For discussion FCR(95-96)115
on 2 February 1996


8AG - New Airport Works Project Management Phase IV

Members are invited to approve the upgrading of 8AG to Category A of the Public Works Programme at an estimated cost of $298 million in money of the day (MOD) prices to allow the Government to continue into the fourth phase (Phase IV) of the overall project management consultancy for the Airport Core Programme.


The existing agreement for Phase III of the project management consultancy for the Airport Core Programme (ACP) will expire on 31 January 1996. Unless a new agreement is put in place with effect from 1 February 1996, the Administration will no longer have access to the professional services it requires beyond that date to facilitate completion of all ACP projects on time and within budget, and to monitor the drawing up and implementation of the Airport Operational Readiness (AOR) programme.


2. The Director of the New Airport Projects Co-ordination Office (D, NAPCO), with the support of the Secretary for Works, proposes to upgrade 8AG to Category A at an estimated cost of $298 million in MOD. This is a resubmission to Finance Committee.


3. The justification for the present proposal is set out in FCR(95-96)112, which was considered by Members at the Finance Committee meeting on 19 January 1996. A copy of the paper is at Enclosure 1. At that meeting, Members raised a number of questions on the proposal. We undertook to provide additional information to address Members’ points when we resubmitted this item for Members’ consideration. The information is now set out in the following paragraphs.

Rationale for Appointing Consultants

4. The need to employ consultants arises from the fact that the ACP is one of the largest package of infrastructure projects in the world and calls on expertise on the management and coordination of large-scale infrastructure projects which is not readily available in Hong Kong. In addition, as part of the multi-disciplinary integrated team at New Airport Projects Co-ordination Office (NAPCO), the consultants provide additional manpower to cater for duties (outlined in paragraph 4 of PWSC(95-96)76 of Enclosure 1) which will lapse after the completion of the ACP projects. It is therefore more cost-effective if the Government employs consultants for a certain period of time instead of creating additional civil service posts which will lead to redundancies after the completion of the ACP. Re-deployment of Government staff to NAPCO to take over the duties of the consultants would mean generating vacancies in other Government departments which would need to be filled. Moreover, Government staff with the necessary expertise are not available in sufficient numbers.

Technology Transfer

5. In addition to the monitoring of ACP projects, the engagement of consultants provides an opportunity for Government staff who do not possess the experience of managing large scale infrastructure projects to acquire the necessary skills and knowledge from the consultants. In this context, the transfer of technology has been included as one of the duties of the consultants. However, it must be emphasized that the consultants’ key job is to provide expert services for the management of the ACP which are not readily available in Hong Kong and to provide additional manpower to cater for workload which is temporary in nature. Technology transfer is only one of the considerations in the appointment of the consultants.

6. By working as an integrated team in NAPCO, Government staff have been given the opportunity to be exposed to new concepts and ideas brought in by the consultants. When Government staff who have previously worked in NAPCO are transferred to other Government departments, they take with them new knowledge acquired from the consultants, leading to the continuation and extension of the transfer in other Government departments. So far, 12 senior professionals, including the current Director of Territory Development and the new Director of Civil Engineering, who worked previously in NAPCO have been posted to other Government departments. Another 26 professionals in NAPCO will also be re-deployed to other Government departments on completion of the ACP projects.

7. Specific examples of the transfer of technology from the consultants to Government staff in the past three phases of the consultancy can be summarised as follows -

  1. Claims and Disputes Resolution

    NAPCO has, through the consultants, structured, implemented and managed ACP claims and dispute resolution activities. To exercise better control of the programme and cost of the ACP projects, the consultants have proposed changes to Government’s existing practice of handling claims by taking a proactive approach. The consultants have assisted NAPCO to develop new procedures for handling claims and computer software to handle the large amount of information on ACP claims. NAPCO has also organised training programmes and seminars on these new procedures for works agents and their staff. In addition, similar training courses on mediation in disputes and extra-contractual negotiations have been organised to further bolster the expertise of local mediators. These new procedures and computer software programmes developed for the ACP will assist the Government in managing other infrastructure projects.

  2. Project Management

    The advanced ACP project management procedures and practices developed by the consultants for the ACP projects have also been adopted by other Government departments, notably the Works Branch and applied to non-ACP projects. This is in accordance with Government’s standard practice of taking ownership of the information and data generated by consultants during the course of their work.

  3. ACP Information Management System

    With the assistance of the consultants, NAPCO has developed an in-house ACP Information Management System (AIMS), which is a suite of database applications for managing information related to the ACP projects, such as contract and consultancy information, cost estimates, commitments and expenditure for ACP projects, claims and construction safety statistics. The system, residing on a computer network, facilitates the dissemination of information to the parties concerned. Analyses and reports are produced to report the status and situation of the ACP, to identify potential problem areas and conflicts, and to provide necessary information support for policy decision and resolution. The Works Branch has already adopted, after some modification, the construction safety module of AIMS for reporting construction safety statistics for other public works contracts and is looking into other areas where components of AIMS could be applied to other non-ACP Government works.

8. In addition to Government staff in NAPCO, more than 300 professionals from other Government departments have been adopting ACP procedures and practices in their projects, deriving benefits from technology transferred from the consultants (Enclosure 2). Works Branch is also in the process of applying new ACP procedures and practices to all other Government works projects, with a view to spreading the transferred technology within Government.

9. The ACP projects are far from full completion, in particular the intensive works on the airport island. We are also entering a new phase of activities as the various agencies involved draw up and prepare to implement the AOR programme. We, therefore, still need the consultants to continue their work on the ACP projects and the technology transfer process.

Staff Cost

10. The pay packages for the consultants’ technical and supporting staff are comparable to those of their counterparts in Government. It is, however, difficult to make a direct comparison between the total pay packages of the consultants’ key staff and senior professionals, and those of Government staff, because there are no direct equivalents. The key staff and senior professionals all had to be brought in from overseas because the expertise that they possess was not readily available in Hong Kong. Such expertise commands a premium in the international market. Based on the performance of the consultants so far, we are of the view that they represent good value for money.


11. The Government requires the services of the consultants to facilitate completion of all ACP projects on time and within budget and to monitor the drawing up and implementation of the AOR programme. The Government has considered the possibility of deploying government staff to replace consultants but has come to the conclusion that it is not viable. The positions currently filled by the consultants are temporary in nature and have been created to cater for the additional workload generated by the ACP projects. These positions will lapse as the ACP projects are completed. Redundancies would, therefore, occur if we were to fill these positions by Government staff. We would also lose the experience and expertise of the consultants in project management at this critical phase of the ACP.

12. The consultants work with Government staff in NAPCO as an integrated team in performing its project management functions in respect of the ACP. These functions include -

  1. regular review of scope, progress, and cost of the ACP projects and advice on ways of resolving any problems identified;
  2. establishment, updating and review of a series of administrative and project control procedures for managing and monitoring the programme and cost of projects;
  3. production of updated forecasts of contract final sums and setting out the current status of contract and project contingencies together with potential future liabilities on these items;
  4. manage interface issues and claims and dispute resolution procedures; and
  5. develop, coordinate and manage AOR programmes for Government departments and monitor the implementation of the Airport Authority’s overall AOR Master Programme.

NAPCO will not be able to perform these functions effectively if sufficient resources and expertise are not made available.


13. We therefore recommend that approval be given by Finance Committee to upgrade 8AG to Category A of the Public Works Programme at an estimated cost of $298 million in money of the day prices to allow the Government to continue into Phase IV of the overall project management consultancy for the ACP covering the period from 1 February 1996 to 31 July 1998 to tie in with the targeted April and June 1998 opening dates for the Airport and Airport Railway.


14. On the recommendation of the Public Works Subcommittee, we submitted the original item FCR(95-96)112 to Finance Committee on 19 January 1996. The Committee voted on the proposal with 14 Members for, 23 against, and one abstained.

New Airport Projects Co-ordination Office
Government Secretariat
January 1996

Enclosure 2 to FCR(95-96)115

Government Works Departments Involved in ACP Works and Adopting ACP Procedures and Practices

Number of professionals
Department in office on site Total

Architectural Services Department




Civil Engineering Department




Drainage Services Department




Environmental Protection Department




Highways Department




Territory Development Department




Water Supplies Department







Last Updated on 2 December 1998