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The following is issued on behalf of the Housing Authority:
The Housing Authority (HA) will regain control over three public housing construction projects tomorrow (February 17) at 10 am as the contractor has been failing to comply with the contractual requirements on progress of works.
"At the joint meeting of the Authority's Building Committee (BC) and Tender Committee (TC) today (February 16), Members were informed that the Notice of Re-entry served on the contractor in December last year would take effect as scheduled in view of the contractor's persistent failure to proceed with the works with due diligence," the Chairman of BC, Mr. Ip Kwok-him, said.
The construction projects are:-
- Redevelopment of Shek Pai Wan Estate Phase 2 (2,398 flats) scheduled for completion in January 2006;
- Fanling Area 36 Phase 1 (3,167 flats) scheduled for completion in March 2007; and
- Fanling Area 36 Phase 2 (1,598 flats) scheduled for completion in February 2007.
Noting that the contractor's performance in terms of progress of work had become unacceptable since July last year, Mr. Ip said the progress of works at the three sites had been closely monitored through regular site inspections and progress meetings between the contractor and the Housing Department's (HD) professional staff.
"So far, the contractor has failed to demonstrate that there will be any promising improvement in its financial resources, labour strength and material supply to sustain satisfactory progress to complete the contracts," he said.
"The time and financial losses to HA will be enormous if the present situation is allowed to drag on indefinitely," Mr. Ip added.
Stressing that the HD had in place a comprehensive and effective system for monitoring the progress and quality of construction works, Mr. Ip said this type of action "is very rare in the industry and hence is an isolated case where re-entry to the contracts is an action of last resort."
"There is no question of inadequate supervision," Mr. Ip said, adding that the HA will claim against the contractor for the losses incurred by HA arising from the re-entry and the financial implications will be assessed after the award of the completion contracts.
At today's meeting, the TC also endorsed the adoption of a shortened tendering process and shortened construction period for Shek Pai Wan Phase 2 and Fanling Area 36 Phase 2. However, normal construction period and tendering process will be adopted for the Fanling Area 36 Phase 1 as the project nature is large and complex, the remaining works are substantial and the flat production is sizeable.
Mr. Ip stressed that there would be no major impact on the Average Waiting Time of three years although the anticipated contract completion date after re-entry would be delayed by 11 to 18 months for the three contracts.
"Shek Pai Wan Estate Phase 2 is the reception estate for tenants of Wong Chuk Hang Estate affected by the Comprehensive Redevelopment Programme. Subject to availability of suitable flats, tenants can choose flats in other estates on Hong Kong Island," he said.
Noting that the contractor had been suspended from tendering contracts under the HA for six months in September last year, Mr. Ip said it would be removed from our List of Contractors in September this year unless sufficient evidence could be provided to support significant improvement in its financial and corporate structure.
Mr. Ip dismissed allegations that the lowest price quoted for tendering construction projects might cause financial difficulties for contractors as successful bidders for HA's construction projects were not always the lowest bidders.
Under a new tender evaluation system introduced in 1999, tenders were assessed by the twin components of performance and price carrying 20 per cent and 80 per cent scores respectively.
The system was revised in August last year with an added component of corporate score carrying a 10 per cent score. The corporate score includes assessment of enhanced financial capacity and monitoring of payment of workers' wages. Scores for the performance and price components were revised to 15 per cent and 75 per cent respectively. Of the 55 tenders awarded under the new system, seven tenders did not go to the lowest tender.
Mr. Ip said the HA had fully paid the contractor all the monies due to it according to the contract conditions. "It is the contractor's responsibility to pay its sub-contractors and workers," he said.
Expressing concern over the welfare of workers, Mr. Ip said HD had pro-actively taken part in various conciliation meetings among the Labour Department and representatives of workers and trade unions.
"HD will continue to provide assistance where possible. However, the HA is not in a position to pay the contractor's domestic sub-contractors and their workers as there is no contract provision for direct payment to the workers.
"It will set a bad precedent if taxpayers' money are used to pay for outstanding wages due by a commercial organization in financial difficulties to its workers," he added.
In common with practices in the private sector, the HA holds retention money, amounting to 10 per cent of the work done certified under the contract is deducted from every interim certificate until the two per cent cap of the total value of the contracts is reached. It is a safeguard against defective performance or non-performance by the contractor. "It will not be sufficient to cover the losses incurred by the HA arising from the re-entry," Mr. Ip said.
Ends/Thursday, February 16, 2006
Issued at HKT 19:04
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