For discussion
EC(98-99)2
on 16 September 1998
ITEM FOR ESTABLISHMENT SUBCOMMITTEE
OF FINANCE COMMITTEE
HEAD 60 - HIGHWAYS DEPARTMENT
Subhead 001 Salaries
Members are invited to recommend to Finance Committee the retention of the following supernumerary post for a period of six months with effect from 1 October 1998 -
1 Government Engineer
(D2) ($116,650 - $123,850)
PROBLEM
The present supernumerary post of Government Engineer/Ting Kau (GE/TK) created for overseeing the construction and commissioning of the Ting Kau Bridge (TKB) project will lapse on 1 October 1998. The Director of Highways (DHy) needs to retain this post in order to resolve a substantial contractual claim relating to the project.
PROPOSAL
2. We propose to retain the GE/TK (D2) post for a period of six months up to 31 March 1999 to oversee the resolution of a substantial contractual claim relating to the TKB project.
JUSTIFICATION
3. On 29 July 1995, Members approved the creation of a Government Engineer post (GE/TK) on a supernumerary basis up to 31 December 1997 to head the TKB project management team under the Lantau Fixed Crossing Project Management Office (LFCPMO). Due to engineering problems, the design-build contractor re-scheduled the completion of works to April 1998. In the light of the revised programme, on 31 October 1997 Members approved the retention of the GE/TK post up to the end of September 1998 to see through the completion and commissioning of the project, including the resolution of claims arising from it. At the time, we expected that any outstanding claims remaining unresolved by the end of September 1998 could be taken up by the Chief Engineer/Ting Kau (CE/TK) and his team.
4. Unfortunately, the contractor for the TKB Contract No. HY/93/38 only submitted the details of one particular claim, namely, Claim 34, in June 1998 after the GE/TK post was last extended. Under Claim 34, the contractor has claimed for extension of time and substantial quantum to permit him to complete the work within a timeframe substantially longer than the contractual completion date. In accordance with the terms of the contract, the claim has now become a dispute between the Government and the contractor. Recent developments indicate that mediation proceedings may well start in late October 1998 to resolve the matter. If this is of no avail, the dispute may well culminate in arbitration proceedings commencing in December 1998. On this basis, the Highways Department (HyD) has projected at Enclosure 1 a programme for the resolution of this substantial claim.
5. In view of the complex legal and contractual arguments at issue and the gravity of the compensation sought by the contractor, HyD needs the support of a directorate officer with the requisite expertise, experience and on-the-job knowledge to assess the merits and quantum of the claim and to prepare for mediation and arbitration proceedings. Proper assessment of the claim, including its inter-relationship with other claims and thorough presentation of the facts at issue will safeguard the interest of both the Government and the contractor in the resolution of the dispute, with the intention of securing a settlement which is fair to both parties. GE/TK has been overseeing the project since July 1995 from construction through to commissioning. At present, he is processing this claim personally on a full-time basis. He is also needed to continue in the role of Supervising Officer to administer the contract and provide independent and impartial assessment of any proposed settlement during the dispute process.
6. As the GE/TK post will expire on 1 October 1998, DHy has explored the feasibility of assigning the other GE in the LFCPMO - GE/LFC (a supernumerary post scheduled to lapse on 1 January 1999) to absorb the substantial workload, but sees no scope for redeployment as the officer is now fully committed to finalise the contracts for the Lantau Link. CE/TK, whose post will lapse on 1 April 1999, is also fully committed in finalising all other financial and contractual matters, and in supervising the completion of outstanding works of the TKB project. We therefore propose to extend the tenure of GE/TK for six months to deal with the claim including preparing for mediation and arbitration. The incumbent will continue to be responsible to the Deputy Director of Highways. The job description of the GE/TK post is at Enclosure 2. The organisation chart of HyD is at Enclosure 3.
7. We will review the need for the post based on the actual progress of the mediation/arbitration proceedings, and stand ready to phase it out earlier than the expiry of its extended tenure if the need no longer exists.
FINANCIAL IMPLICATIONS
8. The additional notional annual mid-point salary cost of this proposal is $1,443,000. The full annual average staff cost including salaries and staff on-cost is $2,406,000. We have sufficient provision in the 1998-99 Estimates to meet the cost of the proposal. There are no other additional staffing or financial implications.
BACKGROUND INFORMATION
9. The TKB project, with an approved project estimate of $3.8 billion, is intended to provide a strategic transport link to reduce congestion on Tuen Mun Road. The project includes a long-span high-level bridge across the Rambler Channel, an approach viaduct connecting to the Tai Lam Tunnel of the Route 3 Country Park Section, slip roads connecting with Tuen Mun Road, and an extension of the Route 3 Interchange to link the TKB with Tsing Ma Bridge and Route 3 Cheung Tsing Section.
10. The major contract of the project, the TKB Contract (Contract HY/93/38) was awarded to the Ting Kau Contractors Joint Venture on 23 August 1994 at a contract sum of $1.74 billion and with a completion date of 23 June 1997. The contractor was required to design and construct a 1 177 metres long bridge, a 700 metres long approach viaduct connecting to the Tai Lam Tunnel of the Route 3 Country Park Section and sliproads to connect with Tuen Mun Road. The unique four-span cable stayed bridge carries a dual three lane carriageway. Due to engineering problems, the contractor re-scheduled the completion of works to April 1998. The TKB was opened to traffic on 6 May 1998.
CIVIL SERVICE BUREAU COMMENTS
11. Civil Service Bureau considers the ranking, grading and duration of the proposed post to be appropriate, having regard to the level of responsibilities and professional input required.
ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE
12. As the post is proposed on a supernumerary basis, we will report its retention, if approved, to the Standing Committee in accordance with the agreed procedure.
Transport Bureau
August 1998
Enclosure 1 to EC(98-99)2
Ting Kau Bridge Contract
Programme for the Resolution of Claim 34
|
Action
|
Date |
|
(a)
|
Appointment of mediator
|
mid-September 1998 |
|
(b)
|
Mediation hearings
|
late October to November 1998 |
|
(c)
|
Conclusion of mediation
|
late November 1998 |
|
(d)
|
If the claim could not be resolved, commencement
of arbitration proceedings
|
December 1998 |
|
(e)
|
Preparation for the arbitration and appointment of arbitrator
|
December 1998 to
March 1999 |
|
(f)
|
Arbitration
|
March 1999 |
|
(g)
|
Arbitration hearings
|
earliest practicable -
June 1999 |
Enclosure 2 to EC(98-99)2
Highways Department
Proposed Job Description
| Post Title | : Government Engineer/Ting Kau (GE/TK)
|
| Rank | : Government Engineer (D2)
|
| Responsible to | : Deputy Director of Highways (D3)
|
Duties and Responsibilites -
I. To be the Supervising Officer for the Ting Kau Bridge contract and to independently, fairly and impartially administer the contract between the Government and the Contractor.
II. In respect of Claim No.34 -
- To review and assess the quantum aspects of the Claim, including -
- to undertake a thorough investigation of the allegations made by the Contractor;
- to review technical matters raised in the Claim; and
- to determine the basis of any dispute with the Contractor to confine the scope of any subsequent mediation.
- To prepare for mediation, including -
- to advise the Deputy Director of Highways (DDHy) on any issues arising in the preparation process;
- to assemble all of the facts in respect of the Claim to enable the mediation team headed by DDHy to prepare for the mediation;
- to establish the quantum for time and money to which the Contractor may be entitled prior to and arising from the mediation;
- to ensure sufficient and experienced resources are deployed to assemble all of the available facts relating to the Claim and the dispute;
- to assess the level of risk to the Government prior to mediation; and
- to recommend to the Secretary for the Treasury the scope and budget ceiling for negotiating a settlement at mediation.
- To review and assess further legal and contractual aspects of the Claim if and when raised in the mediation process.
- During the mediation -
- to respond to any issues on facts raised by the mediator;
- to research further facts as and when issues arise during the mediation; and
- if the mediation is successful, to prepare the contractual documents necessary to secure the agreement in the form of a Supplemental Agreement to the Contract for approval by the Contractor and the Secretary for the Treasury in respect of the terms incorporated therein.
In preparing for the arbitration -- to review the Contractor's Statement of Claim, research further facts as may be necessary, clarify any technical issues, and liaise as necessary with the Government's Independent Checking Engineer;
- to provide all facts needed in the development of Government's Statement of Defence to be prepared by the Department of Justice, and such subsequent responses made by the Contractor prior to the actual arbitration hearings;
- to prepare his own witness statement(s) and be prepared for cross-examination in the arbitration hearings; and
- to review witness statements made by the Contractor's side for correctness.
III. Generally in respect of Contract HY/93/38
- To administer all outstanding and unresolved contract claims.
- To determine valuations of variations recommended by CE/TK.
- To oversee the work of CE/TK.
