For discussion PWSC(96-97)80
on 18 December 1996
ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND
EQUIPMENT
Medical Subventions
8001MJ - United Christian Hospital Extension
Members are invited to recommend to Finance Committee an increase in the approved project estimate of 8001MJ from $1,518.2 million by $118.7 million to $1,636.9 million.
PROBLEM
The approved project estimate for 8001MJ is insufficient for the construction and building services works of Blocks P and G in the United Christian Hospital (UCH).
PROPOSAL
2. The Hospital Authority (HA), supported by the Secretary for Health and Welfare, proposes to increase the approved project estimate of 8001MJ from $1,518.2 million by $118.7 million to $1,636.9 million.
PROJECT SCOPE AND NATURE
3. This project comprises the construction of extension blocks - Blocks B, C, D and S and redevelopment of Block P in UCH to provide 760 additional beds, as well as minor refurbishment to Block G in the hospital.
JUSTIFICATION
4. Taking into account the works already completed for Blocks B, C, D and S and based on the lowest conforming tender received in respect of redevelopment works for Block P and the estimated cost for the minor refurbishment of Block G, HA has revised the project estimate for 8001MJ to $1,636.9 million. This represents an increase of $118.7 million over the approved project estimate of $1,518.2 million. The main factors contributing to this increase are -
|
Amount
|
|
$ million
|
|
(a) Inflation adjustment for construction and building services works
|
120.5
|
|
(b) Deflation adjustment for construction and building services works
|
(43.7)
|
|
(c) Over-estimated costs in original budget
|
(36.5)
|
|
(d) Increase in Consultants fees
|
15.6
|
|
(e) Inflation adjustment for furniture & equipment
|
66.7
|
|
(f) Increase in contribution from UCH
|
(0.9)
|
|
(g) Decrease in project contingency
|
(3.0)
|
|
______
|
|
Total
|
118.7
|
|
______ |
5. A comparison of approved and revised project estimates is at Enclosure 1.
FINANCIAL IMPLICATIONS
6. The additional capital subvention required is $118.7 million. Subject to approval, HA will phase the expenditure as follows -
|
Amount
|
|
$ million
|
|
Up to November 1996
|
1,120.1
|
|
1996 - 97
|
40.5
|
|
1997 - 98
|
120.1
|
|
1998 - 99
|
158.3
|
|
1999 - 2000
|
142.8
|
|
2000 - 2001
|
55.1
|
|
_______
|
|
1,636.9
|
|
_______ |
7. The proposal will not give rise to any additional recurrent expenditure.
PUBLIC CONSULTATION
8. Since the proposed increase in approved project estimate does not involve any change in the scope of works, no public consultation is necessary.
ENVIRONMENTAL IMPLICATIONS
9. The proposed increase in approved project estimate will not give rise to any additional environmental impact.
LAND ACQUISITION
10. This project does not require any land acquisition.
BACKGROUND INFORMATION
11. UCH is an acute hospital with 663 beds serving the local community in Kwun Tong. It provides in-patient and out-patient services covering a full range of clinical specialities, accident and emergency treatment, community nursing services and a nurses training school.
12. The original project scope of UCH extension was approved by the Finance Committee in November 1984. It was expanded subsequently in May 1988 to include the refurbishment of Block P and construction of an extension to Block G, followed by the deletion of two quarter blocks (Blocks E and F) in August 1991.
13. In July 1993, the project scope was further revised to provide for the minor refurbishment of Block G and the redevelopment of Block P to accommodate facilities originally planned for Block G extension and Blocks E and F.
14. Having completed the foundation works of Block P in October 1996, HA wished to proceed with superstructure works for completion in October 1998. However, the result of a tendering exercise indicated that the approved project estimate of $1,518.2 million is insufficient for the works involved and HA has subsequently obtained the tenderers agreement to extend the tender validity period until 11 January 1997. Subject to approval of the proposed increase in project estimate, HA will re-schedule the superstructure works to start in February 1997 for completion in December 1998.
15. Upon completion of the whole redevelopment project, UCH will be able to provide 1 417 beds with expanded supporting facilities. A copy of site layout plan is attached at Enclosure 2.
URGENCY
16. In view of the urgency explained in paragraph 14 above, subject to Members approval, we intend to submit this item to Finance Committee for consideration at its next meeting to be held on 10 January 1997 rather than at the meeting on 17 January 1997 according to the normal timetable.
(KK150)
Enclosure 1 to PWSC(96-97)80
8001MJ - United Christian Hospital Extension
A comparison of the approved project estimate and the revised estimate is as follows -
|
Approved
Estimate
|
Revised
Estimate
|
Increase
|
|
$ million
|
$ million
|
$ million
|
%
|
|
(a) Construction cost
|
|
|
|
|
|
(i) Blocks B, C, D & S
|
937.1
|
856.9
|
(80.2)
|
-8.6
|
|
(ii) Block P
|
191.6
|
306.2
|
114.6
|
+59.8
|
|
(iii) Block G
|
6.1
|
12.0
|
5.9
|
96.7
|
|
________
|
________
|
______
|
______
|
|
Sub-total
|
1,134.8
|
1,175.1
|
40.3
|
+3.6
|
|
(b) Consultants fees
|
189.4
|
205.0
|
15.6
|
+8.2
|
|
(c) Furniture & equipment
|
269.0
|
335.7
|
66.7
|
+24.8
|
|
________
|
________
|
______
|
______
|
|
The project cost
|
1,593.2
|
1,715.8
|
122.6
|
+7.7
|
|
(d) UCH contribution
|
(78.0)
|
(78.9)
|
(0.9)
|
+1.2
|
|
(e) Project contingency
|
3.0
|
0.0
|
(3.0)
|
-100.0
|
|
________
|
________
|
______
|
______
|
|
Project cost to be met by subvention
|
1,518.2
|
1,636.9
|
118.7
|
+7.8
|
|
________
|
________
|
______
|
______ |
2. As regards (a)(i) (construction cost of Blocks B, C, D & S), of the $80.2 million -
- $43.7 million is due to downward movement in tender prices between the fourth quarter in 1990 when the original cost estimate was prepared and the third quarter in 1991 when HA received tenders for Blocks B, C, D and S. During the period when HA received tenders for Block S, the Tender Price Indices for building construction and building services works decreased by 3.9% and 11.9% respectively; and
- $36.5 million is due to an over-estimate in the original budget.
3. As regards (a)(ii) (construction cost of Block P), of the $114.6 million -
- $67.9 million is due to upward movement in tender prices between the fourth quarter in 1990 when the original cost estimate was prepared and the fourth quarter in 1996 when HA received fixed-price lump sum tenders. During this period, the Tender Price Indices for building construction and building services works increased by 49.3% and 17.8% respectively; and
- $46.7 million is due to inclusion in the lowest conforming tender of projected inflation adjustment during the construction period. Having regard to the increasing trend of material and labour indices, the Director of Architectural Services considers this reasonable.
4. As regards (a)(iii) (construction cost of Block G), HA will invite tender for Block G after completion of Block P in December 1998. The estimated increase of $5.9 million has taken into account the anticipated upward movement in tender prices between the fourth quarter in 1990 when the original cost estimate was prepared and early 1999 when HA receives fixed price lump-sum tenders for Block G and projected inflation adjustment during the construction period. Having regard to the increasing trend of material and labour indices, the Director of Architectural Services considers this reasonable.
5. As regards (b) consultants fees, the increase of $15.6 million is the result of an increase in construction cost and inflation adjustment.
6. As regards (c) (Furniture & equipment), the increase of $66.7 million is necessary to allow for inflation adjustment for furniture and equipment required for Blocks S and P.
7. As regards (d) (UCH contribution), Members were informed in August 1991 that UCH has secured donations amounting to $75 million. On 16 July 1993, Members were informed that the amount raised has been increased to $78 million. The sum has since been increased to $78.88 million as at 22 October 1996, and UCH will continue to use its best endeavours to raise additional funds to reduce the capital subvention required.
(KK150)
Last Updated on 16 August 1999
