Cost of project soars by $46m

PUBLISHED : Thursday, 25 November, 1993, 12:00am
UPDATED : Thursday, 25 November, 1993, 12:00am

POOR performance by contractors awarded a water works project in Yuen Long has led to more than a year of delay and partly accounted for $46 million in extra costs.

Officials told legislators yesterday that the project, the first stage of water treatment and transfer facilities at Au Tau, had been delayed for 567 days because two of the three contractors failed to complete work on time.

The total cost on completion of the project last year was $478.2 million, almost triple the $166 million estimated in 1987 when work began.

Legislators in the Public Works Sub-Committee of the Finance Committee were told yesterday that poor performance by the two contractors, the service reservoir contractor and the treatment works civil works contractors, had resulted in a delay of 452 days.

According to the Government, the primary service reservoir contractor failed to complete the works on schedule.

This resulted in a delay of 327 days in handing over the site to the treatment works civil works contractor to start the second stage.

Legislators were told that 299 of the 327 days of slippage were due to poor performance.

The delay led to the treatment works contractors claiming compensation of $27.5 million from the Government.

But the treatment works contractors also failed to complete their job on schedule, leading to a delay of 240 days, with 153 being a result of poor performance.

The total extra costs the three contractors claimed were $45.7 million.

These included $27.5 million for delayed possession of the site and $11.2 million for additional excavation work.

The information was revealed in a submission the Government gave to legislators to ask for an additional $28 million to pay for the project.

Pressed by legislators, Financial Secretary Hamish Macleod, who chaired the meeting, declined to disclose which department was responsible for the slippage.

The funding was finally passed by the subcommittee and payments will be phased in over two years.

But legislators expressed discontent at the Government's ''incompetence'' in controlling costs.

Independent legislator Christine Loh Kung-wai said the Government should prepare an effective means to prevent contractual claims due to delays.

Mr Macleod explained that the Government considered both risks and costs of each project in arranging the contracts.

Legislator Albert Chan Wai-yip questioned whether the Government had signed ''undesirable'' contracts, resulting in the rapidly escalating costs.

But Mr Macleod said cost changes in public works projects were a common phenomenon.