PWSC(97-98)104
For discussion
on 21 January 1998
ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Universities
Lingnan College
3EU - Student hostels
Members are invited to recommend to Finance Committee to increase the approved project estimate of 3EU from $92,385,000 by $22,724,000 to $115,109,000 in money-of-the-day prices.
PROBLEM
The approved project estimate of 3EU is insufficient for the works under the project.
PROPOSAL
2. On the advice of Lingnan College (LC) and in consultation with the Director of Architectural Services who acts as the Technical Advisor to the University Grants Committee (UGC), the Secretary-General, UGC (SG, UGC), with the support of the Secretary for Education and Manpower, proposes to increase the approved project estimate of 3EU from $92,385,000 by $22,724,000 to $115,109,000 in money-of-the-day (MOD) prices.
PROJECT SCOPE AND NATURE
3. The project comprises the construction of 1 000-place student hostels for full-time degree students at LC's new campus in Tuen Mun.
JUSTIFICATION
4. Following a review of the financial position of the project, the SG, UGC considers it necessary to increase the approved project estimate of 3EU from $92,385,000 by 22,724,000 to 115,109,000 in MOD prices (see paragraph 10 below) in order to finalise the account of the project.
5. There are several reasons for the increase. First, there are increases due to price variations in construction works and furniture and equipment since preparation of the costs and up to the time of award of contracts. There are also corresponding increases in professional fees as a result of the increase in the cost of the construction works. Second, there are increases due to changes in standards and/or statutory requirements. Third, a small percentage of the increase required is due to under-estimation of the budget for building services work. Part of these increases are off-set by the reduction of works due to unexpected ground condition or special unforeseen site conditions and by changes in design to reduce the project cost of the works.
FINANCIAL IMPLICATIONS
6. A summary of the proposed increase in the project estimate is as follows -
|
|
|
|
Reasons for Additional Requirements
|
Amount
$ '000
(MOD)
|
% |
|
|
|
|
|
(a) Specification changes
|
|
(9,181)
|
(30.3) |
|
(i) change in standards and/or statutory requirements
|
6,980
|
|
|
|
(ii) addition/reduction of works due to unexpected ground condition or special unforeseen site conditions
|
(6,398)
|
|
|
|
(iii) change in design to reduce the budget on the works
|
(9,763)
|
|
|
|
(b) Price increases in construction works and furniture and equipment since preparation of costs and up to award of contracts
|
|
33,971
|
112.1 |
|
(c) Under-estimate of the original budget of building services works
|
|
2,577
|
8.5 |
|
(d) Corresponding increase in professional fees as a result of increase in the cost of construction works
|
|
2,932
|
9.7 |
|
|
______
|
_____ |
|
Sub-total
|
|
30,299
|
100.0 |
|
Less contribution by LC
(at 25% of additional costs)
|
|
7,575
|
|
|
|
______
|
|
|
Total
|
|
22,724
|
|
7. A comparison of the approved and the revised project costs in MOD prices is at the Enclosure.
8. Of the total revised project cost of $153,479,000 in MOD prices, LC will contribute 25% of the total project cost, rounded up to $38,370,000. The project cost to be funded by the Government is $115,109,000.
9. Discounting the project cost of $92,385,000 previously approved for the construction of student hostels at LC, we need an increase in the approved project estimate of $22,724,000.
10. Subject to Members' approval, we will phase the expenditure as follows -
|
Year
|
$'000
(MOD) |
|
Up to 31 March 1997
|
92,385 |
|
1997-98
|
14,114 |
|
1998-99
|
8,610
|
|
|
115,109
|
11. The proposed increase in the approved project estimate will not give rise to any additional annually recurrent expenditure.
PUBLIC CONSULTATION
12. We consider that public consultation is not necessary for an increase in the approved project estimate.
ENVIRONMENTAL IMPLICATIONS
13. The proposed increase in the approved project estimate will not give rise to any adverse environmental impact as the construction works of the project has been practically completed.
LAND ACQUISITION
14. The proposal does not require additional land acquisition.
BACKGROUND INFORMATION
15. In May 1993, Finance Committee approved a project estimate of $4,800,000 for 3EU to enable the carrying out of site investigation and preliminary design work for the construction of 1 000-place student hostels at LC's new campus in Tuen Mun. In March 1994, Finance Committee further approved the revised project estimate of $92,385,000 at June 1993 prices to carry out the construction works.
16. LC prepared the project estimate for the construction works in June 1993. LC contracted out the site survey and investigation works in July 1993, tendered the main contract of the project in March 1995 and awarded the main contract in August 1995. The project was practically completed in March 1997.
17. With effect from 1 April 1995, project estimates for all newly approved UGC-funded capital projects are expressed in MOD prices, which show the estimated cost of projects after allowing for forecast inflationary increases in construction prices during the period up to the end of construction. UGC-funded institutions will be required to complete the projects within the approved project estimates in MOD prices. Since the project has been practically completed and the project account will soon be finalised, all the amounts in this paper are expressed in MOD prices.
Education and Manpower Bureau
January 1998
Enclosure to PWSC(97-98)104
3EU - Student hostels
Lingnan College New Campus in Fu Tei, Tuen Mun
A comparison of the approved and revised project estimates is as follows -
|
Approved project estimate
|
|
Revised project estimate
|
|
Increase/
decrease |
|
$'000
|
|
$'000
|
|
$'000 |
|
|
|
|
|
|
|
(a) Site survey and investigation works
|
320
|
|
503
|
|
183 |
|
(b) Area and site development works
|
26,690
|
|
18,097
|
|
(8,593) |
|
(c) Building works
|
56,580
|
|
77,534
|
|
20,954 |
|
(d) Building services works
|
18,060
|
|
29,970
|
|
11,910 |
|
(e) Professional fees
|
12,200
|
|
15,132
|
|
2,932 |
|
(f) Furniture and equipment
|
9,330
|
|
12,243
|
|
2,913
|
|
Sub-total
|
123,180
|
|
153,479
|
|
30,299 |
|
|
|
|
|
|
|
|
Less contribution by LC (at 25% of the total cost)
|
30,795
|
|
38,370
|
|
7,575
|
|
|
|
|
|
|
|
Total
(Government's contribution)
|
92,385
|
(at June 1993 prices)
|
115,109
|
(in MOD prices)
|
22,724
|
2. As regards Item (a) (site survey and investigation works), the increase of $183,000 comprises -
- an increase of $14,000 due to upward movement in tender price index (TPI) from the period when the original budget was fixed in June 1993 to the period when tenders for various contracts were separately received in third quarter of 1993 and first quarter of 1994 (TPI increased from 527 to 541 and 586 respectively, that is, increased by 2.66% and 11.20% or by a weighted average of 4.38 %.); and
- an increase of $169,000 due to the necessity to carry out more site survey and investigation works to fully reveal site and soil conditions and to enable the use of more economical piling system. This was not included in the original budgeting/planning exercise because only rough indicative costs and preliminary information were available at the early stage of the project.
3. As regards Item (b) (area and site development works), the net reduction of $8,593,000 comprises -
- a saving of $6,567,000 due to adoption of more economical piling system and that pile depths were much shallower than expected;
- further saving of $9,763,000 due to change in design of adopting the lowest standards or the least provision as far as possible; and
- an increase of $7,737,000 due to upward movement of tender price index from the period when the original budget was fixed in June 1993 to the period when tenders for various contracts were separately received in second quarter of 1994, second quarter of 1995 and fourth quarter of 1996 (TPI increased from 527 to 594, 712 and 885 respectively, that is, increased by 12.71%, 35.10% and 67.93% or by a weighted average of 28.99%).
4. As regards Item (c) (building works), the increase of 20,954,000 comprises -
- an increase of $19,139,000 due to upward movement of tender price index from the time when the original budget was fixed in June 1993 to the time when the tender was received in second quarter of 1994 and second quarter of 1995 (TPI increased from 527 to 594 and 712, that is, increased by 12.71% and 35.10% or by a weighted average of 33.82%); and
- an increase of $1,815,000 due to additional works required because of change in statutory requirements, site conditions, construction needs and additional or improvement works found necessary after moving-in for hostels' proper operation and functioning. Major items are builder's supporting works to the additional building services works, alteration of a staircase to improve means of fire escape, improvement of fire protection of service, utility pipeworks in staircases, addition of fire-rated roller shutters to management offices, strengthening of main window mullions in all lift lobbies and sealing up of all glass-block partitions inside all lift lobbies. These were not included in the original budgeting/planning exercise because only rough indicative costs and preliminary information were available at the early stage of the project.
5. As regards Item (d) (building services works), the increase of $11,910,000 comprises -
- an increase of $ 4,168,000 due to upward movement in building services work tender price index (BSTPI) from the period when the original budget was fixed in June 1993 to the period when the tender was received in the second quarter of 1995 (BSTPI increased from 104 to 128, that is, increased by 23.08%);
- an increase of $4,089,000 due to additional works required by change in statutory requirements, site conditions and construction needs. Major works are replacement of installed light fittings at open staircases with battery-type emergency light fittings and time control gears, extension of smoke detection system to cover meter closets at all floors and all deep recession on the structural ceiling of all habitable rooms, addition of fire service priming tanks to eliminate the possibility of vacuum being created in fire service pumps and pipeworks and supporting works required for the addition of fire-rated roller shutters to management offices These were not included in the original budgeting/planning exercise because only rough indicative costs and preliminary information were available at the early stage of the project;
- an increase of $1,076,000 due to additional or improvement works found necessary after moving-in for hostels' proper operation and functioning. Major works are extension of telephone cables from the corridors to all habitable rooms (to allow resident students and staff to install their telephone lines with the least efforts), addition of power points in warden's quarters and all rooms at the amenities floors for installation of air-conditioners and cabling/wiring works for the provisions of Cable TV service to warden's quarters and student common rooms. These were not included in the original budgeting/planning exercise because only rough indicative costs and preliminary information were available at the early stage of the project; and
- an increase of $2,577,000 due to slight under-estimation in the original budgeting exercise. This was not included in the original budgeting/planning exercise because only rough indicative costs and preliminary information were available at the early stage of the project.
6. As regards Item (e) (professional fees), the increase of $2,932,000 is to reflect the increase in professional fees as a result of the increase in the cost of construction works.
7. As regards Item (f) (furniture and equipment), the increase of $2,913,000 is due to inflation adjustment for furniture and equipment between the period when the original budget was fixed in June 1993 and the period when all the work tenders for building works and building services works were received with a weighted average of TPI increase of 31.23%.
