CB(1)1012/98-99(03)

For Discussion

Legislative Council Panel on Economic Services

Follow-up on the Recommendations of
the Three Inquiry Reports on the New Airport

Introduction

The House Committee of the Legislative Council decided on 26 February 1999 that the relevant Panels would follow up with the Administration on the recommendations of the three inquiry reports on the new airport. The Panel on Economic Services would like to discuss those recommendations that are under the purview of the Economic Services Bureau (ESB) at its meeting on 22 March 1999.

Follow-up actions taken

2. A progress report on the follow-up actions taken by the Administration and the Airport Authority (AA) since the Motion Debate on 3 February 1999 is being sent to the Legislative Council Secretariat for transmission to Members for information. A copy of the progress report is attached at the Appendix.

3. Representatives of ESB, Civil Aviation Department and AA will answer Members' questions on matters falling under their respective purview at the meeting of the Panel on 22 March 1999.

Economic Services Bureau
March 1999

Appendix

Introduction

At the meeting of the Legislative Council on 3 February 1999, the following motion was carried-

"That this Council endorses the Report of the Select Committee to inquire into the circumstances leading to the problems surrounding the commencement of the operation of the new Hong Kong International Airport at Chek Lap Kok since 6 July 1998 and related issues."

2. This progress report sets out the follow-up actions taken by the Administration and the Airport Authority since the Motion Debate on 3 February 1999.

Follow-up Actions by the Administration

3. The Administration shares the hope of the Select Committee that Hong Kong would benefit from the lessons that can be learned. With this objective in mind, the Administration has studied carefully the Select Committee's Report as well as Reports of the Commission of Inquiry and the Ombudsman and taken various follow-up actions.

Guidelines for the Development of Major Infrastructure Projects

4. We are finalising a set of guidelines for the development of major infrastructure projects based on the recommendations and observations in the three reports as well as experience gained from the Airport Core Programme. Once finalized, the guidelines will be circulated by the Works Bureau to all relevant Bureaux and Departments. It is expected that the guidelines would be circulated in April 1999.

5. The guidelines, by their very nature, are of general applicability and are meant to be taken with common sense and flexibility to suit the circumstances of individual projects. They are intended to cover all stages of a project from the selection of delivery agent to operations. In addition, they contain special features such as project auditing, risk assessment and contingency planning. Given the diverse nature and scale of different projects, it would not be appropriate to require every one of them to follow all the details in the guidelines. Due consideration should be given to factors such as the complexity of the project, the number of parties involved and the number of interfaces. A brief description of the key elements in the draft guidelines is at Annex.

Appointments to Governing Bodies of Executive Authorities

6. On appointments and reappointments to governing bodies of executive authorities, the Administration will assess carefully the suitability of prospective appointees, taking into account factors such as their personal abilities, expertise, experience, integrity and commitment to public service. The Administration will also monitor the performance of appointees, including their attendance records, to facilitate consideration of their suitability for reappointment. Bureaux and Departments will be reminded of the need to assess carefully the suitability of prospective appointees and to evaluate their performance and commitment during their tenure for considering reappointment.

7. The same approach will be taken in considering appointments and reappointments to the Board of the Airport Authority, the Members of which are appointed by the Chief Executive.

Personal Responsibility of Individual Civil Servants

8. The Chief Executive has studied the comments in the three reports on the question of the personal responsibility of individual civil servants involved in the issue, having regard to the Government's established procedures to deal with misconduct, negligence or dereliction of duty. After careful consideration, the Chief Executive has concluded that there is no prima facie evidence to support disciplinary action on any of the officers concerned since there is clearly no question of misconduct. There are allegations of negligence or dereliction of duties. The Chief Executive is satisfied that the officers concerned have all acted in good faith and performed their duties with due diligence.

Delineation of power and responsibility
between Government and the Airport Authority

9. The Administration has addressed the question about the delineation of power and responsibility between Government and the Airport Authority (AA) over the development and operation of the airport. The AA is a statutory body set up under the Airport Authority Ordinance to provide, operate, develop and maintain the airport and conduct its business according to prudent commercial principles. On such matters which are within its responsibility, it should function independently, free from Government intervention.

10. Government Members on the AA Board will continue to work with the non-Government Members as a team in bringing about improvements to airport operations. On technical, operational and management matters of the airport that should be handled by the AA, Government Policy Bureaux and Departments are also ready to support and assist the AA in areas under their respective purview. On those matters over which the Government has responsibility (such as the policy aspects of civil aviation, air traffic control and the issue of the aerodrome licence), Government will continue to deal with them.

Aircraft Noise

11. The Civil Aviation Department (CAD) has been monitoring the noise levels at various districts. The measurements have confirmed that these districts are outside the noise exposure forecast (NEF) 25 contour and therefore the noise impact is within the acceptable standard. The only exception is Sha Lo Wan but the residents concerned have been offered noise mitigating measures.

12. The second runway is expected to be available for full operational use in August 1999. Drawing from the lessons learned at the opening of the new airport, CAD has been conducting briefings to the Provisional District Boards of the affected areas such as Shatin, Tsuen Wan, Kwai Tsing and Tuen Mun starting from March 1999 to discuss with them the possibility of noise generated by aircraft using the second runway.

Follow-up Action by the Airport Authority

13. The AA fully agrees that it has to strengthen the working relationship with its franchisees and in particular, Hong Kong Air Cargo Terminals Ltd. The AA has commenced discussions with the two cargo terminal operators with a view to introducing a process that goes beyond normal commercial contracts monitoring. The enhanced monitoring scheme aims to help the AA to oversee the safe and efficient handling of air cargo by being kept notified of problems in advance and monitoring the resolution of these problems. Making use of the Airport Facilitation Committee that is already in place, the AA is also strengthening its liaison and coordination mechanism with its other operational partners.

14. Under the leadership of its Operations and Management Consultant, Mr Richard Siegel (former Director of Civil Aviation), the AA has already started a comprehensive review of its crisis management plans, including contingency arrangements. The review is scheduled for completion by the end of June.

15. The AA is committed to improving the service standards at the airport. It is also conscious of the need for stringent budgetary controls in the present economic climate. To ensure that the AA will run as a highly efficient organisation, it is considering, with the help of a consultant, further streamlining of the management structure in the light of actual operating experience. The AA expects to reach a firm decision by June this year. Meanwhile, the AA has strengthened its IT support and resources to help to resolve the Y2K issue.

16. On the basis of advice from independent legal experts, the AA has terminated with immediate effect the contract of Mr Kiron Chatterjee, its former Head of Information Technology and has not renewed the contract of Mr Chern Heed, its former Airport Management Director. It has also notified Mr K C Tsui, Project Manager, Electrical and Mechanical Works, of the remarks made by the Select Committee and that his performance will be closely observed.

Update on the Operations of the New Airport

17. The new airport has been operating at high service standards in the past few months and has received many favourable comments from passengers. 90% of the passengers can complete their immigration check-in within 15 minutes and collect their luggage within 10 minutes upon arrival of their aircraft. Over the Lunar New Year Holidays, a record number of passengers passed through the airport. The highest daily numbers handled are 117,000 passengers and 96,000 bags. Throughout this period, the services remained at high standards. This has demonstrated the ability of the new airport to operate smoothly even under heavy traffic pressure.

18. There are certain areas where further works and improvements still need to be carried out and closely monitored, e.g. the flight information display system. The AA is conscious of such needs and follow-up action is being taken.


Economic Services Bureau
March 1999

Annex

• Selecting the Most Appropriate Institutional Entity of Delivery
  
  - The choices of selecting a government department, a statutory body, a private enterprise or other form of agreement to undertake a large-scale project should be compared and evaluated at the outset.
  
  
• Clear Demarcation of Responsibility and Authority
  
  - The responsibility and authority between Government and the selected works agent should be clearly demarcated and promulgated. There should also be clear and precise control procedures for tracking the works progress of the project.
  
  
• Good Governance as a General Requirement
  
  - Proper governance by the Board of a statutory works agent is of paramount importance. The chairman and members of the Board should be knowledgeable about the main functional areas of project or have ready access to expert advice independent of the project management team.
  
  
• A Unifying Project Management Approach
  
  - For large-scale and complex projects, a central point of monitoring and control in the form of a project management office should be set up within the government or the statutory body, as justified by circumstances. The office shall have sufficient authority over programme, scope, schedule and budgets. In addition, there should be a high-level Steering Committee overseeing progress of the project and keeping in touch with the Board of the works agent, although it is important that the role of the Steering Committee is clearly defined and that statutory bodies and/or works agents appreciate that responsibility for the implementation of the work rests with them.
  
  
• Check and Balance
  
  - This project management office, independent of the works agent, working direct to the Steering Committee should operate as check and balance by way of exercising overall programme management and control. This section also provides guidelines on contracting out certain functions and the need to involve the ultimate operator of the facilities early. It also emphasises the need for verification of the readiness of the project including training and testing, where appropriate by an independent experts audit.
  
  
• Transparency and Coordination
  
  - Throughout the project management phase, all information relating to the project such as reports and information notes should be fully exchangeable amongst all relevant parties to facilitate effective monitoring of progress.
  
  
• Programme Management
  
  - The works agent must provide the project management office with a comprehensive master programme, targets and critical milestones incorporated into a baseline implementation plan which is updated and statused on a regular basis for control and monitoring purpose. Critical items should also be identified and reported on with follow up actions.
  
  
• Managing the Transition from Construction to Operation
  
  - An executive agent should be assigned to coordinate all transitional activities for the project such as testing, commissioning, training and trials on a comprehensive basis.
  
  
• An International Perspective
  
  - Consideration should be given to the employment of international experts if local resources are not available.
  
  
• Use of an Auditor
  
  - A separate auditor can be drawn from within the organization or from outside to carry out additional independent auditing of the project.
  
  
• Risk Assessment and Contingency Plan
  
  - At the final stage of the project, an overall risk assessment together with comprehensive contingency plans should be prepared to deal with risk areas and unexpected situations.
  
  
• Community Support
  
  - Lastly, it is important to seek and maintain the support of the community for the project by promotional activities.