Project at risk of being treated as abandoned after 90 days
The troubled project to build an artificial bathing beach in Tai Po district is at risk of the contractor regarding the contract as abandoned by the government if work is not resumed within a specified period.
That’s the view from a veteran industry consultant when asked what were the options remaining to the contractor after the government suspended the contract.
“Following the grant of leave to apply for judicial review on the project on October 30, we issued an order for the contractor on November 6 to suspend all works on site,” a spokeswoman for the Civil Engineering and Development Department said in response to enquiries by Construction Post.
Last June, the government awarded the contract for a bathing beach at Lung Mei in Tai Po to Welcome Construction for HK$74.3 million despite strong opposition from environmentalists upset over the potential for irreparable damage to the delicate ecology at Lung Mei.
Asked whether the contractor had submitted claims for extension of time and costs, the spokeswoman said any claims would be dealt with according to the terms of the contract.
The industry consultant said any claims from subcontractors and for increased labour costs could also be passed onto the government unless the contract conditions provided another remedy.
“It should also noted if the suspension order lasts for longer than a specified period of time, there is a specified procedure in the conditions of contract when followed then permits the contractor to treat the contract as abandoned by the employer. The contractor is then entitled to claim his full costs of ending the contract,” the consultant said.
Assuming the project is using the government’s General Conditions of Contract for Civil Engineering Works 1999 edition, clause 55 of the contract provides for the contractor, after a suspension lasting more than 90 days, to seek permission from the employer’s engineer to proceed with the work.
If permission is not granted, then the contractor could elect to treat the works as “an abandonment of the contract by the Employer”.
With the slow paced nature of the judicial process generally, it looks like any decision of the judicial review will not be forthcoming anytime soon.
The project has come under fire over an ecological study submitted to the Environmental Protection Department that environmentalists claim was not comprehensive enough and thus EPD was misled into issuing an environmental permit for the project in April 2010.
No construction work appears to have been ever carried out on the site when Contruction Post visited the site in August and earlier this month.
There is no sign of the contractor’s site office, construction machinery, site hoarding or even a project signboard.
As late as August this year, CEDD said it was still pressing ahead with the works despite a threat by the Save Lung Mei Alliance to apply for a judicial review of the government’s decision to proceed with the work and award the contract.
The lack of construction activity however may be explained by the fact that land for the construction site is not ready yet.
“Necessary land allocation procedure has been in place. Physical clearance and acquisition has been withheld pending the outcome of the judicial review,” the CEDD spokeswoman said.
The Finance Committee of the Legislative Council approved funding of HK$208.2 million at money-of-the-day (MOD) prices for the project in July last year.
The works include a 200-metre long bathing beach with groyne (a kind of wave barrier made of rubble mound), beach buildings, a refuse collection point and a fee-paying carpark.
According to a paper issued to the Public Works Subcommittee of the Finance Committee in May 2012, a sum of HK$85.8 million was also earmarked separately for land resumption of agricultural lots and other ex-gratia allowances for farmers and fishermen.
Welcome Construction has been kicking its heels on this contract ever since tenders were called in August last year.
After tender submission in October 2012, the tender validity period was extended several times to June 2013 due to the fuss kicked up over the project.
With the judicial review finally going ahead, it may be wondering how much longer it is willing to wait to go through with the project.