For discussion PWSC(97-98)8
on 23 April 1997

ITEM FOR PUBLIC WORKS SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 706 - HIGHWAYS
Transport - Roads
551TH - Smithfield extension and associated roadworks

Members are invited to recommend to Finance Committee an increase in the approved project estimate of 551TH from $363 million by $122.06 million to $485.06 million in money-of-the-day prices.

---

PROBLEM
PROPOSAL
PROJECT SCOPE AND NATURE
JUSTIFICATION
FINANCIAL IMPLICATIONS
PUBLIC CONSULTATION
ENVIRONMENTAL IMPLICATIONS
LAND ACQUISITION
BACKGROUND INFORMATION
551TH - Smithfield extension and associated roadworks

---

PROBLEM

The approved project estimate of 551TH is insufficient for the works under the project.

PROPOSAL

2. The Director of Highways (DHy), with the support of the Secretary for Transport, proposes to increase the approved project estimate of 551TH from $363 million by $122.06 million to $485.06 million in money-of-the-day (MOD) prices.

PROJECT SCOPE AND NATURE

3. The scope of the project comprises -

1. construction of a new link road between Smithfield and Pokfulam Road including an underpass extending under Pokfulam Road and the Pokfulam Road Playground, associated elevated structures, retaining walls, and slope works;
2. construction of an elevated road to improve the connection between Mount Davis Road and Pokfulam Road;
3. construction of pedestrian subway across Pokfulam Road and Mount Davis Road;
4. provision of noise mitigation measures; and
5. reprovisioning of the Pokfulam Road Playground at the same location after the construction of the underpass.

JUSTIFICATION

4. Following a review of the financial position of the project, DHy considers it necessary to increase the approved project estimate of 551TH from $363 million by $122.06 million to $485.06 million in MOD prices (see paragraph 8 below) in order to complete the works.

5. There are twothree main reasons for the increase. First,SecondlyThirdly,The third we have to carry out reason is the additional foundation works on account of due to the the actual bedrock level which is, on average, 6.5 metres deeper than that assumed in our original design. The second first reason is the Firstly, The first reason is the actual tender prices arebeing higher than the estimate. SThe secondly, reason is there is increase in in payments made under the current two contracts for the works due to price variations¹ ,fluctuations as the original project estimate approved by the Finance Committee was at since December 1993 prices, not in MOD prices. There are also corresponding increases in consultants’ fees and site staff costs.

FINANCIAL IMPLICATIONS

6. A summary of the proposed increase in the project estimate is as follows -

7. A comparison of the cost breakdowns of the approved project estimate (at December 1993 prices) and the revised project estimate (at December 1996 prices) is at the Enclosure.

8. Subject to approval, we will phase the expenditure as follows -

9. We have derived the MOD estimate on the basis of the Government's forecast of trend labour and construction prices for the period 1997 to 2000.

10. The proposed increase in the approved project estimate will not give rise to additional recurrent expenditure.

PUBLIC CONSULTATION

11. As there is no change in the approved project scope, we have not carried out any further public consultation.

ENVIRONMENTAL IMPLICATIONS

12. We completed the Environmental Impact Assessment (EIA) for the project in February 1994. The EIA indicated that four buildings along the proposed extension will be exposed to higher traffic noise levels as a result of the new road scheme. To keep noise levels within the Hong Kong Planning Standards and Guidelines limits, we have made provision for paving the new road with noise reducing surfacing material and the erection of noise barriers along sections of the new road and Pokfulam Road facing the affected buildings. We will also provide indirect technical remedies in the form of window insulation and air-conditioners to about 84 flats at the affected buildings at Government expense.

13. For short term impact, we will continue to control dust, noise and site run-off during construction through implementation of mitigation measures in the works contract.

14. The proposed increase in the approved project estimate will not give rise to any additional long term or short term environmental impact.

LAND ACQUISITION

15. The proposed increase in the approved project estimate does not require land acquisition.

BACKGROUND INFORMATION

16. We upgraded part of 197TH as 551TH in July 1994 to Category A entitled "Smithfield extension and associated roadworks".

17. The original programme for the project was to complete construction works in June 1997. We have now planned to complete the works in December 1997. The delay of six months is mainly due to an unforeseeable delay in the clearance of 55 graves within a critical portion of the site area on account of due to very strong objections from the related clansmen associations. and invited tenders for the works from 7 prequalified tenderers. After assessment, we considered that these tenders were non-competitive as they exceeded our project estimate by at least 28%. We then rewrote the tender specification by splitting the project into two contracts and re-tendered the works through open tender. We accepted the tender prices so obtained as reasonable although the lowest tender price was still 4% higher than our estimate. ConsequentlyWe awarded the contracts, first in February 1995 and the other in August 1995.

17. The original programme of the project was to start construction in October 1994 for completion in June 1997. Due to the re-tendering exercise, we commenced the works in February 1995 and planned to complete the project in December 1997. A summary of the reasons for a slippage of 6 months in the completion of the whole project is as follows -

18. We have already had completed some about 760% of the construction works as atof the end of March December 1997.

Transport Branch
April 1997
(JJ170)
1996

. 1 -- In accordance with the provision of the contract, we are required to adjust the sum payable to the contractor to reflect changes in the 'Index Numbers of the Costs of Labour and Selected Materials used in Government Contracts'. This is a standard practice set out in Works Branch Technical Circular No. 14/95.

---

(JJ170)

Enclosure to PWSC(97-98)8

551TH - Smithfield extension and associated roadworks

A comparison of the approved project estimate at December 1993 prices and the revised project estimate at December 1996 prices is as follows -

2. For better illustration, the table below explains the proposed increase in the project estimate mentioned in paragraph 1 (a) to (e) -

3. As a reference, the Highway Construction Cost Index increased by about 24% from December 1993 to December 1996.

9. As regards (f) (consultants’ fees for construction stage), the increase of $0.98 million is due to the inflation over the years.

4. As regards (g) (site staff costs), the increase of $11 million is due to the salary revisions of the resident site staff in line with the increases of civil service salaries between December 1993 and December 1996 ($6.6 million) and the additional site staff cost due to delay in completion of the project ($4.4 million).

5. As regards (h) (contingencies), the retention of $20 million is allowed for contingencies for the remaining works.

(JJ170)

---