For discussion PWSC(96-97)74
on 4 December 1996

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 702 - PORT AND AIRPORT DEVELOPMENT
Territories Development
(Civil Engineering - Land development)
403CL - West Kowloon reclamation - remaining hinterland drainage
works and sewerage network package 1

Members are invited to recommend to the Finance Committee to increase the Approved Project Estimate of 403CL under West Kowloon Reclamation from $718 million by $280 million to $998 million.

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PROBLEM
PROPOSAL
PROJECT SCOPE AND NATURE
JUSTIFICATION

Diversion of Existing Utilities
Adverse Ground and Weather Conditions
Programme Recovery Measures
FINANCIAL IMPLICATIONS
PUBLIC CONSULTATION
ENVIRONMENTAL IMPLICATIONS
LAND ACQUISITION
BACKGROUND INFORMATION
403CL - West Kowloon reclamation remaining hinterland drainage works and sewerage network package 1
Proforma Funding Report Project : West Kowloon Reclamation

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PROBLEM

For a variety of reasons which are explained in detail below, the Approved Project Estimate (APE) of 403CL, in isolation, is insufficient for the completion of works under the project, although we have been able to identify savings for the West Kowloon Reclamation (WKR) project as a whole.

PROPOSAL

2. The Director of Territory Development (DTD), with the support of the Secretary for Works, proposes to increase the APE of 403CL by $280 million from $718 million to $998 million in money-of-the day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The scope of the 403CL project, located in the densely populated West Kowloon hinterland area, comprises -

1. reconstruction of approximately 2 500 metres of culverts and drains;
2. construction of surface stormwater drains;
3. dry weather flow interceptors and associated sewers;
4. construction of approximately 1 400 metres of sewer;
5. construction of sewerage pumping stations; and
6. electrical and mechanical works related to sewerage pumping stations.

JUSTIFICATION

4. In conjunction with constructing the necessary drainage works in the reclamation to connect to the existing hinterland systems, we are upgrading the existing systems to maintain equivalent hydraulic performance and effectiveness in the hinterland area. Where physically possible, we will further upgrade the hinterland drainage system to cater for the worst rainstorm expected within a 200 year period.

5. The works are without recent precedent in terms of complexity and intensity as they are located in the most populous and congested part of Kowloon. The works consist of replacement of operating culverts and sewers while contending with existing underground utilities and heavy pedestrian and vehicular traffic. As Members are aware, we have experienced considerable difficulty with these drainage works since their commencement in 1993.

Diversion of Existing Utilities

6. The major difficulty we have encountered is the numerous utilities uncovered during the course of construction. During the design stage, we obtained all available records of underground utility installations. Unfortunately, the accuracy of these records is far below expectation as most of the utilities were laid several decades ago when standards of engineering were less sophisticated. In fact, many of these utilities are uncharted, that is, not on the record of the utility company concerned. A comprehensive pre-contract underground investigation on site to locate all the utilities was not practical because detailed investigation works in the heavily trafficked roads would have caused disproportionate inconvenience and disruption to the public without producing permanent works.

7. As a result, we were able to expose the existing utilities and plan for their diversion only after our contractors had excavated the roads for the drainage works. The rearrangement of these uncharted or incorrectly described utilities entailed very complex procedures. We very often found different utilities intertwined with one another and sometimes meandering out of the trench alignment, requiring additional trench works and temporary diversions to make room for diversions of directly affected utilities. As a typical example, in the construction of a relatively small and simple drain along Mong Kok Road, we encountered entangled utilities owned by four different utility companies. We were only able to design the complicated diversion scheme when the entire section of footpath between Tong Mi Road and Cheung Wong Road was fully exposed. The diversion scheme took one whole year to complete.

8. The utility companies are responsible for diverting their own utility installations. However, if the diversion works take longer than the time normally allowed for under the contract, any prolongation costs or additional works in the Government contract arising from the utility companies’ diversion works will have to be borne by the Government.

9. Diversion of utilities across roads, in addition to the drainage works, requires numerous stages of temporary traffic arrangements. This is a very time consuming process as we have to minimize the inevitable disruption to traffic and provide access for local businesses in this heavily congested area. Because of space constraints, the utility diversion works and drainage works have to be implemented in short sections and on a one-by-one basis, with a fresh scheme of temporary traffic arrangement implemented for each stage.

Adverse Ground and Weather Conditions

10. Furthermore, because of the constraints of carrying out ground investigation at the design stage, works at critical locations have often been hampered by unforeseen ground conditions. For example, it took more than four months to remove a four metre diameter boulder obstructing a deep sewer pipeline at Nathan Road just above the MTR tunnel.

11. Apart from the site constraints, our works on site at times suffered serious disruption in the past two years because of exceptionally inclement weather. On some of the major drainage routes, such as those along Mong Kok Road and Waterloo Road, heavy rain not only caused flooding to the works site and surrounding areas, but also washed down silty soil and refuse from upstream. Our contractors subsequently spent a long time clearing these materials before they could resume work.

12. As a result of the above factors, which are beyond our control and that of the contractors, we have to extend the time for completion and pay additional cost for the works.

Programme Recovery Measures

13. Furthermore, in view of the serious delay of some sections of the drainage works, we have introduced several programme recovery measures to expedite progress with an aim to completing the majority of the works before the onset of the wet season in 1997. These measures include re-sequencing the works, increasing the labour and plant resources of the contractors, and adopting alternative construction methods. The additional expense is partly compensated by savings of direct consequential costs payable to the contractors and in meeting site supervision charges which would otherwise arise if we do not take such measures.

14. These programme recovery measures will benefit the public at large. Due to the nature and location of the construction, our works have caused major disruption and nuisance to the public in the hinterland notwithstanding our utmost efforts to minimize the inconvenience. We also need to complete the works as soon as possible because the temporary traffic arrangements for this project have significant traffic implications on other major developments in the vicinity, including the West Kowloon Expressway and the Western Harbour Crossing which are scheduled to be commissioned by April 1997.

FINANCIAL IMPLICATIONS

15. Following a review of the financial position of the project and estimates for improved construction methods, DTD considers it necessary to increase the approved project estimate of 403CL from $718 million by $280 million to $998 million in MOD prices in order to complete the remaining works. A summary of the reasons for the proposed increase of $280 million is as follows :

16. A comparison of the cost breakdown of the approved and revised project estimates in MOD prices is at Enclosure 1.

17. Subject to approval, we will phase the 403CL expenditure as follows -

18. We have recently identified savings of $280 million in three PWP items under the WKR project and are considering reduction of the APEs of these items accordingly. Details are as follows :

19. The reduced estimates of these three PWP items are the anticipated final costs. As the works of these PWP items have been substantially completed, the remaining sums allowed in the contingencies can now be released.

20. In addition to the offsetting PWP item reductions, other adjustments have been made to the WKR estimate as identified in the proforma funding report for WKR at Enclosure 2. The overall project estimate for WKR has been reduced from $12,793 million MOD to $12,191 million in MOD. We are issuing a separate information note to the Finance Committee explaining the reduction in the APEs of other PWP items in the ACP by $1,258 million.

21. The proposed increase in the 403CL approved project estimate will be offset by savings in the three PWP items (set out in paragraph 18 above) under the WKR project. The proposal will not give rise to additional recurrent expenditure.

PUBLIC CONSULTATION

22. We had consulted all relevant District Boards before 403CL was upgraded to Category A on 8 January 1993. As there is no change in the approved project scope, we consider that further consultation with the District Boards will not be necessary. However, Government departments have been frequently approached by the local residents, sometimes through members of the respective District Boards, asking the Government to complete the hinterland drainage works as soon as possible.

23. We consulted the Legislative Council Panel on Planning, Lands and Works on 19 November 1996. Members raised no objection to the proposal. In the discussion, Members inquired if the Government could seek compensation from the utility companies for the technical difficulties arising from the uncharted utilities. The Administration has looked into the issue. As the drainage works were initiated by the Government for public purposes, the utility companies are under no obligation to compensate the Government for the additional expenses involved.

ENVIRONMENTAL IMPLICATIONS

24. A Construction Environmental Impact Assessment Report produced in 1991 addressed the impacts of the works within WKR. As there is no change in the approved project scope, there would be no additional environmental impact.

LAND ACQUISITION

25. The proposed increase in the APE does not necessitate additional land to be acquired.

BACKGROUND INFORMATION

26. We included 332CL "West Kowloon Reclamation", in Category C of the PWP in April 1989 and have already upgraded a substantial part of the project to Category A. This, together with two other projects, namely 146CL "Yau Ma Tei Typhoon Shelter Reclamation Stage I" and 038FS "Cheung Sha Wan Wholesale Market Complex - Phase I", make up the WKR project within the ACP. The parts of the project which are already in Category A include -

27. We upgraded 403CL to Category A in January 1993 at an estimated cost of $603 million MOD. In July 1994, Finance Committee approved an increase in the approved project estimate of $603 million by $115 million to $718 million MOD to cover the additional cost in dealing with illegal and other unmarked utility installations.

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Enclosure 1 to PWSC(96-97)74

403CL - West Kowloon reclamation remaining hinterland drainage works and sewerage network package 1

A comparison of the approved and revised project estimates in MOD prices is as follows -

2. As regards (a) (reconstruction of approximately 2 500 metres of culverts and drains), of the total increase of $164 million -

1. $28 million is due to further additional work to cater for the utility obstructions at various sections of works;
2. $70 million is due to change in construction method, such as pipe jacking across Tong Mi Road at junction with Mong Kok Road;
3. $27 million is due to employing additional labour and plant for implementation of the programme recovery plan;
4. $5 million is due to the unexpected rock obstruction at Wai On Street; and
5. $34 million is for the contractors' prolongation cost due to delay of works.

3. As regards (b) (construction of surface stormwater drains), of the total increase of $20 million -

1. $5 million is due to the rock obstruction encountered in Fuk Tsun Street;
2. $8 million is due to further additional works to overcome the utility obstructions;
3. $2 million is for the contractors' prolongation cost due to delay; and
4. $5 million is due to additional requirements for road reinstatement work.

4. As regards (c) (dry weather flow interceptors and associated sewers), of the total increase of $29 million -

1. $16 million is due to additional pipe jacking ordered at Arran Street, Fuk Tsun Street, Tong Mi Road and Tonkin Street;
2. $7 million is due to the additional or modification works required for accommodating the utility obstructions;
3. $4 million is due to the investigation work and remedial works to clear the rock obstruction across Nathan Road at Arran Street section; and
4. $2 million is for the contractors' prolongation cost due to delay.

5. As regards (d) (construction of approximately 1 400 metres of sewer), of the total increase of $15 million -

1. $5 million is due to the investigation and remedial works required for clearing the rock obstruction at Beech Street during the pipe jacking operation; and
2. $10 million is for the contractor's prolongation cost due to delay.

6. As regards (e) (construction of sewerage pumping stations), of the total increase of $20 million -

1. $18 million is due to the additional works required to remove the soft spot at the foundation of the Anchor Street and Water Boat Dock pumping stations; and
2. $2 million is for the contractor's prolongation cost due to delay.

7. As regards (g) (consultants' fees for construction stage), of the total increase of $10 million -

1. $3 million is due to the extra payment of consultants' percentage fee arising from the increase in the cost of the works; and
2. $7 million is due to additional design of re-sequencing and alternative construction method.

8. As regards (h) (site staff cost), of the total of $20 million -

1. $13 million is due to the delay in completing the contract works, thus prolonging the period of site supervision;
2. $3 million is due to the overtime spent in the more intensive supervision for the programme recovery measures; and
3. $4 million is due to the additional resources required for the post-construction joint measurement and inspection with the contractors, and preparation of the as-constructed records for works built under the alternative construction methods.

9. As regards (i) (project contingency), the increase of $2 million is to keep the project contingency at about 10% of the remaining expenditure so as to cater for any unforeseen payments such as future claims. As the project works have reached an advanced stage, we consider this level of contingency reasonable to cater for problems that we may encounter.

(KK146)

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Enclosure 2 to PWSC(96-97)74

Proforma Funding Report Project : West Kowloon Reclamation

*Notes :

(1) The WKR budget is reduced by $221M since the construction of a permanent passenger ferry pier and concourse (YM5) and the remaining reclamation works in the WKR south sector (YM6) are to be pursued as non-ACP items;

(2) This reserve is deleted as there is no future item for remaining works.

(3) The land compensation requirements are reduced to $2,273M as saving is identified.

(KK146)

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