PWSC(97-98)89
For discussion
on 10 December 1997

ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE

HEAD 711 - HOUSING
Water Supplies - Combined fresh/salt water supply projects
121WC - Extension of water supply to Ma On Shan

Members are invited to recommend to Finance Committee the upgrading of 121WC to Category A at an estimated cost of $268.2 million in money-of-the-day prices for the construction of a fresh water service reservoir, a salt water service reservoir and associated watermains in Ma On Shan.

PROBLEM

The existing water supply systems serving the Ma On Shan areas will not be able to cope with the anticipated increase in demand for fresh and salt water by 2000.

PROPOSAL

2.The Director of Water Supplies (DWS), with the support of the Secretary for Housing, proposes to upgrade 121WC to Category A at an estimated cost of $268.2 million in money-of-the-day (MOD) prices for the construction of a fresh water service reservoir, a salt water service reservoir and laying of associated watermains in Ma On Shan.

PROJECT SCOPE AND NATURE

3.The scope of the project comprises -

1. constructing a fresh water service reservoir with a storage capacity of 24 000 cubic metres as an extension to the existing Ma On Shan fresh water service reservoir;

2. constructing a salt water service reservoir with a storage capacity of 1 400 cubic metres as an extension to the existing Ma On Shan salt water service reservoir;

3. laying approximately 5 kilometres fresh water mains of diameter ranging from 300 millimetres to 1 200 millimetres; and

4. laying approximately 7 kilometres salt water mains of diameter ranging from 150 millimetres to 450 millimetres.

JUSTIFICATION

4.The existing Ma On Shan water supply systems can meet daily fresh and salt water demands of 44 000 cubic metres and 14 000 cubic metres respectively. This is sufficient to meet present demands. In 1994, the Government identified a number of sites in Ma On Shan for housing developments. These together with other planned developments in Ma On Shan, Sai Sha and Shap Sz Heung areas will increase the population in Ma On Shan areas from 140 000 in 1996 to 265 000 beyond 2002. Given the increase in population in Ma On Shan, we estimate that the daily demands for fresh and salt water will increase to 59 000 cubic metres and 15 000 cubic metres respectively by 2000 when the population will reach 230 000. By then, there will be daily shortfalls of 15 000 cubic metres and 1 000 cubic metres of fresh and salt water respectively. Hence we need to extend the existing water supply networks to the new housing developments by early 2000. Upon completion of the extension works, the water supply systems in Ma On Shan will be able to provide a daily fresh water supply of 71 000 cubic metres and a daily salt water supply of 19 000 cubic metres¹ to meet the demands of the ultimate population of 265 000 beyond 2002.

FINANCIAL IMPLICATIONS

5.We estimate the capital cost of the project to be $268.2 million in MOD prices, made up as follows -

			$ million
(a)	Construction of service reservoirs		49.9
(b)	Mainlaying		52.8
(c)	Pipe materials		52.8
(d)	Consultants' fees for		22.4
	(i)construction stage	1.2
	(ii)site staff expenses	21.2
(e)	Contingencies		17.7
Sub-total			195.6	(at December 1996 prices)
(f)	Inflation allowance		72.6
Total			268.2	(in MOD prices)

A breakdown by man months of the estimate for consultants' fees is at the Enclosure.

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

Year	$ million (Dec 1996)	Price adjustment factor	$ million (MOD)
1998 - 99	29.3	1.16358	34.1
1999 - 2000	39.1	1.26830	49.6
2000 - 01	68.5	1.38244	94.7
2001 - 02	48.9	1.50686	73.7
2002 - 03	9.8	1.64248	16.1
	195.6		268.2

7.We have derived the MOD estimates on the basis of the Government's forecast of trend labour and construction prices for the period 1998 to 2003. We will tender the works under a re-measurement contract because most of the works are underground and hence it is not possible to ascertain the exact quantities of works in advance of construction. We will provide for adjustment due to inflation in the contract because the construction period will be longer than 21 months.

8.We estimate the annually recurrent expenditure to be $1 million. This project by itself will lead to an increase in water charges by 0.2 % in real terms².

PUBLIC CONSULTATION

9.We consulted the Environmental Improvement & Works Committee of the Tai Po District Board and the Sai Kung North Rural Committee on the proposed works within Tai Po District on 13 September 1996 and 10 September 1997 respectively. Both committees supported the proposal. For the proposed works in Sha Tin District, we consulted the Sha Tin East One Area Committee on 17 October 1997 and 28 November 1997, and the Development and Housing Committee of the Provisional Sha Tin District Board on 28 October 1997. The two committees have no objections to the proposed project.

ENVIRONMENTAL IMPLICATIONS

10.The Director of Environmental Protection Department completed an environmental review in April 1995 and concluded that the project would have no long term adverse environmental impact and no environmental impact assessment would be necessary. We will control noise, dust and site run-off nuisances during construction to comply with established standards and guidelines by incorporating environmental pollution control clauses in the works contract. We will also control the waste water discharges generated during the operational phase of the service reservoirs by discharging to the public sewerage system.

LAND ACQUISITION

11.The project does not require land acquisition.

BACKGROUND INFORMATION

12.We upgraded this project to Category B in September 1995.

13.We engaged consultants in April 1996 at a cost of $2.3 million to undertake the investigation study for the project. Upon completion of the study in early 1997, we employed different consultants in May 1997 at a cost of $4.4 million to proceed with detailed design and investigations for the works. We charged the costs of both consultancies to block allocation Subhead B100HX " Minor housing development related works, studies and investigations for items in Category D of the Public Works Programme " . The current consultants have substantially completed the detailed design. We plan to start the construction works in April 1998 for completion in January 2000 to meet the expected fresh and salt water demands in 2000.

Housing Bureau
December 1997

(LL296)

1. This project will increase the capacities of the existing fresh and salt water systems by 27000 cu.m./day and 5000 cu.m./day respectively. However, the storage capacities of the new service reservoirs (listed in paragraphs 3(a) and 3(b) above) required are generally lower than the increase in system capacities because replenishment will be pumped into the service reservoir as the stock in the reservoir is depleted during the course of the day.

2. The increase in water charges is calculated on the assumption that the demand remains static during the period from 1998 to 2003 and that the amount of Government subsidy to the waterworks operations is contained at its present level.

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Enclosure to PWSC(97-98)89

121WC - Extension of water supply to Ma On Shan

DETAILS OF CONSULTANTs' FEES

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 works in construction stage	Professional Technical	6 4	40 16	3.0 3.0	1.0 0.2
(b)Site supervision by resident site staff employed by the consultant	Professional Technical	122 180	40 16	2.1 2.1	14.2 7.0
Total consultant's staff costs					22.4

* MPS = Master Pay Scale

Notes

1.The consultants' fee for works during the construction stage is a provisional part of the lump sum price quoted by consultancy Agreement No. CE 55/96 " Extension of water supply to Ma On Shan/Shau Kei Wan high level water supply systems - design and construction " which is available for acceptance by Government subject to approval for upgrading 121WC to Category A.

2.A multiplier factor of 3.0 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 by the consultants' office. (At 1.4.96, MPS 40 = $55,390 p.m. and MPS 16 = $18,595 p.m.). A multiplier factor of 2.1 is applied in the case of site staff supplied by the consultants.

(LL296)