Economic reforms in the Chinese construction industry - cost management implications

Pertubuhan Ukur Jurutera & Arkitek Brunei (PUJA)
Publication Type:
Conference Proceeding
Innovating and sustaining: challenges and opportunities, 2012, pp. 1 - 13
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The People's Republic of China was formed in 1949 with an economic system based on a planned centralized economy controlled by the government. Under this system, the construction industry was characterized by tight government controls that included the financing of projects and the allocation of design and construction works to state owned enterprises. There was no competitive bidding system with projects priced according to fixed standard price norms published by the government. In 1978 the government introduced fundamental economic reforms aimed at shifting from a planned centrally controlled economy to an open-door market driven economy. These and other ongoing reforms have resulted in a remarkable transformation of the Chinese economy and construction industry over just three decades. This paper examines the impact of these changes on Chinese construction cost management practices and the role of the Cost Engineer. The research methodology for this paper was based on a review of English and Chinese literature and industry interviews in Beijing. The research found that the economic reforms have had a profound effect on Chinese cost management practices and has seen the rapid rise of the Cost Engineering profession. The industry has shifted to a more western open market system and has embraced competitive bidding and market pricing. This has placed tremendous pressure on cost management professionals to adapt and has heightened the need for improving cost engineering education and certification programs.
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