For discussion PWSC(95-96)61
on 8 November 1995

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 703 - BUILDINGS
Recreation, Culture and Amenities - Sports facilities
56RS - Reprovisioning of Yeung Uk Road sportsground in Shing Mun
Valley, area 7, Tsuen Wan

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 56RS from $111 million at April 1994 prices by $30.8 million to $141.8 million in money-of-the-day prices.

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PROBLEM
PROPOSAL
PROJECT SCOPE AND NATURE
JUSTIFICATION
FINANCIAL IMPLICATIONS
PUBLIC CONSULTATION
ENVIRONMENTAL IMPLICATIONS
LAND ACQUISITION
BACKGROUND INFORMATION
56RS - Reprovisioning of Yeung Uk Road sportsground in Shing Mun Valley, area 7, Tsuen Wan

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PROBLEM

The approved project estimate of 56RS is insufficient for the works under the project.

PROPOSAL

2. The Director of Architectural Services (D Arch S), with the support of the Director of Regional Services, proposes to increase the approved project estimate of 56RS from $111 million at April 1994 prices by $30.8 million to $141.8 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The project comprises the construction of an eleven-a-side grass soccer pitch, an eight-lane 400-metre running track, field facilities, two covered spectator stands with a total of 5 000 seats, and ancillary accommodation (including toilets, changing rooms and administration offices).

JUSTIFICATION

4. We need to increase the approved project estimate of 56RS from $111 million at April 1994 prices by $30.8 million to $141.8 million in MOD prices (see paragraph 7 below). The change does not reflect any real increase in the cost of the project.

5. The estimate of $111 million approved by Members in July 1994 was calculated on the basis of construction costs prevailing as at April 1994 and took no account of inflation over the works contract period. Having now received the tender bids for the main building contract, we have reassessed the estimated total outturn cost of the works. As shown in Annex I, we have found that the original estimate of $111 million is inadequate in dollar terms to meet the estimated contract payments. However if we convert the original constant price estimate into MOD dollars by adding an allowance for inflation, the MOD sum of $141.8 million is adequate in dollar terms to meet the total forecast contract payments¹ .

6. We have recognised the problems associated with using constant price estimates. We informed Members in April 1995, Information Note FCRI(94-95)45 (copy at Annex II), of our intention to introduce MOD price based estimates for all public works with effect from 1 April 1995. Our present proposal to increase the approved project estimate of 56RS to $141.8 million in MOD prices is in line with the current arrangement for other capital works projects.

FINANCIAL IMPLICATIONS

7. Subject to approval, we will phase expenditure as follows -

We derive the MOD estimate on the basis of the Government's forecasts of trend labour and construction prices over the period between 1995 and 1999.

8. The proposed increase in the approved project estimate will not give rise to additional recurrent expenditure.

PUBLIC CONSULTATION

9. Since the proposed increase does not involve any change in the scope of works, we have not carried out further public consultation.

ENVIRONMENTAL IMPLICATIONS

10. As the scope of the development covers a sports stadium within Shing Mun Valley Park, and the Director of Regional Services will not use the sports stadium for amplified concerts and the like, the Director of Environmental Protection envisages no adverse operational impacts. D Arch S will implement appropriate mitigation measures to abate noise, dust and site run-off nuisance during construction so as to keep any environmental impact within established standards and guidelines.

LAND ACQUISITION

11. This project does not require any land acquisition.

BACKGROUND INFORMATION

12. In July 1994, Finance Committee upgraded 56RS to Category A with an approved project estimate of $111 million at April 1994 prices for the reprovisioning of Yeung Uk Road sportsground from Yeung Uk Road in Central Tsuen Wan to Shing Mun Valley, area 7, Tsuen Wan.

13. We started piling works in January 1995 and completed them in July 1995. We originally planned to proceed with superstructure works in August 1995 for completion in December 1996. Having assessed the tender prices for superstructure works in July 1995, we found that the approved project estimate of 56RS was insufficient for the works under the contract. We have extended the validity period of the tenders, which will expire on 1 December 1995. Subject to approval, we will re-schedule superstructure works to start in December 1995 for completion in April 1997.

1 -- Under the Government's tender system, we cannot award a tender where the cost of the works will exceed the approved project estimate in dollar terms.
2 -- This is the actual expenditure incurred on the project up to 31 March 1995.

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Annex I

56RS - Reprovisioning of Yeung Uk Road sportsground in Shing Mun Valley, area 7, Tsuen Wan

A breakdown of the total project cost under various contracts

Note Payments to be made under items (b) to (f) will be subject to price adjustment due to the effect of inflation over the period of the works. The outturn cost is likely to exceed the current total sum of $123.96 million.

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