Industry faces a drop in value of new public works

Industry faces a drop in value of new public works

New government projects worth $24.9b in coming year 2014-15

The construction industry is in line for a slight chill with the government cutting back on the value of new projects for the coming financial year as the industry continues to digest what it already has.

According to the estimates of the government’s budget for the 2014-15 financial year released last week, the total value of new public works contracts totals just HK$24.9 billion.

Compared with the total value of HK$92.5 billion for new projects in the current financial year, this represents a huge reduction in the amount of new work to be made available.

However the HK$92.5 billion figures includes certain very expensive one-off items such as the Tuen Mun-Chek Lap Kok Link costing HK$44.8 billion and the Centre for Excellence in Paediatrics costing HK$13.8 billion.

These two items alone accounted for 63 percent of the estimated cost of new work in the current financial year which ends at the end of this month.

The new figure of HK$24.9 billion however does not include work to be awarded by related government organisations such as the Housing Authority and the public-listed railway operator MTR Corporation (0066).

In the Chief Executive’s policy address in January this year, the government made it official policy to provide 470,000 new housing units over the next 10 years.

There were other spending initiatives on infrastructure such as the proposed “East Lantau Metropolis”, the New Development Areas of Kwu Tung North and Hung Shui Kiu and relocating various government facilities into caverns.

However with such projects still under planning, the industry will have several years to wait before tenders are actually called.

As such, apart from government contracts, contractors will have to look towards the Housing Authority, the MTRC as well as the private sector to maintain turnover.

In 2013, the Housing Authority and MTR Corporation awarded new construction work totalling HK$16.3 billion and HK$12.8 billion respectively.

As in the past, the industry can look forward to a varied diet of public works for the new financial year.

Among the bigger value items are a sports centre in Area 14 Tuen Mun costing HK$1.19 billion, the organic waste treatment facilities costing HK$1.53 billion, design and advance works for the integrated basement for the West Kowloon Cultural District costing HK$3.98 billion and preparatory works for the redevelopment of Queen Mary Hospital costing HK$1.73 billion.

Work for the design, site investigation and advance works for the integrated basement for the West Kowloon Cultural District is due to start in the second quarter of the 2014-15 financial year  (Danny Chung)

Work for the design, site investigation and advance works for the integrated basement for the West Kowloon Cultural District is due to start in the second quarter of the 2014-15 financial year (Danny Chung)

One project has been rolled over from the current financial year, the construction of additional floors at Central Piers Nos 4, 5 and 6, now estimated to cost HK$642.3 million compared with the previous estimate of HK$558.9 million.

The Public Works Subcommittee of the Legislative Council’s Finance Committee refused to endorse the government’s funding application for this project last June, asking for another rethink on the project.

The engineering consultants will continue to have plenty to do on studies and design work.

These include various feasibility studies for relocation of government facilities such as sewage treatment works to caverns.

The consultant fees and investigation for the relocation of Sha Tin sewage treatment works is estimated to cost HK$644.5 million.

The planning and engineering study for Sunny Bay reclamation will cost HK$53.9 million while the strategic study for artificial islands in the central waters will cost HK$231.8 million.

A pilot study on underground space development in selected strategic urban areas such as Causeway Bay is estimated to cost HK$69.5 million.

The planning, engineering and architectural study for topside development at the artificial island for the Hong Kong Boundary Crossing Facilities will cost HK$63.6 million.

According to the Housing Authority’s latest six-month schedule for new building works, a total of four public housing and Home Ownership Scheme projects are due for tendering in the period December 2013 to May 2014.

The MTR Corporation meanwhile will be looking to award three contracts for the Shatin-Central Link project during the coming financial year.

These are the Cross Harbour Tunnels, Exhibition Station and Tunnels and Causeway Bay Typhoon Shelter to Admiralty Tunnels.

However it would be second half of 2014 before contractors can get their hands on these contracts.

According to the MTR’s website, it is currently looking to award another five smaller works contracts on the operating railway this year, three of which will be due only in the third quarter of 2014.

Danny Chung

 

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