PWSC(97-98)88
For discussion
on 10 December 1997

ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE

HEAD 711 - HOUSING
Water Supplies - Combined fresh/salt water supply projects
120WC - Extension of Shau Kei Wan high level water supply systems

Members are invited to recommend to Finance Committee the upgrading of 120WC to Category A at an estimated cost of $219.3 million in money-of-the-day prices for the construction of a fresh water service reservoir, a salt water service reservoir, associated water mains and upgrading of an existing pumping station in Shau Kei Wan.

PROBLEM

The existing water supply systems serving the Shau Kei Wan high level areas will not be able to cope with the anticipated increase in water demands for both fresh and salt water by 2000.

PROPOSAL

2.The Director of Water Supplies (DWS), with the support of the Secretary for Housing, proposes to upgrade 120WC to Category A at an estimated cost of $219.3 million in money-of-the-day (MOD) prices for the construction of a fresh water service reservoir, a salt water service reservoir, laying of associated water mains and upgrading of an existing pumping station for the extension of the Shau Kei Wan high level water supply systems.

PROJECT SCOPE AND NATURE

3.The scope of the project comprises -

1. constructing a fresh water service reservoir with a storage capacity of 8 500 cubic metres;

2. constructing a salt water service reservoir with a storage capacity of 500 cubic metres;

3. constructing an access road leading to the proposed service reservoirs;

4. laying approximately 4 kilometres fresh water mains of diameter ranging from 300 millimetres to 450 millimetres;

5. laying approximately 2 kilometres salt water mains of diameter ranging from 200 millimetres to 300 millimetres; and

6. upgrading the existing Shau Kei Wan high level combined fresh and salt water pumping station to increase the daily output capacities of fresh water and salt water from 7 950 cubic metres to 21 000 cubic metres and from 3 450 cubic metres to 6 700 cubic metres respectively.

JUSTIFICATION

4.The existing Shau Kei Wan high level fresh water and salt water supply systems with respective capacities of 4 700 cubic metres per day and 3 700 cubic metres per day can support the water demand for a population of 25 000. In 1994, the Government identified a number of sites in Shau Kei Wan high level areas for private and public housing developments. These housing developments will increase the population in that area from 15 000 in 1996 to 57 000 by early next decade. We estimate that the daily demands for fresh and salt water will increase ultimately to 12 710 cubic metres and 4 740 cubic metres respectively. The existing systems will not be able to provide adequate water supply to the proposed housing developments in the Shau Kei Wan high level areas by the year 2000. Hence we need urgently to extend the existing water supply systems to cope with the anticipated increases in demand. Upon completion of the proposed extension works, the Shau Kei Wan high level water supply systems can provide a daily fresh and salt water of 14 000 cubic metres and 5 500 cubic metres¹respectively. This will enable us to meet the forecast demand beyond 2000.

FINANCIAL IMPLICATIONS

5.We estimate the capital cost of the project to be $219.3 million in MOD prices (see paragraph 6), made up as follows -

			$ million
(a)	Construction of service reservoirs and access road		80.5
(b)	Mainlaying		20.3
(c)	Pipe materials		20.6
(d)	Upgrading existing pumping station		9.1
(e)	Consultants' fees for		15.0
	(i)construction stage	0.8
	(ii)site staff expenses	14.2
(f)	Contingencies		14.5
Sub-total			160.0	(at December 1996 prices)
(g)	Inflation allowance	59.3
Total			219.3(in MOD prices)

A breakdown by man months of the estimate for consultants' fees is at the Enclosure.

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

Year	$ million (Dec 1996)	Price adjustment factor	$ million (MOD)
1998 - 99	24.0	1.16358	27.9
1999 - 2000	32.0	1.26830	40.6
2000 - 01	56.0	1.38244	77.4
2001 - 02	40.0	1.50686	60.3
2002 - 03	8.0	1.64248	13.1
	160.0		219.3

7.We have derived the MOD estimates on the basis of the Government's forecast of trend labour and construction prices for the period 1998 to 2003. We will tender the works described in paragraphs 3(a) to 3(e) above under a standard re-measurement contract because these works will involve a substantial amount of earthworks/geotechnical works and underground mainlaying and it is not possible to ascertain their exact quantities in advance of construction. We will provide for adjustment due to inflation in the contract as the construction period will be longer than 21 months. In respect of works described in paragraph 3(f) above, we intend to purchase four pumpsets through a Government Supplies Department contract for installation by in-house staff.

8.We estimate the additional annually recurrent expenditure to be $1.8 million. This project by itself will lead to an increase in water charges by 0.1 % in real terms² .

PUBLIC CONSULTATION

9.We consulted the Environmental Improvement Committee of the Eastern Provisional District Board on 6 November 1997. The Committee supported the project on the understanding that we will undertake to keep the environmental impact of the project to a minimum, ensure the safety of the slopes within the works area, and explain the proposed works to the residents in the affected areas.

ENVIRONMENTAL IMPLICATIONS

10.The Director of Environmental Protection Department completed an environmental review in January 1995 and concluded that the project would have no long term adverse environmental impact and no environmental impact assessment would be necessary. We will control noise, dust and site run-off nuisances during construction to comply with established standards and guidelines by incorporating environmental pollution control clauses in the works contract. We will also control the waste water discharges generated during the operational phase of the service reservoirs by discharging to the public sewerage system.

LAND ACQUISITION

11.The project does not require land acquisition.

BACKGROUND INFORMATION

12.We upgraded this project to Category B in September 1995.

13.We engaged consultants in April 1996 at a cost of $0.71 million to undertake the investigation study for the project. Upon completion of the study in early 1997, we employed different consultants in May 1997 at a cost of $3.2 million to proceed with detailed design and investigations for the works. We charged the costs of both consultancies to block allocation Subhead B100HX " Minor housing development related works, studies and investigations for items in Category D of the Public Works Programme " . The current consultants have substantially completed the detailed design. We plan to start the construction works in April 1998 for completion in July 2000 to meet the expected fresh and salt water demands in 2000.

Housing Bureau
December 1997

(JJ217)

1. This project will increase the capacities of the existing fresh and salt water systems by 9300 cu.m./day and 1800 cu.m./day respectively. However, the storage capacities of the new service reservoirs (listed in paragraphs 3(a) and 3(b) above) required are generally lower than the increase in system capacities because replenishment will be pumped into the service reservoir as the stock in the reservoir is depleted during the course of the day.

2. The increase in water charges is calculated on the assumption that the demand remains static during the period from 1998 to 2003 and that the amount of Government subsidy to the waterworks operations is contained at the present level.

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Enclosure to PWSC(97-98)88

120WC - Extension of Shau Kei Wan high level water supply systems

DETAILS OF CONSULTANTs' FEES

Breakdown of the estimate for consultant's fees

Consultants' staff costs		Estimated man months	Average MPS* salary point	Multiplier factor	Estimated fee ($ million)
(a)Consultant's fee for works in construction stage	Professional Technical	4 2	40 16	3.0 3.0	0.7 0.1
(b)Site supervision by resident site staff employed by the consultant	Professional Technical	82 120	40 16	2.1 2.1	9.5 4.7
Total consultant's staff costsl					15.0

* MPS = Master Pay Scale

Notes

1.The consultant's fee for works during the construction stage is a provisional part of the lump sum price quoted by consultancy Agreement No. CE 55/96 " Extension of water supply to Ma On Shan/Shau Kei Wan high level water supply systems - design and construction" which is available for acceptance by Government subject to approval for upgrading 120WC to Category A.

2.A multiplier factor of 3.0 is applied to the average MPS point to arrive at the full staff costs including the consultants' overheads and profit, as the staff will be employed by the consultants' office (At 1.4.96, MPS 40 = $55,390 p.m. and MPS 16 = $18,595 p.m.). A multiplier factor of 2.1 is applied in the case of site staff supplied by the consultants.

(JJ217)