PWSC(97-98)125
For discussion
on 17 February 1998

ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE

HEAD 707 - NEW TOWNS AND URBAN AREA DEVELOPMENT
Kowloon Development
Civil Engineering - Land development
469CL - South East Kowloon development at Kai Tak Airport - early development package

Members are invited to recommend to Finance Committee -

1. the upgrading of part of 469CL, entitled "South East Kowloon development at Kai Tak Airport - decontamination and site preparation", to Category A at an estimated cost of $316.9 million in money-of-the-day prices; and

2. the retention of the remainder of 469CL in Category B.

PROBLEM

We need to break up the existing concrete slab and demolish the structures in the north apron area of Kai Tak Airport (NAKTA) to prepare the site for housing development. We also need to decontaminate the site to remove potentially hazardous substances.

PROPOSAL

2. The Director of Territory Development (DTD), with the support of the Secretary for Planning, Environment and Lands, proposes to upgrade part of 469CL to Category A at an estimated cost of $316.9 million in money-of-the-day (MOD) prices for carrying out decontamination and site preparation works at NAKTA.

PROJECT SCOPE AND NATURE

3. The scope of 469CL comprises general site preparation works and the provision of infrastructure including roads, drainage, sewerage and a water supply system at NAKTA.

4. The part of the project we now propose to upgrade to Category A comprises -

1. ground decontamination of NAKTA (about 154 hectares);

2. demolition of existing buildings and structures including services and facilities in the northern part of NAKTA; and

3. breaking up of the existing apron slab and formation of land at NAKTA for housing development (about 154 hectares).

JUSTIFICATION

5. After the cessation of operation of the Hong Kong International Airport (Kai Tak Airport) in July 1998, we plan to develop the NAKTA site in phases, mainly for housing development, to accommodate a population of about 125 000. We need to prepare the site by demolishing the existing buildings and structures and breaking up the apron slab at NAKTA.

6. Site investigations carried out under 440CL "South East Kowloon development - comprehensive feasibility study" between late 1996 and October 1997 have revealed patches of contaminants in the soil underlying NAKTA. These contaminants contain flammable substances, such as petroleum, benzene and methane. They are more widespread towards the southern end of the site. At present, the existing apron slab provides an effective seal preventing the release of the contaminants. In order to avoid the risk to health and safety which would occur if these contaminants were exposed due to excavations for building foundations, basements and services, we need to decontaminate¹ the subsoil of the NAKTA.

7. According to the current public housing development programme, the Director of Housing plans to commence housing construction in the northern part of NAKTA in November 1999 with a target population intake in early 2003. The housing development will progressively take place from the north to the south of NAKTA. In order to meet the very tight housing development programme in the northern part of NAKTA, we need to start the decontamination, demolition and site preparation works in the northern part of NAKTA in July 1998 for completion in November 1999.

8. In the southern part of NAKTA where contamination is more extensive, decontamination of the entire area will take more than two years to complete. To facilitate the timely delivery of the site for later phases of housing development, we plan to divide up the entire southern area into smaller parcels and carry out the decontaimination works parcel by parcel commencing in July 1998 for overall completion in December 2000. We plan to break up the apron slab of each parcel immediately after its decontamination and complete the slab breaking works in the southern part of NAKTA by December 2001.

FINANCIAL IMPLICATIONS

9. We estimate the capital cost of the project to be $316.9 million in MOD prices (see paragraph 10 below), made up as follows -

	$ million
(a) Ground decontamination	68.0
(b) Demolition of existing buildings	20.0
(c) Breaking up of existing apron slab and formation of the site	95.0
(d) Consultants' fees for	24.0
(i) construction stage3.0
(ii) resident site staff costs21.0
(e) Contingencies	21.0

Sub-total

228.0

(at December 1996 prices)

(f) Inflation allowance

88.9

Total

316.9

(in MOD prices)

Due to insufficient in-house resources, DTD proposes to engage consultants to supervise the proposed works. A breakdown by man months of the estimate for the consultants' fees is at the Enclosure.

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

Year	$ million (Dec 1996)			Price adjustment factor	$ million (MOD)
1998 - 1999		25.0		1.16358		29.1
1999 - 2000		55.0		1.26830		69.8
2000 - 2001		68.0		1.38240		94.0
2001 - 2002		55.0		1.50686		82.9
2002 - 2003		25.0		1.64248		41.1
		228.0				316.9

11. We have derived the MOD estimate on the basis of the Government's forecast of trend labour and construction prices for the period 1998 to 2003. We will tender the proposed works under a remeasurement contract because the quantities of the decontamination works may vary according to the actual ground conditions. The contract will provide for inflation adjustments because the contract period will exceed 21 months.

12. The proposed works have no recurrent financial implications.

PUBLIC CONSULTATION

13. The proposed works aim at preparing NAKTA to enable housing development in the area to proceed. Since we will confine the proposed works to the airport site which will have restricted access and is separated from the existing urban areas by major highways, there will be minimal impact on the public. We will consult the public when the finalized development proposal of the whole South East Kowloon is available by mid 1998.

ENVIRONMENTAL IMPLICATIONS

14. We have conducted a land contamination assessment as part of the Environmental Impact Assessment (EIA) for South East Kowloon development under 440CL "South East Kowloon development - comprehensive feasibility study". The contamination assessment, completed in February 1998, concluded and the Director of Environmental Protection agreed that the proposed decontamination and site preparation works would have no long term adverse environmental impact. We will incorporate into the decontamination design suitable mitigation measures so that no adverse impact to the environment will result during its implementation. We will also provide appropriate sorting, storage and disposal of the wastes generated. During construction, we will control noise, dust, site run-off nuisances to within eatablished standards and guidelines by incorporation of standard pollution control clauses in construction contracts.

ACQUISITION

15. The project does not require any land acquisition.

BACKGROUND INFORMATION

16. We included 469CL in Category B in September 1996.

17. We engaged consultants to undertake the detailed design for the proposed works and charged the cost of $4.95 million to the block allocation Subhead 7100CX "New towns and urban area works, studies and investigations for items in Category D of the Public Works Programme". The consultants have substantially completed the detailed design and drawings. We plan to start works in July 1998 for completion in phases from November 1999 to December 2001 to meet the housing development programme.

Planning, Environment and Lands Bureau
February 1998

1.The decontamination process will use a specially designed well system and equipment to facilitate extraction of volatile substances and to stimulate bacterial action. The bacterial action will accelerate the process of bio-degrading the contaminants into harmless products.

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Enclosure to PWSC(97-98)125

469CL - South East Kowloon development at Kai Tak Airport -early development package

Breakdown of the estimate for consultants' fees
Consultants' staff costs		Estimated man months		Average MPS* salary point	Multiplier factor	Estimated fee ($ million)
(a) Consultants' fees for construction stage
(i) contract administration	Professional Technical		12 9	40 16	3.0 3.0	2.0 0.5
(ii) preparation of as-built drawings	Professional Technical		1 5	40 16	3.0 3.0	0.2 0.3
(b) Resident site staff costs	Professional Technical		75 315	40 16	2.1 2.1	8.7 12.3
Total consultants' staff costs						24.0

^*MPS = Master Pay Scale

Notes

1. A multiplier factor of 3 is applied to the average MPS point to arrive at the full staff costs including the consultants' overheads and profit, as the staff will be employed in the consultants' offices. A multiplier factor of 2.1 is applied to the average MPS point in the case of resident site staff supplied by the consultants. (At 1.4.96, MPS pt. 40 = $55,390 p.m. and MPS pt. 16 = $18,595 p.m.)

2. The consultants' fees for the construction stage are based on the lump sum fees calculated in accordance with the consultancy agreement the Director of Territory Development has with the consultants undertaking the design and construction of the project. The costs for resident site staff are based on estimates prepared by the Director of Territory Development. We will only know the actual man months and actual costs when the construction works have been completed.