for detailed study with a view to realising those benefits. In response to my several inquiries on what had subsequently transpired, I was advised recently that circumstances, including a shortage of suitable posts, had prevented any progress being made towards the further studies which had been recommended. Whilst the recommendations made in the report have been described to me as controversial and the potential savings as debatable, it would nevertheless seem that even conservatively regarded, the magnitude of the possible savings is such as to merit greater priority of attention being given to the matter than it appears to have received. I can see little purpose in fostering management studies unless their recommendations and the areas of potential benefit which they indicate are investigated with reasonable promptitude.
56 Head 63 – Public Works Department: Engineering Development. Subhead 145. Maintenance of sewage treatment plants. Audit observations some years ago on the failure to obtain savings by taking advantage in appropriate cases of the bulk tariff rate for electricity consumption, occasioned the issue by the Director of Public Works of a departmental instruction drawing the attention of the Heads of sub-departments to the need to keep electricity charges under contin- uous review. Nevertheless in December 1976 two further cases were brought to notice in audit in which electricity supplied to installations under the control of the Drainage Works Division of the Civil Engineering Office was charged at the general tariff rate, although consumption was sufficiently high to qualify for a supply at the more favourable bulk tariff rate. In one case the use of the bulk tariff rate had already been agreed by the power supply company seventeen months earlier, subject to the fitting by the Public Works Department of corrective equipment to comply with the conditions of supply, but the installation of this equipment was overlooked and the matter was allowed to lapse until brought to notice by audit. In the other case no application for the more beneficial rate had been made. The bulk tariff rate has now been applied in both cases, but appropriate action by the Public Works Department at the proper time would have resulted in a saving estimated at over $25,000.
57 Head 63 - Public Works Department: Engineering Development. Subhead 147. Primary building materials. 002 Pro- duction and processing of quarried stone. Following correspondence over a period of several years on the costing system in use at Government quarries, a revised system was introduced at the Mount Butler Quarry in 1975, with the intention of evaluating it in the light of practical experience before adopting it elsewhere. In the event the system proved to be too sophisticated for the clerical staff at the quarry and, after a period during which it was operated by the Accounting Services Division of the Public Works Department Headquarters, it was replaced by a modified system devised by the then Quarries Section of the Civil Engineering Office. In my view this system does not operate as effectively as might be wished and is in need of further refinement, but the Principal Government Geotechnical Engineer does not agree and considers that it is adequate to establish an appropriate selling price for the products.
58 As part of a proposed improvement in output, new plant installed at the quarry at a cost of $2.6 million was brought into operation in May 1976, raising the annual production capacity there to 300,000 tons, a level which it had earlier been estimated would be necessary to meet demand. However there are indications that the plant has been considerably underutilised, average output for the ten months subsequent to the ‘running-in' period being at an annual rate of only 180,000 tons, 40% below capacity. Most of the aggregate produced was sold to contractors engaged on Government projects and there seemed to have been little demand from other sources, conceivably because prices appeared to have been insufficiently competitive with those quoted by commercial producers. It is not possible to say whether the Government prices reflected on the operation of the quarry or on the costing system referred to above.
59 Head 63 - Public Works Department: Engineering Development. Subhead 999 010. Quarry products. An audit examination of completed capital works contracts administered by the New Territories Division of the Highways Office of the Public Works Department, brought to notice several cases in which, because of an oversight in the accounting process, the cost of quarry materials supplied under the terms of the contracts had been undercharged. The amount of $190,000 involved has now been demanded from the contractors and recoveries of further additional amounts are being made in respect of similar undercharges on contracts still in progress.
60 Head 64 - Public Works Department: Lands and Survey. I have previously commented on weaknesses in the system of internal control over a contract covering the demolition of buildings and the clearance of Crown land, which could give rise to error or malpractice and result in payment to the contractor of excess claims. Following the revision of certain procedures and some improvement in controls, the overall administration of the contracts for this and other similar work was reviewed by a Contract Adviser of the Public Works Department, who has recently reported that he is satisfied that the approach being adopted towards a general tightening up of the day-to-day management procedures will prove beneficial, but that he is proposing to undertake a detailed examination of the items in the contracts with a view to rationalising them and to simplifying the Schedule of Rates, in order to make the task of valuing the work less complicated. Meanwhile audit surveys indicate that inadequacies still persist in respect of the measurement of the work and the Principal Government Land Agent has expressed the view that they are likely to do so for so long as he lacks the necessary staff for this undertaking. I understand that additional posts for this purpose have been requested, but have not yet been approved.
61 Following the collapse in June 1968, of a retaining wall bounding certain private properties, the lot owners were informed in April 1969, that the Government intended entering on the lots for the purpose of reconstructing the wall and also that the right was reserved to recover an appropriate proportion of the cost from the owners. Notwithstanding the relevant conditions of the lease, no prior notice was served on the owners to repair or reconstruct the wall themselves. The contract should have commenced in June 1969 and been completed in October 1970, but because of problems associated with obtaining access and possession of the sites, work was delayed until July 1970 and took until
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