m audit that interim payments made for measured work have been fully substantiated and necessitates my calling unduly frequently on the resident site staff for additional information to facilitate my verification of the accounts.
74 Head 80 Subventions: Medical. Subhead 120. Tung Wah Group of Hospitals. The Tung Wah Group of Hospitals is the largest of the voluntary agencies subvented by the Government, in 1976-77 the medical, education and social welfare recurrent subventions paid to the Group totalling $106 million. In view of the extent of public money involved it seemed appropriate in accordance with the policy for a more thorough audit appraisal of subvented organisations, to which I referred in paragraphs 60 and 61 of my 1974-75 report, that the Tung Wah Group should be amongst the earlier of the subvented organisations subjected to my examination. Accordingly in December 1976 His Excellency the Governor conveyed his authority under Section 15(1) of the Audit Ordinance for me to audit, examine or inquire into the records and accounts of the Group. My inquiries, some of the findings of which are summarised below, concentrated mainly on the Medical Division, which absorbs the bulk of the Government subvention, and complemented a survey of the Non-Medical Division conducted by a firm of management consultants, who were commissioned by the Directors of the Tung Wah Group inter alia to carry out a review of the Group's organisation, systems and procedures.
75 Both my report and that of the management consultants indicated a number of weaknesses in the Group's adminis- tration, particularly in the control of staff. The consultants considered that at least some of these weaknesses could be attributed to the highly centralised nature of the management of the Group, under which authority was vested in the Chairman and Vice-Chairman, who were thus overburdened with detailed work, and which because of the relative frequency of changes in the incumbents of those posts, resulted in a lack of continuity at the decision making level which caused uncertainty at the operating level. I understand that as a result of these findings the Directors of the Group have created a post of Chief Executive and, recognising that defects do exist, have initiated reforms which it is hoped will lead to greater efficiency and economy in the use of public money.
76 Over 70% of the Group's recurrent expenditure is incurred in the payment of salaries and allowances to its staff, but the system for ensuring that staff are fully and efficiently occupied is inadequate and additional staff are appointed without proper consideration being given to whether they can be effectively deployed. Once staff are listed on the establishment no subsequent justification of their posts is required, resulting in a substantial degree of overstaffing, and the Group has made little attempt to lay down standard staff ratios for its various hospitals, without which it is difficult to monitor the efficient deployment of personnel. This is perhaps exemplified by the situation which prevailed at the Tung Wah Hospital between the demolition of the Jubilee Block in 1970 and the partial opening of the new Centenary Building in 1976, when despite the reduction of the number of beds by 37% (from 630 to 392) the staff establishment was reduced by only 10% (from 536 to 484). Indeed a comparison for 1974-75 between this predominantly non-acute hospital and the Group's acute Kwong Wah Hospital indicated that the latter had the lower bed/staff ratio, although because of the Tung Wah Hospital's non-acute status it would have been reasonable to expect that the reverse should have been the case. Taking into account that the actual staff strength at the Tung Wah Hospital was below the approved establishment, I have estimated that the cost of employing the surplus staff amounted to some $3 million over the six year period. Moreover in preparation for the opening of the Centenary Building in 1976, when the number of beds was increased to 542, the Group applied to the Government for additional staff to operate the new wing, with the result that a further 43 posts were created, although these should have been unnecessary at the bed/staff ratios approved prior to the demolition of the Jubilee Block. I have suggested that there should be a complete reassessment of the Group's staff requirements. This suggestion is under consideration, but meanwhile I have been assured by the Chairman of the Group that every effort will be made to secure proper control of personnel and the efficient deployment of staff.
77 It is only reasonable to point out that the overmanning at the Tung Wah Hospital between the demolition of the Jubilee Block and the opening of the Centenary Building might not have continued at such a high rate for so long a period had the building been completed by the scheduled time. Its construction was however fraught with delays as well as rising costs. The original proposal submitted in 1969 estimated that the project would be commenced in March 1970 and completed in December 1971 at a cost of $4.7 million, but as the result of a number of changes to the proposal the estimated cost was increased to nearly $7.4 million, on the basis of which Government approved a capital subvention of $3.7 million.
78 Subsequent alterations to the design delayed the commencement of construction which, because the plans were incomplete, it was decided to divide into two stages, although a single contract basis would normally be the more economical. The first stage eventually commenced in January 1971 and was due for completion six months later, although in the event it was not finished until August 1972. Whilst some problems had been encountered with the foundations this was not the sole cause of the delay, but no attempt was made to claim damages from the contractor. I have been told by the Chairman that the Directors were reluctant to initiate such a claim, because the contractor made a substantial donation towards the project and also because obscurities in the contract would have created difficulties in advancing a claim.
79 Meanwhile the Directors decided prematurely to invite tenders for the second stage of the building and these were received in February 1972. Because of the delays to the first stage this was some five months before it was possible to start work, and in fact work did not actually commence until a year later, in February 1973. Notwithstanding his earlier dilatory performance the contract was awarded to the contractor who had carried out the first stage, but although he had confirmed as late as December 1972 that he would adhere to his original tender price, after being awarded the contract he sought and was granted over $400,000 as compensation for the increase in the prices of materials that had occurred
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