Capital Budgeting Evaluation Practices of Building Contractors in Hong Kong

K.C Lam; S.O Cheung; C.M Tang; S.T Ng

doi:10.5130/AJCEB.v2i1.2889

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Published: Nov 15, 2012

DOI: https://doi.org/10.5130/AJCEB.v2i1.2889

K.C Lam

City University of Hong Kong

S.O Cheung

City University of Hong Kong

C.M Tang

City University of Hong Kong

S.T Ng

University of Hong Kong

Abstract

This paper reports the results of an investigation into capital budgeting evaluation practicesin the construction industry of Hong Kong. The aim of this study was to identify thepopularity and extent of usage of various techniques for capital budget evaluation, investmentappraisal, risk analysis, and management science. The current study was comparedwith a similar survey conducted in 1994 to establish the changes in the capital budgetingevaluation practices of contracting firms over time. The results indicate that there was ageneral increase in the popularity and extent of usage in certain capital budget evaluationtechniques such as “best/worst estimate” and “formal financial evaluation”. In addition,the evaluation techniques examined were fitted into a discriminant function analysis (DFA),and a model has been developed which allows contracting firms to be classified accordingto their predominant characteristics in capital budget evaluation.

How to Cite

Lam, K., Cheung, S., Tang, C., & Ng, S. (2012). Capital Budgeting Evaluation Practices of Building Contractors in Hong Kong. Construction Economics and Building, 2(1), 81-93. https://doi.org/10.5130/AJCEB.v2i1.2889

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Vol 2 No 1 (2002): AJCEB

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Articles (Peer reviewed)

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