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Following is a question by the Hon James Tien and a written reply by the Acting Secretary for Transport and Housing, Mr Yau Shing-mu, in the Legislative Council today (December 3):
Question:
The Government indicated in a press release issued earlier that the cost of the Hong Kong-Zhuhai-Macao Bridge (HZMB) Hong Kong Boundary Crossing Facilities (HKBCF) project (the Project) might exceed the approved project estimate by $5 billion. The cost overrun is attributable mainly to a surge in wage levels of construction workers, prices of construction materials and machinery, etc., in recent years, resulting in the tender prices/estimated tender prices for the works contracts awarded/to be awarded being higher than the estimate in 2011. In this connection, will the Government inform this Council:
(1) given that the authorities indicated in a paper submitted to the Public Works Subcommittee (PWSC) of this Council on October 14 this year that there was a need to increase the estimated expenditure of the Project by an amount of "above $500 million", of the reasons for the substantial increase in the amount of cost overrun to "about $5 billion" as indicated in the press release issued on November 6, i.e. a lapse of less than a month;
(2) of the approved estimated expenditure on the various expenditure items under the Project for which cost overrun may occur and the estimated amounts of cost overrun to be incurred; whether it has assessed if the final amount of cost overrun will exceed $5 billion; if the assessment outcome is in the affirmative, of the reasons for that;
(3) of the expected time for submitting applications for supplementary provision for the Project to PWSC and the Finance Committee of this Council;
(4) whether it has assessed if the cost overrun of the Project will have any impact on the toll of HZMB in future;
(5) whether it will consider importing foreign construction workers for the Project with a view to resolving the problem of project delay and rising cost due to shortage of labour;
(6) whether it has gained an understanding of the work progress of the HZMB-related projects in Zhuhai and Macao and whether those projects have experienced any cost overrun, and compared the situation of those projects with that of the Project; if it has, of the details; if not, the reasons for that; and
(7) whether measures are in place to ensure that the completion date of the Project dovetails with that of the HZMB-related projects in Zhuhai and Macao, so that HZMB will be commissioned as scheduled; if so, of the details; if not, the reasons for that?
Reply:
President,
My reply to the seven parts of the Hon James Tien's question is as follows:
(1) to (4) In the PWSCI(2014-15)7 paper issued by the Government on October 14 this year, it gives an overview of a total of 89 potential capital works items to be submitted by various bureaux and departments to the Public Works Subcommittee for consideration in the 2014-15 Legislative Council session. One of them is the Hong Kong-Zhuhai-Macao Bridge (HZMB) Hong Kong Boundary Crossing Facilities (HKBCF) project. As we stated in Enclosure 2 of the paper, as the tender prices/estimated tender prices for the works contracts awarded/to be awarded are higher than the estimate in 2011, together with the increase in provision for price adjustments, we need to seek the approval of the Finance Committee later for increasing the approved project estimate to meet the latest forecast of construction expenditure. Enclosure 2 of that paper has a standard format and has been adopted for years. There are three standard categories of the "indicative cost of the proposed increase in the approved cost estimate" concerned, i.e. "below $200 million", "$200 million - $500 million" and "above $500 million". At that time, as our initial assessment of the approved project estimate of the HZMB HKBCF has to be increased by about $5 billion, it belongs to the category "above $500 million" in the options listed in the form, and therefore such estimation was provided.
Subsequently, in response to some reports by the media regarding the project cost, the Transport and Housing Bureau indicated in a press release issued on November 6 that as regards the cost for the HZMB HKBCF, the approved project estimate in November 2011 was $30.4339 billion. But according to the current preliminary estimate, the approved project estimate has to be increased by about $5 billion, mainly because the tender prices/estimated tender prices for the works contracts awarded/to be awarded are higher than the estimate when the Government sought approval from the Legislative Council (LegCo) in 2011 due to the surge in wage levels of construction workers, prices of construction materials and machinery, etc., in recent years.
The Highways Department is still conducting detailed assessment on the progress of the project and the newly increased cost. When finalised, we will give a detailed account to the LegCo Panel on Transport at its meeting in December and then seek funding approval for the increase in the approved project estimate from the LegCo Public Works Subcommittee and the Finance Committee according to the procedures.
The Hong Kong SAR Government is responsible for the expenditure of the HKBCF project and the accounts are separated from the HZMB Main Bridge project which the construction is co-financed by the three governments. Therefore, the increase in the approved project cost for the HKBCF project will not affect the toll of the HZMB in future.
(5) For selected trades with skilled labour not readily available locally, some 200 workers were imported under the Supplementary Labour Scheme (SLS) in 2012 to work in the HKBCF reclamation project. The relevant works undertaken by these imported workers have been substantially completed. As for the other parts of the HKBCF project, if contractors cannot recruit sufficient manpower locally, they may continue to apply to the Labour Department for imported workers under the SLS.
Projects costs are affected by many factors with labour cost being only one of them. According to the prevailing requirements of the SLS, wages for imported workers should not be less than the monthly median wages of local workers in comparable positions.
(6) and (7) The entire HZMB project consists of (i) the HZMB Main Bridge; and (ii) the link roads and boundary crossing facilities of the three sides. The works of the HZMB Main Bridge are situated in the Mainland waters and are being carried out by the HZMB Authority. The three sides are responsible for their own boundary crossing facilities and link roads. The projects of the HZMB are huge and complex. There are many technical challenges experienced during the design and construction stages. With safety and quality assurance as the major premises, the three governments have been reviewing the implementation of the projects with a view to overcoming and handling the difficulties concerned in a timely manner, such that the entire HZMB project (including the Main Bridge as well as the link roads and boundary crossing facilities of the three sides) can be commissioned at the same time.
As for the related projects of Zhuhai and Macao, as they are being undertaken by the Zhuhai and Macao governments respectively, it is inappropriate for us to provide information regarding the progress and expenditure of these projects.
Ends/Wednesday, December 3, 2014
Issued at HKT 15:00
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