Public Works Subcommittee of the Finance Committee -- Minutes -- 2 Dec 98

LC Paper No. PWSC62/98-99
(These minutes have been seen by the Administration)

Ref : CB1/F/2/2

Public Works Subcommittee of the Finance Committee of the Legislative Council

Minutes of the ninth meeting held at the Legislative Council Chamber on Wednesday, 2 December 1998, at 10:45 am

Members present :

Hon HO Sai-chu, JP (Chairman)
Dr Hon Raymond HO Chung-tai, JP (Deputy Chairman)
Hon Kenneth TING Woo-shou, JP
Hon James TIEN Pei-chun, JP
Hon Cyd HO Sau-lan
Hon Edward HO Sing-tin, JP
Hon LEE Wing-tat
Hon Fred LI Wah-ming
Hon Margaret NG
Hon Ambrose CHEUNG Wing-sum, JP
Hon CHAN Kam-lam
Hon SIN Chung-kai
Hon WONG Yung-kan
Hon LAU Kong-wah
Hon Emily LAU Wai-hing, JP
Hon SZETO Wah
Hon TAM Yiu-chung, JP
Dr Hon TANG Siu-tong, JP

Members absent :

Hon Albert HO Chun-yan
Hon Eric LI Ka-cheung, JP
Hon James TO Kun-sun
Hon CHEUNG Man-kwong
Hon Christine LOH
Hon CHAN Yuen-han
Dr Hon LEONG Che-hung, JP
Hon Gary CHENG Kai-nam
Hon Mrs Miriam LAU Kin-yee, JP
Hon Andrew CHENG Kar-foo
Hon Timothy FOK Tsun-ting, JP

Member in attendance:

Hon Mrs Selina CHOW LIANG Shuk-yee, JP

Public officers attending :

Miss Emma LAU: Deputy Secretary for the Treasury (3)
Mr Patrick LAU, JP: Secretary for Planning, Environment and Lands
Mr H S KWONG, JP: Secretary for Works
Mr Rob LAW, JP: Director of Environmental Protection
Mr James HERD: Principal Assistant Secretary for the Treasury (Works)
Mr S H PAU, JP: Director of Architectural Services
Mr James LI: Assistant Director of Urban Services (Hong Kong) Environmental Health
Mr H C FAN: Project Manager, Electrical and Mechanical Services Department
Miss Stella WONG: Principal Assistant Secretary for Treasury (E)
Mr Albert LAI, JP: Government Property Administrator
Mr S S LEE, JP: Director of Territory Development
Mr M S HU, JP: Director of Water Supplies

Clerk in attendance:

Miss Polly YEUNG: Chief Assistant Secretary (1)3

Staff in attendance:

Mr Jimmy MA, JP: Legal Adviser
Ms Pauline NG: Assistant Secretary General 1
Ms Anita SIT: Senior Assistant Secretary (1)8

Public Works Programme

Upgrading of projects to Category A

HEAD 703 - BUILDINGS

PWSC(98-99)42	33RB	Replacement of Cremators No. 11 and 12 at Cape Collinson Crematorium, Chai Wan

Addressing a member's concern on whether the cremation services at Cape Collinson Crematorium would be affected during the project period, the Assistant Director of Urban Services (Hong Kong) advised that as cremator no. 11 was mainly operated for large coffins, the Urban Services Department would advise local funeral services providers to refrain from using large coffins until the new replacement cremator was ready for use. As regards cremator no. 12, agreement had been reached with the association of Hindus in Hong Kong, who were the main users of this cremator, to use other cremators during the project period.

2. The item was voted on and endorsed.

PWSC(98-99)48 104KA Sha Tin Government Offices Building

3. Miss Cyd HO Sau-lan said that Members of the Frontier would not support this proposal. Referring to the "10% expansion factor" (Enclosure 1 to the paper) included in deriving the total area required for allocation, she queried that the 10% expansion allowance for reprovisioning user departments to the proposed Shatin Government Offices (STGO) was incompatible with the Government's pledge to achieve 5% productivity gains in the next three years. She commented that the expansion allowance, together with the "surplus area to be allocated" which amounted to 3 209 square metres, was a gross over-provision of office space at the proposed STGO. In response, the Government Property Administrator (GPA) informed members of the latest development that some offices of the Water Services Department currently accommodated in a leased office of about 3 600 square metres in Shatin would also be reprovisioned to STGO and thus, the "surplus area to be allocated" would be occupied. In this connection, Miss HO said that the Administration should provide the most up-to-date information in its papers to the Subcommittee.

4. As regards the 10% expansion factor, the Deputy Secretary for the Treasury (3) and GPA advised that the inclusion of this expansion factor was in line with the established planning practice for Government office buildings. They stressed that the office space reserve was for planning purpose only; the actual area to be allocated would be based on the then genuine needs of individual user departments. Moreover, established guidelines on office space allocation were available for GPA and user departments to follow. On the target of 5% productivity gains, DS/Tsy3 advised that individual bureaux/departments would draw up their own programme on staff deployment and other measures to achieve productivity gains amounting to 5% of the baseline operating expenditure over a period of three years up to the year 2002. The 10% factor however referred to the possible need for additional office space. She clarified that as the two percentages were for different purposes, the question of incompatibility should not arise.

5. In response to Miss HO's enquiry about the estimated $108.8 million for furniture and equipment, the Director of Architectural Services (DArchS) confirmed that it had been the general practice to retain, as far as possible, existing furniture upon reprovisioning of offices. In this case, however, most of the furniture currently used by the potential user departments of STGO had a service span of over ten years and there was a lot of wear and tear. The furniture being used would be replaced by new furniture which would be more compatible with the modern-day office layout, at the same time taking up less space. He also clarified that apart from furniture, the estimate also covered office equipment such as water heaters, partitions etc. DArchS further advised that "the estimated area to be allocated" and the "10% expansion factor" were calculated on the basis of the current standards of office space provision, which in turn had taken into account the design of new furniture. As regards the percentage of increase in office space for potential user departments under the proposed allocation criteria, as compared to their current accommodation, GPA agreed to provide further information.

Admin.

6. Commenting that the present proposal had not provided adequate and up-to-date information notwithstanding the huge financial implications, Miss HO reiterated the position of Members of the Frontier that they would not support the proposal.

7. Dr Raymond HO Chung-tai expressed support for the proposed project as centralising services provided by different Government departments under one roof would help improve operational efficiency and better serve the community. In reply to his enquiry, DArchS confirmed that the existing road network in the area had sufficient capacity to cater for the additional traffic brought about by future users of the building, and that the ingress and egress of the building for vehicles would not pose any problem to the traffic flow and safety of the roads in the vicinity. As regards carparking spaces, a total of 200 carparking spaces would be provided at the basement levels of the building for staff and visitors. Taking into account that there were some 100 spaces available for public rental at the nearby Shatin Central Plaza, the Administration considered the provision of carparking spaces at the proposed STGO sufficient. As to whether providing carparking spaces above ground would reduce the construction cost, DArchS advised that this option had been explored but was discarded for two main reasons. First, it was preferable to reserve the first few floors above ground for Government offices frequently visited by the public. Moreover, building additional storeys for the carpark would exceed the height restriction of 79.4 metres of the site concerned.

8. GPA confirmed in response to a member that the expiry of the lease for offices currently accommodated in the Citylink Plaza could tie in with the schedule of the STGO project without any time gap or undue overlapping. He added that the Government had reached an agreement with the Kowloon Canton Railway Corporation, property owner of Citylink Plaza, to extend the lease period in case of delay in the STGO project.

9. In reply to a member's concern about how the estimate for building services in this project compared to that of other building projects, DArchS pointed out that the normal percentage range of the building services cost against the building construction cost was 40% to 60%. In this case, the percentage was about 50%. For hospital projects, the average percentage was around 70%. Responding to the member's comment that the unit construction cost for the present project might be on the high side, DArchS advised that based on the construction floor area of 56 331 square metres, the estimated unit construction cost was $14,599 per square metre at December 1997 prices. This cost level was considered reasonable when compared with that of similar projects. He added that the "construction floor area" encompassed all the areas where construction works were carried out, including the basement levels and mechanical and electrical plant rooms which were not included in the "gross floor area" of the building. In reply to another member, the Principal Assistant Secretary for the Treasury (E) confirmed that the additional annually recurrent expenditure of $23.3 million of the project represented the estimated management fees and related expenses on maintenance and repairs etc.

10. The Chairman put the item to vote. Miss HO claimed a division. In view of the small number of members present, the Chairman suggested that instead of using the electronic voting system, members should raise hands to cast their votes. 5 members voted for the proposal and 1 member against.

For:
Mr Kenneth TING Woo-shou	Mr James TIEN Pei-chun
Mr LI Wah-ming	Mr Ambrose CHEUNG Wing-sum
Mr SZETO Wah
(5 members)

Against:
Miss Cyd HO Sau-lan
(1 member)

11. The Chairman declared that the item was endorsed.

12. Subsequent to the conclusion of the discussion on item PWSC(98-99)50, Miss Emily LAU queried whether the proceedings of the division recorded above were in order. She said that she was engaged at another meeting when the division was conducted. As the division bell had not rung, she was unable to take part in the voting.

13. At the invitation of the Chairman, the Legal Advisor (LA) advised that when a division was called, according to the Procedure of the Subcommittee, the division bell should have been rung for one minute before the Subcommittee proceeded to a division. In principle, if the Chairman had declared the voting result in respect of an item voted on, and immediately after such declaration, no member present challenged the Chairman's statement, the decision as per the voting result would be carried. Nevertheless, the chairman of a committee or subcommittee should have the discretion over the handling of major irregularities in proceedings. He further explained that if the irregularity in question was considered a major irregularity, the Chairman would have the discretion to decide if a division on the same matter should be conducted afresh, and to discard the result of the voting hitherto held.

14. As regards the division just held for this item, LA said that in his opinion, the ringing of the division bell was an important procedure as the voting result might be affected if this procedure had not been complied with. He therefore suggested that the Chairman might consider declaring the former division held invalid and order to conduct a division for the item afresh. He also drew the Chairman's attention to the possibility that certain members who were present at the former division might not be present at the division to be conducted afresh.

15. The Chairman shared LA's view that the division bell not having been rung for one minute before a division took place was a major irregularity in proceedings. He noted that one member who was present at the former division was not present at this juncture. He informed members that on balance, he would order a division for this item be conducted afresh. Members noted the Chairman's view and raised no objection.

16. Dr TANG Siu-tong enquired about the arrangement in the case that the division bell did not function. The Assistant Secretary General(1) advised that while there were provisions in the Rules of Procedure to cater for the situation in which the electronic voting system did not function, there was no provision to cater for the situation in which the division bell did not function. She added that in the latter case, the major consideration was to make sure that in order to achieve the purpose of ringing the division bell, all members present at the Legislative Council Building would be notified within a specified period of time of an impending division.

17. The Chairman ordered that the Subcommittee proceed to a division for the item. The division bell rang for one minute. 11 members voted for the item, 2 members voted against and 1 member abstained from voting.

For:
Mr Kenneth TING Woo-shou	Mr James TIEN Pei-chun
Mr Edward HO Sing-tin	Mr LEE Wing-tat
Mr Fred LI Wah-ming	Mr CHAN Kam-lam
Mr SIN Chung-kai	Mr WONG Yung-kan
Mr SZETO Wah	Mr TAM Yiu-chung
Dr TANG Siu-tong
(11 members)

Against:
Miss Cyd HO Sau-lan
Miss Emily LAU Wai-hing
(2 members)

Abstention:
Miss Margaret NG
(1 member)

18. The item was endorsed by the Subcommittee.

19. Miss Emily LAU suggested that this item be put to vote as a separate item from other proposals at the Finance Committee. The Chairman agreed to notify the Chairman of the Finance Committee.

Admin.

HEAD 707 - NEW TOWNS AND URBAN AREA DEVELOPMENT

PWSC(98-99)49	53CD	New Territories North East development - main drainage channels for Fanling, Sheung Shui and hinterland

20. Addressing a member's concern on whether the implementation schedule of the river training works under the present proposal would tie in with the progress of the Shenzhen River regulation project, the Director of Territory Development (DTD) advised that the Shenzhen River regulation project was a joint venture of the Drainage Services Department and the Shenzhen Municipal Government for implementation in three stages. Stage 1 had been completed in May 1997. Stage 2, which was concerned with the downstream section of Shenzhen River, was scheduled for completion in November 2000. Stage 3 was designed to deal with the upper reaches of Shenzhen River and was scheduled to start in 2001 for completion in 2004. DTD said that since the lower River Indus was the upper stream of the downstream section of Shenzhen River, the river training works under the present proposal would only need to tie in with Stage 2 of the Shenzhen River regulation project. Hence, the planned schedule, which commenced in February 1999 for completion in March 2001, was appropriate. He also confirmed that flooding hazards in North New Territories would be alleviated with the completion of Stage 2 of the Shenzhen River regulation project and the works under the present proposal.

21. In reply to a member's enquiry, DTD advised that compensation would be paid to those persons who had entitlement to the land being resumed for public works in accordance with the relevant legislation. As regards rehousing, different types of public housing would be offered to clearees in accordance with the relevant eligibility criteria under the prevailing rehousing policy, details of which had been provided to members in a supplementary information note issued on 13 November 1998 [PWSCI(98-99)18]. As to whether eligible clearees would be offered public rental housing in the district where they now resided, DTD pointed out that where practicable, such arrangements would be made but the existing rehousing policy did not oblige the Government to do so. The member urged the Administration to make timely arrangements for rehousing of clearees.

22. The item was voted on and endorsed.

PWSC(98-99)50	487CL	Tung Chung development phase 3A, reclamation for areas 51, 52 (part) and 53 to 56

23. Members noted from the proposal that as the proposed reclamation works were authorized in July 1991, at which time the Environmental Impact Assessment Ordinance (EIAO) had not come into operation, this project was exempted from the requirements of the Ordinance. They however noted that an Environmental Impact Assessment (EIA) for the proposed reclamation works had been conducted as an integral part of the North Lantau Development Study. In reply to members' enquiries, the Director of Environmental Protection (DEP) advised that public works projects which had been gazetted before the EIAO came into operation were exempted from the provisions of the EIAO. This however did not imply that EIA studies on the projects were not required. For the project in question, he confirmed that the EIA study, which had been endorsed by the Environmental Pollution Advisory Committee (the predecessor of the Advisory Council on the Environment (ACE)), had been conducted in a proper and thorough manner, and the implementation of all the required mitigation measures would be subject to strict monitoring.

24. Although the project would not require an environmental permit under the EIAO as it was exempted from the Ordinance, a member enquired whether the necessary steps for obtaining the environmental permit had nevertheless been taken for the project. In reply, DTD said that he was confident that the steps taken, which included the EIA study for the project, the undertaking to implement the mitigation measures recommended in the study and endorsement of the EIA study by the ACE, would fulfil the requirements for obtaining the permit. DEP agreed with DTD that the requirements for obtaining the permit had been fulfilled in essence by the aforesaid EIA work. He further confirmed that for a project gazetted after the EIAO was in force, there were additional procedural requirements, such as placing an advertisement in newspapers to facilitate public scrutiny of the outline brief for the EIA study, which had not been taken for this project. In this connection, the member queried whether the public had been given adequate opportunity to give views on the environmental impact. In response, DEP said that before the EIAO came into operation, the Administration had sought public views on the EIA mainly through consultations with relevant district boards and the ACE. The implementation of the EIAO on the other hand had enabled the public to gain wider access to the information on EIAs. He further informed members that all EIA briefs and EIA reports were now available for scrutiny by the public in a special Home Page on the Internet.

25. In reply to a member, DTD advised that as in the case of other new town development projects, a comprehensive traffic impact assessment study had been conducted in respect of the planned development projects in Tung Chung and Tai Ho. According to the study, the proposed project works would not cause undue disruption to the traffic of the Tung Chung new town. Regarding consultations with the Islands Provisional District Board, DTD confirmed that all along, the Territory Development Department had reported progress regularly to the Board.

26. Noting that the target population of the Tung Chung and Tai Ho new town would reach 320 000 by year 2011, a member asked whether the planned industrial and commercial developments would provide adequate employment opportunities to facilitate the development of a self-contained new town in North Lantau. In reply, DTD confirmed that comprehensive planning had been undertaken for the residential, industrial and commercial developments in the new town, as well as supporting community facilities and infrastructure. He agreed to provide information on the projected employment opportunities available by year 2011 upon full development of the new town.

Admin.

27. Members enquired about the strategy on land formation for housing development in North Lantau to accommodate the target population of 320 000. Mr CHAN Kam-lam pointed out that housing development along the northern coast of Lantau was constrained by the noise impact of the new airport at Chek Lap Kok, and that of the Airport Railway and trunk roads along North Lantau. In response, DTD advised that the various options for land formation in North Lantau would be examined in the relevant development feasibility study scheduled for completion in 1999. He acknowledged the constraints on reclamation in North Lantau as pointed out by Mr CHAN. On the other hand, there was limited flat land in North Lantau and given the topographical conditions of the area, land formation through slope-cutting and hill-levelling was likely to pose major technical difficulties and result in higher land production costs. The most likely strategy was to reclaim additional land along the north-eastern coastal area of Lantau Island where there was high development potential. Mr CHAN and Miss Cyd HO opined that reclamation should not be the sole option to obtain land in Lantau for development. They urged the Administration to further explore the development opportunities in the inland areas of the Lantau Island.

28. In reply to Mr CHAN Kam-lam's enquiry about the source of fill materials for the reclamation works, DTD advised that about 20% of the reclamation site would be filled by public dumping of inert construction waste and the remaining part would be filled by materials obtained from designated borrow areas. In reply to Mr CHAN's further enquiry, DTD advised that the Fill Management Committee under the Civil Engineering Department had designated a number of borrow areas in Hong Kong, including some marine borrow areas. On the impact of sand dredging at the seabed on the marine environment, in particular the impact on Chinese white dolphins, DTD confirmed that EIA studies had been conducted before designating borrow areas. He undertook to provide information on the source of filling material for this project before the Finance Committee meeting on 18 December 1998.

Admin.

29. Mr James TIEN observed that the consultant's fees and inflation allowance in the project estimates appeared to be inconsistent with the current downward trend in prices. Miss Cyd HO echoed Mr TIEN's concern and requested the Administration to review the methodology for deriving consultants cost estimates for public works projects. Mr Edward HO considered the estimated consultant's fees for this project unreasonably high, pointing out that the high consultant's fees had not even included the design part of the project. He enquired about the mechanism for determining the consultant's fees for contract management and employment of site staff.

30. In response, DTD advised that the estimated consultant's fees comprised two parts. The first part (consultant's fees for construction stage of $7 million) was the estimated remuneration for the contract management services provided by the consultant, and the second part (consultant's fees for site staff costs of $52 million) represented the costs for employing site staff for the day-to-day management of the works to be paid to the consultant on a reimbursement basis. The estimated site staff man-months were comparable to the level of Government's in-house resources required should the works be supervised by in-house staff. Mr Edward HO raised further queries on the respective weights accorded to the technical proposals and fees proposals in vetting tenders for engineering consultancies and the basis for determining the site staff establishment. In response, the Chairman advised that the policy issues relating to the engagement of engineering consultants for public works projects be followed up by the relevant Panel.

31. Addressing concerns about estimated consultant's fees and the inflation allowance, the Deputy Secretary for the Treasury (3) (DS/Tsy3) advised that the estimated consultant's fees were for budget purposes only; the actual costs of the consultancy would depend on the outturn tender price as a result of a an open and competitive tendering exercise. Having regard to the recent tender prices for public works consultancies, the Administration had initiated a review on the current methodology for computing estimated consultants' fees for public works projects. She added that the Administration was finalising the review and planned to submit a paper to this Subcommittee and the Finance Committee in due course to explain the proposed modifications.

32. As regards the provision of an inflation allowance to arrive at the money-of-the-day (MOD) project estimates, DS/Tsy3 recapitulated that in the calculation of the inflation allowance, the current prices were converted to MOD prices by multiplying the constant price estimates by price adjustment factors (PAFs). In the past, the Administration would review the PAFs once a year based on the forecasts of the Government Economist on trend labour and construction prices. In view of the relatively sharp fluctuation in construction prices this year, the PAF had been reviewed twice the latest review taking place in September/October 1998. The Administration considered that reviewing the PAFs twice a year was adequate.

33. Taking note of DS/Tsy3's explanation, Mr James TIEN and Miss Cyd HO requested the Administration to provide information on the outturn tender prices and the actual costs incurred on approved projects. DS/Tsy3 responded that the outturn tender prices, in most cases, did not represent the final project costs. She explained that as a project proceeded, a number of incidents such as contract claims might crop up affecting the final project costs. Hence, only upon the completion of a project and finalization of the accounts would it be possible to ascertain the final project costs. She however agreed to discuss the matter further with the Chairman and work out an effective way of providing relevant information on actual project costs to members.

Admin.

34. The Chairman put the item to vote. Eight members voted for the item, six members voted against, none abstained.

For:
Mr LEE Wing-tat	Mr Fred LI Wah-ming
Miss Margaret NG	Mr CHAN Kam-lam
Mr SIN Chung-kai	Mr SZETO Wah
Mr TAM Yiu-chung	Dr TANG Siu-tong
(8 members)

Against:
Mr Kenneth TING Woo-shou	Mr James TIEN Pei-chun
Miss Cyd HO Sau-lan	Mr Edward HO Sing-tin
Mr WONG Yung-kan	Miss Emily LAU Wai-hing
(6 members)

35. The item was endorsed by the Subcommittee.

36. In view of the diverse views of members on the item, some members suggested that this item be put to vote as a separate item from other public works proposals at the Finance Committee. The Chairman agreed to convey members' view to the Chairman of the Finance Committee. In this connection, the Chairman requested the Administration to provide the supplementary information requested by members well in advance of the Finance Committee meeting on 18 December 1998 to facilitate members' perusal. He added that if members had further queries on this item, they should contact the Clerk to the Finance Committee early to arrange for representatives of the Administration to attend the Finance Committee to answer members' further questions.

Revision in scope/approved estimate of projects in Category A

HEAD 709 - WATERWORKS

PWSC(98-99)47 62WC Water supply to West Kowloon reclamation - stage 1

37. Noting that the main reason for the proposed increase in approved project estimate was the increase in the quantity of works arising from changes in alignment and depth of watermains to suit unexpected site conditions, members sought elaboration on the difficulties encountered and whether such difficulties were attributable to inadequate preparatory work at previous project stages. In response, the Director of Water Supplies advised that most of the difficulties were associated with the connection of the watermains in the West Kowloon reclamation area to the existing watermains of neighbouring districts including Yau Ma Tei, Sham Shui Po and Lai Chi Kok. During construction, it was found that there was a substantial discrepancy between the estimated and the actual location and depth of the various existing underground installations in these old districts. Hence, modifications to the alignment and depth of the new watermains were required to provide the necessary interface with the existing watermains and to avoid conflicts with the existing underground installations.

38. As part of the mainlaying works and construction of pipe subways under this project had been entrusted to the Territory Development Department, DTD supplemented that at the investigation and design stages of this project, information on the existing underground installations had been sought from various utility operators and site investigations had been conducted at critical parts of the project site. The Secretary for Works (S for W) pointed out that notwithstanding the preparatory work undertaken by TDD, a certain degree of discrepancy between the estimated and the actual site conditions was inevitable. Generally speaking, the discrepancy was usually greater for projects carried out in old districts since the record on past installations kept by utility operators were mostly incomplete and sometimes inaccurate. For site investigations, it was impracticable and not cost-effective to conduct site investigations to cover the entire area of the project site as this would incur higher investigation costs. For the project in question, S for W considered that the necessary work to obtain information on site conditions had been properly carried out by the departments and consultants concerned.

39. In reply to a member on whether an informational database on underground installations was in place, S for W confirmed that a computerized system was maintained by Highways Department to collate such information. Under the existing permit system, utility operators were required to apply to the Department for a permit for all road excavation works and to submit information on the underground facilities to be installed.

40. The item was voted on and endorsed.

41. The Subcommittee was adjourned at 12:50pm.

Legislative Council Secretariat
17 December 1998