A scientific approach to cost management in Hong Kong
The Origin
In 2008, the global financial crisis swept through Hong Kong, causing dramatic fluctuations in construction costs due to economic turmoil and the overlapping effects of the Ten Mega Infrastructure Projects. Seizing the moment, Rider Levett Bucknall (RLB) in Hong Kong introduced the Construction Cost Relativity (CCR), a relative index that positioned Hong Kong’s construction costs within a global framework, offering the industry scientific insights. From the chaos of the financial crisis to the ambition of the Northern Metropolis, CCR has chronicled the cost evolution of Hong Kong’s construction industry while laying the foundation for future innovation.
Born of Crisis: Catalyzed by Financial Turmoil and Infrastructure Boom
The 2008 global financial crisis caught Hong Kong’s construction sector off guard. Subsequently, the government launched the Ten Mega Infrastructure Projects—such as the Hong Kong-Zhuhai-Macao Bridge and the Hong Kong section of the High-Speed Rail—to stimulate the economy, triggering a surge in demand for building materials and labor, which in turn drove costs skyward. What was the state of Hong Kong’s construction cost levels in an international context? How competitive was the city’s construction industry? Amid the dual forces of financial instability and an infrastructure boom, RLB introduced the CCR. By comparing Hong Kong’s construction cost index with nearly 40 cities across four continents—including Singapore and London—CCR established a dynamic benchmark, empowering Hong Kong to gain a competitive edge in the global arena.
Evolution in Retrospect: Cost Ranking Trends Over the Past 16 Years
From 2009 to 2024, CCR has served as a mirror, reflecting the ups and downs of Hong Kong’s construction cost rankings in an international context. The first phase was a rapid ascent (2009–2012), during which Hong Kong’s ranking soared from 19th to 6th globally. The second phase was a steady climb (2011–2015), coinciding with the peak of the Ten Mega Projects, when Hong Kong achieved its highest-ever ranking—3rd globally—highlighting the intense pressure of resource competition. The third phase was a period of fluctuating decline (2016–2024). Despite the 2020 pandemic disrupting supply chains, Hong Kong’s cost ranking showed no significant increase, instead it steadily declined, underscoring the resilience of its supply chain. These data points not only map out the cost trajectory shaped by economic cycles and policy drivers but also provide practitioners with a basis for forecasting.
Future Outlook: Innovation as the Key to Global Competitiveness
In the context of global competition, the role of the Construction Cost Relativity (CCR) index is increasingly vital. It facilitates informed decision-making by providing a clear comparison of construction costs across major cities worldwide, ensuring that decisions are based on current market conditions. Additionally, the index serves as a crucial benchmark for cost control, significantly reducing the risk of budget overruns. By leveraging the CCR, developers can strategically plan their investments and select locations that align with their financial goals.
Conclusion
In conclusion, the Construction Cost Relativity (CCR) index has proven to be an invaluable tool for Hong Kong’s construction industry, especially in the face of global competition and economic fluctuations. Since its inception during the 2008 financial crisis, CCR has provided a scientific framework for understanding and comparing construction costs on an international scale. This has empowered developers to make informed decisions, control costs effectively, and strategically plan their investments.
As we look to the future, RLB is committed to further innovation with the introduction of a Tender Price Index forecasting model powered by big data and machine learning. This advanced tool will integrate historical data with real-time variables, enhancing the accuracy of cost trend predictions over the next 6–12 months. By improving the quality of cost management services, RLB aims to optimize bidding decisions and maintain Hong Kong’s competitive edge in the global construction market.
Explore the latest cost trends from RLB publications: the Global Annual Report 2025 and the Construction Cost Update for Hong Kong Q1 2025.
FURTHER INFORMATION:
Anderson Chan
