ENG-1993 — Page 312

THE AIRPORT CORE PROGRAMME

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awarded in the course of the year. All were awarded within budget estimates and were proceeding smoothly. They represented 78 per cent of the total value of the government's ACP contracts, and over 90 per cent of the total highways.

The contracts awarded during the year included the Tung Chung section of the North Lantau Expressway at a cost of $920 million; three sections (for the Cheung Ching Tunnel, Kwai Chung Viaduct and Rambler Channel Bridge) of Route 3 for a total of $3.4 billion; the north and south sections of the West Kowloon Expressway for a total of $2.1 billion; the Lantau Fixed Crossing toll plaza advance works and traffic control system for a total cost of $456 million; a variety of land formation and sewerage and drainage works on the West Kowloon reclamation for a total of $3.1 billion; engineering works for the Phase I Central reclamation awarded at a cost of $1.6 billion; and water supply works to North Lantau at a total cost of $942 million.

The government welcomes international participation in the contracts and is strictly applying its traditional 'level playing field' approach on tendering procedures and the award of contracts.

A significant number of international companies, from a wide range of countries, have won construction and site investigation contracts, often in joint ventures. By the end of 1993, Japan had won the largest share by value with 27 per cent of the total, followed by Hong Kong (17 per cent), United Kingdom (14 per cent), the Netherlands (11 per cent), the People's Republic of China (eight per cent), France (seven per cent), Belgium (six per cent), "Australia (four per cent), the United States of America (two per cent), New Zealand (two per cent), Germany (one per cent), Italy (0.6 per cent), and South Africa (0.4 per cent). Firms winning consultancies have come from the United Kingdom, United States of America, the Netherlands, Germany, Australia, Canada, Denmark, Sweden, Switzerland, New Zealand, France, Japan and Hong Kong.

The selection of contractors, whether local or multi-national, is strictly based on their ability to meet the government's requirements in terms of completion time, standards and specifications, and the lowest acceptable price.

Management and Cost Controls

Following the establishment of an overall strategy on the scope of the ACP, its critical programme objectives, and its budget,-regular reviews were conducted in 1993. The strategy is the basis for the overall programme and its project management system. Fixed-price, lump sum contracts are being used for most projects to minimise risks to the government, especially from inflation and changes in the estimation of quantities.

A cost control system has been introduced for the ACP, laying down procedures for monitoring, scrutinising and controlling costs during the design and construction of the government-funded projects. Early warnings of possible cost increases are reported to the New Airport Projects Co-ordination Office (NAPCO) and relevant department heads. Proposed design changes leading to higher costs have to be fully justified and approved before detailed design can start. This system enables upward trends, which could lead to cost increases, to be identified early. If cost increases are accepted, off-setting savings are sought in the same or other ACP projects.

Government works departments, and other participants such as the PAA, MTRC, and the Western Harbour Crossing franchisee, have full responsibility for their own project- level planning, execution, control and management. They are required to complete projects