Viewpoint | Creating Resilience
Surmounting Project Management Risks and Challenges in Asia Pacific
Tight Labour Conditions and Rising Prices of Materials Place Pressure on Construction Costs
August 23, 2022 10 Minute Read
Executive Summary
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- As Asia Pacific continues to contend with pandemic-induced uncertainties, fallout from the Russia-Ukraine conflict and global supply chain disruption, 2022 will pose challenges while creating new opportunities for innovation in project management in mitigating these risks.
- Companies across Asia Pacific are slowly resuming corporate real estate decision-making and investment, spurring numerous new projects for office fit-outs – be it expansion, downsizing to new premises or reconfiguring existing space.
- Ongoing border controls in several markets continue to pose a threat to corporate occupier expansion. Key corporate occupier concerns also include timely and cost-efficient solutions across their fit-out projects and other capital programmes.
- Supply chain bottlenecks are causing severe delays to transportation, leading to acute materials shortages and longer lead-times. Inflation is pushing up the price of fuel and other resources, requiring corporate occupiers to revise or trim budgets. Labour shortages remain a growing concern, with many markets suffering from a lack of skilled and experienced project managers to support the resurgence in work volume.
- With net zero becoming a key priority for corporate occupiers in Asia Pacific, there is also growing demand for office fit-outs to meet higher sustainability standards and achieve certification.
- To counter these trends and effectively navigate these challenges to ensure smooth fit-out project delivery, corporate occupiers can proactively focus on engaging project managers early on in the fit-out planning process to accommodate resource requirements. They can also consider principal contracting, and working with the right partners for design-led construction, bulk buying, alternative suppliers, engaging the right expertise for net zero implementation and sustainable design, as well as designing workplaces to appeal to a hybrid workforce.
Current Project Management Risks and Challenges
Macroeconomic and geopolitical headwinds have pressured distribution networks and revealed vulnerabilities in supply chains across Asia Pacific since the onset of the pandemic, with the region’s manufacturing powerhouses among those most affected.
The rising cost of shipping, along with higher congestion, has stressed supply chains over the past 18 months, with incidents such as the Suez Canal Blockage and port closures in Shenzhen and Ningbo driving up container freight prices. 
The pandemic and the Russia-Ukraine conflict have combined to push up inflation globally. The onset of the Russia-Ukraine conflict in February 2022 has driven up energy prices, particularly for oil and gas, compounding the challenges facing regional supply chains. While inflationary pressure in Asia Pacific is relatively milder than that in the U.S. and Europe, rapid increases in prices for oil, natural gas and coal, along with agricultural commodities, have led to rising cost pressures for raw materials and components, including many of those required for fit-out projects.
A lack of skilled and experienced project management staff is a common theme across many markets in the region, with the best employees often lured away by clients or competitors offering substantial salary increases.
Other trends impacting the cost and complexity of office fit-outs include a move among corporate office occupiers to optimise their real estate portfolios to reduce costs and facilitate hybrid working. This has led to the introduction and demand for more flexible and collaborative workspaces, which can often prove challenging and costly to design and build.
With net zero becoming a key priority for corporate occupiers in Asia Pacific, there is growing demand for office fit-outs to meet higher sustainability standards and achieve certification. Common solutions such as installing energy efficient-lighting and air-conditioning and using recycled and/or sustainable materials will inevitably push up costs, at least in the short-term.
Overcoming Challenges
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