EC(98-99)11

For discussion
on 4 November 1998

ITEM FOR ESTABLISHMENT SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 46 - GENERAL EXPENSES OF THE CIVIL SERVICE
Subhead 083 Recoverable salaries and allowances
(Electrical and Mechanical Services Trading Fund)

Members are invited to recommend to Finance Committee the retention of the following supernumerary multi-disciplinary post, for a period of one year from 6 December 1998, under the Electrical and Mechanical Services Trading Fund -

1 Chief Electrical and Mechanical Engineer/
Chief Building Services Engineer/
Chief Electronics Engineer
(D1) ($98,250 - $104,250)

PROBLEM

The present supernumerary multi-disciplinary post of Chief Electrical and Mechanical Engineer/Chief Building Services Engineer/Chief Electronics Engineer (CEME/CBSE/CEE) (D1) in the Airport Sector Division (ASD) will lapse on 6 December 1998. The Director of Electrical and Mechanical Services (DEMS), General Manager of the Electrical and Mechanical Services Trading Fund (EMSTF), needs continued directorate support for the provision of prompt and effective electrical and mechanical maintenance services to facilities at Hong Kong International Airport (HKIA) at Chek Lap Kok (CLK) and advisory services prior to the redevelopment of Kai Tak.

PROPOSAL

2. DEMS, with the support of Secretary for Works, proposes to retain the supernumerary post of CEME/CBSE/CEE, for a period of one year from 6 December 1998, to provide efficient and effective electrical and mechanical maintenance services at HKIA and advisory services prior to the redevelopment of Kai Tak.

JUSTIFICATION

3. At present, EMSTF has an annual business turnover in respect of HKIA of about $240 million for 1998-99 and an anticipated turnover of about $300 million for 1999-2000 and beyond. This is mainly generated from contractual arrangements with the Airport Authority (AA) and Swire Engineering Services Limited (SESL) and from various Service Level Agreements (SLAs) with 13 government departments¹ to provide maintenance services at HKIA. Of these, contracts M110, M120, M130 and M150 (total contract price: $402.4 million) are with AA for the general building services maintenance and the maintenance of electrical and mechanical equipment, communications systems and major water and sewage treatment systems at HKIA. Sub-contract M009 (contract price: $113.28 million) with SESL is for the maintenance of the baggage handling system. SLAs, at an annual price of around $90 million, are for the maintenance of government facilities at HKIA.

4. The contract period for M110, M120 and M130 is 15 months from June 1998, while those for M150 and M009 are 5 years and 3 years, respectively, from December 1997. There is an option to extend the latter contract for another three years. A summary of contracts showing the contract name, contract period, work description and contract prices is at Enclosure 1.

5. Created under delegated authority on 6 June 1998, the existing multi-disciplinary post of Airport Sector Manager (ASM), who heads ASD, has been filled by a CEME. He is required to oversee and ensure the provision of prompt, quality, reliable and cost-effective electrical and mechanical services to both the AA and the government facilities at HKIA, and to maintain the electricity supply network at Kai Tak to facilitate the commercial use of the site. His main responsibilities are set out in the following paragraphs.

Administration of maintenance contracts and Service Level Agreements

6. To fulfill the requirements of the service contracts and SLAs, ASM has to ensure that customers' requirements are met and resources are deployed effectively and on time. In order to provide satisfactory customer-focused service to all the customers, ASM has to attend liaison meetings with the senior management of the customers, to review the performance of ASD with a view to improving its services. In addition, ASM needs to monitor the operational and financial performance of ASD so as to meet the financial targets.

7. ASM is required to keep abreast of the latest developments in airport engineering, and to liaise closely with the operations and maintenance agents of other international airports as well as the International Civil Aviation Organization. He has to introduce new and world-class standard technologies in works, such as condition-based maintenance, energy efficiency, environmental improvement initiatives and quality management to enhance the cost-effectiveness of maintenance works.

8. Apart from the above maintenance responsibilities, ASM also needs to ensure the proper maintenance of major electrical and mechanical facilities at Kai Tak to facilitate the planned commercial use of the runway area and the terminal building before redevelopment. The maintenance cost involved is about $13 million per annum. In addition, ASM will oversee the decommissioning work for the baggage handling system and the off-airport aeronautical lighting at Kai Tak starting in early 1999. The total estimated decommissioning cost is about $3.1 million.

Exploring new business

9. ASM has to explore opportunities for EMSTF to bid for additional work at HKIA such as the maintenance of the second runway installations, aerobridges, aircraft parking aids, baggage trolleys, baggage screening system and the terminal building extension. These installations and equipment will be closely integrated with those currently maintained by EMSTF and their servicing would generate an additional annual business volume of about $36 million.

Provision of advisory services

10. Following the opening of the HKIA at CLK, the electrical and mechanical equipment and systems are in full operation. ASD has to closely monitor their operation and to fine-tune the equipment so that it is operating at its optimum level. To ensure that these systems meet the demand of the various activities in the Airport at all times, ASM has to maintain frequent contact with senior officers of client departments and the Works Bureau and executives of AA to bring himself up to date on the operational requirements as well as to co-ordinate the normal working procedures and emergency plans. At present, he is actively involved in work to improve the control of airfield ground lighting, as well as advising the client on the new control system for the second runway.

11. In addition, ASM has to prepare for the renewal of maintenance contracts. The most urgent ones are contracts concerning electrical and mechanical maintenance of buildings and pumping systems (M110, M120 and M130) which will expire on 14 September 1999. As these contracts were awarded to EMSTF through competitive tendering, ASM would have to carry out considerable preparatory work for the renewal of these contracts.

12. In view of the above, DEMS proposes to extend the ASM post for a period of one year from 6 December 1998. We will review the continued need for the post at the end of the one-year period.

13. ASM will continue to be assisted by two Senior Electrical and Mechanical Engineers, designated as Engineering Services Manager/Airport Authority Facilities and Engineering Services Manager/Government Facilities and 412 professional, technical and general support staff. As ASM will be required to supervise a multi-disciplinary team, the post, if approved, will be designated as a multi-disciplinary post to be filled by a suitable officer of the rank of CEME, CBSE or CEE. The existing organisation chart of ASD and the job description for the ASM post are at Enclosures 2and3, respectively.

FINANCIAL IMPLICATIONS

14. The additional notional annual salary cost of this proposal at mid-point is $1,213,200. The additional full annual average staff cost of the proposal, including salary and staff on-costs, is $2,131,764. We have set aside sufficient provision under EMSTF to meet the cost of this proposal. The proposal has no implications on Government expenditure.

15. The financial requirements for implementing the above proposal represent 0.08% of the estimated total recurrent expenditure of EMSTF. Therefore, the proposal will have minimal impact on fees or the percentage return on Average Net Fixed Assets.

BACKGROUND INFORMATION

16. In June 1998, EMSTF won contracts M110, M120 and M130 (at a total contract price of $57.41 million) from AA for the operation and maintenance of air-conditioning, electrical and mechanical systems at HKIA. To ensure the provision of prompt and effective electrical and mechanical maintenance services at the new airport and a smooth transition of electrical and mechanical operations from Kai Tak to CLK when the new airport opened in July 1998, we set up the new ASD under EMSTF. We created a supernumerary post of CEME/CBSE/ CEE, under delegated authority, for a period of six months with effect from 6 June 1998 to head the ASD.

CIVIL SERVICE BUREAU COMMENTS

17. The Administration has considered carefully other alternatives including redeployment bearing in mind the need for greater efficiency and productivity under the present economic climate. Having regard to the reasons put forward, we consider the proposal justified. The Civil Service Bureau considers the grading and ranking appropriate.

ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE

18. As the ASM post is proposed on a supernumerary basis, we will report its retention, if approved, to the Standing Committee on Directorate Salaries and Conditions of Service in accordance with the agreed procedure.

Works Bureau
October 1998

Enclosure 1 to EC(98-99)11

Summary of Contracts

Contract No. and Contract Name	Contract Period	Description of work	Client	Contract Price (HK$)
M150 Maintenance of E & M and Communications Systems	5 years (1.12.1997 - 30.11.2002)	Maintenance Contract includes maintenance works for Airfield Tunnels, Airfield Ground Lighting, Electrical distribution System, Emergency Power Equipment, Fixed ground Power, General Building Management System, Supervisory Control and Data Acquisition System, High Mast Lighting, Trunk Mobile Radio, Pre-conditioned Air Units, Perimeter Fence Lighting, Aircraft Recovery Equipment, Building Services maintenance works, Electronic Facilities for Fire Fighting and Rescue vessels/vehicles.	Airport Authority	HK$345,000,000
M009 Maintenance Services to Baggage Handling System at the New Airport at Chek Lap Kok	37 Months (1.12.1997 - 5.1.2001)	Comprehensive maintenance services for the Baggage Handling System at the new Airport at Chek Lap Kok including shift duties, planned prevent maintenance, breakdown maintenance, provision of spares, consultation services, etc.	Swire Engineering Services Ltd.	HK$113,285,000
M110 Maintenance Contract M110 Mechanical Services - Buildings	15 Months (15.6.1998 - 14.9.1999)	Plant operation, and maintenance of Air-conditioning systems and associated auxiliary equipment, water systems, and General Building Management System and in the new Airport at Chek Lap Kok.	Airport Authority	HK$26,528,735
M120 Maintenance Contract M120 Electrical Services - Buildings	15 Months (15.6.1998 - 14.9.1999)	Plant operation, and maintenance of High Voltage Electrical System, Low Voltage Electrical System and the High Voltage Supervisory Control and Data Acquisition system in the new Airport at Chek Lap Kok.	Airport Authority	HK$14,991,085
M130 Maintenance Contact M130 Pumping Systems and Building Services	15 Months (15.6.1998 - 14.9.1999)	Plan operation, and maintenance of sea water pumping system, sewage pumping stations, stormwater pumping stations, aircraft wash bays and wash wells, oil separator, trichurators and related building services in the new Airport at Chek Lap Kok.	Airport Authority	HK$15,894,609

Enclosure 3 to EC(98-99)11

Rank :	Chief Electrical & Mechanical Engineer (D1)/ Chief Building Services Engineer (D1)/ Chief Electronics Engineer (D1) (i.e. multi-discipline)

Main Duties and Responsibilities

Responsible to the Engineering Branch Manager (2) for -

1. managing the ASD;

2. administering the contracts with AA and the sub-contract with SESL;

3. administering the SLAs with the government departments in CLK and Kai Tak;

4. administering the redeployment of staff to CLK;

5. liaising and maintaining frequent contact on operation/maintenance matters with senior officers of client departments, Works Bureau and senior executives of AA at a senior level;

6. negotiating with AA for the renewal of maintenance contracts;

7. negotiating with AA for new business as extensions to the existing maintenance contracts;

8. liaising with operation and maintenance agents of other international airports;

9. introducing new technologies in the operation and maintenance of installations; and

10. introducing energy efficiency, environmental improvement initiatives and quality management on operations and maintenance activities.

1. The 13 government departments are Health Department, Hong Kong Observatory, Independent Commission Against Corruption, Agriculture and Fisheries Department, Government Flying Service, Immigration Department, Fire Services Department, Civil Engineering Department, Administration Wing, Hong Kong Police Force, Post Office, Civil Aviation Department and Government Property Agency.