Lam, K C and Oshodi, O S (2015) The capital budgeting evaluation practices (2014) of contractors in the Hong Kong construction industry. Construction Management and Economics, 33(7), pp. 587-600. ISSN 01446193
Abstract
Capital budget evaluation plays a crucial role in financial management. This places a firm in a competitive position. Recent development points to the need for implementing capital budgeting in construction organizations due to the capital-intensive nature of construction business. The aim here is to investigate the trends in the practice of capital budget evaluation among construction contractors operating in Hong Kong over a 20-year period. A longitudinal survey approach is used; four cross-sectional surveys were conducted between 1994 and 2014. The findings indicate that 'formal financial evaluation' is the most common technique used for capital budget evaluation. In addition, the practice of capital budget evaluation is more pronounced in the large-sized firms. A comparative analysis of the results of the four surveys reveals that there are variations in the degree and frequency of use of capital budget evaluation techniques over the study period. Further research is needed to understand the challenges associated with the use of sophisticated capital budget evaluation techniques in the construction industry of Hong Kong.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | capital budgeting evaluation; discriminant function analysis; investment appraisal; risk analysis |
| Index terms: | survey, comparative analysis, evaluation technique, construction contractor, risk analysis, variation, capital budgeting, discriminant function analysis, financial management, construction organization, Hong Kong, construction industry, investment appraisal |
| Subjects: | economic analysis, data analysis and analytics, practitioner, organization, data collection methods, evaluation and assessment methods, statistical analysis, budgeting, environmental hazards, industry analysis, contractual condition, Geography |
| Topics: | Roles and Professions, Sustainability, Cost Management, Business Strategy, Research Practice, Geographical Context, Contract Administration |
| Descriptive scope: | 4 PTEA |
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