For discussion PWSC(96-97)2
on 17 April 1996

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 707 - NEW TOWNS AND URBAN AREA DEVELOPMENT
New Territories East Development
(Civil Engineering - Land development)
66CL - Sha Tin New Town, stage II - engineering development, package 23, phase 2

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 66CL from $1,232 million by $294.8 million to $1,526.8 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
66CL - Sha Tin New Town, stage II - engineering development, package 23, phase 2

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PROBLEM

The approved project estimate of 66CL is insufficient for the works under the project.

PROPOSAL

2. The Director of Territory Development (DTD), with the support of the Secretary for Planning, Environment and Lands, proposes to increase the approved project estimate of 66CL from $1,232 million by $294.8 million to $1,526.8 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The project scope of 66CL comprises -

1. reclamation, formation and servicing of 216 hectares of land in Ma On Shan; and
2. roadworks related to the approaches to Tate’s Cairn Tunnel.

JUSTIFICATION

4. The outstanding works under the project comprise a final section of Road P8 in area 77 and 90 of Ma On Shan, and associated local access roads and drains. These works were in the preliminary design stage and information on their estimated cost was not fully available when Finance Committee approved an increase in the project estimate of 66CL to $1,232 million on 16 April 1993. We indicated in the related PWSC paper No.1993/26 that we would make a further submission to PWSC when detailed design of the final stage of works had been completed. We are now in a position to do so.

5. Following a review of the financial position of the project, DTD considers it necessary to increase the approved project estimate of 66CL from $1,232 million by $294.8 million to $1,526.8 million in MOD prices (see paragraph 7 below) in order to complete the remaining works. A summary of the reasons for the proposed increase of $294.8 million is as follows -

6. A comparison of the cost breakdowns of the approved project estimate (at November 1992 prices) and the revised project estimate (at December 1994 prices) is at the Enclosure.

FINANCIAL IMPLICATIONS

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

8. We derive the MOD estimate on the basis of the Government’s forecasts of trend labour and construction prices over the period between 1996 and 2000. We will tender the remaining works under a standard remeasurement contract because the quantities of earthworks and foundation works for bridge structures may vary to suit the actual works site conditions. The contract provides for inflation adjustment because the contract period will last longer than 21 months.

9. We estimate the annually recurrent expenditure arising from the remaining works to be $4.97 million.

PUBLIC CONSULTATION

10. As there is no change in the project scope and most of the works under the project have been completed, we consider public consultation not necessary.

ENVIRONMENTAL IMPLICATIONS

11. The consultants completed a Noise Impact Assessment (NIA) for the final section of Road P8 in January 1996. The NIA recommended that a 6.2 metre high noise barrier and a 5 metre high canopy would be required along the south bound carriageway of Road P8 fronting area 86 so as to mitigate the traffic noise levels at Kam On Court and Chinese YMCA College to within the noise standards stipulated in the Hong Kong Planning Standards and Guidelines. We shall implement the traffic noise mitigation measures at the estimated capital cost of $29 million which is part of the overall cost of the project. In addition, we shall control dust, noise and site run-off impacts during construction to within established standards and guidelines by incorporation of appropriate environmental pollution control clauses into the relevant contracts.

LAND ACQUISITION

12. The proposed increase in the approved project estimate does not require further land acquisition.

BACKGROUND INFORMATION

13. In July 1981, Finance Committee agreed to upgrade 66CL to Category A at an estimated cost of $680 million for the phase 2 development of Ma On Shan. Members approved increases in the project estimate in July 1983, May 1985, July 1988, March 1989, October 1989 and November 1991 respectively to cover contract price fluctuation payments, additional works and increase in construction costs for the outstanding works. In April 1993, Members further approved the increase in the project estimate to $1,232 million.

14. We have implemented the works under 66CL in stages. We started the works in May 1982 and completed most of the works including the northern part of Road P8 in December 1993. The remaining works comprise mainly the final section of Road P8 to be implemented in two stages. We started the stage I works in August 1993 and expect to complete the works in August 1996. We engaged consultants to undertake the design and investigations for the stage II works at an estimated cost of $4.5 million, charged to the project 62CL “Sha Tin New Town, stage II - engineering development: detailed design and investigation”. The consultants have completed the detailed design for the stage II works.

15. Because of the need to revise the layout plan of Ma On Shan South to re-zone area 77 from industrial use to residential use and to incorporate the necessary changes to the road layout, we were unable to start the stage II works in June 1994 as originally planned. We have now revised the layout plan accordingly and scheduled to start the works in August 1996. By August 1996, the stage I contract can release part of the works site required for the stage II works. We schedule the completion of the final section of Road P8 in November 1998.

1 -- The inflation allowance is in respect of expenditure on the project in the financial years 1996-97, 1997-98 1998-99, 1999-2000 (see paragraph 7).
2 -- This is the actual expenditure incurred on the project up to 31 March 1996.

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Enclosure to PWSC(96-97)2

66CL - Sha Tin New Town, stage II - engineering development, package 23, phase 2

A comparison of the approved project estimate at November 1992 prices and the revised project estimate at December 1994 prices is as follows -

2. As regards (c) (roads and drainage), of the increase of $170 million -

1. $5 million is for price fluctuation payments made under the contracts for the works completed during the period between November 1992, when we prepared the last estimate, and December 1994. As a reference, the Civil Engineering Works Index (CEWI) increased by about 12% during this period;
2. $165 million is for the cost of the stage II Road P8 works. Of the total cost of $165 million -
   1. $53 million is for two bridge structures of Road P8 and one footbridge;
   2. $28 million is for 670 metres of box culverts;
   3. $57 million is for about 1 000 metres of access roads; and
   4. $27 million is for associated footpaths, cycle tracks, stormwater drains and sewers.

3. As regards (e) (landscaping), the increase of $2 million is for additional landscaping works associated with the outstanding works as mentioned in paragraph 2(b) above.

4. As regards (f) (consultants’ fees for the construction stage) and (g) (site staff costs), the total increase of $19 million is in line with the increase in the cost of the works.

5. As regards (h) (contingencies), we retain $29 million as contingencies for the remaining works estimated at $291 million. The $291 million is inclusive of $93 million for the stage I remaining works, $167 million for the stage II works and $31 million for the associated fees and site staff costs.

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