'Extras' balloon on new airport projects

PUBLISHED : Sunday, 04 August, 1996, 12:00am
UPDATED : Sunday, 04 August, 1996, 12:00am

The cost of building Chek Lap Kok airport and related projects has risen by nearly $1 billion, largely due to design modifications and extra construction costs as contractors race the clock to complete the project on time.

Official figures obtained by Sunday Money show at least $924 million extra has been paid so far to contractors working on 20 airport-related contracts, each worth more than $500 million.

The figure is almost twice that recently quoted to legislators - and it could end up being substantially higher when all the schemes are completed in 1998.

A recent report to a government finance committee revealed other claims from contractors totalling $5.684 billion were outstanding as of March 31, though it was expected most of these could be challenged successfully.

Projects for which extra claims already have been paid to contractors include the showpiece Tsing Ma suspension bridge, West Kowloon expressway, North Lantau expressway and the airport railway.

The New Airport Projects Co-ordination Office (Napco), which is overseeing the airport projects, said the money had been paid after claims lodged by contractors and subsequently disputed by the Government had been settled.

'The total amount paid in supplemental agreements for airport core programme works for the 20 Government contracts was $924.2 million,' Napco spokesman Halima Guterres said.

Of this, taxpayers would have to shoulder $417.73 million. The balance of $506.47 million would be paid by the Airport Authority (AA) or the Mass Transit Railway Corporation (MTRC).

'There is sufficient provision within the airport core programme estimates to meet these costs and the projects remain within budget,' she said.

Napco said claims for extra payments had been for a number of reasons, including acceleration of work, change in the scope of projects, and disputed extensions of time.

Ms Guterres said other additional payments had been made to cover contractors' claims which were not disputed by the Government.

'Where a claim is disputed, it may be necessary to settle the dispute with a cash payment. Such payments are made under a supplemental agreement. Money paid for undisputed claims are the contractor's entitlement under the contract,' she said.

The $924 million figure cited by Napco does not include additional construction which the Government's considers to be outside the scope of the airport core work.

This includes the construction of a massive interchange on the North Lantau expressway at Yam O that will link with a road tunnel through to Discovery Bay.

The $924 million figure is also nearly double the claims figures recently given to legislators (see table).

That showed $524 million had been paid by the Government, MTRC and AA up to March 31 to settle more than 1,800 claims.

The report to finance committee members, however, did reveal claims totalling $5.684 billion were outstanding, although it said most of these could be successfully challenged, to leave an estimated liability of $2.3 billion.

Firms believe further claims are in the pipeline as work on the airport, railway and seven Government-funded projects progresses. The airport is scheduled for completion in spring 1998 and the railway in the summer.

The railway would be particularly hard hit, a construction boss said, because four years of political wrangling between Britain and China meant contractors had to start work before final designs were ready, leaving enormous scope for later design changes.