For discussion FCR(96-97)54
on 19 July 1996

ITEM FOR FINANCE COMMITTEE

CAPITAL WORKS RESERVE FUND
HEAD 708 - CAPITAL SUBVENTIONS AND MAJOR SYSTEMS AND EQUIPMENT
Medical Subventions
Suhead 8012MD Kwong Wah Hospital - Low Block Extension

Members are invited to approve a revised scope of the project to expand the out-patient department of Kwong Wah Hospital and an increase in the approved commitment from $33.8 million by $17.36 million to $51.16 million in money-of-the-day prices.

---

PROBLEM
PROPOSAL

Project scope and nature

• Reprovisioning of the existing OPD
• Additional facilities included in the original scope of the project
• Facilities not included in the original project
JUSTIFICATION
FINANCIAL IMPLICATIONS
ENVIRONMENTAL IMPLICATIONS
BACKGROUND INFORMATION
Details of Consultant's Fees
Comparison of the Approved and Updated Project Estimates

---

PROBLEM

The approved project of constructing an extension block next to the out-patient department (OPD) of Kwong Wah Hospital (KWH) is not the best option in terms of departmental planning and space utilisation. The approved commitment of $33.8 million is also insufficient to meet the estimated expenditure mainly due to changes in price level.

PROPOSAL

2. The Secretary for Health and Welfare proposes to revise the scope of the original project by constructing a new block at an alternative site in KWH for reprovisioning and expanding the OPD and to increase the approved commitment from $33.8 million (at third quarter 1992 prices) by $17.36 million to $51.16 million in money-of-the-day (MOD) prices.

Project scope and nature

3. The revised project will involve the redevelopment of an existing two-storey building in KWH, which accommodates a mortuary and instrument stores and offices, into a new five-storey out-patient block, and the renovation of the second floor of the New Wing for an expansion of the occupational therapy and prosthetic-orthotic units. A site plan is at Enclosure 1.

4. The new block with a gross floor area of 5 370 m² will accommodate the following facilities of the OPD -

Reprovisioning of the existing OPD

(a) 17 consultation rooms;

Additional facilities included in the original scope of the project

(b) 19 additional consultation rooms;

(c) two assessment rooms for paediatric patients;

(d) clinic administration offices;

(e) an out-patient dispensary;

(f) a physiotherapy out-patient department;

(g) two minor operating theatres;

Facilities not included in the original project

(h) medical record offices;

(i) four patients instruction rooms; and

(j) one eye laser room and one fine needle aspiration room.

JUSTIFICATION

5. Members approved in July 1993 a commitment of $33.8 million for the construction of an extension block next to the OPD of KWH to accommodate new and additional facilities for the OPD listed in paragraph 4 (b) to (g) above [FCR(93-94)49]. While Hospital Authority (HA) and KWH proceeded with

preparations for the project, Members approved in July 1994 a major refurbishment programme for the main building of KWH [FCR(94-95)48]. After a detailed technical assessment, the Director of Architectural Services advised that it was undesirable to proceed with both projects at the same time within a confined location - the site constraint would make it impossible to provide a work site for the contractors and the OPD project would result in blockage of the access of construction vehicles to the main building. The hospital has since considered other development options for the OPD expansion.

6. With the decantation of the mortuary and instrument stores and offices from a two-storey building, which was built some 30 years ago, to other premises in KWH in January 1996, it became possible for the hospital to demolish the building and use the site for construction of a new five-storey block for reprovisioning and expanding the OPD. This option will overcome the site constraint problem mentioned in paragraph 5 and offer flexibility for better planning and space utilisation It also has the advantage of integrating the majority of the out-patient services under one roof with improved environment, better access and convenience for patients.

7. Due to the lead time taken to identify a new site and for KWH to decant facilities in the two-storey building, there is a need to increase the approved commitment from $33.8 million (at the third quarter 1992 prices) by $17.36 million to $51.16 million in MOD prices to allow for price increase as reflected by Tender Price Index (TPI) adjustment.

FINANCIAL IMPLICATIONS

8. A comparison of the approved and revised project estimates by component is as follows -

A breakdown of the estimates for professional fees for the revised project is at Enclosure 2.

9. The difference of $24.07 million (i.e. $96.9 million - $72.83 million) in total project costs between columns (I) and (II) above is mainly due to changes in price level as detailed in Enclosure 3. The difference of $4.46 million (i.e. $96.9 million - $92.44 million) between columns (II) and (III) above is derived from better planning and space utilisation made possible by the availability of an alternative site.

10. A revised estimate of the cashflow for the project is as follows -

11. We derive the MOD estimate on the basis of the Government's forecasts of trend labour and construction prices over the period between 1996 and 2000. We shall tender the piling and superstructure works under two fixed-price lump-sum contracts as we can define clearly the scope of the works in advance, leaving little room for uncertainty.

12. The Tung Wah Group of Hospitals (TWGHs) have undertaken to contribute 50% of the total project cost for the construction of the ground to third floors of the new out-patient block and the renovation of the second floor of the New Wing, and to meet the full cost of constructing the fourth floor and fitting out the physiotherapy out-patient department and the two new minor operating theatres. The proposed financial commitments of the Government (HKG) and the TWGHs are -

13. This project does not require land acquisition and clearance. Subject to Members' approval, HA plans to start work in September 1996 for completion in November 1998.

14. The proposal will not give rise to any further additional recurrent expenditure.

ENVIRONMENTAL IMPLICATIONS

15. In July 1996, the Director of Environmental Protection completed an Environmental Review (ER) of this project and concluded that, given the nature, size and location of this project, the operation of the project would have limited potential for adverse impacts on the environment. An Environmental Impact Assessment would not be necessary. HA will implement arrangements for the management, storage, transport and disposal of chemical and clinical wastes as recommended in the ER. HA will equip the new building with central air-conditioning, which will improve the internal noise environment of the new building. For the demolition work, HA will conduct a survey to assess the likely disturbance of asbestos-containing materials (ACM) and remove / dispose of any ACM prior to commencement of any demolition works in strict accordance with the relevant codes of practice and guidelines. For short term impacts during construction, HA will control noise, dust and site run-off nuisances to within established standards and guidelines through the implementation of appropriate mitigation measures in relevant contracts.

BACKGROUND INFORMATION

16. Members approved on 8 July 1994 a refurbishment project 8016MM "KWH - Refurbishment and Improvement" for the implementation of a comprehensive programme to bring building services and facilities of the main building of KWH up to current standards and to improve the quality of service. The work has started in February 1995 and is due to complete by June 1997.

Health and Welfare Branch
July 1996

---

Enclosure 1 to FCR(96-97)54

A location plan of the Kwong Wah Hospital is not attached

---

Enclosure 2 to FCR(96-97)54

Details of Consultant's Fees

Breakdown of estimates for consultant's fees

Notes

1. We apply a multiplier of 3 to the average Master Pay Scale (MPS) point to arrive at the full costs including the consultant's overheads and profit, as the consultant will employ staff in his office. (At 1 April 1995, MPS points 40 and 16 are equivalent to $51,440 and $17,270 per month respectively.)

2. We base the figures given above on estimates prepared by Hospital Authority. We will only know the actual man-months and fees after selecting the consultant through the usual competitive lump-sum fee bid system.

3. The estimated consultant's fees represent 10.6% of the total construction estimate, and cover service for quantity surveying, architectural, structural engineering and building services disciplines.

---

Enclosure 3 to FCR(96-97)54

Comparison of the Approved and Updated Project Estimates

A comparison of the approved project estimate at the third quarter of 1992 (Q3 1992) prices and the updated project estimate at December 1995 prices is as follows -

2. As regards items (a) to (d) (Building, Building services, External works and Contingencies), the total increase of $20.769 million is due to inflation in respect of building and building works between the third quarter of 1992, which price level we used to prepare the original cost estimate, and December 1995. During the same period, the Tender Price Index (TPI) for building works increased by 43.93% (from 519 at Q3 1992 to 747 at Q4 1995) and the TPI for building services works by 17.43% (from 109 at Q3 1992 to 128 at Q4 1995).

3. As regards item (e) (Professional fees), the increase of $2.638 million is a consequence of the increase in construction cost.

4. As regards item (f) (Furniture and equipment), the increase of $0.657 million is due to Consumer Price Index (A) adjustment which increased by 28.93% (from 126.5 at Q3 1992 to 163.1 at December 1995).

---