For discussion FCR(95-96)84
on 1 December 1995
ITEM FOR FINANCE COMMITTEE
CAPITAL WORKS RESERVE FUND
HEAD 703 - BUILDINGS
Government Offices - Intra-governmental services
Subhead 3002GA Purchase and fitting out of office accommodation for the Hong Kong Economic and Trade Offices in Tokyo, Geneva and New York
Members are invited to approve a change in scope of 3002GA for the purchase and fitting-out of new office accommodation for the Hong Kong Economic and Trade Office in Geneva.
We have not been able to identify suitable accommodation which could be purchased outright for the Hong Kong Economic and Trade Office (HKETO) in Geneva.
2. The Secretary for Trade and Industry proposes to amend the scope of 3002GA to allow the Government to enter into a design/build/transfer agreement with the developer of a site adjacent to the World Trade Organisation (WTO) in Geneva, to construct suitable accommodation on the basis of a fixed-price, lump-sum contract within the project estimate approved by Members on 16 December 1994.
3. The original scope of project 3002GA, if approved by Members, will involved the purchase and fitting out of general office accommodation for the HKETOs in Tokyo, and New York and Geneva. If Members approve this proposal, we will modify the scope of project 3002GA to provide for the acquisition in Geneva, through a design/build/transfer arrangement, of a two-storey, free standing building comprising general office and associated functional accommodation for the HKETO in Geneva, at. Nothwithstanding this change, we expect to stay within the original estimated cost of $240 million for the whole project. Within this, we expect the expenditure on the acquisition of office accommodation HKETO in Geneva to remain within the original estimate of $60 million.
4. For operational reasons, the HKETO in Geneva needs to be in reasonably close proximity to the inter-governmental organisations in Geneva, especially the WTO, and the missions of other governments. All key staff of the Geneva HKETO have to attend meetings at the WTO and liaise with other governments on a daily basis. Physical proximity is an essential part of operational efficiency.
5. The inter-governmental organisations in Geneva are clustered in the north western part of the city. Because of their number, variety and importance, the very large number of foreign missions servicing these organisations and Geneva town planning restrictions, office accommodation in the area is in very short supply. Despite an intensive search lasting over 12 months we have not been able to identify office premises which are suitable and available for purchase.
6. In view of this, we have had to explore other options. We have now identified a site close to the WTO which is being developed by a major Swiss construction firm, S.A. Conrad Zschokke. This is one of the very few as yet undeveloped sites in the zone near the inter-governmental organisations and foreign missions which the Geneva authorities will give permission to build on. Three plots are available on site, two of which have already been earmarked by the governments of Canada and the Republic of Korea for development under design/build/transfer arrangements. We have negotiated on a no-commitment basis with Messrs Zschokke for a similar arrangement. Construction would be in line with standards set by the Swiss Institution of Architects (which broadly parallel standards in Hong Kong) and would provide for a new HKETO (including internal fitting out, furniture and equipment) within the cost estimate of $60 million approved by Members in December 1994.
7. The project will provide a two-storey, free-standing building comprising 850m² net of general office and associated functional accommodation. Whilst this is some 80m² in excess of the HKETOs current vetted requirements, the additional provision will cater for modest future expansion. The Government Property Administrator will monitor the design, implementation and management of the construction project with the advice of the Director of Architectural Services and other government departments as appropriate.
8. Whilst we would normally purchase land outright, and obtain tenders for the construction of a government office, this is not possible in Geneva because the Canton of Geneva does not make land available for sale directly to foreign entities other than in exceptional circumstances (for example, where the foreign entity is an international organisation such as the United Nations). Nonetheless the cost of this project will not exceed the project estimate approved by Finance Committee as the arrangements to be finalised with the developer will be a fixed-price, lump-sum contract within this sum. Subject to the outcome of negotiations, the cost per square metre of the construction plus fitting-out is likely to be some 10-15% less than the comparable cost of purchase without fitting out. We expect the new office to be completed in early 1997.
9. In December 1994 Members approved the creation of Subhead 3002GA at an estimated total cost of $240 million at December 1994 prices, of which $60 million was approved in respect of the cost of acquiring office accommodation including internal fitting-out and provision of furniture and equipment in Geneva. Since we are working within this original estimate, there are no additional financial implications arising out of this proposed change to the project scope.
10. On 16 December 1994, after considering FCR(94-95)94, Members approved the creation of a new subhead for the purchase and fitting out of office accommodation for the HKETOs in Tokyo, Geneva and New York at an estimated cost of $240 million as follows -
Purchase of about 800 square metres of office accommodation||110||50||45
|Internal fitting-out, including building services||10||5||5
|Furniture and equipment, including telephone and computer system||5||5||5
11. We have until 31 December 1995 to conclude an agreement with the developer of the proposed site in Geneva. If we do not conclude an agreement by that time the developer may offer the site to other interested diplomatic missions. Because the recommendations of the next Public Works Subcommittee (PWSC) meeting will only reach Finance Committee on 5 January 1996, we submit the proposed change of scope of this project direct to this Finance Committee meeting. We have consulted Chairman of PWSC and he agrees with our approach.
12. We expect to conclude negotiations for purchase of office accommodation in New York and Tokyo early in 1996.
Trade and Industry Branch
Last Updated on 2 December 1998