For discussion PWSC(96-97)3
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)
409CL - Sha Tin New Town - stage II : servicing and extension of Chap Wai Kon, Ngau Pei Sha and To Shek Villages in area 35

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 409CL from $53 million by $40.9 million to $93.9 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
409CL - Sha Tin New Town - stage II : servicing and extension of Chap Wai Kon, Ngau Pei Sha and To Shek Villages in area 35
Breakdown of the resumption, clearance and construction costs of the Ngau Pei Sha, Chap Wai Kon and To Shek Villages extension works

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PROBLEM

The approved project estimate of 409CL 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 409CL from $53 million by $40.9 million to $93.9 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The scope of the project comprises -

1. formation and servicing of 9.88 hectares of land, including roads and drainage, as village extension areas for Chap Wai Kon, Ngau Pei Sha and To Shek Villages; and
2. slope stabilization works over an area of 1.97 hectares behind the villages.

JUSTIFICATION

4. Following a review of the financial position of the project, DTD considers it necessary to increase the approved project estimate of 409CL from $53 million by $40.9 million to $93.9 million in MOD prices (see paragraph 5 below) in order to complete the works. There are two main reasons for the increase. The first reason is to cover the additional cost of unforeseen works including the need for additional slope stabilisation works, two open spaces and two bus bays. The other reason is to provide for construction cost increases as a result of delays in the project due to difficulties we have encountered in land clearance. A detailed breakdown of the proposed increase of $40.9 million is as follows -

A comparison of the cost breakdown of the approved project estimate (at January 1993 prices) and the revised project estimate (at December 1994 prices) is at the Enclosure 1.

FINANCIAL IMPLICATIONS

5. 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 1996 and 2000. We will tender the proposed works under a standard remeasurement contract because of uncertain ground conditions for the earthworks and slope stabilization works. We will also provide for inflation adjustment in the contract because the construction period will last longer than 21 months.

6. In accordance with the current policy, the resumption/clearance and construction costs for village improvement schemes are split between Government and the small house grantees. The sum to be recovered from the grantees includes the cost of resumption/clearance and the costs for the formation of the portion of land to be granted and the provision of lanes, footpaths and stormwater drains within the granted area. Outside the area to be granted, Government will bear the costs of resumption/clearance and the costs for the formation of open space, car parks and community and recreational facilities and the provision of principal road, sewers and stormwater drains. A breakdown of the resumption, clearance and construction costs of the Ngau Pei Sha, Chap Wai Kon and To Shek Villages extension works and the amount to be recovered from the grantees is at Enclosure 2.

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

PUBLIC CONSULTATION

8. We gazetted the roadworks of this project in November 1993 under the Roads (Works, Use and Compensation) Ordinance and received no objection.

ENVIRONMENTAL IMPLICATIONS

9. The Director of Environmental Protection completed an Environmental Review for the project in February 1993 and found that the project would not cause long term adverse environmental impacts. Upon completion, the roads, drainage, sewerage and other amenities will substantially improve the environmental and living conditions in the area and benefit both the extension areas and existing villages. For short term impacts during construction, we will control dust, noise and site run-off nuisance to within established standards or guidelines by incorporating appropriate environmental pollution control clauses in the works contract.

10. The proposed increase in the approved project estimate will not result in additional environmental impacts.

LAND ACQUISITION

11. We will resume about 226 lots of agricultural land and one building lot in the order of about 3.1 hectares. The Housing Department has identified that the clearance will affect twelve people in five households, involving nine domestic structures, and will offer these families accommodation in line with the existing policies. We will charge the cost of land acquisition and clearance estimated at $138 million based on current compensation rates to Head 701 - Land Acquisition. A detailed breakdown of the cost and the amount to be recovered from grantees as explained in paragraph 6 above is at Enclosure 2.

BACKGROUND INFORMATION

12. In May 1993, Finance Committee upgraded 409CL to Category A at an estimated cost of $53 million for the servicing and extension of Chap Wai Kon, Ngau Pei Sha and To Shek Villages. The extension area formed will provide land for 126 small house sites, associated infrastructure and other amenities.

13. We originally planned to start the works in November 1993 for completion in March 1995.

14. However, since the project site has a long boundary and requires the resumption of a sizeable area of private land, we encountered numerous land resumption and clearance problems between mid 1993 and early 1995. Typical examples included various requests from landowners to adjust the resumption boundary and the need to exclude a building/agricultural mix lot from the original resumption plan to avoid boundary complications and undue delay in the whole land resumption process.

15. Other problems which also caused delay to this project included the need to provide additional land required for two local open spaces, slope stabilization works and two bus bays which we did not include in the original scope of the project when we proposed to upgrade it to Category A in May 1993² .

16. In order to resolve the problems encountered, it was necessary to change the resumption boundaries which called for the concerted efforts of a number of Government departments. We finally resolved the problems, obtained the agreement of the affected landowners and finalised the resumption boundary in June 1994.

17. In addition to the problems mentioned above, a landowner lodged a petition direct to the Executive Council. The petition requested to exclude from resumption a portion of an existing access which is surrounded by walls and situated between the house of the objector and the public thoroughfare immediately next to the project site. For safety reasons, we cannot allow such direct access to the thoroughfare. We therefore attempted to persuade the objector to withdraw her objection but she refused to do so. In November 1995, the Governor-in-Council over-ruled the objection in the interests of the public.

18. We now plan to start the works in August 1996 for completion in May 1998.

19. A summary of the slippage of 33 months in the commencement of the project is as follows -

1 -- The inflation allowance is in respect of expenditure on the project in the financial years 1996-97, 1997-98, 1998-99 and 1999-2000 (see paragraph 5).
2 -- The introduction of the Preliminary Project Feasibility Studies for public works projects since early 1994 has helped to define clearly the project scope and make realistic assessments of the estimated project costs, project timetable and resource requirements at an early stage. This will help to prevent the recurrence of problems experienced in this project.

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Enclosure 1 to PWSC(96-97)3

409CL - Sha Tin New Town - stage II : servicing and extension of Chap Wai Kon, Ngau Pei Sha and To Shek Villages in area 35

A comparison of the approved project estimate at January 1993 prices and the revised project estimate at December 1994 prices is as follows -

2. As regards (a) (earthworks), (b) (roadworks), (c) (drainage and sewerage works), (d) (street lighting, utilities and minor landscaping works) and (e) (slope remedial works), of the total increase of $12 million -

1. $5 million is due to the increase in construction costs. As a reference, the Civil Engineering Works Index (CEWI) increased by 11.3% between January 1993, when we prepared the original estimate, and December 1994;
2. $2.5 million is for additional sewerage works at To Shek Village and two additional bus bays required by Drainage Services Department and Transport Department respectively;
3. $1.7 million is for providing fencing around the formed land to prevent illegal dumping or occupation required by Director of Lands;
4. $1 million is for additional slope works. We completed the final geotechnical report for the project in June 1994. The report recommended for additional works to stabilise the natural slope behind the villages; and
5. $1.8 million is for the formation, and the consequential provision of drainage in the two additional local open spaces.

3. As regards (f) (consultants’ fees for construction stage), the increase of $0.3 million is in line with the increase in the cost of the works.

4. As regards (g) (site staff costs), the increase of $2.5 million is due to an under-estimate of $1.3 million in the original estimate and $1.2 million for adjustments in site staff costs in line with the increase in the cost of the works. We estimate the site staff costs to be about 10% of the cost of works for contracts of similar size and nature.

5. As regards (h) (contingencies), the increase of $1.5 million is in line with the increase in the cost of the works.

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Enclsoure 2 to PWSC(96-97)3

Breakdown of the resumption, clearance and construction costs of the Ngau Pei Sha, Chap Wai Kon and To Shek Villages extension works

*Note

According to the present policy as explained in paragraph 6 of the paper, the Government can recover $39.7 million from the 126 grantees (i.e. (a) plus (c) above).

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