For discussion PWSC(96-97)92
on 22 January 1997
ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE
HEAD 705 - CIVIL ENGINEERING
Civil Engineering - Land development
229CL - Diamond Hill development - works, stage I
Members are invited to recommend to Finance Committee an extension in the scope of 229CL to include the site formation of a portion of land adjacent to the original boundary of the Diamond Hill site formation works area.
PROBLEM
We need to pay the contractor for additional site formation works at Diamond Hill development carried out under contract No. GC/86/05 - Diamond Hill area B site formation.
PROPOSAL
2. The Director of Civil Engineering, with the support of the Secretary for Planning, Environment and Lands, proposes to expand the scope of project 229CL to enable the payment of $18 million for additional site formation works to be made from the project vote.
PROJECT SCOPE AND NATURE
3. Site formation works within the original scope of 229CL "Diamond Hill development - works, stage I" (area A on the location plan at Enclosure I) involved the removal of about 1.22 million cubic metres of rock and 0.78 million cubic metres of soft material and the construction of two access roads. The proposed extension in project scope involves the removal of an additional 0.03 million cubic metres of rock and 0.23 million cubic metres of soft material on land adjacent to the site of Diamond Hill development, stage I, identified as "Area of additional excavation works" at Enclosure I.
JUSTIFICATION
4. In November 1985, the government commenced site formation works to develop some 48 hectares of land on Diamond Hill. These works were scheduled to be carried out in two stages, viz, in areas A and B at Enclosure I. We started the first stage works (area A) under 229CL "Diamond Hill development - work, stage I" in 1985 and completed this stage in 1989.
5. In November 1985, we estimated that the site formation works in the area marked area B in Enclosure I would require the excavation of about 2.4 million cubic metres of rock and 0.9 million cubic metres of soft materials. As these excavated materials would be surplus to the requirements of the works, we concluded that it would be more cost-effective to form the site through a revenue earning contract1 . In September 1987, we awarded contract No. GC/86/05 at a payment of $52.4 million to Government and commenced the stage II (area B) works.
6. The original site boundary for the area B works took account of, but did not include, the location of the entry portal for the Tates Cairn Tunnel (TCT), which was under planning at that time. The TCT franchisee originally intended to locate the portal to the south of the area B works boundary as indicated in Enclosure I (the original location of Tates Cairn Tunnel portal), with the formation of the slope around the portal being the responsibility of the tunnel franchisee.
7. In August 1988, while the area B works were in progress, a decision was taken by the tunnel franchisee and the government to relocate the original site of the entry portal further to the south as indicated in Enclosure I (the final location of Tates Cairn Tunnel portal). This led to the need for an extension of the site boundary for the area B works to encompass the area of additional excavation works indicated in Enclosure I in order to maximise the area available for the Diamond Hill development project. Enclosure II shows a section of the residual area of land resulting from the relocation of the tunnel portal and demonstrates the need for additional excavation to reduce the land in the additional works area to the datum level of the original platform for area B.
8. On the assumption that the ground conditions in the additional works area would be similar to those which generally applied throughout the original works area, the contractor for the revenue earning contract was instructed to carry out the additional excavation works. These works were completed in October 1993. However, in the event, the amount of saleable material gainfully quarried from the additional works area was minimal. Consequently, the contractor made a claim for some $36 million for the additional excavation works.
9. We have negotiated with the contractor and, having taken into account the actual quantities of saleable rock obtained from the additional works area and the general requirements of the contract, we have agreed on a no-commitment basis a settlement in the order of $18 million. Since the additional works in question were public works and formed part of the relevant Diamond Hill development, we consider it appropriate to settle this payment from the project vote of 229CL. Subject to Members approval of an expansion in the scope of project 229CL, we will make the necessary payment from the project vote and settle the outstanding claim. Sufficient funds are available under the approved project estimate for this purpose.
FINANCIAL IMPLICATIONS
10. Project 229CL has an approved project estimate of $100 million, of which $44 million are still available. We will meet the $18 million payment for additional site formation works from the remaining funds. There is no need to increase the approved project estimate for this purpose.
11. The proposed expansion in scope of the project will not give rise to additional recurrent expenditure.
PUBLIC CONSULTATION
12. We consider public consultation unnecessary as the works have already been completed.
ENVIRONMENTAL IMPLICATIONS
13. There are no environmental implications as the works have been completed.
LAND ACQUISITION
14. We do not require land acquisition for the project.
BACKGROUND INFORMATION
15. In March 1984, the Land Development Policy Committee endorsed a consultancy proposal for the development of about 48 hectares of land on Diamond Hill. We subdivided the development area into areas A and B and phased the site formation works in two stages.
16. On 24 July 1985, we upgraded 229CL for stage I works in area A to Category A with an approved project estimate of $100 million. We commenced the works in November 1985 and substantially completed them in September 1989.
17. We commenced the works for stage II in area B in September 1987 under revenue earning contract No. GC/86/05, and substantially completed the works in October 1993.
(DD1069b)
1 -- Based on the experience of the site formation works at area A at Diamond Hill, the Director of Civil Engineering concluded that the site formation works at area B at Diamond Hill could be undertaken more cost-effectively by a revenue earning quarry contract rather than a conventional site formation works contract. Under this agreement the contractor would pay a monthly royalty to Government for the right to sell any saleable rock or stone quarried during the course of the site formation works.
Last Updated on 16 August 1999
