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Following is the text (English only) of the speech by the Secretary for Works, Mr Lee Shing-see, on "The Way Forward to Excellence in Construction" at the Lighthouse Club Seminar today (October 11):
Good morning, Mr. Chairman, Distinguished Guests, Ladies and Gentlemen,
It gives me great pleasure to have been invited to give a keynote address at today's Lighthouse Club Seminar. The seminar provides a most timely opportunity for prominent leaders of the construction industry to recapitulate the recommendations made by the Construction Industry Review Committee (CIRC) and to exchange views on how the industry should embark on its change programme and maintain momentum in various reform initiatives.
As you may recall, the Chief Executive appointed the CIRC in April last year, under the chairmanship of the Honourable Henry Tang, to examine the current state of the construction industry and to identify specific measures to improve its overall performance in terms of quality, efficiency, productivity, site safety, environmental friendliness and customer satisfaction. After nine months of intensive and wide-ranging consultation with the industry and Government, the CIRC completed the review and submitted its report to the Chief Executive in January this year.
In its report entitled "Construct for Excellence", the CIRC recommended a package of 109 improvement measures aiming to substantially lift the quality and cost-effectiveness of the construction industry. Emphasis is placed on a major culture change in order to achieve an integrated construction industry that is capable of continuous improvement towards excellence in a market-driven environment. Clients, in particular public sector clients, are expected to play an important role in this respect.
We note that the CIRC report has received very encouraging response from stakeholders of the construction industry. The Government, having carefully considered the report, agrees that the recommended improvement measures will enable the industry to improve its overall performance and are worth pursuing. Since June this year, we have formulated a strategy in taking forward the CIRC recommendations and are making steady progress.
The role of Works Bureau within Government
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According to the CIRC report, the public sector accounted for almost half of the total construction volume locally in 1999. Public sector clients have been called upon to take a lead in changing the behaviour of the construction industry through contractual requirements. The Works Bureau, being the policy bureau for the Public Works Programme, has been closely involved in the delivery of capital works projects and has had long-established relationship with the local construction industry. It is considered to be best placed to steer the change programme within the Government.
Responsibilities for policy issues and regulatory requirements affecting the construction industry are dispersed among several bureaux and departments. The CIRC has identified the need to set up a mechanism within the Government to co-ordinate difference of views and resolve complicated issues in a timely manner, which will help avoid conflicting regulatory requirements and improve communication between the Government and the industry.
I am pleased that the Government has accepted CIRC's recommendations and has assigned works to assume a lead role within the Government to foster better co-ordination on construction-related matters and to maintain an overview of all issues concerning the industry. We have in end July set up a task-based Industry Review Division, headed by a Deputy Secretary, to act as the overall co-ordinator for the implementation of CIRC recommendations. Through the formation of steering committee and working groups, we will strive to ensure better co-ordination in policy making which impacts on the industry. We will also be monitoring the progress of implementing the CIRC recommendations, and will conduct a full review of the overall progress in three years' time.
Interface with the construction industry
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To enable the construction industry to successfully reform itself, it is vital to have different sectors of the industry to plan and work together. The vast change programme recommended by the CIRC has identified the need to establish a statutory industry co-ordinating body as a key building block for the future success of the construction industry. The CIRC has recommended that the industry co-ordinating body should have a permanent secretariat and be funded by the industry through construction levies. To foster better co-ordination within the industry, the Government has accepted in principle the setting up of this statutory body that will bring together all stakeholders to deliberate on industry-wide issues and to communicate the industry's needs and aspirations to the Government.
Pending establishment of the statutory body which will involve legislation and substantial input from the industry, the Government has recently announced the setting up of the Provisional Construction Industry Co-ordination Board (Provisional CICB). I need not emphasize that there is wide industry support for the provisional board which has a very capable chairman, the Honourable Henry Tang. It also comprises a very broad membership appointed on personal basis, consisting of major industry stakeholders including construction clients, professionals, academics, consultants, contractors, workers, as well as independent persons. There are also five ex-officio representatives from the Government in the Provisional CICB.
The Provisional CICB will become the focal point for co-ordination within the construction industry and will sustain momentum for change. As the provisional board will eventually be operating independently from the Government, arrangements are being made to enable it to be financially self-supporting, with its own secretariat, hopefully by early next year. The Provisional CICB will co-ordinate, prioritize and monitor the implementation of improvement measures requiring the input of the construction industry, consult stakeholders on major issues and carry out promotional activities. Its main tasks will include enhancing self-regulatory functions for the construction industry through the formulation of codes of conduct, and devising performance indicators for the industry to measure its improvement. It will be reporting regularly to the Financial Secretary on the progress made.
We anticipate that the experience gained by the Provisional CICB will facilitate the efficient and effective development of framework and legislation for early formation of the statutory body. The Works Bureau will hold regular liaison meetings with the provisional board which will serve as the main channel for the Government to seek the industry's feedback on strategic matters impacting on local construction, such as construction technology, research and standardization, and human resources development. We expect the existing Construction Advisory Board and its committees will be dissolved when their consultative roles are fully taken over by the Provisional CICB in due course.
The way forward
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The construction industry is at the dawn of reform and reforms are never easy to undertake. Having accepted all the CIRC recommendations, the Works Bureau will take forward those ones falling within its portfolio. Indeed, we have already acted on a significant number of the CIRC recommendations. Let me take this opportunity to update you on the progress of some of them.
First of all, the CIRC calls for a rethink of the method of procurement for construction works. In this regard, we will promote the wider use of "Design and Build" approach. This would introduce the Contractor in the early stage of the supply chain, enabling the designer and the constructor to integrate and draw out the best value for money solutions. We are also exploring the application of partnering approach to our projects. In the meantime, we also notice the industry concern on throat-cutting of tender prices in construction contract. To improve the current practice, we are considering several measures. Firstly, we will promote the wider use of the marking scheme. That is, the award of a contract will be based on a combined technical and price score, in lieu of just the lowest tender price. Secondly, we will incorporate the Contactor's Performance Index System into the marking scheme. This will provide an incentive to the contractor to perform better and hence improve the quality.
Construction workers registration scheme
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Workmanship has a significant bearing on the quality of our finished products. To raise quality standards, we have been developing a Construction Workers Registration Scheme. The proposed scheme requires construction workers to register under three categories of skilled, semi-skilled or general workers. When the scheme is in operation, the quality of construction works will be better ensured through certification of the skill levels of the workers. Accurate information can be obtained from the registration system regarding the number of construction workers by trade, which will facilitate better planning and training of manpower resources. We believe the recognition of the skill levels of the workers will instill in them a sense of belongings. There will be incentives for construction workers to enhance their skill and professional status through such systematic recording of their skill levels under the registration system. We have already started the preparation of the Drafting Instruction for the concerned bill. Our target is to introduce the bill on workers registration to Legislative Council for its enactment by the end of 2002.
Employment of more trade-tested workers
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At present, all works departments require their contractors to employ a minimum percentage (15% in general) of Qualified Tradesmen and Intermediate Tradesmen. This contractual requirement aims at improving the quality and safety of the construction works, and ensuring that works are carried out effectively and competently by contractors. In line with the CIRC recommendation, we have commenced the drafting of a revised technical circular which will require more trades and higher proportions of Qualified Tradesmen and Intermediate Tradesmen to be employed by our contractors. We hope to introduce this improvement measure by early next year which will, in the course of time, help to raise the skill levels of construction workers and set an example for clients in the private sector.
Wider use of direct labour
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There are diverse views on the merits and demerits of the employment of construction workers on a long-term basis. We are currently implementing a trial scheme to investigate the effect of long-term employment of construction workers on quality of works and site safety, and also the applicability to different types of contracts and workers of different trades. Under this trial scheme, the contractor will be awarded an additional sum if the total number of long-term workers employed on site for a calendar month is not less than 25% of the total employed workers. The first public works contract under trial, that is the Castle Peak Road Improvement between Area 2 and Ting Kau, has already commenced in August this year. Four other selected contracts are in the pipeline.
Performance management of consultants
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We have been striving to raise standards and motivate continuous improvement in the performance of consultants, which may be realized by means of a fair, objective and transparent assessment system. In this regard, a working group has been formed to streamline the existing framework and procedures for managing consultants in respect of admission, performance reporting, appeal and removal. We are formulating a consultant performance index system to facilitate quantitative assessment to reflect past performance. To enhance transparency, we will be examining the implementation arrangements for disclosure of full details in respect of the performance assessment of consultants. To improve objectivity of the assessment, the existing appeal measures will also be reviewed with a view to establishing more structured mechanism and procedures.
Wider adoption of milestone payments approach
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The milestone payments approach has been used in a number of major works contracts in the public sector. We believe that the approach can simplify the payment assessment process and help the project team to have better control over the programme. It should also help the contractors to improve their cashflow thus encouraging them to deliver better performance. The Working Group on Interim Payment Schedules is now preparing a set of Standard Conditions of Contract and guidelines on the adoption of milestone payments approach for use in public works contracts.
Wider adoption of information technology (IT)
The Works Bureau is committed to the adoption of more IT for service delivery. With the support of the construction industry, the electronic dissemination of tender documents for works contracts have commenced more than a year ago. We have recently moved another important step forward. In August this year, we promulgated a technical circular on electronic dissemination of invitation of consultancy proposals. We have also commenced a feasibility study on electronic procurement for public works projects for completion in March next year. To sustain the momentum on the use of IT, we will need a coherent strategy on electronic collaboration. We are currently conducting a consultancy study on electronic services delivery for public works projects with a view to formulating a strategy by early 2002.
Wider use of recycled materials
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We have promulgated via a technical circular in December 2000 a corrigendum to the General Specification for Civil Engineering Works (1992 Edition) allowing wider use of suitable recycled inert construction and demolition material in public works projects. To further promote the use of recycled materials, the Highways Department has been arranging trial laying of recycled sub-base materials and is monitoring their performance before finalizing the revised specifications. For the use of recycled coarse aggregates in concrete, the specifications for prescribed-mix concrete are being finalized whilst the draft specifications for designed-mix concrete are being prepared. By mid 2002, the Civil Engineering Department will set up a sorting plant at Tuen Mun Area 38 with a daily capacity of 1,200 tonnes of recycled aggregates.
Conclusion
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Ladies and gentlemen, in the interest of time, I have only mentioned just a few of our major initiatives that are being launched. You may be rest assured, however, that more improvement measures will be introduced in the coming months, in response to the CIRC recommendations.
With the newly established co-ordination framework, all concerned parties will be able to act in collaboration. The construction industry will take ownership of and implement the change programme. The Works Bureau will continue to count on your support in the process of transforming our construction industry into a modern, safe, innovative, efficient, cost-effective, environmentally responsible and client-oriented industry, in the not-too-distant future. Let us all work towards "Excellence in Construction".
Thank you.
End/Thursday, October 11, 2001
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