For discussion PWSC(96-97)58
on 6 November 1996

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 707 - NEW TOWNS AND URBAN AREA DEVELOPMENT
Hong Kong Island and Islands Development
(Civil Engineering - Land development)
370CL - Belcher Bay reclamation

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 370CL from $349 million by $47.3 million to $396.3 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
370CL - Belcher Bay reclamation

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PROBLEM

The approved project estimate of 370CL 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 370CL from $349 million by $47.3 million to $396.3 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The scope of the project comprises -

1. reclamation of 10.3 hectares of foreshore and seabed in Belcher Bay between Shek Tong Tsui and Kennedy Town;
2. construction of 936 metres of seawall;
3. a new public cargo working area;
4. extension of two stormwater drains; and
5. a 1.7-hectare temporary district open space.

JUSTIFICATION

4. Following a review of the financial position of the project, DTD considers it necessary to increase the approved project estimate of 370CL from $349 million by $47.3 million to $396.3 million in MOD prices (see paragraph 6 below) in order to complete the works. There are two main reasons for the increase. The first reason is the increase in payments made under the current contract for the works mentioned in paragraphs 3(a), (b), (c) and (d) above due to price fluctuations. The other reason is the need to provide additional and enhanced facilities in the temporary district open space as detailed in paragraph 9 below. A summary of the proposed increase of $47.3 million is as follows -

5. A comparison of the cost breakdowns of the approved project estimate (at December 1992 prices) and the revised project estimate (at December 1995 prices) is at the Enclosure.

FINANCIAL IMPLICATIONS

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

7. We have derived the MOD estimate on the basis of the Government’s forecasts of trend labour and construction prices for the period 1996 to 1999. We will tender the works for the construction of the temporary district open space under a lump sum contract because we have firm quantities for the majority of the works. As the contract period is less than 21 months, the contract will not provide for adjustments to the tender price due to inflation.

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

PUBLIC CONSULTATION

9. We consulted the Environmental and Works Committee (EWC) of the Central and Western District Board on the conceptual design of the proposed temporary district open space in October 1995. Due to shortage of open space in the area, EWC considered that the original scheme with soft and hard landscaping was inadequate to meet the demand of local residents. They requested additional and upgrading of facilities including a maritime theme for all the facilities, a children’s playground enlarged by about three-quarters of the originally planned size, an additional jogging trail, fitness stations and pavilions, etc. We agreed to the requests and have revised the design to incorporate such additional requirements. EWC endorsed the revised design in December 1995.

10. We consulted the Urban Council on the proposed temporary district open space with the added facilities in April 1996. The Urban Council supported the proposal.

ENVIRONMENTAL IMPLICATIONS

11. In mid 1992, the consultants conducted an environmental impact assessment (EIA) for the reclamation and roadworks. The EIA concluded that the environmental impact arising from the project can be controlled within established limits. We have included in the contract documents mitigation and monitoring measures recommended in the EIA study to mitigate noise, air and water quality impacts during construction and operation. There will be no additional impact as a result of the additional facilities and the proposed increase in the approved project estimate.

LAND ACQUISITION

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

BACKGROUND INFORMATION

13. In May 1992, Finance Committee upgraded 370CL to Category A at an estimated cost of $288 million for the reclamation of Belcher Bay to provide land for the construction of a dual carriageway linking Connaught Road West with Smithfield in Kennedy Town.

14. On 1 September 1992, the Governor in Council authorized the Belcher Bay link roadworks under the Roads (Works, Use and Compensation) Ordinance subject to a temporary district open space being provided on the reclamation with the costs to be met from 370CL. In May 1993, Finance Committee approved an increase in the project estimate to $349 million to cover higher-than-expected tender prices and the revised project scope to include a temporary district open space.

15. We started the reclamation works in May 1993 for completion in November 1996. Part of the site was handed over to the Western Harbour Crossing (WHC) franchisee in September 1995 for completion of the road connections to the WHC. Remaining works include the extension of stormwater drains and the temporary district open space. We aim to complete all the remaining works by February 1998.

16. The Director of Architectural Services has substantially completed the detailed design of the temporary district open space. We plan to start the construction of the open space in February 1997 for completion in February 1998 under a separate contract.

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Enclosure to PWSC(96-97)58

370CL - Belcher Bay reclamation

A comparison of the approved project estimate at December 1992 prices and the revised project estimate at December 1995 prices is as follows -

2. As regards (a) (reclamation and seawall), (b) (public cargo working area) and (c) (stormwater collector culverts), the total increase of $35 million is for price fluctuation payments made under the contract for the works completed during the period between May 1993, when we started the works, and December 1995. As a reference, the Civil Engineering Works Index (CEWI) increased by 15.1% during this period.

3. As regards (d) (temporary district open space), of the total increase of $10 million -

1. $7.4 million is for the additional and enhanced facilities in the temporary district open space; and
2. $2.6 million is due to the increase in the costs of labour and materials. As a reference, the CEWI increased by 20.2% between December 1992, when we prepared the last estimate, and December 1995.

4. As regards (e) (consultants’ fees for construction stage), the increase of $0.7 million is in line with the increase in the cost of works.

5. As regards (f) (site staff costs), the increase of $4.8 million is due to adjustments to site staff salaries since we prepared the last estimate in December 1992. The salary levels of comparable ranks in the civil service, on which the salaries of the site staff are based, increased by about 33% between December 1992 and December 1995.

6. As regards (g) (contingencies), we retain $9.3 million as contingencies for the remaining works.

1 -- The inflation allowance is in respect of expenditure on the project in the financial years 1996-97, 1997-98 and 1998-99. (see paragraph 6)
2 -- This is the actual expenditure incurred on the project up to 31 March 1996.

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