have been recovered from bondsmen had sufficiently prompt action been taken to advise them that the relevant contractors were in default.
68 Head 69 - Public Works Non-recurrent: Engineering. Subhead 725. Widening and realignment of Castle Road (Seymour Road to Robinson Road) and Castle Road/Robinson Road junction improvements. In paragraph 73 below, I refer to the continuing lack of a clearly defined method of recording the interim measurements of work at the High Island water scheme. A comparable situation was noted at the site of the Castle Road/Robinson Road junction improvements, where because of frequent changes of Resident Engineer and the necessity to concentrate on the engineering difficulties encountered, it has been agreed that the measurement records were less than ideal. I have been advised that, with the substantial completion of the project, a full record of measurement will be available shortly. Whilst this will not give me an adequate assurance with regard to the payments under the above subhead during the financial year under review, it will permit me ultimately to verify the correctness of the final sum paid under the contract.
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69 Head 70 Public Works Non-recurrent: New Towns and Public Housing (other than Housing Authority) New Territories Village Removal Policy. To facilitate Government development schemes in Tsuen Wan District, a revision in the policy for resiting old villages affected by such schemes was approved by the Finance Committee of the Legislative Council in March 1969. The policy included the grant of assistance to pre-war owners of old village houses, or post-war owners by succession, by the formation of village resite areas and the provision of new village houses in exchange for the surrender of the old houses, the standard new house, provided on a ground area of 675 square feet, being a two-storey structure with a cockloft (which could be converted into a third storey) and which was granted in exchange for each 0.01 acre (436 square feet) of building land surrendered.
70 It was on this basis that the Finance Committee, in 1973, approved funds for the reprovisioning of Sham Tseng village, and an initial contract for 18 houses was let in August 1975 at a cost of $1.64 million, approximately $91,000 per unit. Three months later, following a change in the small house policy whereby three-storey houses were permitted, the specification for the houses was modified to accede to villagers' requests for an extra storey of domestic accommoda- tion and this modification, for which funds were available in the project vote, was approved by the Deputy Financial Secretary at an estimated additional cost of $340,000, approximately $19,000 per unit. Similar changes in design were adopted for the remaining 42 houses required for the scheme and also for 44 houses at Wo Yi Hop Road (required in connection with a further removal), the unit cost of these houses being in the region of $119,000 and $118,000 respectively. The overall increase in cost for both schemes was some $2 million, the modifications in design resulting in houses which, compared with those previously provided, were considerably enhanced both in the extent of the accommodation and in the unit cost. As these changes were not referred to the Finance Committee, who had approved the original policy on the basis of the lower standard of housing, I have questioned whether sufficient authority for the variations was obtained. Although I have not yet received a reply to my inquiry, I understand that the Secretary for the New Territories has now prepared a paper on the village removal policy and proposes to seek clarification of the circumstances in which it is necessary to go to the Finance Committee to seek specific approval of village removal costs.
71 Head 71 Public Works Non-recurrent: Waterworks. Subhead 901. High Island water scheme. The terms of the compensation awarded to villagers whose lands and homes were affected by the High Island water scheme, to which I referred in paragraphs 51 to 55 of my report for 1974-75, provided that the 101 families involved could, if they wished, elect to receive cash in lieu of some or all of the shops and flats to which they were entitled. Certain of the villagers exercised this option and there remained in the Government's hands 118 of the flats and 7 of the shops, which in April 1976 the Deputy Financial Secretary considered should be disposed of in the most profitable manner and in the shortest period of time. An audit review over a year later showed that in fact only 4 of the flats had been sold, whilst 16 properties had been allocated for various Government uses on a permanent or temporary basis, leaving on hand 100 flats and 5 shops which had remained unused since their completion in 1974 and 1975. Of these, 10 flats have recently been sold and it is proposed to allocate a further 30 flats and shops to departments needing accommodation in the area. I inquired whether consideration had been given to the possibility of making the remaining 65 units available for public housing or private rental, in order that some belated benefit might be obtained for the very considerable expenditure incurred in their construction, but was informed that the properties would not be disposed of in this manner for so long as the possibility existed of their being sold at satisfactory prices. The present intention is to offer the units for sale in lots of 10 at two- monthly intervals.
72 When inviting attention in my previous report to difficulties which had arisen in interpreting wages and materials fluctuation clauses in civil engineering contracts and in verifying the correctness of claims made under such contracts, I made specific reference in paragraph 41 to a case in which I had not seen evidence in support of the computation of a large payment made to one contractor following an ex-gratia variation of the contract, and in paragraph 42 to my request for further information to substantiate the inclusion of a particular element of that payment involving an estimated $2.8 million. Despite several subsequent reminders the Director of Water Supplies has yet to respond to my inquiries on the matter and to supply the explanations required.
73 Somewhat similarly, at the time of my most recent site visit to the High Island water scheme, no action had been taken to re-establish the system of keeping measurement records in a form to permit the adequate verification of interim payments, although as I mentioned in paragraph 54 of my previous report, the Director of Water Supplies had earlier informed me that this would be done. The absence of such records continues to impede my obtaining sufficient assurances
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