WORK SHORTAGES have forced Hong Kong contractors and consultants to slash prices by 30%.
Construction firms are cutting pay and imposing longer working hours as they try to squeeze profits out of their workload.
Hong Kong's construction market is withstanding the impact of the Asian economic crisis better than some, but competition is hotting up as outside contractors and consultants compete for work.
Two already awarded design and build contracts on the mammoth £5.1bn West Rail project came in 30% below estimate just before Christmas.
And the Association of Consulting Engineers of Hong Kong's latest member survey shows that 62% of firms are offering discounts of 30% or less.
Almost all of the respondents to ACEHK's survey said there was insufficient work for consulting engineers, and 72% expected their turnover to fall.
Only three of the 29 responding firms had won work at higher fees. More than 60% of consultants expect to cut staff numbers, and 45% expect to cut salaries by as much as 10%.
The feeling is that the market could recover quickly, particularly as £3.2bn of construction contracts for West Rail project are expected to be awarded this year.
'It has been a really difficult time in the last year, and another difficult year is ahead,' said Nishimatsu Construction Hong Kong branch projects director John Porter.
Cutting the link to the US dollar, effectively devaluing Hong Kong's currency, would help the economy, he said.
(see Analysis page 10 and West Rail supplement).
Lists of prequalified bidders for 12 major construction contracts have just been published by West Rail client Kowloon-Canton Railway Corporation. Firms appearing on several of the lists include Kumagai Gumi, Kier Hong Kong, Amec, Laing and Balfour Beatty.