Government auditors have blasted Highways Department over its performance in the planning and construction supervision of the improvement works for Tung Chung Road on Lantau Island.
In its latest report released last week the Audit Commission recommended remedial measures to improve the areas of project planning and environmental impact assessment, project implementation and management of alternative designs.
The auditors, in particular, probed a series of mishaps during project implementation and management of alternative designs that ultimately resulted in completion being delayed by 36 months and final cost on one of the projects on the road jumping by nearly a third.
In response to the commission’s report, the Director of Highways said he agreed with the recommendations.
The works for the improvements to Tung Chung Road which links Tung Chung in North Lantau to Cheung Sha in South Lantau was carried out with two public works projects.
The first project, referred to as Project A, was for a short stretch of Tung Chung Road from Pa Mei to Lung Tseng Tau.
The second project, referred to as Project B, was for a longer stretch of the road from Lung Tseng Tau to Cheung Sha Sheung Tsuen.
The report did not identify the contractor for Project B but according to the government gazette, the project was awarded to the CCECC & CRWJ Joint Venture for a contract sum of HK$561.6 million in June 2004.
The engineering consultant supervising the projects was not identified but according to the gazette tender notices, the consultant was Mott Connell.
While Project A finished on time and within the budget of HK$32 million set by the Finance Committee of the Legislative Council, it was a different matter for Project B.
The government had to apply for additional funds before it could award the contract in 2004 and again in 2007 and 2008 to top up the approved project estimate, which eventually stood at HK$865.1 million.
The final account for the contractor, which took three and a half years to do after completion in June 2009, totalled HK$743.5 million, representing an increase of 32 percent over the original contract sum.
With the cost of the consultant added, the final cost topped HK$846.9 million.
There were several reasons for the increase in overall cost, including contract price fluctuations allowed under the contract (HK$122.9 million), works variations to suit actual site conditions (HK$30.1 million) and increase in consultancy fee (HK$23.6 million).
The road for Project B was split into road sections A and B.
The contractor took an additional 1,098 and 983 days to complete the works for section A and B respectively due to inclement weather, constraints due to insufficient vehicle permits, substantial increase in piling obstruction, changes in bridge alignment to avoid existing streams and other design changes
The contractor however was unable to claim all of the additional time as extension of time (EOT) and had to pay liquidated damages totalling HK$26.2 million.
Auditors said part of the delay was actually self-inflicted by the contractor.
“According to the HyD, Contractor B’s slow progress of work during the initial stage of the works was accountable for these delays,” the report said.
Due to slow progress and insufficient resources, the department hit the contractor with seven unsatisfactory performance reports with two consecutive reports in 2005 and 2006, leading to enhanced monitoring of the contractor’s performance on a six-weekly basis.
Auditors took the department to task for not being able to issue enough vehicle permits for the contractor to keep up with progress and insufficient site investigation before contract award which led to increases in cost such as the huge increases in quantities for boulder and rock excavation that led to delays in piling and resulting in prolongation cost payments.
In its defence, the department said the initial site investigation work in the country park areas was severely hampered by restrictions imposed by the Agriculture, Fisheries and Conservation Department.
The department’s handling of alternative designs by the contractor came in for particular criticism.
Auditors noted the 2004 technical circular on the management of alternative designs especially the requirement that there should not be additional cost implications.
Although the contractor said there would be a saving of HK$12 million for its alternative design, in the end, the cost of it was the same as the original design, at HK$150.4 million plus a sum of HK$31 million for price-fluctuation adjustments.
“As a result, there was no cost saving to the government,” the report said.
In addition, the delay in issuing a supplementary agreement to cover the alternative design left the government in an unfavourable position as regards the financial terms.
The agreement was only signed in December 2009, four and half years after approval was first given in June 2005 and six months after substantial completion in 2009 and only after the department had paid 99.96 percent of the total cost of the alternative design.
Although the approval stipulated no entitlement to EOT, the contractor was still awarded EOT totalling four months as well as associated prolongation cost of HK$10.5 million arising from the alternative design.