Construction Cost Management in China: The Impact of Government Economic Reforms

The South African Association of Quantity Surveyors
Publication Type:
Conference Proceeding
International Cost Engineering Council: 8th ICEC World Congress, 2012, pp. 1 - 20
Issue Date:
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This paper examines the changes in Chinese construction cost management practices brought about by the 'open door' economic reforms implemented by the Chinese government since 1978. Prior to these reforms the construction industry was tightly controlled by the government and a quota pricing system was used whereby all projects were priced according to nationally uniform standards of pricing prepared and issued by the government. The 1978 economic reforms resulted in a transformation from this closed system to a market oriented system that incorporated competitive bidding utilizing market pricing. The key problem that the industry has faced is coping with fundamental changes to their industry in a relatively short period of time. The methodology to investigate this problem comprises a review of English/Chinese literature, an exploratory perception survey of construction professionals in the Chinese construction industry in Tianjin and Beijing and a project case study interview in Beijing. The government economic reforms have had a profound effect on the Chinese construction industry and cost management practices. The Chinese industry has developed at an unprecedented phenomenal rate to the point where it is now a global leader. The industry has shifted to a more 'western' open market system and has embraced competitive bidding and market pricing. This transformation has occurred in a very short space of time and the research has found that the industry is struggling to adapt to the 'western style' of cost management. The research has found a pressing need for the further development of cost management education and training in China. In the past decade more than 110,000 cost engineers have been certified in China with growing concerns about the quality and adequacy of the certification system. The paper provides original contribution to the field through in-country case studies, surveys and interviews and the analysis/translation of Chinese literature.
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