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5. CONCLUSIONS
SMEs in Hong Kong's construction sector are collectively a major part of the economy ranking high in terms of number of establishments, contribution to gross domestic product, and size of employment. Construction sector SMEs however also account for substantial environmental concerns, such as air, water and noise pollution, energy consumption, waste generation and chemical waste production compared to other sectors.

The construction industry in Hong Kong is also characterised by its large number of sub-contractors. Numerous specialist operators, often using short-term labour, typically support the larger main contractors. The industry is highly competitive and works to tight deadlines. Completion on time is a high priority, whilst resources such as space on site for recycling remain limited.

This Review Report has been compiled through internet research, literature reviews and questionnaire surveys of stakeholder organizations to identify:

Findings are summarised as follows.

5.1 SUPPLY CHAIN PRESSURES FOR ENVIRONMENTAL MANAGEMENT & EMS
Construction sites accounted for 69.7% of industrial related complaints during 2003. In response to such concerns over previous years the construction industry faces ever-increasing expectations towards compliance and improved performance. The sources of these supply chain pressures can be classified into a hierarchy of four levels:

Level 1 (CIRC and PCICB directives) in particular is seen as the over-riding catalyst and framework for environmental improvement throughout the construction industry, being manifested at least in public projects through Level 2 (Technical Circulars).

5.1.1 The CIRC and PCICB
The CIRC report Construct for Excellence (January 2001) set out 109 recommendations recognised by industry as the authoritative roadmap towards a modern, safe, innovative, efficient and client-oriented construction industry. Seventeen of these specifically addressed the environment. Progress on these environmentally related recommendations, as reported by the PCICB^[1] , is having and will have further impacts on construction enterprises working on public sector projects. These recommendations are observed to have direct impacts on main contractors and they may also indirectly affect sub-contractors through the supply chain. CIRC recommendations outcomes to date include:

^[1]PCICB Paper No 114 Progress Report on Implementation of Recommendations of the Construction Industry Review Committee (July 2004)

In addition, public works and housing project specifications have been revised to facilitate use of recycled materials as hardcore in foundations, sub-base in road pavement and concrete in technically less demanding works (ETWB has identified some 100 projects).

Whilst these requirements so far affect mainly public sector projects, it is widely anticipated that they will in time begin to feature in private sector projects (examples are already evident, described further below), and will eventually filter down to SME sub-contractors and sub-sub-contractors. Although there is no recommendation to mandate ISO14001 in the construction sector, the CIRC report (para 8.50) encourages its voluntary adoption, with mandatory certification "preferably considered at a later stage when the construction industry has acquired more expertise in tackling the environmental challenge".

5.1.2 Environmental Legislation and Regulations
The key supply chain pressure facing all construction related companies is compliance with legislative and regulatory requirements. Construction companies in particular have financial reasons for avoiding environmental convictions since these are considered when tendering for government contracts. Environmental legislation in Hong Kong consists of:

New legislation and amendments are being introduced on a regular basis. In July 2004 the Legislative Council passed a Bill to implement a construction waste disposal charging scheme that will provide further supply chain pressure for environmental protection.

In addition to statutory requirements, construction companies face numerous other including Codes of Practice (issued for example by EPD and EMSD), Technical Memoranda and Guidance Notes (mainly issued by EPD), "ProPECC PN" Practice Notes for Professional Persons (issued by EPD), "PNAP" Practice Notes for Authorized Persons and Registered Structural Engineers (issued by BD) and Technical Circulars, TCs (issued by ETWB and its predecessors). Clearly for any company to be assured of compliance with relevant legislation and codes, a systematic process is required to identify, understand and keep up to date with the many requirements in place. This is a fundamental element (and benefit) of an ISO14001 EMS.

5.1.3 Government Technical Circulars
ETWB Technical Circulars (TCs) are the key means of implementing policies and procedures relating to construction sites. Some 46 current TCs (issued from 1988 to date) include explicit requirements for environmental protection. New TCs since 2002, in addition to specifying the management of environmental impacts (e.g. ecological protection, waste minimisation, etc), are increasingly exerting a strong influence on the behaviour of contractors in several areas, particularly by:

TC 14/2003 (Role of Departmental Safety & Environmental Advisor on Health, Safety and Environmental Protection on Construction Sites) gives an insight into future developments, stating in Section 1 that:

"The objective to revise and extend the duties of Departmental Safety Advisor is to enhance the communication and management on environmental performance of contractors on construction sites so that the established framework for the safety management system and the Pay for Safety Scheme can be extended for applying to environmental protection."

Such requirements, although non-statutory, create strong drivers to the second and third tiers players of the supply chain to move towards improved environmental management.

5.2 CLIENT REQUIREMENTS FOR ENVIRONMENTAL MANAGEMENT AND EMS
The environmental supply chain requirements of the local client organisations included in the survey can be broadly categorised into five main areas:

The over-riding supply chain requirement is in compliance with environmental legislation. Other areas are applied in differing degrees as follows.

5.2.1 Public Works and Related Departments
Environmental supply chain requirements of public works and building related departments were identified to include:

Contracts for public buildings also increasingly include requirements for environmental assessments using (HK-BEAM)^[2] . Only the EPD at present requires the implementation of an ISO14001 EMS, and this for the design, build and operation of waste management facilities since 2000 (environmental monitoring is also specified, with a portion of the Contract Sum allotted for compliance with environmental performance requirements).

^[2]HK-BEAM has to date been adopted by 95 major developments, approximately 30% of which have been commissioned by public sector clients.

5.2.2 Private Developers and Utility Companies
Environmental supply chain requirements of private developers and utility companies were identified to include:

More recently, requirements for Waste Management Plans, Environmental Management Plans, and employment of an independent environmental checker have been introduced in isolated and individual private sector projects. Private developers have also been keen to explore construction technologies new to Hong Kong such as prefabrication, left-in formworks and slip form construction. A large number of private developers also require their construction projects to be assessed against and certified under HK-BEAM.

5.2.3 Main Contractors and Larger Construction Companies
Many main contractors and larger construction companies in Hong Kong have already obtained certification to ISO14001, and more continue to do so. Unlike other industries in Hong Kong, in which global partners and customers have demanded ISO14001 certification, its adoption in the construction industry has arisen on a purely voluntary basis.

Under a typical mode of operation in construction sector: Client/Designer - Main Contractors - Main contactors - Sub-contractors (service providers/materials suppliers), the main contractors play an important role in communicating the environmental requirements from the clients to their sub-contractors. Main contractors generally issue environmental guidelines to their sub-contractors that specify compliance with statutory and client requirements. Most main contractors appear to take full control of the construction project and site operation, with sub-contractors found to play minor roles in environmental protection (such as participation in training and education programmes), as they may simply supply labour and equipment to the main contractors without direct involvement in environmental management in construction projects. As such the environmental requirements of clients are to a large degree absorbed by the main contractors and seldom reach the second or third tier players of the supply chain. Little significant or direct pressure appears to be directed to sub-contractors or sub-sub contractors other than requirements arising from the main contractors' adoption of an EMS, whether or not this is certified to ISO14001. However, there is a strong desire from main contractors for sub-contractors to improve their environmental performance and ensure the necessary standards on site.

5.3 SOURCES OF ENVIRONMENTAL SUPPORT
Nineteen professional and academic institutions in Hong Kong have been identified that can offer expert advice and technical assistance, tailored to the specific needs of individual construction SMEs, on local environmental requirements, ISO14001 EMS, and pollution control measures:

The services offered by these organisations are highly diversified, depending upon their nature, mandate and scale, and include for example the provision of general information, ISO14001 mentorship, tailor-made training, best environmental practice guides, and pollution control technologies.

In addition, over 80 local consultancies provide construction related services in areas including environmental auditing, pollution control, impact assessments, analytical and laboratory services, training and strategy, and ISO14001 EMS development.