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Practices of Hong Kong building contractors in strategic asset allocation process: longitudinal approach

K.C. Lam (Department of Building and Construction, City University of Hong Kong, Kowloon, Hong Kong)
D. Wang (Department of Building and Construction, City University of Hong Kong, Kowloon, Hong Kong)
M.C.K. Lam (Department of Building and Construction, City University of Hong Kong, Kowloon, Hong Kong)

Journal of Financial Management of Property and Construction

ISSN: 1366-4387

Article publication date: 25 July 2008

Abstract

Purpose

The purpose of the paper is to report the investigation results of current practices of strategic asset allocation process, which consists of capital budget planning, monitoring, and control of Hong Kong building contractors. The changes of the said practices are compared with the results of the two similar surveys undertaken in the past longitudinally.

Design/methodology/approach

A total of 157 questionnaires were sent to about 1,000 approved Hong Kong building contractors (classified as group A, B, C in accordance with their maximum capacities). The total response rate was 30.7 per cent. Statistical techniques, a two‐dimensional contingency table, and discriminant function analysis (DA) were deployed to analyze the survey data via SPSS.

Findings

Only the practice of a regular review of the minimum rate of return of major projects was popular. For monitoring aspect, 100 per cent of surveyed contractors monitor project performance once operational. The result of post‐completion audits on major projects was 63 per cent. For the results of the longitudinal study, 66.7 per cent of group C firms employed the practices of intermediate and long‐term capital budgets and 71.4 per cent of large firms had a formal body for screening investment proposals compared with 54.8 per cent and 63.3 per cent of the same group's practices in 1994 respectively. DA results showed that the patterns within the three different groups (A, B, and C) were very similar, and group A and group B were active in capital budgeting monitoring and control.

Practical implications

Planning was the weakest and data showed that Hong Kong building contractors had tight control of the projects.

Originality/value

This paper reports the investigation results of current practices of strategic asset allocation process, which consists of capital budget planning, monitoring, and control of Hong Kong building contractors.

Keywords

Citation

Lam, K.C., Wang, D. and Lam, M.C.K. (2008), "Practices of Hong Kong building contractors in strategic asset allocation process: longitudinal approach", Journal of Financial Management of Property and Construction, Vol. 13 No. 3, pp. 176-186. https://doi.org/10.1108/13664380810913412

Publisher

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Emerald Group Publishing Limited

Copyright © 2008, Emerald Group Publishing Limited