To maintain a sound business model, it is important to keep acclimatizing oneself to the factors that define success, especially to clients and other stakeholders such as employees. Businesses that conduct renovation business must be familiar with client needs and expectations, to ensure that they counter competition. This study assessed the critical success factors in the renovation business in Hong Kong. Further, the study prioritized the critical success factors. To achieve this, the study conducted research that involved 64 participants drawn from different quarters in the renovation industry. The study revealed that the Hong Kong market is different from other markers. This factor was first identified in the literature review. The study revealed that the management’s experience and risk management were the most important success predictors in the renovation market. Descriptive and inferential statistics were used. This research has an important bearing on the renovation fraternity. It outlines the important aspects that must be given priority, to ensure that such businesses remain operational and competitive. Further, the study gives a glimpse of what clients expect from their contractors who should move in to fulfill such needs.
Table of Contents
Importance of Critical Success Factors in Hong Kong Renovation Industry
The real estate business has many different types of business models. Being in the field calls for high levels of business acumen to ensure that such a company remains a going concern for as long as the market remains. As such, companies in real estate need to be versatile and dynamic with their business models. To sustain such versatility and dynamism, the need for sound economic decisions and the understanding of the reasoning behind such decision remain at an all-time high. Decisions, therefore, need to be conscious and supported by a considerable level of reasoning; most of which comes from scientific research. This paper will focus on renovations of a residential building – a business model in the real estate.
Investors in real estate, especially those in residential buildings will opt to renovate buildings for different reasons. According to Ástmarsson, Jensen, and Maslesa, (2013), investors might be looking for the alignment of the landlord-tenant perspectives, especially in aspects such as energy consumption of the property. Shipley, Utz, and Parsons (2006) explained that investors might be interested in sequential redevelopment, where buildings are upgraded to accommodate new and modern designs, which are appealing and impressive to the target clientele. Zavadskas, Kaklauskas, and Raslanas (2004) explained that the ultimate end when considering residential building renovations to an investor is the profit margins, which often accompany such a development. Further, renovating buildings ensures that the building in question gets a new lease of life giving the investor more time to earn from the asset in the long run, especially if they are considering leasing or renting the asset.
Hong Kong is a metropolitan city boasting of its diverse culture, which makes it pay special emphasis to contemporary architecture in terms of modernism, postmodernism, and building functionalism. The city is constrained in terms of space, as the available land is minimal. The city has the single largest concentration of skyscrapers more than any other cities (So, 2017). The constant renewal of the city’s skyline using iconic structures and skyscrapers increases the appetite of the populace in the city towards high end and modern buildings. These developments coupled with the reasons described in the above paragraph are a testament that validates the need to renovate residential buildings.
A renovation project is a complicated, non-routine, and a one-time effort that is often limited by constraints such as budgets, time, resources, without forgetting performance specifications that are aimed at meeting customer needs. To execute such a project, it is important to acknowledge that the completion of such an undertaking can only be realized through the perfect combination of numerous events and interactions that are either planned or otherwise. All these factors happen in a constantly changing environment and participants. As thus, the ability to deliver the pre-determined objectives is a critical objective.
In the renovation process, certain factors are placed higher than others in relation to the success of a project. Such factors are the critical project success factors, a term that was first brought to the surface by a John F. Rockart, a scholar from the MIT Sloan School of Management (Babu and Sudhakar, 2015). The definition of such factors is important, especially to the management of the project in that it helps in defining information needs, as well as, for planning purposes. Critical success factors are important to managers, especially when understood right from the start of a project. Besides, they provide directional assistance to both managers and project members in the execution of the project. As such, the project is most likely to be achieved within the constraints explained, especially with time, cost, and quality.
Understanding the critical success factors is a means to ensure successful completion of projects. Successful project completion is highly dependent on the management and control of different aspects. It is at this point that the critical success factors interject and provide important assistance in the decision-making support mechanisms. According to Rubin and Seelig (1967), the study and understanding of critical success factors is a vital method to improve the efficiency and effectiveness of project delivery. Sanvido et al (1992) explained that there is a direct correlation between the achievement of critical success factors and project success.
This paper aims to study and eventually prioritize the critical success factors in renovation projects in Hong Kong. The study has been necessitated by a project, which has been commissioned by a private organization, who is the client and further involved are the project’s consultant and contractor. The project has been allotted a budget of HK $20 million and as such, it is important to determine the critical success factors to ensure that the project will be successful within the defined constraints.
A renovation process is a process aimed at restoring or improving the structural, design, or functional characteristics of a structure (Attalla, Hegazy, and Haas, 2003). Singh (2007) explains that such renovations can be in the form of modifications, conversion, or complete replacement. Al-Tmeemy, Abdul-Rahman, and Harun (2011) adds to the same and includes actions related to restoring, modifying, or improving a building. There is a difference between a new building and renovation where the later occurs at existing structure or building. Sanvido et al (1992) defined critical success factors as those factors that predict the success of a project; it is those factors that when thoroughly and completely satisfied during the execution of a project, they will ensure that the expectations of the project stakeholders are met.
Before describing the success factors for renovations, it is vital to first explore what takes a project to be successful. This will be determined by distinguishing between the success of the project management effort and project success. According to De Wit (1988), the success of a project management is measured against the traditional and widespread performance measures against quality, time and cost. One efficient tool of handling projects is project management. According to Altikinson (1999),
“Project Management is the application of a collection of tools and techniques (such as the CPM and matrix organisation) to direct the use of diverse resources toward the accomplishment of a unique, complex, one-time task within time, cost and quality constraints. Each task requires a particular mix of theses tools and techniques structured to ®t the task environment and life cycle (from conception to completion) of the task.” (p337)
Different factors often come in handy to explain or predict the success of a project. Rubin and Seelig (1967) evaluated the relationship between a project manager’s background characteristics and some specified characteristics of a project such a manager is managing. The study found out that organizations preferred their most experienced project managers to be in charge of high priority areas. However, the study found out that there was no relationship between project performance and a manager’s experience.
Project Management Success and Project Success
The understanding of project success is important before understanding the critical success factors. As such, a distinction between project management success and project success is necessary. As explained by De Wit (1988), project management success is an aspect that is measured against traditional factors that define performance, which is cost, time, and quality. On the same breadth, Munns and Bjeirmi (1996) understood and explained project management as the control of achievements of the objectives laid out during a specific project. Project success is something entirely different.
Atkinson (1999) explains that there is a link on the iron triangle of time, cost and quality in project management measurements. Baccarini (1999) argues that the success of a project management is dependant of the process of the project as well as the successful accomplishment of quality, cost and time objectives. Another factor considered is the process of project management. Nonetheless, Pinto and Slevin (1988) argues that the success of a project is not all about the meeting performance, schedule and cost specifications but also includes client satisfaction.
Project success as concluded by Cooke-Davies (2002) is an aspect that is complex beyond time, costs, and quality parameters. It has more to do with perception. Project managers need to understand that the client’s perceptions have a lot to do with the final results. As such, it follows that project success is controlled by factors beyond a project manager. Due to the differential in project success factors, projects can fail or succeed independent of the management techniques and processes.
Project Success Criteria
De Wit (1988) and Cookie-Davies (2002) explain that project success criteria are the measure by which the success or failure of a project is judged. As mentioned earlier, the cost, time, and quality triangle, often known as the Iron-triangle have been widely used as the measures of project success criteria. Due to the evolution of management sensitivity to stakeholders, the concept of client emotions was brought into play as described by Pinto and Slevin (1988). Shenhar, Dvir, Levy, and Maltz (2001) opined that four major dimensions distinctly describe project success. First, it is the project efficiency, second, the impact the project has on the customer, third, the direct organizational and business success, and fourth and last, future preparations.
Success Factors and Critical Success Factors
Success factors, according to Han, Yusof, Ismail, and Aun (2011) are factors that influence and determine how successful a project will be. It is the combination of inputs to the management system that directly or otherwise lead to the successful completion of the management as explained by De Wit (1988). In essence, success factors are a management factor that is squarely under the control of the management. They can be either hard or soft factors. Soft factors are those factors, which are subjective and intangible and also are hard to measure, as explained by Chan, Scott, and Chan (2004); for instance, management experience. Hard factors are those that are measurable, tangible, and objective.
Critical Success Factors, as explained by Rockart (1982), are the relatively small but important matters in the construction industry that demand attention for success to be achieved. Sanvido, Grobler, Parfitt, Guvenis, and Coyle (1992) explained that critical success factors are those factors that predict the success of a project. It is those factors that when thoroughly and completely satisfied during the execution of a project, they will ensure that the expectations of the project stakeholders are met. Critical success factors are the factors that are very important for managers to improve their organization. They are used to indicate progress in different areas. Considering that critical success factors are inherent to specific projects in specific locations, it is not appropriate to generalize them and apply them blindly across different industries (Yong and Mustaffa, 2013).
Recent Research Findings on Critical Success Factors
In a study conducted by De Silva, Rajakaruna, and Bandara (2008), it was established that there are more than 46 challenges faced by Sri-Lankan construction firms. The study further identified 13 major motivators that can be used to improve the performance of the construction industry. On this same breadth, Gunasekera (2009) on his part identified 30 critical factors unique to the Sri Lankan construction industry but with a focus on controllable factors from the perspectives of the client, project manager, and the consultant. However, he did not dig deep enough to consider HR factors, which are relatively important.
Garbharran, Govender, and Msani (2012) assessed the critical success factors in the South African construction industry and identified 17 such factors. In general, the findings point to the direction where project managers and contractors were of a strong opinion that critical success factors are important in the achievement of a project’s success. Biological factors in the process were found to be inconsequential in the achievement of such success.
In the Norwegian market, Alias, Zawawi, Yusof, and Aris (2014), through literature review, identified five variables that are associated with project performance, especially in the execution phase of a project. To further support the findings, Zidane, Johansen, Andersen, and Hoseini (2015) identified nine factors that lead to delays in the Norwegian construction industry. Such factors include management and coordination, administration, decision-making, waiting, and quality aspects.
Shifting the gears to Malaysia and Saudi Arabia, Yong and Mustaffa (2013) identified 15 factors under seven subheadings. The study concluded and recommended that human-associated factors should be given priority and further improved for projects to be executed successfully. Such human factors included commitment, communication, competence, and cooperation. Mitra and Wee Kwan Tan (2012) found that a project was delayed for nine reasons, which included the use of inferior tools and methods, as well as, inexperienced staff. Hong (2011) found that aspects such as scope, team, and change variables have a strong effect on project success and can predict a project’s success.
After the author conducted a comprehensive literature review, 6 critical success factors were identified for the current project: quality control, time management, budget and cost control, Activity Scheduling/Planning Control, Risk management, and Management Experience.
As project processes becomes complex, there is need for a deeper exploration of the planning and controlling processes to ensure the project is effectively implemented. A project management process without critical planning and controlling is likely to result to disastrous effects. However, a team that critically plans and controls a project process assists the management to rectify any unforeseen issues when they occur.
Time is one of the key elements in the iron triangle of project management besides quality and cost. Ability to predict the duration that a project takes before completion eliminates delays
Cost control and management is a key element in the iron triangle besides time and quality. The ability of a project manager to determine the realistic cost of a project before the implementation of a project will over budget.
The third key element of the iron triangle is quality. One of the pressures that is triggering construction is globalization. However, globalization poses many challenges particularly in small organizations. However, in future, it is projected that globalization will make the world a global village. Due to this, it is essential that every organization develops a quality of workmanship at international level.
Risk management can be defined as a process one deals with uncertainty. Duncan (2013) explains that risk management is beneficial to an organization as it helps the company to mitigate and avoid probable problems and issues. This process is critical in the identification of external and internal issues. Oren (2009) identifies that early identification of problems and issues provides an organization with time to form a mitigation plan.
An experience management team is referred to their professional capabilities, techniques, skills, and expertise required in effective project management. The level of experience of project manager determines the quality of work produced and performed.
Summary of the Literature Review
In each of the mentioned countries, it has been identified that there are different critical success factors, which have different effects on different stages of a project. Depending on the researcher, a number of factors were identified for each evaluated country and it is clear that no country was similar to the other. As such, it is paramount that stakeholders in each country determine their own unique critical success factors and further prioritize them in order of how important they are to the specified country. This discovery necessitates the evaluation of Hong Kong as a different country with possible significant differences between the country and others, which have featured in this review.
The study started by reviewing critical success factors for different kinds of renovation projects. Through the analysis, the researcher managed to identify some aspects that need further analysis from the Hong Kong perspective. The review of literature above disclosed some critical success factors in construction management. However, no information in the study related directly to the Hong Kong market. This study is, therefore, aimed to fill the gap thus identified.
This study operated within the precincts of the descriptive research design. As elaborated by Lambert and Lambert (2012), descriptive research design allows for the study of predetermined phenomena without influencing or manipulating them in any way. The study was established to do an evaluation of the perception of industry practitioners. In this case, participants’ perceptions and operational facts in the construction industry were gathered, without making any manipulations or interference with their courses to ensure that the actual scenario in the field was captured as it was. In the end, the factors that squarely contributed to the success of the renovation projects were the ultimate aim.
The following research questions were to be answered at the end of the study;
To select the participants of this study the stratified simple random sampling technique was applied. Homogeneous subsets from different renovation sites were organized before sampling. The homogeneous subsets in construction sites comprised of different stakeholders in the project including the client, project managers, construction crew, and consultants. In the literature review, it was identified that critical success factors touch on the client perceptions and feelings and as such, it was paramount that the client is factored in. All the renovation sites considered allowed for the study to be conducted and requested for the sharing of the study results.
All the sites and the individuals selected to participate in the study were informed prior to their participation that they will be offered no incentives to participate. The participants were informed and they agreed that their participation was purely voluntary. Further, they were informed that no reprisals whatsoever would arise if they chose to decline the invitation or drop out of the study midway. In addition, the site managers and the individual farmers were informed that the reasons for the study were purely academic and their responses would remain anonymous in the entire study stages through the publishing of the study findings. In the end, 64 participants from nine renovation sites accepted to participate in the 10-minute survey. As such, the sample size of the study was 64.
A questionnaire was developed and administered to the research participants (Appendix 1). The structured questionnaire was used to elicit data and information from the study participants. The questionnaire contained simple questions that had to be filled by the participants in a span of 5-10 minutes. The questionnaire had close-ended questions. In addition, the questionnaire was self-administered due to time and resource constraints.
The principle of developing a questionnaire is to elicit specific information related directly to the research aim and objectives. The adoption of close-ended questions was meant to make it easy for the research participants to find it easy and fast to answer.
To ensure that the data was reliable for statistical analysis, it was tested first using the Cronbach’s Alpha test before commencing any other analysis. According to Dörnyei and Taguchi (2009), Cronbach’s Alpha test measures the internal consistency of the data. The minimum acceptance level of the Cronbach’s Alpha test is a value equal to or more than 0.7 for each of the provided variables.
Table 1: Range of Values of Cronbach’s alpha
|Cronbach’s alpha||Internal consistency|
|0.9 ≤ α||Excellent|
|0.8 ≤ α < 0.9||Good|
|0.7 ≤ α < 0.8||Acceptable|
|0.6 ≤ α < 0.7||Questionable|
|0.5 ≤ α < 0.6||Poor|
|α < 0.5||Unacceptable|
The analysis of the Cronbach’s alpha indicated that the data was consistent and fit for analysis as indicated by the table below.
Table 2: Cronbach’s Case Summary
|Case Processing Summary|
|a. Listwise deletion based on all variables in the procedure.|
|Cronbach’s Alpha||N of Items|
From the results above, none of the variables was deleted. Only 6 figures in the whole statistic had a Cronbach’s Alpha of 0.5, which indicates a poor internal consistency. As such, the items were allowed to proceed as they were of negligible influence.
Two kinds of statistics were used in the study – descriptive and inferential statistics. Descriptive statistics are used to provide an overview of the results, which are presented in simple tables and graphics. Descriptive statistics were used for the analysis of the first, second, third, and fourth questions. Inferential statistics are used for the purposes of comparison, testing, and forecasting or predictions. These statistics were used for the purposes of analyzing the fifth question. Excel and IBM SPSS statistical packages were used in the analysis.
To analyze demographic profiles, the study used descriptive statistics. The respondents were supposed to select their most fitting answer as presented in the questionnaire. Issues to do with the length of experience, educational background, and exposure to formal project management were used in the analysis.
Figure 1: A review of participants’ loyalty to renovation projects
Figure 2: Participants exposure to formal project management
Figure 4: Experience of the participants
Figure 4: Educational Backgrounds of the Participants
Table 3: Descriptive Statistics
|Valid N (listwise)||64|
Table 3: Descriptive Statistics
From the above table, it is clear that the Hong Kong market attaches more value to Management experience, risk management, budget and planning control, activity scheduling, quality control, and time management in that order.
|Correlation between Vectors of Values|
|Table 4: Correlation of Critical Success FactorsThis is a similarity matrix|
The table shows how the variables (critical success factors) relate to each other. From this analysis, it is clear that the budget and experience were found to be highly related according to the respondents. On the same breadth, risk management and quality control were found to be highly unrelated. Using the inferential statistics above, it is easy for the management for a renovation project to determine how to pair the critical factors should the need arise.
Discussion of the Results
The results demonstrated above indicate that the respondents were of adequate knowledge of the renovation projects environment based on their exposure to management and periods of time they have been working on these projects. As such, based on aspects such as experience, exposure, and professional background, it is appropriate to infer that the participants were of reasonable knowledge and understanding of the operations and likely results in renovation project performance.
Operators in Hong Kong have been found to have an emphasis on management experience. This is not entirely surprising since people in Asia have a dimension for seniority. People who are more experienced in their trade attract more admiration and respect in their work. As such, it is perceived that experience is a predictor of success in renovation projects. With experience, one is perceived to be in a position of influencing people and coordinating group work. Risk management came in second. It was perceived to be an important predictor of success as risk management eliminates the propensity of work to slow down or fall behind schedule.
A correlation analysis identified that management experience and budget management are two highly related factors. It indicates that quality control and the budget are highly tied to each other as activity scheduling and risk management. From this, it is easy to see that poor budget management or low budgetary allocation has a significant implication on the quality of the end product. This is a rational way of viewing the relationship. Quality control and risk management had the least correlation. This means that participants did not perceive quality control in any dimension of risk management.
Comparing other studies to what has been shown in this study, it is clear that there are significant differences with what other markets perceive to be critical success factors. Foong (2017) indicated that in renovation projects, quality is a dimension that should rank high, since clients are more interested in the quality of finishes. When the quality of output is poor, Foong indicated that clients are on a high note likely to reject the work. On the contrary, this study has placed quality control as the second last variable. This indicates that there are critical differences in the two markets and the perceptions that are held by the stakeholders in the markets.
This study was conducted on the precincts of two main objectives. The first objective aimed at identifying the critical success factors, which predict the success of renovation projects in Hong Kong. The objective was achieved after the assessment of the industry stakeholders using a questionnaire. To give confidence to the researcher that the participants were fit to provide reliable and valid information, the researcher incorporated important questions that proved the demographic characteristics of the participants was what was required.
The second objective of the study was to identify how important the critical success factors were in the order of priority. To achieve this, a Likert scale was used to gauge how important each of the mentioned variables was related to each other. To achieve this objective, data from the participants were coded and analyzed using SPSS. Using frequency analysis, it was revealed that management experience was held high as the most critical factor. This result was tied to the culture of the people in Hong Kong where seniority in the society is important. Further, it was identified that risk management came in second, which was an indication that the Hong Kong renovation experts were risk averse. Quality control and time management did not feature as very important, a dimension that is heavily disputed by Foong (2017). Foong ties quality management to the acceptability of a project in the perspective of a client. Renovation, which is basically a facelift to an asset, is a dimension that needs to be well articulated, especially in renovation projects. This was not shown to be the case in Hong Kong.
The study produced an in-depth analysis of critical success factors relevant to the Hong Kong renovation industry. The study provides important insights to industry players concerning what to focus on to ensure the success of their projects. The aspect of experience in project management, an aspect tied to people’s skills, is synonymous to studies conducted by Belassi and Tukel (1996) and Scott-Young and Samson (2004). These two studies found out that project management experience was a critical component to project performance or success.
Project managers need to have a clear understanding of those components that define the success of projects in the eyes of their stakeholders. To ensure that renovation companies deliver value and consequently stay in business, it is paramount to pay attention to the factors that define success. Failure to identify and pay necessary attention to success factors is tantamount to strangling the business. Competition is rife in the renovation industry and thus, it is important to pay attention to research findings to ensure that a company stays relevant in the industry. Research in this sense offers a business the opportunity to adapt to changes, as well as, operate with a concise sense of direction.
The study was conducted within a short timeframe implying that time was a constraint. The researcher is also a student and a practitioner and as such, lesser time was left for the study, which had to simultaneously run together with other aspects. This constraint does not rule out the validity of the results. Further, the sample size was not big enough. More participants would have been roped in to ensure that the margin of error was reduced. More of people such as owners and consultants in such projects would be wanted to ensure that the actual picture on the ground is found.
In future, approaches that are more diverse are needed. For instance, focus groups and a wider audience is needed.
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Less than 5 years
Between 5 and 10 years
Between 10 and 15 years
Over 15 years
Mechanical/ Electrical Engineering
|Budget and cost control|
|Activity Scheduling/Planning Control|
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