Airport payments tangled in red tape
RED tape is delaying the payment of millions of dollars for work to construction contractors working on airport related projects.
Inquiries by the South China Morning Post revealed that all of the international contractors working on the biggest airport core programme contracts had been hit by the delays.
'It has become a serious bureaucratic nightmare affecting just about every contractor and subcontractor working on the airport core programme,' one construction director said.
The Government's contract conditions allow contractors to make claims for extra money or time if government engineers make changes to designs.
But they are tougher than normal conditions because claims must be made within 14 days of the contractor being told of any design change, regardless of when the alterations must be carried out. Claims must be updated every 28 days.
Consequently, contractors have to renew their claims every month even though they may have no clear idea how much the changes will cost or when they will be implemented.
'It is an intolerable situation. You have contractors who are lodging claims now for work that may not take place for another eight or 12 months. But they have to be made now and regularly updated otherwise firms will not be paid,' the construction director said.
There have already been rows between contractors and government consultants over how the 14 and 28 day periods should be defined.
The situation is even worse for contractors who have already done the work and are waiting for their claims to be properly agreed by the Government.
The eventual bill can take several months to sort out. In the meantime firms can be doing more and more work for less and less cash.
The Government has tried to overcome the problem by making interim payments, but these represent only a fraction of the total bill.
Engineering sources said foundation and reclamation contractors, including Franki and UDL (Holdings), are in the worst position because they have largely completed their work and are still owed a large amount of money for all the alterations made by government engineers.
The French-led construction consortium building the Kwai Chung viaduct has already submitted about 160 claims, even though it only has been working on site for 16 months.
Rohan Shorland, project director of Campenon Bernard, said: 'Of the 160 I expect we will withdraw 25 voluntarily and some will be rejected by the engineer. We have had to make such a large number of claims to protect our commercial position.' Secretary for Works James Blake promised to look into the problems to see if the Government and its consultants could be more flexible.