XN000022-1997-03-05 — Page 52

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No evidence of an upward trend in contractual claims

Following is a question by the Hon Zachary Wong and a written reply by the Secretary for Works, Mr Kwong Hon-sang, in the Legislative Council today (Wednesday):

Question:

Reply:

Will the Government inform this Council:

(a)

(b)

(c)

Mr President,

of the individual public works projects in which compensation in excess of $50 million was claimed by contractors, together with the total amount of compensation claimed, over the past three years;

of the reasons for contractors claiming compensation in respect of the above projects, the outcome of such claims and the amount of compensation ultimately paid by the Government; and

whether there is an upward trend of such claims in recent years and, if so, what the reasons are; and what measures the Government has put in place to improve the situation?

Construction contracts for public works apportion risks involved in the construction process between the Employer (Government) and the Contractor. It follows logically, therefore, that contracts should provide means by which contractors may submit claims for additional money (cost claim) or time (extension of time or "EOT" claim) or both, associated with the risks where liability rests with the Employer. Contractual claims are a normal and natural part of construction contracting.

For a construction contract, claims for compensation are assessed, determined and valued, where appropriate, by the Engineer for the Contract (the Engineer) in accordance with the terms and conditions of the contract. The amount so assessed by the Engineer is usually less than that claimed by the contractor, often substantially less.