PLC Paper No. PWSC 79

(These minutes have been
seen by the Administration)

Ref : CB1/F/2/2

Public Works Subcommittee of the Finance Committee
Provisional Legislative Council

Minutes of the eleventh meeting
held at the Legislative Council Chamber
on Tuesday, 17 February 1998, at 9:30 am


Members present :

Hon HO Sai-chu, JP (Chairman)
Dr Hon Raymond HO Chung-tai, JP (Deputy Chairman)
Hon WONG Siu-yee
Hon Edward HO Sing-tin, JP
Hon Mrs Elsie TU, GBM
Hon Henry WU
Dr Hon LEONG Che-hung, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon CHAN Yuen-han
Hon CHAN Kam-lam
Hon Frederick FUNG Kin-kee
Hon Howard YOUNG, JP
Hon Mrs Miriam LAU Kin-yee, JP
Dr Hon TANG Siu-tong, JP
Hon KAN Fook-yee
Hon NGAN Kam-chuen
Dr Hon LAW Cheung-kwok

Members absent :

Prof Hon NG Ching-fai
Hon Eric LI Ka-cheung, JP
Hon Allen LEE, JP
Hon CHEUNG Hon-chung
Dr Hon Mrs TSO WONG Man-yin
Hon MOK Ying-fan
Hon CHENG Kai-nam
Hon LAU Wong-fat, JP
Hon Timothy FOK Tsun-ting
Hon TAM Yiu-chung, JP

Public officers attending :

Miss Emma LAU
Deputy Secretary for the Treasury (3)

Mr Bowen LEUNG, JP
Secretary for Planning, Environment and Lands

Mrs Stella HUNG, JP
Deputy Secretary for Works

Mr Rob LAW, JP
Director of Environmental Protection

Mr James HERD
Principal Assistant Secretary for the Treasury (Works)

Mr S S LEE, JP
Director of Territory Development

Mr S H PAU, JP
Director of Architectural Services

Mrs Margaret CHAN
Principal Assistant Secretary for Education and Manpower (9)

Mr M Y CHENG
Assistant Director of Education (Allocation & Support)

Miss Annie TANG
Director-General of Industry

Miss Anges WONG
Assistant Director-General of Industry

Mr Bobby CHENG
Principal Assistant Secretary for Trade and Industry (B)

Ms K Y CHANG
Deputy Secretary for Security (2)

Mr Albert LAI, JP
Government Property Administrator

Mr K S LEUNG, JP
Director of Highways

Mr Johnny CHAN
Principal Assistant Secretary for Transport (5)

Mr S K LO
Chief Engineer/Port & Airport Development, Transport Department

Ms Carolina YIP
Principal Transport Officer/Urban

Mr H P LIU
General Manager/Planning, Marine Department

Mr M S HU, JP
Director of Water Supplies

Mr Nigel FRENCH, JP
Secretary-General, University Grants Committee

Ms Michelle LI
Principal Assistant Secretary for Education and Manpower (1)

Dr FUNG Hong
Deputy Director (Hospital Planning & Development), Hospital Authority

Ms Jennifer CHAN
Principal Assistant Secretary for Health and Welfare (M2)

Mr W T YEUNG
Chief Engineer/Consultants Management, Drainage Services Department

Clerk in attendance:

Mr Andy LAU
Senior Assistant Secretary (1)6

Staff in attendance:

Ms Pauline NG
Assistant Secretary General 1

Mrs Vivian KAM
Chief Assistant Secretary (1)5
PUBLIC WORKS PROGRAMME

Upgrading of projects to Category A

HEAD 702 - PORT AND AIRPORT DEVELOPMENT


PWSC(97-98)132321CL Reclamation and servicing of Tuen Mun area 38 for special industries

A member enquired the reasons for including an inflation allowance of $571.7 million and the need for using money-of-the-day (MOD) estimates for capital works projects. The Deputy Secretary for the Treasury (DS/Tsy) advised that the use of MOD prices for project estimates was to overcome the problem of constant-price approved project estimates which was based on the prevailing costs of construction at a given date and took no account of inflation over the contract period of the project. In the present proposal, the project cost was worked out in MOD prices, having regard to an inflation allowance of $571.7 million. She added that the actual tender prices would be the results of a competitive bidding process and the inclusion of an inflation allowance in the project estimate would not encourage tenderers to inflate their prices.

2. Regarding the estimates for consultants' fees, the Director of Territory Development (DTD) clarified that a major part of the provision would be used to cover the costs of resident site staff employed by the consultants. A small portion would be for remunerating the consultants for supervising the staff concerned. The consultants' fees at the construction stage was estimated to be $18 million. As regards the schedule for the project under consideration, DTD said that the Administration planned to start the proposed works in July 1998 for completion in June 2001, although expenditure for the project would span over a period of five years.

3. A member pointed out that in view of the limited information provided in the Public Works Subcommittee (PWSC) papers, it would be difficult, if not impossible, for members to judge whether or not the proposed estimates were reasonable. He suggested that the Administration should give an assurance in future PWSC papers that the estimates were reasonable. DS/Tsy explained that when drafting PWSC papers, the Administration would try to set out as clearly as possible the key elements which the Administration had regard to in preparing the estimates. DTD supplemented that the Administration would prepare a detailed design for each project and use this information to arrive at an estimated cost for the project. Should there be a need to change the scope of the project or to revise the project estimates after the funding approval of the Finance Committee, separate proposals with full justifications would be put forward for members' consideration.

4. Members generally considered it important for public work projects to be closely monitored. In view of concerns raised on how project estimates were arrived at and the related monitoring mechanism, members agreed to discuss the subject further at the Panel on Planning, Lands and Works. Meanwhile, a member requested the Administration to provide additional information on the forecast and actual expenditures in respect of projects completed over the past few years. DS/Tsy took note of the member's request, adding that such information was also available in the Annual Estimates of Expenditure. Admin


5. The item was voted on and endorsed.