For discussion PWSC(97-98)29
on 21 May 1997

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

119CL - Tai O development, package 3, engineering works

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 119CL from $90 million by $73.8 million to $163.8 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
119CL - Tai O development, package 3, engineering works

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PROBLEM

The approved project estimate of 119CL 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 119CL from $90 million by $73.8 million to $163.8 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The scope of the project comprises the reclamation and formation of about 12.8 hectares of land to provide sites for public and village type housing, workshops, commercial development, and government and institutional purposes in Tai O.

JUSTIFICATION

4. We have completed a major part of the reclamation under this project in the Tai O Town which provided sites for the Lung Tin housing estate, a fire station, amenity area and local open space. A sewage treatment plant, four sewage and drainage pumping stations, a trunk sewer, and roads have been constructed to service the new development as well as part of the old town. The drainage improvement works have also been completed. The remaining works under 119CL comprise the construction of a riverwall and site formation works for 1.8 hectares of land for village house developments adjacent to the Lung Tin housing estate together with the associated roads and drains.

5. In November 1994, we completed a detailed site investigation for the remaining works and found the layer of soft clay at the location of the proposed riverwall and reclamation much thicker than we had originally envisaged. The thicker the clay layer is, the greater in magnitude the clay layer will settle when it is loaded by reclaimed fill materials. As any sizeable settlement will damage the structures, roads and underground utilities built on the reclaimed land, we have to reduce the settlement of the reclaimed land which might occur after the construction of the infrastructure. In this regard, we need to carry out special ground treatment works to strengthen the soft clay as well as to accelerate its consolidation. In addition, we need to construct a special type of riverwall to cater for the anticipated settlement due to the consolidation of the soft clay.

6. We also need to place the reclaimed fill materials in layers with blankets of geotextiles in order to avoid future local or differential settlement. It takes five to six months for each layer of fill to consolidate sufficiently before we can place the next layer of fill. We need therefore to complete the reclamation in stages and extend the construction period for the remaining works from the original schedule of two years to three years. Under the revised schedule, we will complete the reclamation works in the first two years and construct the roads and drains in the final year. The above additional works and time required are the main reasons leading to an increase in the cost of the project.

7. Following a review of the financial position of the project, DTD considers it necessary to increase the approved project estimate of 119CL from $90 million by $73.8 million to $163.8 million in MOD prices (see paragraph 9 below) in order to complete the remaining works. A summary of the reasons for the proposed increase of $73.8 million is as follows -

		Amount ($ million)		%
(a) Specification changes		33.7		61.3
(i) changes in user’s requirement for works completed	5.7
(ii) changes in design for the remaining works due to poor ground conditions	28.0
(b) Quantity variation for works completed - increase in the quantities of works based on actual measurement		4.5		8.2
(c) Price variation for works to be carried out - price increases since preparation of the last cost estimate in March 1991		8.5		15.4
(d) Additional site investigation works		0.6		1.1
(e) Others		7.7		14.0
(i) contingencies	1.5
(ii) consultants’ fees for design and construction stages	2.3
(iii) site staff costs	3.9
Sub-total		55.0	(at December 1996 prices)	100.0 ____
(f) Inflation allowance1		18.8 _____
Total		73.8 _____	(in MOD prices)

¹ The inflation allowance is in respect of expenditure on the project in the financial years 1997-98, 1998-99, 2000-01 and 2001-02 (see paragraph 9).

8. A comparison of the cost breakdowns of the approved project estimate (at March 1991 prices) and the revised project estimate (at December 1996 prices) is at the Enclosure.

FINANCIAL IMPLICATIONS

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

² This is the actual expenditure incurred on the project up to 31 March 1997.

10. We have derived the MOD estimate on the basis of the Government’s forecast of trend labour and construction prices for the period 1997 to 2002. We will tender the remaining works under a lump sum contract because we have firm quantities for the majority of the works. We will provide for inflation adjustment to the tender price because the contract period will exceed 21 months.

11. We estimate the annually recurrent expenditure arising from the remaining works to be $890,000 of which $30,000 for operation and maintenance of the sewerage works will be charged to the Sewage Services Trading Fund.

12. Based on the current level of sewage charges and current water consumption rate, the impact of the proposed sewerage works on sewerage charges is negligible.

PUBLIC CONSULTATION

13. We consulted the Islands District Board on the proposed works on 27 February 1995. The Board had no objection to the proposal.

14. We gazetted the proposed remaining works under the Roads (Works, Use and Compensation) Ordinance on 13 October 1995 and received two objections from representatives of the villagers of Sha Tin Village, Tai O. They objected because the tenants of the land involved had not settled their claims for compensation with the private land owners who would receive compensation for land resumption from Government.

15. We explained to the objectors that Government’s policy was to ensure that fair compensation would be provided to land owners in resuming any private land. We also explained that eligible clearees would, in addition to receiving proper rehousing, be paid an ex-gratia removal allowance in accordance with the established policy. Regarding compensation from the owners of the private lots involved, we urged the objectors to settle their claims direct with the lot owners.

16. On 28 January 1997, the Governor-in-Council authorised the proposed works without modifications.

ENVIRONMENTAL IMPLICATIONS

17. The Director of Environmental Protection completed an Environmental Review for the remaining works in May 1995 and concluded that the proposed works would not cause long-term adverse environmental impact and that an Environmental Impact Assessment was not required. During the construction period, we will control the dust, noise, site run-off and odour impact to within the established standards and guidelines by incorporating and enforcing appropriate environmental pollution control clauses in the contract.

LAND ACQUISITION

18. We will resume 0.05 hectares of agricultural land and 0.17 hectares of building land for the remaining works. The land acquisition and clearance works will affect 43 households involving about 110 people. The Director of Housing will rehouse eligible clearees to public housing in line with the existing policy. We will charge the cost of land acquisition and clearance, estimated at $36.3 million, to Head 701 - Land Acquisition.

BACKGROUND INFORMATION

19. We upgraded 119CL to Category A in July 1976 at an estimated cost of $45 million for the reclamation and formation of about 12.8 hectares of land in Tai O. In July 1988, Finance Committee approved an increase in the approved project estimate from $45 million by $28 million to $73 million to cater for additional works arising from the revised development strategy for Tai O following the conclusion of a further consultancy study under 119CL. In June 1991, Finance Committee further approved an increase in the approved project estimate from $73 million by $17 million to $90 million to cater for the general increase in the construction cost for the drainage improvement works and the remaining works set out in paragraph 4 above.

20. The consultants for 119CL have completed the detailed design and drawings for the remaining works. We plan to start the works in October 1997 for completion in November 2000.

Planning, Environment and Lands Branch
May 1997
(DD1114)

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Enclosure to PWSC(97-98)29

119CL - Tai O development, package 3, engineering works

A comparison of the approved project estimate at March 1991 prices and the revised project estimate at December 1996 prices is as follows -

2. As regards (a) (engineering works), of the total increase of $45.2 million -

1. $10.2 million is to cover the increase in the completed drainage improvement works, made up of the following -

   1. $4.5 million is due to an increase in the quantities of the completed works based on actual measurement on site;

   2. $3.0 million is for carrying out dredging in Tai O Creek to provide a safe marine access to a pumping station which was constructed as part of the drainage improvement works, as requested by Drainage Services Department to facilitate future maintenance; and

   3. $2.7 million is for constructing additional sewer connections to the trunk sewer to replace expedient connections discovered during the construction of the drainage improvement works; and

2. $35.0 million is to cover the increase in the cost of the remaining works, made up of the followings -

   1. $7.0 million is due to the increase in the costs of labour and materials for the remaining works ($13.7 million) between the period March 1991, when we prepared the last estimate, and December 1996. As a reference, the Civil Engineering Works Index increased by 52% between March 1991 and December 1996;

   2. $28.0 million is due to the increase in construction cost arising from specially designed works for overcoming the unexpected engineering difficulties in implementing the remaining works over the soft clay along the Tai O Creek basin. A breakdown of the total increase of $28.0 million is as follows -

      1. $17.0 million is for providing special ground treatment works to strengthen the underlying soft clay as well as to accelerate its consolidation;

      2. $4.5 million is due to the extension of the construction period from the original schedule of two years to three years for the avoidance of future local or differential settlement of the reclaimed land; and

      3. $6.5 million is for constructing a special type of riverwall to allow for the anticipated large settlement of the soft clay.

3. As regards (c) (site staff costs), the increase of $3.9 million is due to the increase in site staff costs estimated at about 11% of the increase in cost of works under paragraph 2(b) above, which is consistent with prevailing site staff costs for contracts of similar size and nature.

4. As regards (d) (consultants’ fees for the design and construction stages), the increase of $2.3 million is due to the increase in consultants’ fees for design and construction stages estimated at about 5% of the increase in the cost of the works under paragraph 1(a) above. The consultants’ fees are based on a percentage scale of the cost of construction works as laid down in the consultancy agreement signed in 1975.

5. As regards (e) (site investigation), the increase of $0.6 million is due to the detailed site investigation for the works referred to in paragraph 5 in paper PWSC(97-98)29.

6. As regards (f) (landscape work), the increase of $1.5 million is due to the general increase in costs for landscape work between March 1991, when we prepared the last estimate, and December 1996.

7. As regards (g) (contingencies), we retain $5.5 million as contingencies for the remaining works.

(DD1114)

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