For discussion
on 24 February 1999

PWSC(98-99)72

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 707 - NEW TOWNS AND URBAN AREA DEVELOPMENT
New Territories East Development 394CL -Sha Tin New Town - stage II : servicing and extension of Pai Tau Village in area 6A

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 394CL from $11.2 million by $24.5 million to $35.7 million in money-of-the-day prices.

PROBLEM

The approved project estimate of 394CL is insufficient for the works under the project.

PROPOSAL

2. The Director of Territory Development (DTD), with the support of the Secretary for Planning, Environment and Lands, proposes to increase the approved project estimate of 394CL from $11.2 million by $24.5 million to $35.7 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The scope of 394CL comprises formation and servicing of 1.7 hectares of land, including retaining walls, roads and drainage, for a village extension area at Pai Tau Village in Sha Tin.

JUSTIFICATION

4. Having reviewed the financial position of the project, DTD considers it necessary to increase the approved project estimate of 394CL from $11.2 million by $24.5 million to $35.7 million in MOD prices (see paragraph 7 below) in order to complete the works. The proposed increase in the approved project estimate is necessary -

1. to cover the cost of additional works including formation of an additional small house site to cater for an objection to the project lodged in 1991, extension of the emergency vehicle access (EVA), and construction of a vertical cantilever retaining wall (instead of a conventional retaining wall) to reduce the extent of land resumption¹ ; and
   
   
2. to provide for an increase in construction cost as a result of delay in the project from the original target commencement date of September 1992 to June 1999 due to difficulties encountered in land resumption and clearance.

5. A summary of the proposed increase in the approved project estimate is as follows -

	Factor	Amount ($ million)			%
(a)	Specification changes		10.1		52.9
	(i)additional formation and EVA extension	2.1
	(ii)cantilever retaining wall	8.0
(b)	Price variation		4.9		25.6
	(i)price increase since preparation of the last estimate	4.9
(c)	Others		4.1		21.5
	(i)contingencies	1.7
	(ii)consultants' fees	2.4
Sub-total			19.1	(at December 1997 prices)	100
(d)	Provision for price adjustment		5.4
Total			24.5	(in MOD prices)

6. A comparison of the cost breakdown of the approved project estimate (at March 1992 prices) and the revised project estimate (at December 1997 prices) is at the Enclosure.

FINANCIAL IMPLICATIONS

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


8. We have derived the MOD estimate on the basis of the Government's forecasts of trend labour and construction prices for the period 1999 to 2002. We will tender the proposed works under a standard remeasurement contract because the quantity of earth works may vary according to the actual ground conditions. The contract will not provide for price adjustment because the contract period will not exceed 21 months.

9. Under the current policy, small house grantees are required to pay premia in respect of small house grants. The premium reflects the full costs of resumption, clearance, and formation of the portion of land to be granted to eligible villagers, and the costs of providing internal access roads and drains within the village expansion area. We will recover about $21.7 million from the 41 grantees in this respect.

10. The proposed increase in the approved project estimate will not give rise to additional recurrent expenditure.

PUBLIC CONSULTATION

11. We consulted the Development and Housing Committee of Sha Tin District Board on the project on 7 April 1992. The Committee supported the project. We gazetted the road scheme of the project under Roads (Works, Use and Compensation) Ordinance in December 1992 and received one objection. The then Governor-in-Council overruled the objection and authorized the road scheme in December 1993 without modification.

12. Owing to the objection set out in paragraphs 16 and 17 below, we had to revise the village layout plan in consultation with the local villagers. The local villagers supported the revision to the village layout plan in early 1997.

ENVIRONMENTAL IMPLICATIONS

13. The Director of Environmental Protection completed an Environmental Review (ER) for the project in October 1997. The ER concluded that the project would not cause any long term adverse environmental impact and an environmental impact assessment was not necessary. Upon completion, the project will improve the environmental and living conditions in the area including both the extension area and the existing villages. We will control dust, noise and site run-off nuisances during construction in accordance with established standards and guidelines through the implementation of mitigation measures in the relevant works contract.

LAND ACQUISITION

14. We originally intended to resume five lots of building land and ten lots of agricultural land, covering some 0.84 hectares in total. Owing to the objection set out in paragraph 17 below, we have now reduced the resumption area to ten lots of agricultural land covering about 0.82 hectares. The land resumption will necessitate the removal of 79 households involving 208 people and 90 structures. The Director of Housing will rehouse eligible clearees in public housing in accordance with the existing policy. We will charge the costs of land acquisition and clearance, estimated at about $31.0 million, to Head 701 - Land Acquisition.

BACKGROUND INFORMATION

15. In June 1992, Finance Committee upgraded 394CL to Category A at an estimated cost of $11.2 million for the servicing and extension of Pai Tau Village in area 6A of Sha Tin. The extension area formed was intended to provide land for 40 small house sites, associated infrastructure and other amenities.

16. We originally planned to start the works in September 1992 for completion in September 1993. However, following the upgrading of the project to Category A, we encountered difficulties with land resumption.

17. In October 1991, an indigenous villager raised an objection to the project because his application for building a small house on his lot within the project site was rejected. Negotiation for withdrawal of this objection was difficult and time consuming. The villager eventually agreed to withdraw his objection in September 1993 after we had included an additional small house site in the project.

18. Between October 1993 and October 1996, we dealt with land resumption problems arising from five private building lots affected by slope works. These five lots were owned by indigenous villagers of Tai Po. Resuming these lots would have required us to offer small house sites to the owners of these lots. Villagers of Pai Tau and Sheung Wo Che strongly opposed to this because it would take away five of the 41 small house sites reserved for them. Because of difficulties in getting an agreement between the land owners (indigenous villagers of Tai Po) and the potential grantees (villagers of Pai Tau and Sheung Wo Che), we finally revised the village layout plan and adopted a more expensive form of retaining wall to avoid the resumption of the five lots.

19. We finalised the resumption boundary in March 1997 to enable District Lands Officer/Sha Tin to process the land clearance and resumption. In April 1998, the Director of Planning updated the original village layout plan and, following a further round of consultation, the revised village layout plan was adopted in October 1998. The Executive Council approved the new resumption boundary on 1 December 1998.

20. We plan to start the works in June 1999 for completion in October 2000.


Planning, Environment and Lands Bureau
February 1999


(PWSC0074/WIN3)

Enclosure to PWSC(98-99)72

A comparison of the approved project estimate at March 1992 prices and the revised project estimate at December 1997 prices is as follows -


2. As regards (a) (earthworks), (b) (roadworks), (c) (drainage and sewerage works) and (d) (street lighting, utilities and minor landscaping works) above, the total increase is $15.0 million with breakdown as follows:-

1. $4.9 million, about 56% of the cost for items (a), (b), (c) and (d) above in the approved project estimate at March 1992 prices, is due to the increase in construction costs. (As a reference, the Civil Engineering Works Index increased by 56% between March 1992, when we prepared the original estimate, and December 1997);
   
   
2. $8.0 million is for the construction of a vertical cantilever retaining wall instead of the originally proposed conventional retaining wall. The revised design is necessary to minimise land resumption; and
   
   
3. $2.1 million is for the formation of one additional small house site and construction of the extension of the EVA. We made provision for this additional small house site and the extended EVA when we revised the village layout plan.

3. As regards (e) (consultants' fees), the increase of $2.4 million is in line with the increase in the quantity of works and price adjustment.

4. As regards (f) (contingencies), the increase of $1.7 million is in line with the increase in the cost of works.


(PWSC0074/WIN3)


1. We originally intended to form the small house site platform by building a conventional retaining wall-cum-cut slope. This would have required the removal of buildings on five private lots above the proposed small house site. To avoid resuming these lots, we subsequently decided upon an engineering solution involving the construction of a bored pile wall from the site platform to the ground level of the existing buildings thereby allowing the buildings to remain intact.