Engineering and construction - Overview

 

Current Issues and Trends

In the new millennium engineering and construction ("E&C") will continue to be a key indicator and driver of economic activity and wealth creation.
  
In this fast changing world the challenges facing E&C companies will become ever more complex.  Technology evolves apace - the information age and electronic commerce are now inescapable facts of life.  New forms of procurement are emerging driven by higher customer expectations, the need for lower costs and shorter completion times.  
  
Yet amidst all this change, E&C companies must continue to meet strict compliance requirements of governments, regulatory bodies and more recently meet increasing standards in environmental management.

Outlook

The E&C industry plays a significant role in the economy of Hong Kong.  Along with the ever developing China market, new road and rail links, commercial and residential developments and major infrastructure projects are prevalent.  
   
In the current economic climate which impacts the E&C industry, it is essential that E&C businesses are innovative in their approach and maintain strong controls over tendering procedures and cost control as there continues to be strong competition and pressure on margins.

Leading Advisors to the E&C Sector

With our formidable E&C client base, globally and in Hong Kong and mainland China, PricewaterhouseCoopers has multi-disciplinary professional service teams with extensive knowledge and experience within the E&C sector.  Our E&C audit, tax, consulting and dispute analysis and investigations groups provide an integrated approach which facilitates relevant and prompt solutions to E&C business needs.


Dispute analysis and investigations

  • The E&C industry is invariably faced with disputes in respect of contract claims, variation orders, liquidated damages, extensions of time and prolongation costs.  Our E&C team includes qualified engineers and other industry experts who provide litigation support for international and local arbitration.  
      
  • In the set up of new capital projects we provide independent advice on assessing critical paths and risk profiles.  This involves a quantitative assessment for evaluations of projected costs and final completion dates.
      
    Learn more about our Dispute Analysis and Litigation Support.

 

Tax planning

  • Consideration needs to be given to the most appropriate vehicle in which E&C businesses should operate in both Hong Kong and China.  Taxation implications may vary considerably between partnerships, joint ventures or other corporate entity structures. 
     
  • The deductibility of forseeable loss and liquidated damages provisions continues to be a focus of the Inland Revenue.  We frequently advise on the considerations and documentation that need to be maintained to support such deductions. 
     
  • The profit recognition policies of E&C businesses generate a degree of scrutiny by the Inland Revenue.  With changes to the tax law in assessing income on a percentage of completion basis compared to a completion basis the impact on any tax liability needs to be considered.

 

New accounting standards

  • New accounting standards on provisioning have been issued internationally and in Hong Kong and mainland China.  Application of these standards are a concern to the E&C industry due to the high degree of judgement that is required in reviewing contract exposures.  We continually assist management with this judgement process to ensure the requirements of the standards are maintained.  
     

Visit our global Engineering and Construction website.

 

Contact us

Brian Hunter
Hong Kong Engineering and Construction Leader
Tel: +[852] 2289 2808
Email

KK So
Asia Pacific Real Estate Tax Leader
Tel: +[852] 2289 3789
Email

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