PWSC(97-98)100
For discussion
on 21 January 1998
ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE
HEAD 704 - DRAINAGE
Environmental Protection - Sewerage and sewage treatment
282DS - Central, Western and Wan Chai West sewerage, stage I works
Members are invited to recommend to Finance Committee the increase of the approved project estimate of 282DS from $1,417 million by $398 million to $1,815 million in money-of-the-day prices.
PROBLEM
The approved project estimate of 282DS is insufficient to complete the works under the project.
PROPOSAL
2. The Director of Drainage Services (DDS), with the support of the Secretary for Planning, Environment and Lands, proposes to increase the approved project estimate of 282DS from $1,417 million by $398 million to $1,815 million in money-of-the-day (MOD) prices.
PROJECT SCOPE AND NATURE
3. The project scope of 282DS comprises the construction of -
- the Western trunk sewer (2.6 kilometres long and 1 050 to 1 800 millimetres in diameter) from Smithfield Road to Des Voeux Road West;
- the Central trunk sewer (0.9 kilometre long and 900 to 1 800 millimetres in diameter) from Pottinger Street to the Central sewage screening plant;
- the Wan Chai West trunk sewer (2.4 kilometres long and 1 200 to 1 800 millimetres in diameter) from Ice House Street to the Wan Chai East sewage screening plant;
- interceptor sewers (4.3 kilometres long and 400 to 1 500 millimetres in diameter) and reticulation sewers (14.7 kilometres long and 225 to 750 millimetres in diameter) in Central, Western and Wan Chai West;
- a new sewage pumping station and associated ancillary works in the existing Central sewage screening plant; and
- a new sewage pumping station, screening facilities and associated ancillary works in the existing Wan Chai East sewage screening plant.
JUSTIFICATION
4. We are implementing the proposed works in five contracts. We have already awarded three contracts to construct the proposed trunk sewers and pumping stations as in items (a), (b), (c), (e) and (f) in paragraph 3 above. The remaining two contracts still to be tendered are for the proposed interceptor and reticulation sewers at item (d) in paragraph 3 above.
5. As far as possible, we have located the trunk sewers in tunnels along routes which cause minimum disturbance to the traffic of the affected areas. However, it is necessary in a number of congested streets to construct shallower interceptor and reticulation sewers by open trench methods in order to upgrade the existing sewerage network and to cater for future development. Experience with works involving open trench methods implemented in other areas (such as West Kowloon) indicates that costs have escalated sharply, especially for works in urban areas with busy traffic flows. The increase in costs is mainly due to the need to impose strict control of road openings and programming of works to minimize adverse traffic impacts, the need to meet stringent environmental requirements and difficulties in working in the close vicinity of other underground services. As a result, recent tender prices for such works have increased significantly. As the two remaining contracts of this project involve similar works in congested areas, we need to revise the cost estimates to take account of the latest market price for construction works in such areas.
6. In order to minimise the adverse effects of the works on the highly congested areas of Central, Western and Wan Chai, we plan to include additional special conditions of contract in the remaining two contracts to ensure that we maintain tight control over the contractors' method of working. Under these conditions, we will strictly limit the sequence, number and extent of road openings that can take place in an area or street at any one time, and we will not allow the contractors to make further road openings until the previous works have been completed satisfactorily. We will exercise this control in accordance with detailed traffic management plans with a view to maintaining good public access and coordination with other construction works in the area. As a consequence of complying with these strict requirements, contractors will have to provide substantial additional resources in programming, managing and executing the works. We therefore expect that tender prices will increase accordingly. As we will need to extend the contract periods for constructing the works to suit these special circumstances, resident site staff costs will also be higher.
7. Following a review of the financial position of the project, we consider it necessary to increase the approved project estimate of 282DS from $1,417 million by $398 million to $1,815 million in MOD prices (see paragraph 9 below) in order to complete the remaining works. A summary of the reasons for the proposed increase is as follows -
|
Factor
|
|
Amount
($ million)
|
|
% |
|
(a) Price variation
|
|
279.0
|
|
81.6 |
|
(i) revision of cost estimates for the remaining two contracts to reflect the latest market price for construction works in busy urban areas
|
150.0
|
|
|
|
|
(ii) revision of cost estimates for the remaining two contracts to account for the anticipated higher tender prices due to additional contractual restraints on the execution of works
|
50.0
|
|
|
|
|
(iii) inflation adjustment1
|
79.0
|
|
|
|
|
(b) Others
|
|
62.8
|
|
18.4 |
|
(i) contingencies
|
7.3
|
|
|
|
|
(ii) consultants' fees for construction stage
|
0.5
|
|
|
|
|
(c) Inflation allowance
|
|
56.2
|
|
|
|
|
_____
|
|
|
|
Total
|
|
398.0
|
(in MOD prices)
|
|
|
|
_____
|
|
|
8. A comparison of the cost breakdown of the approved project estimate (at December 1995 prices) and the revised project estimate (at December 1996 prices) is at Enclosure 1. Breakdown of estimates for consultants' fees is at Enclosure 2.
FINANCIAL IMPLICATIONS
9. Subject to approval, we will phase expenditure as follows -
|
Year
|
$ million
(Dec 1996)
|
Price
adjustment
factor
|
$ million
(MOD) |
|
Up to 31 March 1997
|
60.62 |
-
|
60.6 |
|
1997 - 98
|
204.2
|
1.06750
|
218.0 |
|
1998 - 99
|
223.5
|
1.16358
|
260.1 |
|
1999 - 2000
|
252.3
|
1.26830
|
320.0 |
|
2000 - 01
|
282.1
|
1.38244
|
390.0 |
|
Year
|
$ million
(Dec 1996)
|
Price
adjustment
factor
|
$ million
(MOD) |
|
2001 - 02
|
209.7
|
1.50686
|
316.0 |
|
2002 - 03
|
152.4
|
1.64248
|
250.3 |
|
______
|
|
______ |
|
1,384.8
|
|
1,815.0 |
|
______
|
|
______ |
10. We have derived the MOD estimate on the basis of the Government's forecasts of trend labour and construction prices over the period 1997 to 2003. We will tender the remaining two contracts as remeasurement contracts because we are uncertain about the existence and exact locations of underground utilities such as electric cables, telephone lines and water mains. The contracts will provide for inflation adjustment as the contract period will exceed 21 months.
11. The proposed increase in the approved project estimate will not give rise to additional recurrent expenditure.
PUBLIC CONSULTATION
12. We consulted the Wan Chai District Board on the proposed works on 11 July 1995, and the Central and Western District Board on 13 July 1995,
7 September 1995 and 17 April 1997. The District Boards supported the proposal. As there is no change in the approved project scope, we do not consider it necessary to carry out further public consultation.
ENVIRONMENTAL IMPLICATIONS
13. We completed an Environmental Impact Assessment (EIA) on the construction and operation of the project works in May 1996. The study indicated that odour from the Central and Wan Chai East sewerage screening plant is a concern. According to the recommendation of the EIA, we would install odour control facilities inside the plants to meet established standards and guidelines.
14. The proposed sewerage works will improve the nearby coastal water quality by reconnecting sewers which currently discharge untreated sewage into the Harbour via stormwater drains, into sewerage system, proper. For short term impact during construction, we will control noise, dust and site run-off nuisance during construction through the implementation of mitigation measures in relevant contracts.
15. As there is no change in the approved project scope, there will be no additional environmental impact as a result of this proposed increase in project estimate.
LAND ACQUISITION
16. The proposed increase in the approved project estimate does not require any land acquisition.
BACKGROUND INFORMATION
17. On 19 July 1996, the Finance Committee approved the upgrading of 282DS to Category A at an estimated cost of $1,417 million in money-of-the-day prices for the implementation of Central, Western and Wan Chai West sewerage, stage I works.
18. We started the construction of the proposed trunk sewers and pumping stations in September 1996. We plan to start the construction of the remaining stage I works in February 1998. We shall complete the whole of the stage I works by August 2001.
Planning, Environment and Lands Bureau
January 1998
(DD1169)
1.The inflation adjustment is for the works described under items 3(a) to 3(f) for the period between December 1995 and December 1996.
2. This is the actual expenditure up to 31 March 1997.
Enclosure 1 to PWSC(97-98)100
282DS - Central, Western and Wan Chai West sewerage, stage I works
A comparison of the approved project estimate at December 1995 prices and the revised project estimate at December 1996 prices is as follows -
| | Approved
Estimate
(Dec 1995) | | Revised
Estimate
(Dec 1996)
|
|---|
| | | $ million |
|
|---|
| (a) | Western trunk sewer
| | 211.0 | | 230.0
|
| (b) | Central trunk sewer
| | 73.0 | | 80.0
|
| (c) | Wan Chai West trunk sewer
| | 182.0 | | 200.0
|
| (d) | Interceptor sewers and reticulation sewers in
| | 131.0 | | 343.0
|
| (i) Central | 24.0 | | 63.0 |
|
| (ii) Western | 20.0 | | 53.0 |
|
| (iii) Wan Chai West | 87.0 | | 227.0 |
|
| (e) | Pumping station and associated ancillary works in the Central sewage screening plant
| | 98.0 | | 107.0
|
| (i) Civil works | 61.0 | | 67.0 |
|
| (ii) Electrical and mechanical works | 37.0 | | 40.0 |
|
| (f) | Pumping station, screening facilities and associated ancillary works in the Wan Chai East sewage screening plant
| | 152.0 | | 166.0
|
| (i) Civil works | 85.0 | | 92.8 |
|
| (ii) Electrical and mechanical works | 67.0 | | 73.2 |
|
| (g) | Consultants?fees for construction stage
| | 10.0 | | 10.5
|
| (h) | Resident site staff costs
| | 95.0 | | 150.0
|
| (i) | Overseas factory inspection
| | 0.3 | | 0.3
|
| (j) | Contingencies
| | 90.7 | | 98.0
|
| Total | 1,043.0
| | 1,384.8
|
2. As regards (a) (Western trunk sewer), (b) (Central trunk sewer), (c) (Wan Chai West trunk sewer), (e) (Pumping station and associated ancillary works in the Central sewage screening plant) and
(f) (Pumping station, screening facilities and associated ancillary works in the Wan Chai East sewage screening plant), the respective increases of $19 million, $7 million, $18 million, $9 million and $14 million are all revisions of the cost estimates to account for inflation. As a reference, the Civil Engineering Works Index (CEWI) increased by 10% between December 1995 and December 1996.
3. As regards the total increase of $212 million for item (d) (Interceptor sewers and reticulation sewers in Central, Western and Wan Chai West),
- $150 million is due to the upward revision of cost estimates to account for sewerage works to be carried out in busy urban areas. The increases reflect recently returned tender prices for similar contracts;
- $50 million is due to the upward revision of cost estimates to account for the anticipated higher tender prices as a result of additional contractual restraints on the execution of works; and
- $12 million is due to the upward revision of cost estimates to account for inflation.
4. As regards (g) (Consultants' fees for construction stage), the increase of $0.5 million is due to an upward revision of consultants' fees to account for inflation. As a reference, the Hang Seng Consumer Price Index increased by 6.7% between December 1995 and December 1996.
5. As regards the total increase of $55 million for item (h) (Resident site staff costs),
- $7.5 million is due to a revision of the salaries of resident site staff in line with the increase in civil service salaries between December 1995 and December 1996; and
- $47.5 million is due to an increase in the resident site staff cost as a result of the longer time for the completion of the project.
6. As regards (i) (Overseas factory inspection1), we retain $0.3 million for overseas factory inspection
7. As regards (j) (Contingencies), we reserve an additional amount of $7.3 million as contingencies in the light of the anticipated increase in the construction costs.
(DD1169)
1.Pumps and penstocks required as part of the necessary electrical and mechanical equipment are not available in the local market. After we place the order, we will need to attend precision tests at the factory overseas to ensure that the equipment is acceptable before delivery.
Enclosure 2 to PWSC(97-98)100
282DS - Central, Western and Wan Chai West sewerage, stage I works
Breakdown of estimates for consultants' fees
|
Consultants' staff costs
|
|
Estimated
man
months
|
Average
MPS
salary
point
|
Multiplier
factor
|
Estimated
fee
($ million) |
|
(a) Consultants' fees for construction stage
|
Professional
Technical
|
57
19
|
40
16
|
3.0
3.0
|
9.47
1.06 |
|
(b) Site supervision by resident staff employed by the consultants
|
Professional
Technical
|
665
1 860
|
40
16
|
2.1
2.1
|
77.35
72.63 |
|
|
|
|
|
_____ |
|
Total consultants' staff costs
|
|
160.51 |
|
|
|
|
|
_____ |
Notes
1. A multiplier factor of 3.0 is applied to the average MPS point to arrive at the full staff costs including the consultants' overhead and profits, as the staff are employed in the consultants' office. (At 1.4.96, MPS pt. 40 =
$55,390 p.m. and MPS pt. 16 = $18,595 p.m.). A multiplier factor of 2.1 is applied in the case of site staff supplied by the consultants.
2. The figures given above are based on the actual fee proposal from the consultants undertaking the investigations, design and construction supervision of Central, Western and Wan Chai West sewerage, stage I works.
(DD1169)
