 to 2009Q1 in Figure 4.20 when the gross government spending and its major component touched their bottoms in the 2007Q4 to 2008Q1 in Figure 4.1, 4.6, 4.7 and 4.12 and the civil engineering and building employment of the Public Sector reached their bottoms in the 2006Q4 to 2009Q3 in Figure 4.16 and 4.17. The half-cycle time of the Real Wage Index is therefore 4.25 to 6.75 years. At the same time, the government spending, construction employment and the Real Wage Index therefore bottomed during the similar period. The Real Wage Index of the major trade workers as well as the construction employment started to recover from their bottoms as soon as the government spending was recovering. Since both early and late construction stages are normally labour intensive, the labour content is used to dominate the government spending at these two stages and the Real Wage Index usually rises once the government spending starts to increase. The Real Wage Index therefore bears almost no time lag with the government spending at its bottom. Figure 4.21 compares the Real Salary Index A of the construction managerial and professional employees deflated by CPI(C). Similar to the observations of the Real Wage Index in Figure 4.20, the Real Salary Index A, which indicates the real salary levels of various construction professionals employed in the same company for fewer than two years, also exhibits certain time lag from the peak of the government spending in the 1996Q3 to 1996Q4 and continued to rise until the 2000Q2 to 2002Q3. However, the reasons behind such time lag at the peak are quite different from the abovementioned labour intensive arguments for the Real Wage Index. The professional employment usually remains stable across the construction projects until their completion. After the government spending peaks after the capital intensive phase of the construction projects, i.e. turning point at the completion of the structural works, the professional content rises even more than the labour content and the relative demand of the construction professionals is comparable to the construction workers. The Real Salary Index A therefore
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continues to increase for some time until the completion of the construction projects with a time lag of 3.5 to 6 years even after the government spending reached its peak. After reaching its peak, the Real Salary Index A then fell by 10~20% until its bottom in the 2005Q2 to 2009Q2 in Figure 4.21 when the gross government spending and its major component touched their bottoms in the 2007Q4 to 2008Q1 in Figure 4.1, 4.6, 4.7 and 4.12 and the civil engineering and building employment of the Public Sector reached their bottoms in the 2006Q4 to 2009Q3 in Figure 4.16 and 4.17. The half-cycle time of the Real Salary Index A is therefore 2.75 to 7 years. Same as the Real Wage Index, the Real Salary Index A therefore bottomed during the similar period to or even earlier than the government spending and construction employment. Both Real Salary Index A of the construction professionals and Real Wage Index of the major trade workers started to recover from their bottoms as soon as the government spending rebounded from its bottom. Since the construction professionals always dominate the pre-construction stage of every construction project, the relative demand for the construction professionals vis--vis construction workers is the highest during the early construction stage when the capital involved is relatively small. The Real Salary Index A usually starts to recover even earlier than the obvious recovery of the government spending. The Real Salary Index A is therefore leading the government spending by 2.5 years at its bottom.
200 180 160 140
Figure 4.21 - Real Salary Index A of Construction Managerial & Professional Em ployees (1983Q2 to 2010Q2) Building and Construction (Deflated by CPI(C) (1983Q1 = 100)) Engineering and other technical support personnel Architect BS Engineer Civil Engineer Electrical Engineer Engineering Manager Mechanical Engineer Project Manager Quantity Surveyor Safety Officer 1983Q2 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Structural Engineer
Index
120 100 80 60 40 20 0
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March 2011
Figure 4.22 compares the Real Salary Index B of the construction managerial and professional employees deflated by CPI(C), which indicates the real salary levels of various construction professionals employed in the same company for more than two years. Unlike the Real Salary Index A in Figure 4.21, the Real Salary Index B is generally rising for the past 27 years without salient drop from any peak or sudden rise from any bottom. Strictly speaking, the Real Salary Index B reached its peak in the 2001Q2 to 2006Q2 and its bottom in the 2008Q2 to 2009Q4 with a half-cycle time of 2 to 8.5 years, which are very wide ranges indicating that various construction professionals having long term employment in the same company have their own patterns of salary levels. Generally speaking, the reasons behind the time lag relationships between the Real Salary Index A and the government spending are applicable to the Real Salary Index B. The government spending therefore led the Real Salary Index B by 4.5 to 9.75 years at the peak and by 0.25 to 2 years at the bottom. However, there obviously exists another set of factors affecting the peak and bottom patterns of the non-stop rising Real Salary Index B, e.g. organization tenure, work experience, management level, etc. All these possible factors may help to explain why the up and down swing of the government spending may have little impact on the salary levels of those construction professionals having longer employment in the same company.
Figure 4.22 - Real Salary Index B of Construction Managerial & Professional Em ployees Building and Construction (1983Q2 to 2010Q2) (Deflated by CPI(C) (1983Q1 = 100)) Engineering and other technical support personnel Architect 400 BS Engineer 350 Civil Engineer 300 Electrical Engineer 250
Index
Engineering Manager Mechanical Engineer Project Manager Quantity Surveyor Safety Officer 1983Q2 1984Q1 1984Q4 1985Q3 1986Q2 1987Q1 1987Q4 1988Q3 1989Q2 1990Q1 1990Q4 1991Q3 1992Q2 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003Q3 2004Q2 2005Q1 2005Q4 2006Q3 2007Q2 2008Q1 2008Q4 2009Q3 2010Q2 Structural Engineer
200 150 100 50 0
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March 2011
Control Variables Money Supply vs. Government spending vs. Real Wage Index vs. Real Salary Index Hang Seng Index vs. Government spending vs. Real Wage Index vs. Real Salary Index Tael Gold Bar vs. Government spending vs. Real Wage Index vs. Real Salary Index GDP vs. Construction GDP
Seasonally Unadjusted Half-Cycle Time Money Supply No half-cycle is observed Time Lag Peak/Boom No time lag Bottom/Bust No time lag Half-Cycle Time Hang Seng Index No half-cycle is observed Time Lag Peak/Boom Hang Seng Index coherent with others Bottom/Bust Hang Seng Index reciprocal to others Half-Cycle Time Tael Gold Bar No half-cycle is observed Time Lag Peak/Boom Tael Gold Bar noncoherent/reciprocal to others Bottom/Bust Tael Gold Bar noncoherent/reciprocal to others Half-Cycle Time GDP No half-cycle is observed Construction GDP No half-cycle is observed Time Lag Peak/Boom Undetermined Bottom/Bust GDP led by 5 years Half-Cycle Time All CPIs 6 years Time Lag Peak/Boom No time lag Bottom/Bust No time lag Half-Cycle Time All TPIs 5.25 to 5.5 years Time Lag Peak/Boom No time lag Bottom/Bust No time lag
Seasonally Adjusted Half-Cycle Time No half-cycle is observed Time Lag Peak/Boom No time lag Bottom/Bust No time lag
Half-Cycle Time Hang Seng Index No half-cycle is observed Time Lag Peak/Boom Hang Seng Index coherent with others Bottom/Bust Hang Seng Index reciprocal to others Half-Cycle Time Tael Gold Bar No half-cycle is observed Time Lag Peak/Boom Tael Gold Bar noncoherent/reciprocal to others Bottom/Bust Tael Gold Bar noncoherent/reciprocal to others Half-Cycle Time GDP No half-cycle is observed Construction GDP No half-cycle is observed Time Lag Peak/Boom Undetermined Bottom/Bust GDP led by 5 years
CPIs
Not applicable
TPIs
Not applicable
Table 4.4 Summary of Time Lag Relationships amongst Control Variables
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4.2.3
Control Variables Figure 4.23 and 4.24 depict the seasonally unadjusted and adjusted time series of the Money Supply, Hang Seng Index, Tael Gold Bar, GDP and Construction GDP. Figure 4.25 and 4.26 compare the trends of various Consumer Price Indices and Tender Price Indices. Table 4.4 summarizes the time lag relationships for both seasonally unadjusted and adjusted time series shown in Figure 4.23 to 4.26. (1) Money Supply, Hang Seng Index, Tael Gold Bar, GDP and Construction GDP Figure 4.23 compares the seasonally unadjusted time series of the naturally logged Money Supply, Hang Seng Index, Tael Gold Bar, GDP and Construction GDP. All Money Supply M1, M2 and M3 exhibit similarly non-stop rising trend for the past 27 years without salient peak and bottom. Hang Seng Index on the other hand experienced more frequent ups and downs for the past 27 years with a swing period from the 1997Q2 to 2003Q1. This more or less remarks the turning point of the government spending and developer spending at their peaks but is still far from their bottoms. At the same time, the end of the swing period in the 2003Q1 from when the Hang Seng Index started to rise again coincides with the peak of the Real Wage Index and Real Salary Index A and B. In other words, the Hang Seng Index, government spending and developer spending attained their peaks during the similar period but the Hang Seng Index reached its bottom when the Read Wage Index and Real Salary Index A and B peaked. This change in the time lag relationships, i.e. from a coherent to a reciprocal pattern, within the swing period from 1997Q2 to 2003Q1, between the Hang Seng Index, government and developer spending, and the Real Wage Index and Real Salary Index A and B is worthy of further investigation. There may exist either two sets of factors or another set of factors affecting these macro-economic indicators at peak and bottom. Unlike the Money Supply and Hang Seng Index, the Tael Gold Bar started to rise since 1999Q2 without any pause, which can be interpreted to have different cyclical patterns from the government and developer spending, and the Real Wage Index and Real Salary Index A and B. While GDP experienced a sudden drop in the 2000Q2 and then went slowly upwards from the bottom in the 2001Q2 until now, the Construction GDP reached its peak in the 2001Q4 and then fluctuated downwards to its bottom in the 2006Q2. This suggests that the Construction GDP goes against the direction of the GDP and lags behind the GDP by 5 years at the bottom.
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March 2011
Figure 4.23 - Money Supply M1, M2 & M3, Hang Seng Index, Tael Gold, GDP & GDP Construction (1982Q1 to 2010Q2) (Naturally Logged; Seasonally Unadjusted)
16.000 15.000 14.000
Logged HK$ Million
13.000 12.000 11.000 10.000 9.000 8.000 7.000 6.000 1982Q1 1982Q4 1983Q3 1984Q2 1985Q1 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4 Figure 4.24 - Money Supply M1, M2 & M3, Hang Seng Index, Tael Gold, GDP & GDP Construction (1982Q1 to 2010Q2) (Naturally Logged; Seasonally Adjusted) 16.000 15.000 14.000
M1 M2 M3 Hang Seng Index Tael Gold Bar GDP GDP Construction
Logged HK$ Million
13.000 12.000 11.000 10.000 9.000 8.000 7.000 6.000 1982Q1 1982Q4 1983Q3 1984Q2 1985Q1 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4
M1 M2 M3 Hang Seng Index Tael Gold Bar GDP GDP Construction
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March 2011
Figure 4.24 shows the seasonally adjusted time series of the naturally logged Money Supply, Hang Seng Index, Tael Gold Bar, GDP and Construction GDP. Same as the seasonally unadjusted time series, all Money Supply M1, M2 and M3 go upwards in a non-stop manner for the past 27 years without ups and downs. The rest period of the Hang Seng Index spans from the 1997Q3 to 2002Q4, which again coincides with the peaks of the government spending and developer spending. The smoothed Hang Seng Index reached its bottom when the Real Wage Index and Real Salary Index A and B attained their peaks. Generally speaking, both seasonally unadjusted and adjusted Hang Seng Index bear a coherent relationship with the government and developer spending and the Real Wage Index and Real Salary Index A and B at their peaks and a reciprocal relationship with them at their bottoms. The factors driving these observations deserve further investigation. (2) Consumer Price Indices Figure 4.25 depicts the trends of various Consumer Price Indices including the Composite CPI, CPI(A), CPI(B) and CPI(C). All CPIs had risen to their peak in the 1997Q3 and then had fallen sharply by 20% until they reached their bottoms in the 2003Q3 with a half-cycle time of 6 years. Since they had reached their bottoms, all CPIs started to recover and have been increasing up to now except for a short period of ups and downs from the 2008Q2 to 2009Q3.
Figure 4.25 - Consum er Price Indices (1982Q1 to 2010Q2) (1983Q1 = 100)
380 360 340 320 300 280 260 240 220 200 180 160 140 120 100 80 1982Q1 1982Q4 1983Q3 1984Q2 1985Q1 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4
Composite CPI CPI(A) CPI(B) CPI(C)
Index
66
March 2011
(3) Tender Price Indices Figure 4.26 compares the trends of various Tender Price Indices from both Public and Private Sector. The Highway Department and CEDD TPIs, which indicate the tender price levels for those civil engineering projects launched by the government, had not experienced big swing until they reached their peaks in the 2008Q3 and then dropped to their bottoms in the 2009Q2. On the other hand, the building projects of both Public and Private Sector reached the peak TPIs in the 1997Q4 and then suddenly dropped by 30% to their bottom in the 2003Q1 with a half-cycle time of 5.25 years. However, the TPIs for those building projects had almost been doubled from the 2003Q1 to 2008Q3 with a half-cycle time of 5.5 years. These TPIs then fell again to their bottoms in the 2009Q2. Both CPIs and TPIs reached their peaks during the period from the 1997Q3 to 1997Q4 and their bottoms variously from the 2003Q1 to 2003Q3. Generally speaking, both government spending and developer spending are commonly known as the fundamental drivers of the TPIs. In particular, the trends of the TPIs for the building projects resemble those of the government spending and developer spending. Since both CPIs and TPIs are observed to have coherent ups and downs, the government spending, which is leading the developer spending at the peak, is also leading the CPIs and TPIs.
Figure 4.26 - Tender Price Indices (1982Q1 to 2010Q2 (1983Q1 = 100)
500 480 460 440 420 400 380 360 340 320 300 280 260 240 220 200 180 160 140 120 100 80 1982Q1 1982Q4 1983Q3 1984Q2 1985Q1 1985Q4 1986Q3 1987Q2 1988Q1 1988Q4 1989Q3 1990Q2 1991Q1 1991Q4 1992Q3 1993Q2 1994Q1 1994Q4 1995Q3 1996Q2 1997Q1 1997Q4 1998Q3 1999Q2 2000Q1 2000Q4 2001Q3 2002Q2 2003Q1 2003Q4 2004Q3 2005Q2 2006Q1 2006Q4 2007Q3 2008Q2 2009Q1 2009Q4
RLB DLS ASD Housing Department HyD CEDD
Index
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March 2011
4.3
Time Lag Analysis Pearsons Correlation Coefficients

Section 4.2 is delegated to the visual inspection of the time lag relationships among the Independent Variables, Dependent Variables and Control Variables defined in Section 3.4. However, the visual inspection is limited by looking at the time difference between any pair of variables in attaining their peaks or bottoms, which does not involve rigorous and robust statistical tests. This section takes an alternative approach in detecting the time lag relationships by using the Pearsons Correlation Coefficients. The time lag in terms of quarters or years with the highest positive value of Pearsons Correlation Coefficient as the turning point within the range from 0 to 16 quarters is considered as the stochastic time lag.
4.3.1
Dependent Variables vs. Control Variables
The stochastic time lag relationships between each pair of the seasonally adjusted Dependent Variable and Control Variable by using the Pearsons Correlation Coefficients are detailed in the Appendix D1 to D28. Table 4.5 summarizes the conclusive stochastic time lag relationships.
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Control Variables Money Supply
Seasonally Adjusted Significant Correlation Money Supply M1 Generally negative against Employment Indicators and positive against Real Wage Index and Real Salary Index A and B Money Supply M2 Same as M1 Money Supply M3 Same as M1 Stochastic Time Lag/Turning Point No turning point
Hang Seng Index
Significant Correlation Hang Seng Index Same as Money Supply M1, M2 and M3 Stochastic Time Lag/Turning Point No turning point
Tael Gold Bar
Significant Correlation Tael Gold Bar Generally negative against Employment Indicators and mixed against Real Salary Index B Stochastic Time Lag/Turning Point No turning point
GDP
Significant Correlation GDP Generally negative against Employment Indicators and Real Salary Index A and positive against Real Salary Index B Stochastic Time Lag/Turning Point No turning point
Construction GDP
Significant Correlation Construction GDP Specific to each Dependent Variable Stochastic Time Lag/Turning Point General and Construction Unemployment 3 to 5 quarters Public Sector Civil Engineering and Total Construction Employment 3 to 5 quarters Private Sector Civil Engineering, Building and Total Construction Employment 2 to 4 quarters Construction Employment 3 quarters Real Wage Index All 5 to 7 quarters Real Salary Index A Building & Construction 6 to 7 quarters Real Salary Index A BS Engineer 2 to 3 quarters Real Salary Index A Engineering Manager 7 to 8 quarters Real Salary Index A Project Manager 3 to 4 quarters Real Salary Index A Quantity Surveyor 10 to 11 quarters Real Salary Index A Safety Officer 3 to 4 quarters
Table 4.5 Summary of Stochastic Time Lag Relationships between Dependent Variables and Control Variables
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Appendix D1 to D4 show the Pearsons Correlation Coefficients between the Dependent Variables and Money Supply M1. All Employment Indicators bear significantly negative correlations with the Money Supply M1 except for the General Unemployment and Unemployment Rate. Real Wage Index of all major trade workers and the Real Salary Index A and B of all construction professionals are significantly positively correlated to the Money Supply M1 except for the Real Salary Index A and B of the Building & Construction and the Real Salary Index A of the Engineering Manager. However, although almost all Dependent Variables bear significant correlations with the Money Supply M1, no conclusive stochastic time lag relationships are detected, i.e. no turning point in the Pearsons Correlation Coefficients is envisaged. Despite this, the Real Salary Index B of all construction professionals have significantly positive correlations higher than 90% with the Money Supply M1. Appendix D5 to D12 summarize the Pearsons Correlation Coefficients between the Dependent Variables and Money Supply M2 and M3. Same conclusions as the case of the Money Supply M1 are reached in that almost all Dependent Variables have significant correlations with the Money Supply M2 and M3 but no conclusive stochastic time lag relationships are shown. At the same time, the Real Salary Index B of all construction professionals have significantly positive correlations higher than 90% with the Money Supply M2 and M3. Appendix D13 to D16 report the Pearsons Correlation Coefficients between the Dependent Variables and Hang Seng Index. Despite that fact that the Hang Seng Index has much greater fluctuations than the Money Supply M1, M2 and M3, the Hang Seng Index bears same pattern of correlations with all Dependent Variables as the Money Supply. No conclusive stochastic time lag relationships are again detected. At the same time, the Real Salary Index B of all construction professionals have significantly positive correlations higher than 90% with the Hang Seng Index. Appendix D17 to D20 show the Pearsons Correlation Coefficients between the Dependent Variables and Tael Gold Bar. All Employment Indicators bear significantly negative correlations with the Tael Gold bar. Real Salary Index B of all construction professionals are either significantly positively or negatively correlated with the Tael Gold Bar. However, all significant correlation values are between -50% and +50%. No conclusive stochastic time lag relationships are again detected. Appendix D21 to D24 summarize the Pearsons Correlation Coefficients between the Dependent Variables and GDP. Both Employment Indicators and Real Salary Index A of all construction professionals bear significantly negative correlations with the GDP. On the other hand, the Real Salary Index B of all construction professionals have significantly positive correlations between 30% and 80% with the GDP. However, no turning point in the significantly positive correlation values is detected.
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Appendix D25 to D28 report the Pearsons Correlation Coefficients between the Dependent Variables and Construction GDP. Construction GDP is shown to have significantly positive correlations with the General and Construction Unemployment with the turning points detected between 3 to 5 quarters. Turning points between 3 to 5 quarters are also detected between the civil engineering employment and total construction employment of the Public Sector and the Construction GDP. At the same time, both civil engineering and building employment as well as the total employment of the Private Sector have significantly positive correlations with the Construction GDP with turning points between 2 to 4 quarters. Accordingly, the Construction Employment is also significantly positively correlated with the Construction GDP with turning point at 3 quarters. In general, the Construction GDP is leading most of the Employment Indicators by 2 to 5 quarters with significantly positive correlation values higher than 80%. Construction GDP also bears significantly positive correlations higher than 80% with the Real Wage Index of all major trade workers except for the Marble Worker. In general, the Construction GDP is leading the Real Wage Index of all major trade workers by 5 to 7 quarters. At the same time, the Construction GDP is also leading the Real Salary Index A of the Building & Construction by 6 to 7 quarters, the BS Engineer by 2 to 3 quarters, the Engineering Manager by 7 to 8 quarters, the Project Manager by 3 to 4 quarters, the Quantity Surveyor by 10 to 11 quarters and the Safety Officer by 3 to 4 quarters with significantly positive correlation values higher than 80%. However, on the other hand, no turning points are detected between the Construction GDP and the Real Salary Index B of all construction professionals.
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GVCWs Private Sector
Seasonally Adjusted Significant Correlation Private Sector Specific to each Dependent Variable Stochastic Time Lag/Turning Point Construction Unemployment 4 quarters Significant Correlation Private Sector Generally positive against Real Wage Index and Real Salary Index A and B Stochastic Time Lag/Turning Point Construction Unemployment 12 quarters Public Sector Civil Engineering Employment 4 quarters Public Sector Total Construction Employment 3 quarters Significant Correlation General Trades Generally negative against Employment Indicators and positive against Real Wage Index and Real Salary Index A and B Stochastic Time Lag/Turning Point No turning point Significant Correlation Special Trades Generally positive against all Dependent Variables Stochastic Time Lag/Turning Point No turning point Significant Correlation Buildings Specific to each Dependent Variable Stochastic Time Lag/Turning Point Residential led Construction Unemployment and Unemployment Rate by 13 to 14 quarters Residential led Real Wage Index of Rebar Fixer, Plasterer, Painter and Electrical Fitter by 14 to 15 quarters Significant Correlation Structures & Facilities Specific to each Dependent Variable Stochastic Time Lag/Turning Point Transport led Construction Unemployment by 5 quarters Transport led Public Sector Building Employment by 13 to 15 quarters Transport led Public Sector Civil Engineering Employment by 2 quarters Transport led Public Sector Total Construction Employment by 12 quarters Environment led Construction Unemployment and Unemployment Rate by 4 to 5 quarters
Public Sector
General Trades
Special Trades
Buildings
Structures & Facilities
Table 4.6 Summary of Stochastic Time Lag Relationships between Dependent Variables and Independent Variables
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4.3.2
Dependent Variables vs. Independent Variables The stochastic time lag relationships between each pair of the seasonally adjusted Dependent Variable and Independent Variable by using the Pearsons Correlation Coefficients are detailed in the Appendix D29 to D76. Table 4.6 summarizes the conclusive stochastic time lag relationships. Appendix D29 to D32 show the Pearsons Correlation Coefficients between the Dependent Variables and the Private Sector GVCW. Private Sector GVCW bears significantly positive correlation higher than 80% with and led the Construction Unemployment by 4 quarters. Both Real Salary Index A and B occasionally have either significantly positive or negative correlations between -50% and +50% with the Private GVCW. No turning points are detected elsewhere. Appendix D33 to D36 report the Pearsons Correlation Coefficients between the Dependent Variables and the Public Sector GVCW. Similar to the Private Sector GVCW, the Public Sector GVCW has significantly positive correlations higher than 70% with and led the Construction Unemployment by 12 quarters. It also led the civil engineering employment and total construction employment of the Public Sector by 4 quarters and 3 quarters respectively. In general, the Public Sector GVCW bears significantly positive correlations higher than 70% with the Real Wage Index of all major trade workers but without any turning points. Same as the Money Supply, the Public Sector GVCW is significantly positively correlated to the Real Salary Index A and B of most construction professionals except for the Building & Construction and Engineering Manager. Appendix D37 to D40 summarize the Pearsons Correlation Coefficients between the Dependent Variables and the General Trades GVCW. General Trades GVCW bears significantly negative correlations with all Employment Indicators except for the General Unemployment and Unemployment Rate but have significantly positive correlations with the Real Wage Index of all major trade workers without any turning points. Same as the Control Variables and the Public Sector GVCW, the General Trades GVCW also has significantly positive correlations with the Real Salary Index A of most construction professionals except for the Building & Construction and Engineering Manager. On the other hand, the General Trades GVCW bears significantly positive correlations with the Real Salary Index B of all construction professionals except for the Building & Construction. Nevertheless, no turning points are detected.
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Appendix D41 to D44 show the Pearsons Correlation Coefficients between the Dependent Variables and the Special Trades GVCW. Unlike all Control Variables and Construction Sites GVCWs, Special Trades GVCW has significantly positive correlations with most Employment Indicators except for the Private Sector. It also bears significantly positive correlations with the Real Wage Index of all major trade workers. Same as the General Trades GVCW, the Special Trades GVCW has significantly positive correlations with the Real Salary Index A and B of all construction professionals except for the Real Salary Index A of the Building & Construction and Engineering Manager and the Real Salary Index B of the Building & Construction. No turning points can be detected. Appendix D45 to D60 report the Pearsons Correlation Coefficients between the Dependent Variables and various components of the Buildings GVCW. Residential GVCW led the Construction Unemployment and Unemployment Rate by 13 to 14 quarters with significantly positive correlations over 80%. It also led the Real Wage Index of the Rebar Fixer, Plasterer, Painter and Electrical Fitter by 14 to 15 quarters with significantly positive correlations higher than 70%. Commercial GVCW occasionally bears significantly positive or negative correlations between -50% and +50% with some Employment Indicators, Real Salary Index A and B of some construction professionals without any turning points. Industrial & Storage GVCW did not lead any Dependent Variables but bears significantly negative correlations with the Real Wage Index of all major trade workers and Real Salary Index B of all construction professionals. Service GVCW has similar correlation patterns with the General and Special Trades GVCWs without any turning points. Appendix D61 to D76 show the Pearsons Correlation Coefficients between the Dependent Variables and various components of the Structures & Facilities GVCW. Transport GVCW is found to have led the Construction Unemployment by 5 quarters, the building employment of the Public Sector by 13 to 15 quarters, the civil engineering employment of the Public Sector by 2 quarters, the total construction employment of the Public Sector by 12 quarters with significantly positive correlations higher than 70%. Utilities & Plant GVCW bears significantly negative correlations with the Real Wage Index of all major trade workers and the Real Salary Index B of all construction professionals. Environment GVCW led the Construction Unemployment and Unemployment Rate by 4 to 5 quarters. Sports & Recreation GVCW is significantly positively correlated to the Real Wage Index of all major trade workers and the Real Salary Index B of all construction professionals without any turning points.
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4.3.3
Independent Variables vs. Control Variables The stochastic time lag relationships between each pair of the seasonally adjusted Independent Variable and Control Variable by using the Pearsons Correlation Coefficients are detailed in the Appendix D77 to D99. Table 4.7 summarizes the conclusive stochastic time lag relationships.
Variables GVCWs
Seasonally Adjusted Significant Correlation GVCWs Specific to each Independent Variable
Stochastic Time Lag/Turning Point Private Sector led Public Sector by 8 quarters Special Trades led General Trades by 4 to 8 quarters Utilities & Plant led Transport by 6 to 8 quarters Environment led Transport by 3 to 4 quarters
Control Variables
Significant Correlation Control Variables Specific to each Independent Variable
Stochastic Time Lag/Turning Point Construction GDP led Public Sector GVCW by 2 to 3 quarters Construction GDP led Construction Sites GVCW by 0 to 1 quarter Construction GDP led Special Trades GVCW by 6 to 7 quarters Construction GDP led Transport GVCW by 5 to 6 quarters Construction GDP led Structures & Facilities by 3 quarters Construction GDP led Gross GVCW by 3 to 4 quarters
Table 4.7 Summary of Stochastic Time Lag Relationships between Independent Variables and Control Variables
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Appendix D77 and D78 show the Pearsons Correlation Coefficients between each pair of the Independent Variables. Private Sector GVCW is found to have led the Public Sector GVCW by 8 quarters with a significantly positive correlation near 80%. Special Trades GVCW also led the General Trades GVCW by 4 to 8 quarters with a significantly positive correlation near 80%. At the same time, the Utilities & Plant GVCW also led the Transport GVCW by 6 to 8 quarters with a significantly positive correlation over 80%. Environment GVCW is found to have led the Transport GVCW by 3 to 4 quarters with a significantly positive correlation over 90%. Appendix D79 to D99 report the Pearsons Correlation Coefficients between each pair of the Independent Variable and Control Variable. Money Supply M3, which is representative of the Money Supply M1 and M2, and the Hang Seng Index have significantly positive correlations near 90% with various components of the Locations other than Sites GVCW without any turning points. Tael Gold Bar occasionally bears significantly positive or negative correlations between -50% and +50% with various GVCWs. GDP bears significantly positive or negative correlations with most GVCWs but without any turning points. However, the Construction GDP is found to have led the Public Sector GVCW by 2 to 3 quarters, the Construction Sites GVCW by 0 to 1 quarter, the Special Trades GVCW by 6 to 7 quarters, the Transport GVCW by 5 to 6 quarters, the Structures & Facilities GVCW by 3 quarters with significantly positive correlations over 70%. In general, the Construction GDP led the gross GVCW by 3 to 4 quarters.
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4.4
MRA & HRA Results

Section 4.2 and 4.3 are delegated to the qualitative and quantitative analyses of the time lag relationships among the Independent Variables, Dependent Variables and Control Variables defined in Section 3.4. The findings suggest that certain statistical relationships exist between the Dependent Variables and Independent Variables, which are moderated by the Control Variables. This section moves a step forwards into the statistical relationships amongst these variables by using the Multiple Regression Analysis (MRA) and multivariate Hierarchical Regression Analysis (HRA). Since the GDP and Construction GDP have a much shorter reportable time series vis-vis other Independent Variables and Control Variables, each set of the Dependent Variables are separately regressed on the GDP and Construction GDP by using the MRA. Besides the GDP and Construction GDP, each set of the Dependent Variables are regressed on the other Control Variables in the Model 1 in the HRA and then regressed on the Independent Variables in the Model 2. Both Partial Regression Coefficients, i.e. , and Variances, i.e. R2, are discussed.
4.4.1
Factors Affecting Employment and Unemployment Appendix E1, E2, E6 and E7 report the MRA and HRA results by regressing the Employment and Unemployment Indicators on the Independent Variables and Control Variables. Appendix E1 and E2 summarize the prediction power of the GDP and Construction GDP on the Unemployment and Employment Indicators respectively. GDP is significantly negative in predicting the Construction Unemployment and Unemployment Rate, i.e. the higher the GDP, the lower the Construction Unemployment and Unemployment Rate. However, this finding is contradicted by the finding that the Construction GDP is significantly positive in predicting all Employment and Unemployment Indicators. The visual time lag between the GDP and Construction GDP in Figure 4.24 can help to explain this phenomenon. Further statistical analysis is highly recommended in giving a more conclusive explanation.
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Appendix E6 shows the prediction power of the Independent Variables and Control Variables on the Unemployment Indicators. Money Supply M2 is significantly negative in predicting the Unemployment Indicators, i.e. the greater the Money Supply M2, the lower the General and Construction Unemployment. On the other hand, the greater the Money Supply M1 and M3, the higher the Construction Unemployment and General Unemployment respectively. Contradicting results are encountered again because the Money Supply M1, M2 and M3 do not exhibit salient time lag among them and it is initiatively expected that they have the same prediction direction on the Dependent Variables. Same as the Money Supply M2, the Hang Seng Index and Tael Gold Bar are significantly negative in predicting the General Unemployment and Unemployment Rate. Nevertheless, same as the Money Supply M1, the more expensive the Tael Gold Bar, the higher the Construction Unemployment. The unexpected prediction direction of the Money Supply M1 and M3 and Tael Gold Bar on the General and Construction Unemployment is worthy of further investigation. In general, the set of the Control Variables is powerful in predicting the Employment and Unemployment Indicators and gives significant R2 greater than 80%. After the set of the Independent Variables in terms of various GVCWs is added in the Model 2, the prediction power on the Unemployment Indicators, i.e. R2, is improved by 10~15%. Public Sector, Private Sector and Special Trades GVCWs are significantly positive in predicting the General Unemployment and Unemployment Rate, which are again unexpected but can be partially explained by the time lag between the GDP and Construction GDP in Figure 4.24. Nevertheless, the various GVCWs are rarely significant in predicting the Construction Unemployment and Unemployment Rate. Further time lag between the Construction GDP and Construction Unemployment may be driving this phenomenon. Appendix E7 summarizes the prediction power of the Independent Variables and Control Variables on the Construction Employment Indicators. Money Supply M1 is significantly negative in predicting the building and total construction employment of the Public Sector and the total employment of the Construction Sites. The time lag between the Money Supply M1 and the Construction Employment Indicators is one of the possible reasons behind. Surprisingly, the Money Supply M2 is significantly negative in predicting the civil engineering and total construction employment of the Public Sector but significantly positive in predicting the civil engineering and total construction employment of the Private Sector. The leading role of the government spending, which is coherent with the Construction Employment Indicators, may be able to explain this phenomenon. However, the prediction power of the Money Supply M3 goes in the opposite direction against that of the Money Supply M2, both of which are supposed to go in the same direction instead. The unexpected discrepancies amongst the Money Supply M1, M2 and M3 in predicting the Employment and Unemployment Indicators deserve separate and in-depth investigation.
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Hang Seng Index is significantly positive in predicting the construction employment of the Public Sector but significantly negative in predicting that of the Private Sector. Although the Hang Seng Index has a visually different cyclical pattern against those of the government and developer spending and the Construction Employment Indicators, the leading role of the Hang Seng Index as a priori indicator of the macroeconomic environment may pose some implications. At the same time, the time lag between the construction employment of the Public and Private Sector can further help to explain this phenomenon. Tael Gold Bar is significantly negative in predicting the civil engineering and total construction employment of the Public Sector and the total employment of the Construction Sites. Since both Hang Seng Index and Tael Gold Bar belong to the asset class or an investment instrument in fighting against the inflations, they are expected to have same prediction direction or a leading role of other macro-economic indicators. The opposite prediction direction of the Tael Gold Bar vis--vis the Hang Seng Index suggests that there exists a third driver of this contradictory phenomenon. Despite these unexpected prediction results, the set of the Control Variables is again powerful in predicting the Construction Employment Indicators and gives significant R2 between 50% and 80%. The addition of the set of the Independent Variables in terms of various GVCWs into the Model 2 helps to improve the prediction power on the Construction Employment Indicators, i.e. R2, by 15~45%. Nevertheless, the GVCWs occasionally are significant in predicting the Construction Employment Indicators. Private Sector GVCW is significantly positive in predicting the building and total construction employment of the Private Sector, which is initiatively a must. This initiation however does not apply to the statistical relationship between the Public Sector GVCW and its Construction Employment. Whilst the General Trades GVCW is significantly negative in predicting the civil engineering and total construction employment of the Public Sector, the Special Trades GVCW is significantly negative in predicting the Construction Employment of both Public and Private Sector. Various Structures & Facilities GVCWs occasionally give unexpected prediction direction on the Construction Employment of both Public and Private Sector. All these significantly negative prediction direction may originate from the time lag between the government spending and the Construction Employment Indicators.
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4.4.2
Factors Affecting Real Wage Index Appendix E3 and E8 report the MRA and HRA results by regressing the Real Wage Index of all major trade workers on the Independent Variables and Control Variables. Appendix E3 summarizes the prediction power of the GDP and Construction GDP on the Real Wage Index respectively. GDP is only significantly negative in predicting the Real Wage Index of the Rebar Fixer whilst the Construction GDP is significantly positive in predicting the Real Wage Index of all major trade workers. The time lag between the GDP and Construction GDP once again helps to explain the unexpected results of the case of the GDP. The significantly positive prediction direction of the Construction GDP on the Real Wage Index of all major trade workers is highly expected and reconciles with the initiation. The prediction power of the Construction GDP, i.e. R2, is significant for all cases ranging from 15% to 55%. Appendix E8 shows the prediction power of the Independent Variables and Control Variables on the Real Wage Index. Money Supply M1 is significantly positive in predicting the Real Wage Index of most major trade workers except for the Formworker, Scaffolder and Electrical Fitter, whilst the Money Supply M2 is also significantly positive in predicting the Real Wage Index of the Rebar Fixer, Steel & Metal Worker and General Labour. However, the Money Supply M3 is negative in predicting the Real Wage Index of all major trade workers. This is similar to the case of the Construction Employment where different prediction directions are observed for the Money Supply M1, M2 and M3. Unlike the prediction on the Construction Employment, both Hang Seng Index and Tael Gold Bar have the same prediction direction and are significantly negative in predicting the Real Wage Index of all major trade workers. The conventional leading role of both Hang Seng Index and Tael Gold Bar in the macro-economic environment once again provides good reasons for this phenomenon. In general, the set of the Control Variables is powerful in predicting the Real Wage Index with R2 between 85% and 95%. When the set of the GVCWs is added into the Model 2, the General Trades GVCW is found to be the one and only one GVCW that is significantly positive in predicting the Real Wage Index of most major trade workers including the Concretor, Bricklayer & Drainlayer, Rebar Fixer, Steel & Metal Worker, Scaffolder, Plasterer, Electrical Fitter and General Labour. Industrial & Storage GVCW is only significantly positive in predicting the Real Wage Index of the Concretor, Bricklayer & Drainlayer and Formworker. Various Structures & Facilities GVCWs are significantly negative in predicting the Real Wage Index of most major trade workers, which can be explained by the time lag between the government spending and the Real Wage Index. The prediction power on the Real Wage Index is generally improved by 5~18%.
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4.4.3
Factors Affecting Real Salary Index A Appendix E4 and E9 report the MRA and HRA results by regressing the Real Salary Index A of all construction professionals on the Independent Variables and Control Variables. Appendix E4 shows the prediction power of the GDP and Construction GDP on the Real Salary Index A respectively. GDP is significantly negative in predicting the Real Salary Index A of most construction professionals except for the Architect and Mechanical Engineer whilst the Construction GDP is significantly positive in predicting the Real Salary Index A of almost all construction professionals except for the Architect and Structural Engineer. The time lag between the GDP and Construction GDP provides a good explanation in this arena. Same as the Real Wage Index, the significantly positive prediction direction of the Construction GDP on the Real Salary Index A falls within common expectations. The prediction power of the Construction GDP, i.e. R2, is significant for all cases ranging from 12% to 71%. Appendix E9 summarizes the prediction power of the Independent Variables and Control Variables on the Real Salary Index A. Money Supply M1 is significantly negative in predicting the Real Salary Index A of all construction professionals except for the Engineering Manager. At the same time, the Money Supply M2 is also significantly positive in predicting the Real Salary Index A of most construction professionals except for the Structural Engineer. However, the Money Supply M3 is mixed in predicting the Real Salary Index A. This phenomenon is the same as the case of the Construction Employment and Real Wage Index where the Money Supply M1, M2 and M3 come up with different prediction directions. Both Hang Seng Index and Tael Gold Bar are significantly negative in predicting the Real Salary Index A of most construction professionals except for the significantly positive prediction on the Real Salary Index A of the Structural Engineer. The leading role of both Hang Seng Index and Tael Gold Bar again plays an important role but the significantly positive prediction on the Real Salary Index A of the Structural Engineer deserves further investigation. The set of the Control Variables is powerful in predicting the Real Salary Index A with R2 ranging from 35% to 95%. The addition of various GVCWs into the Model 2 gives mixed results. Amongst various GVCWs, the Special Trades GVCW is the one and only one giving significant prediction on the Real Salary Index A of most construction professionals. Except for the Safety Officer, the Special Trades GVCW is significantly negative in predicting the Real Salary Index A. Both Public and Private Sector GVCWs are significantly negative in predicting the Real Salary Index A of the Mechanical Engineer. Various Structures & Facilities GVCWs are generally negative in predicting the Real Salary Index A and occasionally give significantly negative prediction. In general, the prediction power on the Real Salary Index A, i.e. R2, is improved by 4~60%.
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4.4.4
Factors Affecting Real Salary Index B Appendix E5 and E10 show the MRA and HRA results by regressing the Real Salary Index B of all professionals on the Independent Variables and Control Variables. Appendix E5 shows the prediction power of the GDP and Construction GDP on the Real Salary Index B respectively. Unlike the case of the Unemployment and Employment Indicators, Real Wage Index and Real Salary Index A, the GDP is significantly positive in predicting the Real Salary Index B of all construction professionals whilst the Construction GDP is significantly negative in predicting the Real Salary Index B of most construction professionals except for the Project Manager. So long as the prediction directions of the GDP and Construction GDP remain different, the time lag between them still provides a good explanation. The difference in the nature of the Real Salary Index A and B and the possible factors such as organization tenure, work experience, management level, etc., may provide further insight into this phenomenon. The prediction power of the GDP, i.e. R2, is significant for all cases ranging from 20% to 68%. Appendix E10 summarizes the prediction power of the Independent Variables and Control Variables on the Real Salary Index B. Money Supply M1 is significantly positive in predicting the Real Salary Index B of the Architect and significantly negative in predicting the Real Salary Index B of the Structural Engineer. On the other hand, the Money Supply M2 is significantly negative and the Money Supply M3 is significantly positive in predicting the Real Salary Index B of all construction professionals. This reconfirms the phenomenon that the Money Supply M1, M2 and M3 have different prediction directions amongst them. Same as the Real Wage Index and Real Salary Index A, both Hang Seng Index and Tael Gold Bar are significantly negative in predicting the Real Salary Index B of all construction professionals except for the significantly positive prediction on the Real Salary Index B of the Architect and Structural Engineer for the case of the Tael Gold Bar. In other words, both Hang Seng Index and Tael Gold Bar are leading the Real Wage Index and Real Salary Index A and B. Nevertheless, the Real Salary Index A and B of the Architect and Structural Engineer may contain different cyclical patterns. In general, the set of the Control Variables is powerful in predicting the Real Salary Index B with R2 ranging from 68% to 99%. After adding various GVCWs into the Model 2, the prediction power on the Real Salary Index B is generally improved by 1~30%. Both Public and Private Sector GVCWs are significantly positive in predicting the Real Salary Index B of some but not all construction professionals. However, both General and Special Trades GVCWs give the opposite prediction direction on the Real Salary Index B. The time lag between the Construction Sites and Locations other than Sites GVCWs is useful in explaining this phenomenon. Buildings GVCWs occasionally give significantly positive prediction on the Real Salary Index B whilst various Structures & Facilities GVCWs are only significantly negative in predicting the Real Salary Index B. The prediction power on the Real Salary Index B, i.e. R2, is generally improved by 1~30%.
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4.5
Summary of Findings
Time lag relationships among various Independent, Dependent and Control Variables have been firstly investigated by using visual inspection of both seasonally unadjusted and adjusted time series. The government spending is obviously a leading indicator of the developer spending in the peak but such relationship is ambiguous in the bottom. Similarly, the spending in building services maintenance and/or refurbishment is leading the spending in general renovation works in the peak, which remains undetermined in the bottom. This suggests that there may be another driver behind their time lag relationships. On the other hand, the spending in new construction works is found to be leading the spending in refurbishment and renovation both in the peak and bottom. However, the time lag relationships among the respective construction spending components are ambiguous and require further investigation. Due to the town planning practices in Hong Kong through which each district is designated as either residential or commercial district in terms of its economic and social functions, the spending in residential and commercial developments, which belong to two different markets, cannot be easily theorized by looking at their time lag relationships. On the other hand, the government spending in infrastructures, which shares over 90% and is leading the other minor government spending, is actually leading the developer spending. This can best reflect the general town planning direction of the government and the investment strategy of the developers. Moreover, a short fluctuating period may be a normal phenomenon when both government spending and developer spending are reaching their bottoms. The cyclical patterns at the peak and the bottom are therefore driven either by two sets of different factors or by the same set of factors exhibiting similar cyclical patterns. The general unemployment is obviously leading the construction unemployment. However, no time lag exists between their unemployment rates. When unemployment in terms of numbers and rates are put together, the construction workforce is shown to have lost jobs at the same pace as the general public but recovered at a slower pace than other industries. The building employment of the Private Sector is leading the Public Sector, which is on the face of it contradictory to the general town planning direction of the government. The different cyclical patterns of the different building employment types at the peaks and bottoms may be driven by other factors. On the other hand, the civil engineering employment of the Public Sector is leading the other employment types. The total construction employment of the Public Sector is leading the Private Sector, which is in line with the finding that the government spending is leading the developer spending.
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The government spending, construction employment, Real Wage Index and Real Salary Index A bottomed during the similar period. The Real Wage Index of the major trade workers as well as the construction employment started to recover from their bottoms as soon as the government spending was recovering. Since both early and late construction stages are normally labour intensive, the labour content is used to dominate the government spending at these two stages and the Real Wage Index usually rises once the government spending starts to increase. On the other hand, since the construction professionals always dominate the pre-construction stage of every construction project, the relative demand for the construction professionals vis-vis construction workers is the highest during the early construction stage when the capital involved is relatively small. The Real Salary Index A usually starts to recover even earlier than the obvious recovery of the government spending. The Real Salary Index A is therefore leading the government spending at its bottom. Moreover, since the professional employment usually remains stable across the construction projects until their completion, the professional content rises even more than the labour content and the relative demand of the construction professionals is comparable to the construction workers even after the government spending peaks after the capital intensive phase of the construction projects, i.e. turning point at the completion of the structural works. The Real Salary Index A therefore continues to increase for some time until the completion of the construction projects even after the government spending reached its peak. Money Supply M1, M2 and M3 exhibit similarly non-stop rising trend for the past 27 years without salient peak and bottom. Hang Seng Index on the other hand experienced more frequent ups and downs for the past 27 years with a 6-year swing period from mid-1997, which remarks the turning point of the government spending and developer spending at their peaks. Hang Seng Index, government spending and developer spending attained their peaks during the similar period but the Hang Seng Index reached its bottom when the Read Wage Index and Real Salary Index A and B peaked. This indicates a change from a coherent to a reciprocal pattern between the Hang Seng Index, government and developer spending, and the Real Wage Index and Real Salary Index A and B, which is worthy of further investigation. However, Tael Gold Bar has different cyclical patterns from the government and developer spending, and the Real Wage Index and Real Salary Index A and B. At the same time, the Construction GDP goes against the direction of the GDP. Both CPIs and TPIs reached their peaks and bottoms during similar period. Both government spending and developer spending are commonly known as the fundamental drivers of the TPIs. The trends of the TPIs for the building projects particularly resemble those of the government spending and developer spending. Since both CPIs and TPIs have coherent ups and downs, the government spending, which is leading the developer spending at the peak, is also leading the CPIs and TPIs.
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The abovementioned time lag relationships have also been investigated by using Pearsons Correlation Coefficients. Various comparisons have been made between each pair of the Independent Variables, Dependent Variables and Control Variables. Unlike the general trends that have been revealed by the visual inspection, the stochastic time lag relationships are very specific among the variables. Statistical conclusions, which are summarized in Table 4.5 to 4.7, are occasional and unable to be generalized to such abstract level as the visual inspection.
MRA and HRA have been used to detect the stochastic prediction power of each Independent and Control Variable on the Dependent Variables. Generally speaking, the Control Variables are powerful in predicting the Employment and Unemployment Indicators. The higher the GDP is, the lower the construction unemployment and unemployment rate. On the other hand, the lower the Construction GDP is, the lower the construction unemployment and unemployment rate. This reaffirms the visual inspection that the Construction GDP goes in the opposite direction against the GDP. At the same time, the greater the Money Supply M2, the Hang Seng Index and Tael Gold Bar are, the lower the general and construction unemployment. However, the greater the Money Supply M1 and M3 are, the higher the construction unemployment and general unemployment respectively. Money Supply M1, M2 and M3 therefore do not exhibit salient time lag among them, which is contradictory to common initiation. Same as the Money Supply M1, the more expensive the Tael Gold Bar, the higher the construction unemployment. The greater the government spending, developer spending and spending in building services maintenance and/or refurbishment are, the greater the general unemployment and unemployment rate. However, the various construction spending components are rarely significant in predicting the construction unemployment and unemployment rate. This can be partially explained by the time lag between the GDP and Construction GDP.
The greater the Money Supply M1 is, the lower the building and total construction employment of the Public Sector and the total employment of the new construction works. This abnormality can be explained by the time lag between the Money Supply M1 and the Construction Employment Indicators. At the same time, the greater the Money Supply M2 is, the lower the civil engineering and total construction employment of the Public Sector but the greater the civil engineering and total construction employment of the Private Sector, which is fully explicable by the leading role of the government spending coherent with the Construction Employment Indicators. Nevertheless, the Money Supply M3 has the opposite impact against the Money Supply M2. The unexpected discrepancies amongst the Money Supply M1, M2 and M3 in predicting the Employment and Unemployment Indicators deserve separate and in-depth investigation.
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The higher the Hang Seng Index is, the greater the construction employment of the Public Sector but the lower the construction employment of the Private Sector. In this arena, the leading role of the Hang Seng Index as a priori indicator of the macroeconomic environment may pose some implications even though it has a visually different cyclical pattern from the government and developer spending and the Construction Employment Indicators. The time lag between the construction employment of the Public and Private Sector also offers some help in explaining this phenomenon. On the other hand, the greater the Tael Gold Bar is, the lower the civil engineering and total construction employment of the Public Sector and the total employment of the new construction works. As investment instruments, the opposite prediction direction of the Tael Gold Bar vis--vis the Hang Seng Index suggests that there exists a third driver of this contradictory phenomenon. Unlike the Control Variables, various construction spending components are only occasionally significant in predicting the Construction Employment Indicators. The greater the developer spending is, the greater the building and total construction employment of the Private Sector. However, this common initiation does not apply to the statistical relationship between the government spending and the construction employment of the Public Sector, which can be explained by the time lag between the two. The greater the spending in general renovation and/or refurbishment is, the lower the civil engineering and total construction employment of the Public Sector. On the other hand, the greater the spending in the building services maintenance is, the lower the total construction employment of both Public and Private Sector. Various government spending in the infrastructures occasionally give unexpected prediction directions on the construction employment of both Public and Private Sector. Generally speaking, all these negative prediction directions may originate from the time lag between the government spending and the Construction Employment Indicators. Generally speaking, the Control Variables are powerful in predicting the Real Wage Index. The greater the Construction GDP is, the higher the Real Wage Index of all major trade workers. The greater the Money Supply M1 is, the higher the Real Wage Index of most major trade workers. At the same time, the greater the Money Supply M2 is, the higher the Real Wage Index of several major trade workers. However, the greater the Money Supply M3, Hang Seng Index and Tael Gold Bar are, the lower the Real Wage Index of all major trade workers. On the other hand, various construction spending components are not as powerful as the Control Variables in this regard. The spending in general renovation and/or refurbishment and industrial development are the two that are significantly positive in predicting the Real Wage Index of most major trade workers. The greater the various construction spending components in the infrastructures are, the lower the Real Wage Index of most major trade workers, which can be explained by the time lag between the government spending and the Real Wage Index.
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Same as the Real Wage Index, the Control Variables again are powerful in predicting the Real Salary Index A. The lower the GDP and the greater the Construction GDP are, the higher the Real Salary Index A of most construction professionals, which can be explained by the time lag between the GDP and Construction GDP. The greater the Money Supply M1 and the lower the Money Supply M2 are, the lower the Real Salary Index A of most construction professionals. However, the Money Supply M3 is mixed in predicting the Real Salary Index A. The greater the Hang Seng Index and Tael Gold Bar are, the lower the Real Salary Index A of most construction professionals. Nevertheless, the various construction spending components give mixed results in predicting the Real Salary Index A. The spending in the building services maintenance is the one and only one giving significantly negative prediction on the Real Salary Index A of most construction professionals. The greater the various government spending in the infrastructures is, the lower the Real Salary Index A. Control Variables are at the same time powerful in predicting the Real Salary Index B. Unlike the Unemployment and Employment Indicators, Real Wage Index and Real Salary Index A, the greater the GDP and the lower the Construction GDP are, the lower the Real Salary Index B of most construction professionals. The difference in the nature of the Real Salary Index A and B and the possible factors such as organization tenure, work experience, management level, etc., may provide further insight into this phenomenon. The greater the Money Supply M2 and the lower the Money Supply M3 are, the lower the Real Salary Index B of all construction professionals. This reconfirms the phenomenon that the Money Supply M1, M2 and M3 have different prediction directions amongst them. Same as the Real Wage Index and Real Salary Index A, the greater the Hang Seng Index and Tael Gold Bar are, the lower the Real Salary Index B of all construction professionals. The greater the government and developer spending are, the higher the Real Salary Index B of some construction professionals. However, the greater the spending in the building services maintenance and general renovation and/or refurbishment are, the lower the Real Salary Index B. The greater the spending in building developments and the lower the various government spending in the infrastructures are, the higher the Real Salary Index B.
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Chapter 5 Questionnaire Survey Analysis

5.1 Introduction
This chapter reports the results of various statistical data analyses of the questionnaire survey with respondents targeted at construction professionals attached in Appendix B by using the descriptive statistics, One-Way Analysis of Variance (A OVA), multivariate Multiple Regression Analysis (MRA) for the groups of the Dependent Variables, i.e. various problems and personal experience during boom and bust times, and the Independent Variables, i.e. various personal attributes. The first part of this chapter details the results of the statistical analyses by using the problems during boom and bust times as the Dependent Variables. The second part discusses the results of the statistical analyses by using the personal experience during boom and bust times as the Dependent Variables. The fourth part provides a summary of this chapter.
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5.2
Problems during Boom & Bust Times

Section 3.2.1 mentions that the primary data sources are collected by using questionnaire survey in order to study the factors causing boom and bust to the Hong Kong construction industry. The primary data collected include the following categories:
(1) Personal Attributes (Question No. 1 to 3) Employment type Employer type Management level Overseas work experience
(2) Problems during Boom & Bust Times (Question No. 4 and 5) Unit economic efficiency Unit work safety Unit quality of work output Unit work performance reliability Reluctance to invest in training Difficulties in recruiting young people Reluctance to invest in business or organization Reluctance to innovate
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(3) Personal Experience during Boom & Bust Times (Question No. 6 and 7) I changed employer I changed project My role on projects changed My colleagues changed frequently Change in my work reliability Change in my workload and work hours Change in quality of my work output Change in my remuneration package My personal development opportunities Change in my training opportunities Change in my safety and health risk Change in my work experience My enjoyment, fulfillment and meaningfulness of work Change in a sense of pride in my work My work-life balance My stress experienced Change in my ethical behaviour at work Change in my commitment to lifelong learning
This section is delegated to the discussion of the descriptive statistics, A OVA and MRA results by using the set of the Problems during Boom & Bust Times as the Dependent Variables and the set of the Personal Attributes as the Independent Variables.
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5.2.1
Descriptive Statistics & A OVA Results Appendix F1 to F4 summarize the descriptive statistics and A OVA results of the Dependent Variables, i.e. Problems during Boom & Bust Times, factorized by the Independent Variables, i.e. Personal Attributes. Appendix F1 reports the descriptive statistics and A OVA results of the Dependent Variables factorized by the Employment Type. Those self-employed construction professionals faced bigger problems (a mean of 2.364~3.500) than those employed ones (a mean of 2.046~2.579) during boom and bust times defined in Question No. 4. In other words, the self-employed construction professionals are neutral to the problems they faced during boom and bust times whilst the employed ones tend to be optimistic when they faced the problems during boom and bust times. On the other hand, the dispersions of such perceptions of both self-employed and employed construction professionals have similar range, i.e. 40~50%. However, the selfemployed ones have more consistent views as a group (a SD% of 30~48%) than the employed ones (a SD% of 44~49%). In terms of stochastic differences, both self-employed and employed construction professionals have significantly different views to all problems they faced during boom and bust times except for the problems of economic efficiency and work safety. With a view to the descriptive differences in the perceptions, the employed construction professionals are significantly more optimistic than the self-employed ones in facing the problems during boom and bust times. However, these two groups are more consensual when they faced the problems in economic efficiency and work safety. Appendix F2 compares the descriptive statistics and A OVA results of the Dependent Variables factorized by the Employer Type. The construction professionals working in developer are the most optimistic when they faced problems (a mean of 1.500~2.000) whilst those working in localized foreign contractor are the most pessimistic (a mean of 3.000~4.000) during boom and bust times. Nevertheless, the construction professionals working in localized foreign contractor share the most consistent views with the lowest dispersion (a SD% of 0~47%). On the other hand, those working in local contractor have the most dispersed views (a SD% of 42~55%) when they faced problems during boom and bust times.
A OVA results show that, unlike the Employment Type, the construction professionals do not have significantly different views when their views are factorized by the Employer Type. Amongst the problems when they faced during boom and bust times, the construction professionals have significantly different levels of difficulties in recruiting young people and reluctance to innovate. In particular, the construction professionals working in developer and educational institution perceive the lowest level whilst those working in localized foreign contractor share the highest level of difficulties in recruiting young people. At the same time, those working in
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government and developer are the least reluctant to innovate whilst those working in localized foreign contractor and educational institution are the most reluctant to innovate. Appendix F3 reports the descriptive statistics and A OVA results of the Dependent Variables factorized by the Management Level. Unlike the Employment Type and Employer Type, the construction professionals at different management levels tend to be optimistic towards certain problems during boom and bust times rather than being optimistic to everything during boom and bust times. The junior management is the most optimistic towards quality of work output, work performance reliability, reluctance to invest in training and reluctance to innovate but the most pessimistic towards economic efficiency, work safety, difficulties in recruiting young people and reluctance to invest in business/organization. On the other hand, both middle and senior management only exhibit moderate tendency towards the problems during boom and bust times. They are neither the most optimistic nor the most pessimistic towards the problems they faced during boom and bust times. Similarly, the junior management has the greatest variations in the dispersion level, i.e. they share either the most consistent or the most divergent views towards the problems. Despite this, the construction professionals at different management levels only share significantly different views in terms of the reluctance to invest in business/organization and reluctance to innovate during boom and bust times. Appendix F4 summarizes the descriptive statistics and A OVA results of the Dependent Variables factorized by the Overseas Work Experience. The construction professionals with moderate overseas work experience are the most optimistic when they faced problems (a mean of 1.769~2.444) whilst those with well overseas work experience are the most pessimistic (a mean of 2.257~3.024) during boom and bust times. The construction professionals with well overseas work experience have the least dispersed views (a SD% of 37~46%) whilst those with moderate overseas work experience share the most divergent views with the greatest dispersion (a SD% of 38~60%) when they faced problems during boom and bust times. Unlike the Employment Type and even worse than the Employer Type and Management Level, the construction professionals do not have significantly different views when their views are factorized by the Overseas Work Experience. They only perceive significantly different levels of reluctance to innovate. In other words, no matter which Personal Attribute is used to factorize the problems they faced during boom and bust times, the construction professionals have significantly different views in terms of the reluctance to innovate during boom and bust times.
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5.2.2
MRA Results Appendix F5 reports the MRA results by regressing the Problems during Boom & Bust Times on the Personal Attributes. Same as the A OVA results by using the Employer Type, the groups of the Personal Attributes are only powerful in predicting the perceptions of the construction professionals regarding the difficulties in recruiting young people (R2 = 32.0%) and reluctance to innovate (R2 = 27.5%) during boom and bust times. Similar to the A OVA results, the self-employed and employed construction professionals have significantly different views to all Problems during Boom & Bust Times except for economic efficiency and work safety. Such MRA results further indicate that the significant differences shown by A OVA are confirmed to be linear, i.e. the self-employed construction professionals are more pessimistic than the employed ones. Other than the Employment Type, the other Independent Variables do not have significant prediction power on the Problems during Boom & Bust Times except one or two significant partial regression coefficients, i.e. .
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5.3
Personal Experience during Boom Times

Subsequent to the discussion of the descriptive statistics of and stochastic relationships between the problems the construction professionals faced during boom and bust times and the various personal attributes, this section is delegated to the discussion of the descriptive statistics, A OVA and MRA results by using the set of the Personal Experience during Boom Times as the Dependent Variables defined in Question No. 6 and the set of the Personal Attributes as the Independent Variables.
5.3.1
Descriptive Statistics & A OVA Results Appendix F6 to F9 detail the descriptive statistics and A OVA results of the Dependent Variables, i.e. Personal Experience during Boom Times, factorized by the Independent Variables, i.e. Personal Attributes. Appendix F6 shows the descriptive statistics and A OVA results of the Dependent Variables factorized by the Employment Type. Unlike the Problems during Boom & Bust Times where the self-employed construction professionals are consistently more optimistic than the employed ones, both of them share very similar perceptions towards the change they experienced during boom times (a mean of 2.824~3.944 for self-employed vs. a mean of 2.543~3.810 for employed). In terms of magnitude, both self-employed and employed construction professionals experienced changes during boom times because all means exceed 2.500. At the same time, the levels of dispersion of such perceptions of both self-employed and employed construction professionals are also similar (a SD% of 19~46% for self-employed vs. a SD% of 22~45% for employed). Accordingly, the self-employed and employed construction professionals only share significantly different views in terms of very few items including their work-life balance and stress experienced during boom times. Appendix F7 reports the descriptive statistics and A OVA results of the Dependent Variables factorized by the Employer Type. Same as the Problems during Boom & Bust Times, the construction professionals working in localized foreign contractor have the most extreme views and experienced the greatest change for most items (a mean of 3.000~5.000) during boom times except for their work reliability, workload and work hours, work-life balance and stress. On the other hand, there is no one specific Employer Type experiencing consistently lesser change for most items than other construction professionals during boom times. At the same time, the construction professionals as a whole are neutral to the change for certain items including change of their colleagues, workload and work hours and stress (a mean of around 2.500). The levels of dispersion are generally lower than the Employment Type, which implies that the construction professionals share more consistent views in terms of the Employer Type rather than the Employment Type. Since there are no salient differences among various Employer Type, the construction professionals only have significantly different views to very few items such as change of project and personal development opportunities during boom times.
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Appendix F8 summarizes the descriptive statistics and A OVA results of the Dependent Variables factorized by the Management Level. Unlike the Employment Type and Employer Type, the construction professionals at different management levels neither experienced consistently greater nor lesser change for most items during boom times. At the same time, their personal experiences are more or less similar to each other in terms of the means. The junior management experienced the greatest change in colleagues, workload and work hours, work quality and safety and health risks (a mean of 3.000~3.333). The middle management experienced the greatest change in work reliability, work quality, personal development opportunities, training opportunities, work-life balance, stress, ethical behaviour and life-long learning commitment (a mean of 2.811~3.757). The senior management level experienced the greatest change in employer, project, role, remuneration package, work experience, work enjoyment and sense of pride (a mean of 3.412~3.872). Both middle and senior management have similar levels of dispersion (a SD% of 18~48%) whilst the junior management has varying levels of dispersion towards different types of experience (a SD% of 0~67%). Similar to the Employment Type and Employer Type, the construction professionals at different management levels do not share significantly different views to any item of personal experience during boom times. Appendix F9 compares the descriptive statistics and A OVA results of the Dependent Variables factorized by the Overseas Work Experience. Same as the Management Level, the construction professionals having different levels of overseas work experience perceived greater change for certain items only during boom times. Those with little overseas work experience perceived the greatest change in employer, training opportunities and life-long learning commitment (a mean of 3.292~3.408). Those with moderate overseas work experience perceived the greatest change in colleagues, workload and work hours, work quality, safety and health risks, work-life balance and stress (a mean of 2.720~3.192). Those with well overseas work experience perceived the greatest change in project, role, work reliability, remuneration package, personal development opportunities, work experience, work enjoyment, sense of pride and ethical behaviour (a mean of 2.914~4.054). The construction professionals having different levels of overseas work experience have very similar levels of dispersion (a SD% of 15~46%) during boom times. Unlike the Employment Type, Employer Type and Management Level, the construction professionals factorized by the Overseas Work Experience often have significantly different views such as their remuneration package, sense of pride, worklife balance, stress and life-long learning commitment. In other words, each Personal Attribute is effective in differentiating the views of the construction professionals for different items of the Personal Experience during Boom Times.
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5.3.2
MRA Results Appendix F10 shows the MRA results by regressing the Personal Experience during Boom Times on the Personal Attributes. Similar to the A OVA results by using the Employment Type, Employer Type and Management Level, the Personal Attributes are only powerful in predicting the personal experience of the construction professionals regarding the change in project (R2 = 29.1%), change in colleagues (R2 = 33.0%) and stress (R2 = 28.7%) during boom times. At the same time, the MRA results reconfirm the A OVA findings that the Personal Attributes are not effective in differentiating the views of the construction professionals to their personal experience during boom times. Employment Type does not provide significant partial regression coefficients, i.e. , to all Personal Experience during Boom Times. Employer Type such as Developer, Localized Foreign Contractor and Quasi-government Organization occasionally has significant prediction power on the Personal Experience during Boom Times. Same as the A OVA results, the Overseas Work Experience is the most powerful amongst the Personal Attributes in predicting the personal experience of the construction professionals during boom times. However, this finding is relative to other Personal Attributes only and limited to certain items of personal experience. Generally speaking, the Personal Attributes rarely provide significant partial regression coefficients.
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5.4
Personal Experience during Bust Times

Whilst Section 5.3 is delegated to the discussion of the descriptive statistics of and stochastic relationships between the Personal Experience during Boom Times and Personal Attributes, this section is delegated to the discussion of the results of the same statistical analyses by replacing the Personal Experience during Boom Times by the Personal Experience during Bust Times as the Dependent Variables.
5.4.1
Descriptive Statistics & A OVA Results Appendix F11 to F14 summarize the descriptive statistics and A OVA results of the Dependent Variables, i.e. Personal Experience during Bust Times, factorized by the Independent Variables, i.e. Personal Attributes. Appendix F11 compares the descriptive statistics and A OVA results of the Dependent Variables factorized by the Employment Type. Same as boom times, both self-employed and employed construction professionals share very similar perceptions towards the change they experienced during bust times (a mean of 2.400~3.118 for self-employed vs. a mean of 2.255~2.957 for employed). Nevertheless, both of them experienced greater change during boom times than bust times (a mean of 2.824~3.944 for self-employed and 2.543~3.810 for employed during boom times). In other others, they tend to feel neutral during bust times instead of experiencing changes during boom times. The employed construction professionals have more consistent views to their personal experience than the self-employed ones during bust times (a SD% of 28~48% for self-employed vs. a SD% of 19~43% for employed). Both of them have similar levels of dispersion to their personal experience during boom times (a SD% of 19~46% for self-employed and 22~45% for employed during boom times). Accordingly, both construction professionals only have significantly different views for very few items including their training opportunities and sense of pride during bust times. Appendix F12 reports the descriptive statistics and A OVA results of the Dependent Variables factorized by the Employer Type. Similar to the Personal Experience during Boom Times, no one single Employer Type experienced consistently greater or lesser change for most items than other construction professionals during bust times. At the same time, all groups of construction professionals are more neutral to the change for all items during bust times than boom times (a mean of 2.300~2.973). Nevertheless, the construction professionals share more divergent views in terms of the Employer Type rather than the Employment Type. Same as boom times, there are no salient differences among various Employer Type during bust times and the construction professionals only have significantly different views to their work experience.
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Appendix F13 details the descriptive statistics and A OVA results of the Dependent Variables factorized by the Management Level. Unlike boom times where the construction professionals at different management levels have similar personal experiences to each other, the junior management shows the greatest perceptions of change for most items during bust times (a mean of 2.667~4.000) except for workload and work hours, work quality, work experience and work enjoyment. On the other hand, the senior management experienced the greatest change in workload and work hours, work quality, work experience and work enjoyment (a mean of 2.765~3.014). The middle management level experienced the least change for all items (a mean of 2.056~2.912). In other words, both junior and senior management definitely experienced changes during bust times but the middle management level did not perceive similar thing during the bust times. Same as boom times, both middle and senior management have similar levels of dispersion (a SD% of 17~45%) whilst the junior management has varying levels of dispersion towards different types of experience (a SD% of 0~57%). Same as boom times and similar to the Employment Type and Employer Type, the construction professionals at different management levels do not share significantly different views to any item of personal experience during bust times except for life-long learning commitment. Appendix F14 compares the descriptive statistics and A OVA results of the Dependent Variables factorized by the Overseas Work Experience. Same as boom times, the construction professionals having different levels of overseas work experience perceived greater change for certain items only during bust times. Those with little overseas work experience perceived the greatest change in employer, project, role, workload and work hours, work quality, health and safety risk and worklife balance (a mean of 2.756~3.118) during bust times, the list of which is entirely different from boom times. Those with moderate overseas work experience perceived the greatest change in colleagues, work reliability, remuneration package, personal development opportunities, training opportunities, work experience, work enjoyment, sense of pride, stress and life-long learning commitment (a mean of 2.458~2.962) during bust times, the list of which is again entirely different from boom times. Unlike boom times, those with well overseas work experience perceived the greatest change in ethical behavior only (a mean of 2.972) during bust times. Same as boom times, all groups of the construction professionals have very similar levels of dispersion (a SD% of 19~46%) during bust times. Unlike boom times but similar to the Employment Type, Employer Type and Management Level, the construction professionals factorized by the Overseas Work Experience do not have any significantly different views among various groups during bust times.
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5.4.2
MRA Results Appendix F15 shows the MRA results by regressing the Personal Experience during Bust Times on the Personal Attributes. Similar to the A OVA results by using the Employment Type, Employer Type, Management Level and Overseas Work Experience, the Personal Attributes are only powerful in predicting the personal experience of the construction professionals regarding the change in project (R2 = 25.7%) and work experience (R2 = 28.9%) during bust times. Nevertheless, unlike boom times, the partial regression coefficients, i.e. , tell another story that the Employer Type very often has significant prediction power on the personal experience the construction professionals faced during bust times including the change in employer, colleagues, remuneration package, personal development opportunities, work experience and ethical behaviour. Employment Type only provides significant partial regression coefficient to the change in employer during bust times. Management Level is significant in predicting the change in employer, workload and work hours, personal development opportunities, stress and life-long learning commitment. Unlike boom times, the Overseas Work Experience is the least powerful amongst the Personal Attributes in predicting the personal experience of the construction professionals during bust times and does not give any significant partial regression coefficient. Generally speaking, the Personal Attributes are more powerful in predicting the personal experience of the construction professionals during bust times rather than boom times.
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5.5.
Summary of Findings
Both problems and personal experience the construction professionals faced during boom and bust times are investigated by using descriptive statistics, A OVA and multivariate MRA. Personal Attributes as the Independent Variables exhibit different prediction powers and degrees of differentiation on the Dependent Variables. The employed construction professionals are more optimistic than the self-employed ones when they faced the problems during boom and bust times faced the problems. Both self-employed and employed construction professionals have significantly different views to all problems they faced during boom and bust times except for the problems of economic efficiency and work safety. On the other hand, the construction professionals working in developer are the most optimistic when they faced problems whilst those working in localized foreign contractor are the most pessimistic during boom and bust times. However, the construction professionals working in different employers do not have significantly different views except for difficulties in recruiting young people and reluctance to innovate. Those working in developer and educational institution are the most optimistic whilst those working in localized foreign contractor are the most pessimistic in recruiting young people. Those working in government and developer are the least reluctant to innovate whilst those working in localized foreign contractor and educational institution are the most reluctant to innovate. The construction professionals at different management levels tend to be optimistic towards certain problems during boom and bust times rather than being optimistic to everything during boom and bust times. In particular, the junior management is the most optimistic towards quality of work output, work performance reliability, reluctance to invest in training and reluctance to innovate but the most pessimistic towards economic efficiency, work safety, difficulties in recruiting young people and reluctance to invest in business/organization. However, both middle and senior management are neither the most optimistic nor the most pessimistic towards the problems they faced during boom and bust times. On the other hand, the construction professionals with moderate overseas work experience are the most optimistic when they faced problems whilst those with well overseas work experience are the most pessimistic during boom and bust times. Stochastically speaking, the Personal Attributes are only powerful in predicting the perceptions of the construction professionals regarding the difficulties in recruiting young people and reluctance to innovate during boom and bust times. The selfemployed and employed construction professionals have significantly different views to all problems they faced during boom and bust times except for economic efficiency and work safety.
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Unlike the problems they faced during boom and bust times, both self-employed and employed construction professionals have very similar perceptions towards the change they experienced during boom times. They only have significantly different views in terms of very few items including their work-life balance and stress experienced during boom times. However, similar to the problems they faced during boom and bust times, the construction professionals working in localized foreign contractor have the most extreme views and experienced the greatest change for most items during boom times except for their work reliability, workload and work hours, work-life balance and stress. At the same time, the construction professionals working in different employers are neutral to the change for certain items including change of their colleagues, workload and work hours and stress. They only have significantly different views to very few items such as change of project and personal development opportunities during boom times. The construction professionals at different management levels neither experienced consistently greater nor lesser change for most items during boom times. Their personal experiences are more or less similar to each other in terms of the means. The junior management experienced the greatest change in colleagues, workload and work hours, work quality and safety and health risks. The middle management experienced the greatest change in work reliability, work quality, personal development opportunities, training opportunities, work-life balance, stress, ethical behaviour and life-long learning commitment. The senior management level experienced the greatest change in employer, project, role, remuneration package, work experience, work enjoyment and sense of pride. However, they do not share significantly different views to any item of personal experience during boom times. The construction professionals having different levels of overseas work experience perceived greater change for certain items only during boom times. Those with little overseas work experience perceived the greatest change in employer, training opportunities and life-long learning commitment. Those with moderate overseas work experience perceived the greatest change in colleagues, workload and work hours, work quality, safety and health risks, work-life balance and stress. Those with well overseas work experience perceived the greatest change in project, role, work reliability, remuneration package, personal development opportunities, work experience, work enjoyment, sense of pride and ethical behaviour. They often have significantly different views such as their remuneration package, sense of pride, worklife balance, stress and life-long learning commitment. Stochastically, the Personal Attributes are only powerful in predicting the personal experience of the construction professionals regarding the change in project, colleagues and stress during boom times. Employer Type occasionally has significant prediction power on the personal experience of the construction professionals during boom times. Overseas Work Experience is the most powerful amongst the Personal Attributes in predicting the personal experience of the construction professionals during boom times.
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Same as boom times, both self-employed and employed construction professionals have very similar perceptions towards the change they experienced during bust times. Nevertheless, both of them experienced greater change during boom times than bust times. They only have significantly different views for very few items including their training opportunities and sense of pride during bust times. On the other hand, the construction professionals working in different employers are more neutral to the change for all items during bust times than boom times. The junior management shows the greatest perceptions of change for most items during bust times except for workload and work hours, work quality, work experience and work enjoyment. The senior management experienced the greatest change in workload and work hours, work quality, work experience and work enjoyment. The middle management level experienced the least change for all items. The construction professionals at different management levels do not have significantly different views to any item of personal experience during bust times except for lifelong learning commitment. On the other hand, same as boom times, the construction professionals having different levels of overseas work experience perceived greater change for certain items only during bust times. Those with little overseas work experience perceived the greatest change in employer, project, role, workload and work hours, work quality, health and safety risk and work-life balance during bust times. Those with moderate overseas work experience perceived the greatest change in colleagues, work reliability, remuneration package, personal development opportunities, training opportunities, work experience, work enjoyment, sense of pride, stress and life-long learning commitment during bust times. Those with well overseas work experience perceived the greatest change in ethical behavior only during bust times. All these lists of changes experienced by the construction professionals during bust times are entirely different from boom times. Stochastically speaking, the Personal Attributes are only powerful in predicting the personal experience of the construction professionals regarding the change in project and work experience during bust times. Unlike boom times, the Employer Type very often has significant prediction power on the personal experience the construction professionals faced during bust times including the change in employer, colleagues, remuneration package, personal development opportunities, work experience and ethical behaviour. Employment Type only provides significant partial regression coefficient to the change in employer during bust times. Management Level is significant in predicting the change in employer, workload and work hours, personal development opportunities, stress and life-long learning commitment. Unlike boom times, the Overseas Work Experience is the least powerful amongst the Personal Attributes in predicting the personal experience of the construction professionals during bust times and does not give any significant partial regression coefficient.
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Chapter 6 - Interview Data Analysis

6.1 Introduction
The Research Team have considered a wide range of potential stakeholders for interview, and finally chosen nine interviews, either as individuals or as a group. The selected stakeholders for interview have been carefully considered in that the interviewees scope of background and experience should be able to represent a broad spectrum of the construction industry in Hong Kong. This chapter presents the main themes arising from an analysis of their views. The stakeholders in the interview include: (1) HKSAR Government Top-Level Policy Levels (Ex-Deputy Director of Works Department, CEDD) (1 interviewee); (2) Main Contractors, Principal Sub-Contractors, and First-level SubContractors (2 interviewees) (3) Major Clients MTRC, Government Departments, HKHA, HKHS (4 interviewees) (4) Education & Training Institutions - Universities, CIC, VTC and training institutions (5 interviewees) (5) Consultants of medium size (1 interviewee) (6) Trades Unions, Workers Associations, Professional Institutions (3 interviewees) Gov
Prod
Cli
Edu
Conslts Insts
The purpose of the interviews is to elicit views from these stakeholders about: Factors that cause boom & bust in the HKCI; Opportunities in improving the quality of the workforce; Possible linkages between volatile contract price fluctuation on the quality of the construction workforce; and The shortage of young people to join the construction industry.
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6.2
Capturing the Data from the interviews

Our approach has been to pose broad questions about the issues, and to capture the essence of stakeholder thinking in relation to them. Thus for example, in the first objective, the focus on factors that cause boom & bust may not be the prime concern of most of our stakeholders. They experience the effects of boom & bust, but may not think about the factors that cause each event. This is to be expected. Our questions about how the stakeholder goes about their planning, and what data they use, drives at the causal factors, but if these factors are not in the stakeholders level of awareness, then they will not articulate them to other stakeholders, nor to us. However, if the stakeholder has a clear idea about the problem, then they will identify which stakeholder needs to take action, and what needs to be done. Our questions are designed to trigger this response. We also look to the statements made, not just on their face value, but with a view to capturing their underlying priorities and values. This requires a degree of judgement in evaluating responses, and thus an interpretation of the meanings imbued. We look for face-value content as well as omissions. The latter may throw as much light on the nature of the issues as the things that have been stated. Prior to each interview, the questions were prepared to suit respective stakeholders, and sent a few days prior to a face-to-face meeting. These took place at the offices of the interviewees to make it convenient for each of them to fit into their schedules. Interviews were conducted in either English or Cantonese, whichever suited the respondents and by mutual agreement. Two or three of the Research Team members participated in asking questions, and taking notes of responses, supported by audio recordings. There were transcribed to produce a record of the questions and responses for each interview. A sample of the questions is given in Appendix A - Interview Questions. Sometimes additional questions were asked in order to clarify a particular statement, but these are not shown here, as they generally fall under an existing topic area. The transcripts of the nine interviews are shown in Appendix G - Transcripts of Interviews. We have abstracted statements from the transcripts to illustrate the key points where emphasis is needed. A summary of the responses is provided down below, and the following commentary is arranged broadly according to the sequence of questions that we posed. Some questions were omitted for a particular respondent, and this is indicated by Not Asked in the respective column. We have indicated Not discussed where the question was originally sent to the respondent, but we did not obtain a response, either because of lack of time or because the question was no longer relevant, given responses already given.
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We found the interviewees were very willing and candid in expressing their opinions, and were able to fully explain and substantiate their viewpoint. All of the interviewees already had several decades of experience in the HKCI and their views could be accepted as representative of the stakeholder group they represented. We took their views seriously and tried to probe to fully understand the reasons for their viewpoint. We were grateful for the generosity of their time, and noted that they all were interested in the topic of our research, and keen to express their opinions about what problems the industry faces and also what is needed to be done to change things for the better.
6.2.1
Interview 1
10 June 2010 Ex- Deputy Director, CEDD ot discussed Money value of projects See The Project Management Handbook used by CEDD, HyD, DSD and WSD. RAE done annually on a 10-year rolling plan. ot discussed Yes but only overall, not in detail Sometimes demand for types of manpower skills is considered in more detail. Other aspects not. ot discussed
1.1 Date of Interview 1.2 Interviewee Background 2.1 Content of annual plans? 2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower?
2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower? 3.2 What aspects considered?
3.1 Does your organisation have models for manpower planning? 3.2 Do these models work? 4. How about the CEs 10 major projects impact? 5. Which stakeholders can help? 6. Opinion about Boom & Bust? 7. What criteria are used to regulate? 8. What criteria should be used?
ot discussed ot discussed
Government is the most important stakeholder ot many like this. Prefer steady workload. eed and Financial Funds available Difficult to say. It is domain of the Bureau Level & Star Chamber (CE+FS+CS) ot discussed
9. Implementation of Edu. Bureau Qualifications Framework (QF)?
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6.2.2
Interview -2
8 Jul 2010 Representative of Hsin Chong Construction Group Ltd ot asked ot asked Plans for 3 years ahead. Use CE Policy Address, Dev Bureau info, plus company contacts Yes ot discussed Yes but only for upper levels, professionals, administrative managerial supervisory or first-line management. Manual workers not considered. Consider training, employment conditions, innovation, globalisation, QWL ot discussed
1.1 Date Interview 1.2 Interviewee Background 2.1 Content of annual plans? 2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower? 2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower? 3.2 What aspects considered?
3.1 Does your organisation have models for manpower planning? 3.2 Do these models work? 4. How about the CEs 10 major projects impact?
ot discussed Expect shortage of professional and supervisory staff, esp in 3 years time. Will need to pay high salary to retain them VTC, in short term. Universities and CITA in long term. CIC to provide policy to government to attract young people to join & stay. Contractors welcome boom, Will pay more wages. But worry about bust because of cut-price bidding, poor quality output. Suggest smoothing of cycle. Government investment in public works, inflation, material prices, wages Governments total investment in public works per year, and this should not fluctuate too much year on year. ot discussed
5. Which stakeholders can help?
6. Opinion about Boom & Bust?
7. What criteria are used to regulate?
8. What criteria should be used?
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6.2.3
Interview 3
13 Jul 2010 Representatives of Council of the Institute of Construction CIC CIC prepare annual plans since 2008. Based on the 6 major Committees of Council ot asked CIC uses its own manpower planning approach, independent of other agencies. ew model being development by CityU consultant. Using Key Performance Indicators similar to those of BCA in Singapore ot asked Yes. Many aspects considered: Demand for particular skills; training; Employment conditions; Culture; Innovation; Globalisation and QWL.
1.1 Date Interview 1. 2 Interviewee Background
2.1 Content of annual plans?
2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower?
3.1 Does your organisation have models for manpower planning? 3.2 Do these models work? 4. How about the CEs 10 major projects impact? 5. Which stakeholders can help? 6. Opinion about Boom & Bust?
ot discussed
ot discussed Yes. 50% will be MTR works. Expect shortage of civil engineers. Will need to attract youngsters ot asked CIC believes in steady workload, working to a 20-30 year plan. Large variations in workload are not sustainable. Government should facilitate people to work overseas. B & B is wasteful in training, De-motivating one. All decisions are politically motivated. The HKCI should regulate itself, based on good understanding of industry capacity and long-term plan for workload. Laws should be used if voluntary methods do not work ot discussed
7. What criteria are used to regulate? 8. What criteria should be used?
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6.2.4 Interview 4
1.1 Date Interview 1. Interviewee Background 2.1 Content of annual plans? 2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower? 2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower? 3.2 What aspects considered? 3.1 Does your organisation have models for manpower planning? 3.2 Do these models work? 4. How about the CEs 10 major projects impact? 13 Jul 2010 Representative of Greg Wong & Associates Ltd ot discussed ot discussed ot discussed
ot discussed ot discussed ot discussed ot discussed
ot discussed Own business is not affected that much compared to big consulting firms. Own business will be more selective and avoid risk of shortages of manpower Better to start now to recruit, train and promote necessary personnel.. Key players are the Government, CIC and the HKCI as a whole. Young people should be targeted. The needs of society are important concern, not the supply of public works contracts. We may need to import manpower if projects needed by society. Suggests smoothing of demand by adjustment (delay) of non-critical projects Manpower, underemployment and unemployment. o need to regulate the workload. For maintenance work, use flexibility based on need ot discussed
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6.2.5
Interview 5
19 Jul 2010 Representative of KCRC ( Ex Sec. for Works] KCRC does not employ construction workers, but we manage railway assets, the debt profile, and employ specialists. ot discussed KCRC do not use construction workers, so no need. Believes the Govt Development Bureau already has this in hand. ot discussed Yes, as a responsible property client Age, skill and multi-tasking of workforce must be taken into account. I believe in sub-contracting, but system needs to work better.
1.1 Date Interview 1.2 Interviewee Background 2.1 Content of annual plans?
2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower? 2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower? 3.2 What aspects considered?
ot applicable The ACP in the 1990s was a one-off project, and assessed accordingly. Believes that Govt is doing a similar assessment for these new projects. Contractors should do their own assessments. Govt. needs to work with local contractors. Expects most of the problems will arise in supervision areas. Local contractors; International contractors; Consultants; Govt Development Bureau; Immigration Dept; Labour Dept; HKCA; and CIC. HK has been pragmatic about meeting its manpower needs. Labour is flexible & willing to travel across territory. CIC is moving the industry in the right direction. HK had problems with labour supply in 1990s, and Govt established APCO and monitored situation. Statistics do not ensure complete assurance that supply can meet demand. Govt cannot dictate social needs according to commercial concerns. Social eeds must have priority (new railways, hospitals, etc) and Govt should address these first. Then they can see if there are any potential supply problems when adding other needs. ot discussed
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6.2.6
Interview 6
20 Jul 2010 Representatives of HKCI General Trades Union one ot dicussed ot discussed
1.1 Date Interview 1. 2 Interviewee Background 2.1 Content of annual plans? 2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower? 2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower? 3.2 What aspects considered?
ot discussed Yes Training needs; Retraining; Employment conditions; Industry image; Social status of workers; Globalisation ot discussed
3.1 Does your organisation have models for manpower planning? 3.2 Do these models work? 4. How about CEs 10 major projects impact? 5. Which stakeholders can help?
ot discussed Expect shortage in 3 years time.
Training institutions (CIC, VTC, universities, and Trades Unions); Government; Trades Unions welcome the boom times, as it provides work, jobs, and security. After the boom in 1997, the bust was a continuous downward trend until 2003. Since then demand has increased and now we need more manpower. Public works contracts can be used to smooth the workload. It should be the Government policy It should be the Government policy, because they are the biggest investor in society, and play a leading role in regulating industry workload. ot discussed
9.
Implementation of Edu. Bureau Qualifications Framework (QF)?
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6.2.7
Interview 7
4 Aug 2010 Representative of Gammon Construction Ltd ot discussed ot discussed Rely on HKCA data, Works Digest, the media, friendly consultants, & private contacts. We look forward 3 years 50% reliable, and useful somewhat Yes Many aspects considered: Demand for particular skills; training; Employment conditions; Innovation; Globalisation and QWL.
1.1 Date Interview 1. 2 Interviewee Background 2.1 Content of annual plans? 2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower? 2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower? 3.2 What aspects considered?
In the past, yes. Tried a demographic transition model. ot now. o Expect huge shortage in the near future. Workers will become more choosy about for whom and where they work. Retention of employees is difficult. Only the Government can negotiate and regulate Works Dept and MTRC projects. Other stakeholders can voice their views through these stakeholders to the media Current workload now and for next year is not that bad, and we can cope. Expect serious shortage of manpower. Total workload should match with available manpower. Local manpower, inflation and material prices. Overseas contractors cannot help much Local manpower resources ot discussed
8. What criteria should be used? 9.Implementation of Edu. Bureau Qualifications Framework (QF)?
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6.2.8
Interview 8
13 Aug 2010 Representatives of IVE, VTC Every year IVE produces Strategic Plan for following 3 years, and submits it to Govt Education Bureau. It includes major initiatives based on views from industry, Gov.t Bureaux (EB,CEDB) and Chief Executive. Baseline Budget income & Expenditure Use VTC Bi-Annual Manpower Survey for Building & Civ. Engg. Training Board. Also did our own survey of construction sites in March this year to every site on one day (Supported by C& S Dept). People working in offices were also covered by the survey. People working in interior decoration businesses were not included this year, but they will be in the next. Also liaise with CIC and CICTA, so that we dont see any gaps or overlaps. ot discussed Yes Include both quantitative and qualitative aspects: inc. training needs; employment condition; the development of the HKCI (new technologies,). Conduct an Employment Survey of IVE Graduates to find out what they are doing, and relevance of their work to their studies. Yes, we have our own Manpower Plan
2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower?
3.1 Does your organisation have models for manpower planning? 3.2 Do these models work?
The results from our analysis are adequate. CIC has another model based on macro-economic GDP data. Govt produces a plan of expenditure, and do a conversion to numbers of people needed. We also do this, but Govt is more accurate. It helps us to cross-reference our data with MTRC data, and we are within 15% of accuracy. Already experiencing difficulties in recruiting teaching staff in a tight labour market. For industry recruits, young people are not interested in engineering, particularly construction. Generally, people dont know that there is a boom coming. We need to do promotion in advance of demand. Are seeing some results already. Young people are smart. We have increased our recent intakes for training by a factor of 3 compared to 1997 boom, but since then one VTC is closed... Included in Q above
4. How about CE 10 major projects impact?
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We plan to recruit non-local students from PRC mainland. We are working now at maximum capacity for training. Expect peak demand for HKCI to hit in 2013 when demand will be 10 times compared to now. Will be lucky if we can double the numbers going through training. Govt need to look at the big picture. We can see only a partial picture. a. Availability of manpower in the industry; b. Availability of training capacity in training institutions; c. Priority of projects should be based on economic benefits; d. Private sector should be considered in overall picture. e. Govt is doing its best under the circumstances.
The Qualifications Framework is fully implemented, but the ITAC does not include construction. The closest to construction is the electrical industry.
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6.2.9
Interview 9
23 Aug 2010 Representatives of MTRC + 2 others MTRC plan based on major projects, e.g. until 2020. Decisions are not driven by MTRC, but by: Funding; eed; Govt policy; Political development; Statutory process; Co-ordination with others.
2.2. Units of measurement? 2.3 Data for own company/dept forecasts of manpower? 2.4 Sources reliable & useful? 3.1 Consider impact on Cons Manpower?
Money value and manpower numbers We keep records of our previous projects, covering 50 trades.
Yes Yes. We look at resources generally. We are not worried about obtaining sufficient workers. Govt will have to import. Testing & Commissioning require specialists. We will adjust schedule when key staff are unavailable. Many aspects considered: Demand for particular skills; Training; Employment conditions; Culture; Innovation; Globalisation and QWL.
3.2 What aspects considered?
3.1 Does your organisation have models for manpower planning? 3.2 Do these models work? 4. How about CE 10 major projects impact?
See response above: Use our own model
See response above: Model has good track record. As I am involved in recruitment, even now we have difficulty in recruiting geotechnical engineers, and construction planners. Difficult to recruit expatriates Abu Dhabi offers better packages. General civil engineering recruitment is OK. The government Development Bureau needs to take the lead and look at overall demand & supply. This is lacking now. Plus: CIC; CICTA; Contractors; HKCA
The industry workload needs to support a core team of construction people, then import if needed. Singapore has the same problems. Cannot avoid ups and downs of workload, but we must ensure a minimum of workload so that local people are fully employed. The XRL project takes about 50% of our staff. We need to stagger the workload, but much is beyond our direct control
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Dont know. The Government should take the lead. We need to understand what we have already. There is no overall co-ordination. If this is provided, then things will proceed better. ot discussed
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6.3
Analysis of the Responses
6.3.1
Content of Annual Plans for a Department / Organisation / Firm We have chosen to separate the two different stakeholder roles that the HK SAR Government plays. One is a policy-making and regulatory role (Gov), the other is as a client in the public sector (Cli). Both prepared annual plans based on assessments of the money to be spent on construction works, and these were converted into values for manpower demand. The policy-making Gov role found this to be more important in terms of the HKCI as a whole, whereas the Cli role tended to restrict itself to manpower needs for the government department itself, so this distinction seems important from the point of view of our study objectives. The assessment of construction manpower needs from the Gov role was carried out as a normal course of annual planning, but our enquiries did not discover how detailed an analysis is done. We know from the Airport Core Projects ACP that in the early 1990s, the government set up NAPCO to oversee the 10 major projects for the Port and Airport Development Strategy PADS, and a project management consultant, Bechtel, was commissioned to coordinate the manpower needs for each of the projects. Since this data is so crucial to all stakeholders in planning for their own demand forecasts, we see a great need for the Gov to publish their overall forecasts, and show the basis on which these have been formulated. Indeed, many of our respondents stated this expectation. We originally framed this question with main contractors in mind, but it was also included in the question list where other stakeholders might also prepare plans. Four stakeholders answered this question (government policy makers, contractors, clients and education), as we considered that others found this question was less relevant to their organization. Our purpose was to find out whether manpower planning within organizations was done, how far ahead did they plan, what models did they use, what data did they use, and was this useful and meaningful. Through this line of enquiry we tried to assess what factors they took into account The Main Contractors (Prod) both prepared annual plans, and used a time horizon of 3 years ahead. They relied on the HKSAR Chief Executive Policy Address, together with the project information issued by the Development Bureau, the Works Digest and the Hong Kong Construction Association (HKCA). They supplemented this with information from the media, friendly consultants, and through their own private contacts. Their views about the reliability differed, with one stating that the forecast was only 50% reliable whereas the other found the exercise was reliable and useful.
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The Education and Training Institutions (Edu) prepared annual plans and it was clear that they put a lot of care and effort into this. In the case of the CIC, this process is only in place since 2008, and they have already commissioned a research study to prepare manpower plans for the whole industry. The model being developed was not yet operational, as their initial trial runs using the model had not yet produced the desired results, but they expected this to be refined by the end of the calendar year. The IVE also prepared detailed plans, and have also commissioned new surveys to understand more exact data on numbers and types of people working in the HKCI. Both public sector and private sector clients Cli create annual plans for manpower needs. The MTRC prepare these for each major project, and these are compiled into one master plan which extends ten years to 2020. They use data from their historical records covering 50 trades, and can forecast their different types of manpower, including manual labour, technicians, supervisors, professional specialists, and middle and top-level project managers. The several questions which focused on the annual plans, were expected to elicit responses about the key factors that cause boom and bust. We could not discern any clear picture about these factors from responses in this topic area. However, there was certainly an awareness of the need to understand the factors better, particularly from the Edu and Cli stakeholders. Both the Edu respondents told us that they had commissioned new surveys / models, and this was encouraging. The lack of clear identification of factors was not restricted to the questions related to annual plans, since we also gave an opportunity to our interviewees in our later questions about Boom & Bust.
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6.3.2
Impact of Annual Plans upon HK Construction Manpower, Aspects Considered, and Models Used? Generally all the stakeholders considered the impact of their own plans on the industry as a whole. Large stakeholders such as the MTRC have a major impact on the whole industry over the next ten years, and this is understood not only by themselves and the government but also by others. Clearly, this sort of shared information is vital so that each stakeholder can react to the proposed plans, and it is also apparent that most of the stakeholders are aware of the huge impact on the industry, especially over the coming three years, with a peak in demand expected in 2013. Although there was a strong emphasis on the quantitative targets, other, more qualitative aspects were frequently mentioned (by almost all respondents). Firstly, in terms of numbers of people needed in the future, most stakeholders identified which categories they were concerned about, and what they were likely to experience as shortages arose. They could also indicate their strategy for overcoming the problems that would arise from the shortages. Frequently mentioned shortages were supervisors, some key manual skills (shot-firers in tunnelling), as well as professional level people. Many respondents mentioned the importation of labour, some mentioning specific types (Professional engineers). Two surprises came out of the responses. (a) One of the main contractors said that they did not even consider manual labour in their plans. (b) One of the key clients with a set of major projects stated that they were not worried about obtaining sufficient workers, as the Government would have to import. Secondly, other aspects frequently mentioned were The need for training; Employment conditions needed to be improved (examples of these were restricted to providing uniforms for site workers). No key employer groups Cli nor Conslts mentioned the possibility of employing manual workers on weekly, or monthly paid regular employment contracts, instead of daily wage payments. One Prod, stakeholder was in favour of providing longer terms employment contracts (with semi-monthly wages) to give more job security. Both the CIC and the Trades Unions mentioned this as being important, together with image and social status of workers;
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Development of a professional culture at all levels was generally overlooked. The exception was the CIC who recognised the need for better ethical conduct, as a foundation to further develop this quality has already been established to the extent that a preference for HK professionalism is already recognised within the industry when setting up projects overseas; Innovation was mentioned by about half of the stakeholders and revolved around prefabrication / precasting. Innovations in management processes were not mentioned. Globalisation was mentioned by about half of the stakeholders, and usually in the context of importation of labour/professional skills. Quality of Working Life (QWL) was mentioned by 3 stakeholders (Prod, Cli and Edu) but only in passing. We have the impression that if we had not asked the question, this would have been ignored. The CIC response made a clear connection between QWL and the unattractive image of the industry and how this makes it difficult to recruit young people. They stressed that this was particularly acute because of the age profile of the existing workforce, with many workers in their 50s likely to retire in the next 10 years.
Few models were used for manpower planning. A demographic transition model was used by one contractor Prod in the past, but was not found useful. The MTRC Cli used their own model, based on their past records of manpower needed for various tasks, and they claimed it had a good track record. The IVE (VTC) Edu also used their own model and have persevered with it, but acknowledge theirs is not as accurate as Gov.
6.3.3
Impact of the Chief Executives Policy Statement about 10 Major Projects, and Which Stakeholders Can Help? The new railway projects will take up about 50% of the total workload created by the new projects, and this alone will have a major impact on the whole construction industry. Many stakeholders already experience difficulties in recruitment, so the projected increase in workload will start to bite from now onwards. The Government Development Bureau Gov was cited by several stakeholders as being the key player in addressing the problem. Edu was also seen as important, with other stakeholders receiving a mention by one or two respondents.
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6.3.4
Opinions about Boom & Bust, and Criteria for Regulation This question is obviously the crux of the whole interview. Most stakeholders saw Boom & Bust as a negative thing, as it placed stresses & strains on the whole industry. Some said it was inevitable, and unavoidable. One indicated that it was the norm, and the industry was flexible enough to accommodate fluctuations. Others clearly expected that intervention was both possible and necessary through policy changes. Many argued that there should be a minimum capacity of output that should be used to guide government to regulate the flow of work. This would improve efficiency, help to reduce the negative image, and help to attract new blood, especially youngsters. The list of factors mentioned that should be used to regulate included: Governments total investment in public works per year (and this should not fluctuate too much year on year); The HKCI should regulate itself based on a good understanding of industry capacity and a long-term plan for workload. Law should be introduced if necessary; Maintenance work; Social needs of projects (new railways, hospitals, etc) given priority, then other needs Local manpower resources available (2 respondents mentioned this); Availability of training capacity in training institutions; Economic benefits of projects; Private sector demand should be included in picture; Better understanding of what we have already.
6.3.5
Implementation of the Education Bureaus Qualification Framework (QF)?

Only the IVE was asked this question. The QF is implemented but does not include the construction workers, only the electrical workers of the construction industry are
included in the QF framework.
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6.4
Summary of Interview Responses in Relation to the Study Objectives

In relation to the four areas of concern we tried to elicit responses for, we can summarise that our respondents identified: Nine factors that cause boom & bust in the HKCI (see Para. 6. 3.4 above); Six areas of opportunities in improving the quality of the workforce (see Para. 6.3.2 above); No possible linkages between volatile contract price fluctuation on the quality of the construction workforce; and Almost universal agreement that there is a shortage of young people to join the construction industry, and that this is a significant problem (see Para. 6.3.2 and 6.3.4 above).
The interviewees opinions form a very significant part to this research study. The essence of it would be further highlighted in the Conclusion and Recommendation chapter.
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Chapter 7 Discussion, including Forum Responses
7.1
Meeting with the Objectives

The research work has been proceeding in line with the original objectives, and most of the key issues for investigation have been identified. Much of the statistical data from government sources is already collected. The empirical data from interviews and the survey questionnaire that are collected meets with the original objectives.
7.2
Scope of Improvements in Hong Kong Construction Industry

The various objectives which this study seeks to address are part of the underlying aim to improve the way the industry meets the needs of its various stakeholders. In particular, the phenomenon of the changes in the workload from boom to bust and back again, are well-known, yet difficult for the industry to deal with on its own. Our enquiries objectives are aimed to explore the scope for improvement, and see to what extent that the issues are recognised or understood by the key stakeholders involved.
7.3
Labour Shortages
The labour shortages are mostly described as short-term, in specific skill areas. For the most part, the ageing workforce, increased skill demands and insufficient training are identified as the causes. Some segments of construction are experiencing unemployment or low utilization, and some is attributed to inadequate skill levels. It is imperative to find ways to attract young people to join the construction industry in order to ensure its manpower sustainability in future.
7.4
Ageing Workforce
Baby boomers are leaving construction because of retirement, youngsters are not following in their father's footsteps into skilled trades the way they used to, preferring comfortable to the physical labour jobs as required in the construction industry. The average age of the construction workforce is over 40. A majority proportion of the workforce is over 45 years old and the industry is projecting significant losses of workers through retirement over the next decade.
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7.5
Attract Young People to Join the Industry

The construction industry must find ways to attract sufficient young people to meet the increased demand for skilled workers. What makes this difficult is the fact that the construction industry has traditionally suffered from a poor image as a short term career option, and like everywhere the IT, sales, marketing, property agency, insurance and other servicing jobs offer more comfortable condition than the dirty construction sites have to offer. Issues to address attract young people to join the construction industry are put forth in the next chapter.
7.6
Training
In view of the relatively large number of trades in the construction industry, grouping of the trades into several main categories would help the parties concerned to coordinate the types of training needed to meet the demand of different categories of workers. The skills required for the construction workers in the 10 major infrastructure projects and minor works projects being undertaken by the Government would increase the demand for civil workers while the minor works projects would boost the job opportunities of decoration and renovation workers. To enhance the employability and productivity of the workers for the jobs to be created by these projects, workers have to be equipped with multi-skills. Apart from actively following up the collaboration training scheme with major contractors for civil workers, the CICTA should also provide appropriate training scheme according to the needs of minor works projects to enable workers to learn the required skills. In addition, categorization of trades under the construction workers registration system and the sub-contracting system of the industry were also deliberated.
7.7
Avoid the Future Down Turn Period as Far as Possible

The Hong Kong construction enterprises should use their competitive edge services to take advantage of the opportunities in the wake of the rapid recovery since the financial crisis in Hong Kong in 2008. At the same time Government should also consider and take precautionary measures how to even out and stagger the public projects supply to avoid the recurrence of the long downturn depression as faced by the construction industry from 1999 to 2005.
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Chapter 8 Conclusions and Recommendations

8.1 Opportunities in Greater Pearl River Delta (GPRD)
Since the signing of the Mainland/Hong Kong Closer Economic Partnership Arrangement (CEPA) since 2003, it has marked a milestone in the economic relations between the two places, in particular, the closer integration and development of the GPRD has developed from a conceptual plan to an implementation reality. It gives Guangdong and Hong Kong the opportunity to explore greater cooperation in the areas of trade in goods, investment facilitation and construction services and so on. The GPRD and its development provide the cornerstone for CEPA, which in turn helps to remove the hurdles for expediting the GPRD integration and promote regional economic development. Over the past years as economic cooperation between Guangdong and Hong Kong gathers momentum, cooperation and coordination in the two areas of infrastructure and urban planning are growing in breadth and depth. For instance, Hong Kong and Guangzhou have further strengthened the cooperation in the logistics sector, the five airports in the GPRD i.e. Hong Kong, Shenzhen, Guangzhou, Zhuhai and Macau, will strengthen coordination and division of work among themselves. In road construction, the region has completed the 5.5 km dual 3-lane carriageway Western Corridor connecting Hong Kong and Shenzhen which was opened in July 2007, and the construction of a 26 km Hong Kong Section of the Guangzhou-Shenzhen-Hong Kong Express Rail is undergoing and will enhance Hong Kong as the southern gateway to the Mainland, and another mega project, Hong Kong-Zhuhai-Macau bridge gets the green light to go ahead in 2011. All this will further benefit the economic development, and foster the economic integration of the region. The closer economic ties, cooperation and ever growing tourism are set to benefit the prosperity of Hong Kong. From that on GPRD should strive to extend its economic influence and strengthen cooperation with the nearby provinces such as Fujian, Jiangxi, Hunan, Guangxi and Hainan to develop an economic partnership amongst regions in southern China. The CEPA agreement thus brings about a win-win situation. In the long run, extending CEPA to cover Taiwan is a crucial strategy of building a unified economic region comprising four economies i.e. the Mainland, Hong Kong, Macau and Taiwan, and there is no doubt that Hong Kong will become to play an increasing role in helping both the economic and political development in the Mainland as a whole. As CEPA will promote bilateral economic and trade cooperation in the immediate term, giving a stimulus to and reviving Hong Kong's economy in a string of opportunities in particular engineering and construction related services which Hong Kong has the competitive edge. As a matter of fact many engineering related professional services from Hong Kong in the areas of architectural, engineering and construction related consultancies, environmental protection, property development, property agency, facility management, railway infrastructure and system management etc. have set up their business to explore the opportunities in the GPRD, the Mainland. There are many successful cases.
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8.2
To Strengthen and Provide the Training Facilities

In order to create a sustainable work environment for the construction sector in the long term, it is recommended that Hong Kong should continue to strengthen and provide the training facilities in the engineering and construction related services, and to aim at becoming a training hub in the region, not only to provide training for local people but also to people from other countries in the region. This would enable the professionals, technicians and skilled workers from Hong Kong to gain and develop their career opportunities in GPRD, the mainland and in other neighbouring countries, and to encourage the exchange training to ensure that it is reflective to the current and future needs of the situation in the region. There is a need to separating workers skills from trades and to understand the preference of workers so as to enhance the skills and as a result their employability in the construction industry. There are short term measure to cope with the boom of the construction industry in order to tackle with the anticipated peak demand of manpower in 2013, and the long term measure on how to equip with the necessary skills, quantity and quality of manpower in order to make the Hong Kong construction industry, and the society as a whole, to be sustainable and have a healthy growth.
8.3
Attracting Young People to Join the Industry

As discussed in Chapter 7, ways and methods proposed to attract young people to join the construction industry needs to be put forward strategically in order to sustain the Hong Kong construction, to raise the quality of professionals by attracting the most talents to join the industry, and to build up Hong Kong as an international professional engineering service centre to supply and export world class qualified professionals in various sectors of the construction industry in the region. The Hong Kong Government launched the cross-sectoral hierarchy Qualification Framework (QF) in May 2008 to introduce the well-defined competence standards of qualifications and clear articulation ladder to enable people to set their goals and direction to obtain quality-assured qualifications. Currently the QF has covered many trades such as printing and publishing, watch and clock, hair dressing, property management, jewelry, beauty industry and so on. It is therefore recommended to incorporate the construction industry into the QF as well, so that the members, especially the young people will have the opportunity to map out their progression pathways for life-long learning. It also helps those young skilled workers with low education attainment to obtain the qualifications for their career development and enhance their future employment prospects.
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Both short term and long term strategies are needed to be planned and implemented carefully in order to position Hong Kong in the forefront in the construction industry of the region. We should not ignore the detrimental effect that would be caused by the difficulties, imbalance of manpower supply and demand, in attracting the young people of high calibre to join the industry.
8.4
A Long Term Construction Planning Policy

As mentioned before to avoid the recur of the long grievance as experienced in 19992005, it is necessary for the Government to achieve an adequate and a sustainable public projects supply in Hong Kong, by adjusting her infrastructure development policy in a stable and sustainable manner. The implications of this research study are as follows: The Hong Kong government should focus on her planning policy so as to stagger out public projects in long term in order to achieve a stable and predictable construction industry transition situation. The government should be aware of the impact of the current planning policy on the existing and future infrastructure development in Hong Kong. For example, if the government foresees a trough for demand of the infrastructure projects, it can streamline its planning procedure, by increasing the Cat B and the Cat D projects in order to meet the small to medium construction contractors survival expectation. Only with a long term vision, and a sustainable public construction projects supply, it can reduce and avoid the bust of the construction industry during the downturn in the construction market situation.
8.5
Bust Doesnt ecessarily Come After the Boom

The construction industry is worried about the bust coming after the boom time of the present 10 Mega Infrastructure Projects. Yet, there are still quite a number of needed infrastructure projects which are of critical impact to the future sustainable development and survival of Hong Kong. It all relies on our wisdom and timely action to identify, to plan and how best to implement these projects. Some of such projects are identified and examples are briefly described down below:
8.5.1
Cross Border Transport Links To satisfy the ever-increasing need for the cross border transportation and to provide value-added service, Hong Kong needs a comprehensive and integrated strategy, which should cover proposal for new links and improvement of existing links by land, sea and air. The strategy should also include enhancement of operation and service at all the links.
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8.5.2
ew Development of the Hong Kong International Airport The passengers and air cargo data show that the operation of the present Hong Kong International Airport will become saturated in a few years time, and is in need of expansion to cope with the ever increasing demand for passenger and cargo flights, otherwise a lot of business opportunities will be diverted to the neighbouring places and the business operation will be lost to other competitors in the Region. The status of the Hong Kong International Airport as the air transport hub of the Region will be further jeopardized, given the very fierce competition of the neighbouring airports in the Region. The future of the Hong Kong International Airport development should cover both hardware upgrade, such as the construction of the third airport runway, and the necessary software enhancement. The new runway requires delicate planning and implementation in view of the controversial political and environmental issues.
8.5.3
Maintenance of Old Buildings Structural safety of old buildings (about 10,000 private buildings are over 35 years old) and the hygienic condition of these properties and their backstreets in the city are a big concern for quite a long time, and Government has been working hard on it. Old buildings are dangerous and prone to collapse if they are lack of maintenance. Yet some are still collapsed despite a stringent building regulation imposed in HK. Innovative and viable strategies are needed to tackle this problem. Further study or strategy should incorporate coordinated cross disciplinary action (technical, legal, financial, etc.) and cross policy bureau involvement. Maintenance and retrofitting work are enormous and in need of the attention of the whole community.
8.5.4
ew Development of the Lantau Island There was a Government plan some year ago to develop the Lantau Island as a tourist attraction area. But for some reasons, we see no further follow-up of the Plan. The development for tourist attraction will, no doubt, help a lot in boosting up HKs tourist industry. Resuming the plan and devising a long term development strategy is of utmost importance to the development of Hong Kong.
8.5.5 Development of Hong Kong as an International Logistics Hub Logistics is one of the most important economic pillars of Hong Kong. We are facing very fierce competition in the Region. The upgrading and building of new logistics facilities are crucial to maintain HK as an International Logistics Hub. Immediate study and strategy development is needed and should cover logistics parks, logistics IT portal, taxation, etc to provide speedy, efficient and quality service.
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8.5.6
Modernization of the Urban Environment of Hong Kong The urban environment of Hong Kong has not been modernised, leaving many ageing infrastructure in need of up-keeping and upgrading. A comprehensive study is needed to identify the scope of the problem and an effective strategy should be immediately developed to rectify the situation. Areas that are of immediate concern are urban renewal areas, the West Kowloon Cultural District, sports facilities and ageing infrastructure, covering transportation, water supply, drainage works, etc.
8.5.7
Development of Hong Kong as an environmental technology hub As Hong Kong faces an imminent pressure to tackle the waste problem, the three strategic landfills will be filled up successively in 2014, 2016 and 2018, Hong Kong, like all other cities, urgently needs to find a long term solution for waste treatment. It cannot afford to delay the preparatory work for building the Integrated Waste Management Facilities (IWMF). The Government should continue to discuss with the community and engage all stakeholders on the planning and design of a modern IWMF. Modern incinerators are different from the old ones, due to significant technological advancement in the past 15 years, comprising a mechanical sorting and recycling plant, an advanced waste-to-energy incinerator and an environmental education centre. In fact, it is a state-of-the-art facility with the provision of community amenities that would meet the needs of the nearby community. Environmental industry has been identified as one of the 6 niche new economic pillars for Hong Kong. With our investment, information and expertise, we need to make every endeavour to excel in the areas of renewable energy, incinerator, water, energy efficiency, low carbon technology application etc., such that Hong Kong will be developed as an environmental technology hub of the Region.
8.5.8
Development of Hong Kong as an International Professional Engineering Servicing Centre Hong Kong has long been an international centre of attracting the most talent engineering professionals and there are many opportunities and world class projects under construction in Hong Kong, facilitating the nurturing of the professionals. Studies should be conducted and strategy be developed as soon as possible to build up Hong Kong as an international professional engineering service centre to supply and export world class qualified professional engineers, specialist, technologists and technicians in various sector of the construction industry like general engineering services, feasibility investigation, planning, contracting, project management and financial management of mega projects.
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8.6
Recommendations
There are recommendations proposed herein, they are:
The Government should look into the issues and to even out and lengthen the construction time of those infrastructure projects which do not fall into the critical path of the long term strategic public works programme (1) (2) (3) To postpone those non-critical public projects with a view to smoothing the possible boom and bust cycle of the construction industry in Hong Kong; To provide sufficient Cat. C and Cat. B projects to ensure a smooth flow of provision of works for the construction industry in a sustainable manner; To provide more Cat. D projects of the small to medium contracts, which are catered for the small and medium sized contractors who can remain sustainable by getting the share of the small to medium construction works, as they cannot compete with those well established large contractors.
The Hong Kong construction enterprises should use their competitive edge to take advantage of the opportunities in the wake of the rapid recovery since the financial crisis in 2008, by working out a strategically long term construction plan by: (4) (5) Improving the training to meet the construction needs; Improving the employment conditions, for example, instead of daily wages, change to semi-monthly wages for the construction workers to enhance their job security; Improving unattractive image of the industry and raise the social status of the construction workers, for example, give them uniforms, improve the construction site conditions by provision of portable toilets, cool drinking water and atomised water spray during hot weather, re-schedule working hours under high temperature period; Improving the quality of working life.
(6)
(7)
All these measures can help to alleviate the reoccurrence of the grievous situation during 2001 when there was low ebb in the Hong Kong construction industry.
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Since 1997, infrastructure development of Hong Kong has lagged behind our neighbouring cities, and, to a certain extent, many of our infrastructure are ageing or not in pace of modern development. This unsatisfactory trend will lower our competitiveness and means of measure should be implemented to halt this. We should cast away the conventional demand-driven approach, and adopt a supply-driven philosophy. In view of time wasted and opportunities lost since the 1997, the traditional step-by-step moving style will put Hong Kong far behind others, and we should adopt a Leap Frog approach, by streamlining processes and cutting red tapes, with more emphasis on future vision. With the continual and concerted effort of the Government and the construction industry, our infrastructure development will be maintained as the top class of the Region and will enhance the leading edge of Hong Kong. Bust does not necessarily come after the boom. This research study is of value to both academics and professionals in the construction industry. More importantly, this study addresses one of the critical issues, that is how to best implement the succession plan for the ageing construction workforce that is faced by the construction industry in order to sustain the present and the future construction workload. The construction stakeholders, in particular the Government, should take the precautionary measures earlier with the wisdom.
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Policy Changes to Avoid Boom and Bust of the Construction Cycle

KP Yim, YM Fan, Linda Fan, Paul Fox, Vincent Ng

Policy changes to avoid boom and bust of the construction cycle

Ir KP Yim, Ir YM Fan, Ir Dr Linda Fan, Dr Paul Fox, Dr Vincent Ng

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Funded by Hong Kong Construction Association

March, 2011, Hong Kong

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Background to the Study

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Project Approach and Scope

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Project Progress and Activities

Policy Changes to Avoid Boom and Bust of the Construction Cycle

The Project Report

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Chapter 2 Review of Past Research Studies

The final section summarises the review.

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Definitions and Selection of Key Concepts

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Title: Characteristics of Boom & Bust in the HKCI

Permanent lower workload leads to lower capacity max. and min.

Figure 2.1 Characteristics of Boom & Bust in the HKCI

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Factors that Cause Boom and Bust to the HK Construction Industry

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Independent & Dependent Variables for Statistical Analysis

Salaries & Daily Wages

Skilled Worker Unskilled Worker

Short Organisation Tenure (Temporary)

Best Lending Rate

Long Organisation Tenure (Permanent)

Hang Seng Index

Figure 2.2 Independent & Dependent Variables for Statistical Analysis

Policy Changes to Avoid Boom and Bust of the Construction Cycle

Independent Variables by Broad & Detailed End-users

GVCW for Construction Site by Broad Trade Group

By Broad End-user Group

By Detailed End-user Group

GVCW Buildings GVCW for Construction Sites by Broad Trade Group

Site Formation & Clearance

GVCW Structures & Facilities

Piling & Related Foundation Works