PAA rocked by $50m costs row

PUBLISHED : Sunday, 10 October, 1993, 12:00am
UPDATED : Sunday, 10 October, 1993, 12:00am

ANOTHER row is brewing at the controversial Provisional Airport Authority (PAA).

The Chek Lap Kok airport terminal design is costing the PAA an extra $50 million - less than two years after the design contract was awarded to the most expensive bid on the shortlist, the Mott Consortium.

In a move that triggered strong reactions from legislators, the PAA board yesterday approved the extra payment to the consortium who won the contract at $536 million, believed to be $70 million higher than the two losing bids.

The PAA said the extra $50 million was for ''additional work'' required of Mott Consortium after ''an awful lot of improvements'' were made to the original design concept.

But legislator Samuel Wong Ping-wai, representing the engineering profession, said: ''Is the PAA doing its job professionally? After the master plan layout, how many major changes are they making now which gives the Mott Consortium all these subjects forclaims?'' The PAA had moved the railway, altering what Mr Wong described as ''one of the most important aspects'' of the original concept.

The original design requires the railway to be within the terminal. But the PAA recently decided to move it westward so the railway could equally serve the second passenger terminal, scheduled to come on stream at a later date.

Legislator Mr Albert Chan Wai-yip, United Democrats spokesman on airport projects, doubted the PAA had thought the project through if improvements had to be made now.

''Who should be responsible for this? We want a full explanation. Was there an oversight?'' he said.

''It has been less than two years since the contract was awarded and it is costing the PAA an average of $2.6 million a month extra before construction has even started.'' The Legislative Council sub-committee on financing of the airport core programme will meet on October 18, when members will quiz officials on the progress of work and costs of the terminal design.

This is the second time in less than a month the PAA has been involved in a controversy. The authority has yet to explain to the Legislative Council about an aborted trip to Vietnam by two senior executives.

The contract awarded to Mott Consortium is a fixed-price contract with an onerous cost control requirement. According to the contract, the British consortium will be required to redesign at its own expense should its final design push construction costs higher than the estimated $7 billion.

''My objection to this is that right from the beginning Legislative Councillors have been complaining about the selection of consultants for this project, on the grounds that it is the most expensive bid on the shortlist,'' Mr Wong said.

PAA spokesman Philip Bruce said the ''improvements'' to the terminal design were ''outside the scope of the original fixed price lump sum contract''.

''We will be in trouble if we changed the original scope of the contract. [You may ask] why didn't we get it right? But it is not a question of that. The Mott Consortium is still doing that original work.

''They have not come back for more money. We asked them to do additional work which we knew we had to pay for,'' Mr Bruce said.

He said many of the ''modifications'' came as a result of requests from airlines and other users.

Mr Chan questioned whether consultations with users could have been carried out earlier.

Mr Bruce said one of the modifications was an increase in retail space which ''has very good revenue potential'' for the airport.

''That was not in the original concept so we have to pay them for that design,'' he said.