Government’s cost control office for infrastructure projects a good idea in theory

The new body has already identified billions in savings but it remains to be seen if that is the result of poor budgeting or cutting corners on standards

PUBLISHED : Friday, 02 September, 2016, 1:13am
UPDATED : Friday, 02 September, 2016, 1:13am

Hong Kong boasts a stellar record in building mega infrastructure facilities in a cost-effective and timely manner. But that reputation is now being put to the test after serious cost overruns and delays in key public work projects including the high-speed rail link to Guangzhou. There is a need for more stringent cost control measures.

Whether the government’s new project cost management office is the answer remains to be seen. But it is good that the issues are being addressed with a sense of urgency. After all, the high-speed railway and the Hong Kong-Zhuhai-Macau Bridge will, between them, cost HK$25 billion more to complete than anticipated. There are valuable lessons to be learned.

With an annual staff cost of more than HK$10 million a year, the new office is understandably under pressure to show its worth. After two months of operation, it has already identified savings worth billions of dollars in some 40 projects, according to development minister Paul Chan Mo-po. He said another 300 projects would be scrutinised over the next three years.

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It would be tempting to commend the government for saving taxpayers billions of dollars. But it also calls into question the accuracy of the original project estimates. The scope of savings identified suggests something may be amiss in the first place. It also underlines the need for closer scrutiny by our lawmakers when approving funding for infrastructure projects.

Equally worthy of concern is whether cost reductions are achieved at the expense of quality and safety. There have been worries that projects may be substantially altered to help save money, leading to possible massive financial claims from contractors in future or even adverse impacts on project safety.

The pledge by Chan to uphold safety and other standards is to be welcomed. The development blueprint outlined by the minister recently is as ambitious as it is challenging. That makes accurate budgeting and vigorous cost control more important than ever.