Speech by Secretary for Works

Following is the speech (English only) by the Secretary for Works, Mr Lee Shing-see, at the opening ceremony of the Housing Conference 2002 today (January 16) :-

Dr. Cheng, Mr Crane, distinguished guests, ladies and gentlemen,

I am pleased to attend the Housing Conference 2002 with the theme of "New challenges in quality housing reforms", and to be invited to deliver an opening address in front of this impressive gathering of industry leaders and senior professionals.

The traditional wisdom of housing projects purely as a means to provide physical shelter has long given way to rising public aspirations and rapid social developments. Over the passage of time, housing has gradually evolved into a holistic concept embodying innovative design features, advanced technology applications, enhanced creature comforts and ease of accessibility. This approach requires greater sensitivity and faster responsiveness to user requirements as well as better co-ordination among different contributing parties on the supply chain. The Housing Conference 2002 presents an ideal forum to share ideas and experience on the core issues of quality, sustainability, partnering and risk sharing.

I believe few will dispute the fact that our construction industry is facing an extremely challenging period. As a small economy with an open trade system and a virtually free market, Hong Kong cannot be spared from the volatility of external economic conditions. The sharp reversal of fortunes since 1998 has caught many by surprise and triggered off some painful but unavoidable structural adjustments. While one cannot dismiss the trauma that this process has inflicted upon individuals, the community in Hong Kong has reacted in a typically pragmatic fashion, showing yet again our unique strengths of resilience and flexibility. Instead of looking for quick-fix solutions, those with a perceptive mind have promptly switched to the new rules of engagement on a tormented corporate landscape. This unique survival instinct and adaptability will continue to provide us with an edge over other players in the market.

Perhaps I am exposing myself to the risk of agitating some people by suggesting that amidst this surge of morbid sentiments lies a window of opportunity to break away from the old paradigm. In fact, the industry must gear itself up for even more sweeping reforms under these adverse circumstances. Against this backdrop, the report of the Construction Industry Review Committee (CIRC) has set out a roadmap to promote immediate steps as well as long-term measures to upgrade quality and competitiveness.

To take forward such a massive change programme calls for mutual support and understanding between the industry and Government. The Provisional Construction Industry Co-ordination Board chaired by the Honourable Henry Tang will serve as a focal point to inculcate a progressive service culture, to pool together efforts on an industry scale, and to sustain the momentum for change. As a complement to this new mechanism, a steering committee under my personal direction has also been established to drive for progress on those recommendations that require an initial lead from public sector clients.

Although the institutional framework that I have just outlined has only been in existence for no more than a few months and is still picking up its speed, I would like to highlight a number of initiatives being pursued by the Works Bureau that might bear some relevance to the discussion topics today.

Construction Personnel Registration Scheme

One common ingredient for success in business is a dedicated and motivated team of staff. While technology plays an increasingly important part in raising productivity, nothing replaces the mastery of a human touch. For the construction industry, quality of workmanship is still an essential key to continuous customer satisfaction and loyalty.

The present regulatory system of construction personnel is highly fragmented and incomplete. Despite some existing schemes catering for selected technical trades, there is no statutory provision governing the registration of general construction workers. This has caused difficulties in promoting skills development, hampered manpower planning and professional development. The lack of a reliable personnel database has also inhibited effective site management, risk assessment and deployment of safety procedures.

We intend to rectify this problem by establishing a statutory registration scheme for construction personnel. Given its extensive coverage and possible impact on frontline workers, we have conducted a detailed consultation with all interested parties on principal features of the scheme including registration qualifications, transitional arrangements, level of fees and penalties. Our target is to introduce a bill into the Legislative Council later this year and to commence the registration system not later than 2003.

Once successfully launched, the scheme will serve as a platform for the introduction of other initiatives to upgrade the level and variety of professional skills possessed by our construction workforce. It will also provide a more reliable basis for manpower forecast and planning.

Partnership in Construction

The hallmark of all successful business ventures is collaboration, accommodation and teamwork. Growing complexity of construction projects calls for closer involvement and integration. The prevalence of an adversarial attitude in the industry often gives rise to inflation of costs, inefficiency and protracted disputes. The ultimate aim of a partnering approach is to instill a sense of shared vision among key stakeholders and to resolve any problems that arise during project implementation. Experience gained by the Housing Authority and MTR Corporation has indicated that when properly and consistently applied, partnering can achieve considerable benefits in enhancing performance.

The CIRC has suggested to augment the concept of partnering with incentives, such as target cost contracting and prime contracting, to induce pursuance of improved project outcomes. To this end, we have been actively examining different alternative procurement approaches with a view to achieving better value for money and facilitating better integration in project delivery. A research will soon be commissioned for completion by end of this year to gather local and overseas knowledge on this subject, and to evaluate the merits of different contractual and procurement arrangements. This should be able to shed some light on the best way in which partnering could be more widely adopted in the public domain.

Electronic Services Delivery for Works Project

Another common tool to increase productivity is importation and application of new technologies. At present, a unified Computer Aided Drafting Standard for Works Departments is in place so that project participants could exchange engineering information with data integrity. We have also made it an option for tender submissions and consultancy proposals to be placed on removable media such as CD-ROMs.

From a strategic perspective, the main thrust of our efforts is enshrined in the Electronic Services Delivery (ESD) framework anchored upon the Works Project Communication Platform and the Works Project Information Standard, supported by administrative infrastructures and specialized services catering for project procurement, site communication and project management.

To implement this framework requires an overarching strategy for better project collaboration. We are finalizing a preliminary strategy based on the views expressed so far, and I urge you to participate actively in our consultation exercise, which will soon start.

Construction Procurement System

In terms of contract procurement, Government as a public entity must abide by the four basic principles of openness, transparency, fairness and cost-effectiveness. Unfortunately, there is a general impression that public procurement policy lacks sophistication, and that it will inevitably lead to acceptance of the lowest bid, irrespective of the project outcome. But it has long been our established practice to evaluate tenders based on a balanced emphasis on conformity, capabilities and price.

A statistical survey that we conducted recently shows that out of the 100 works contracts awarded in the financial year 2000-01, 28% were not won by the lowest bidders. It thus remains debatable if conclusive evidence is available to back up the allegations made against the existing procurement system.

However, we fully acknowledge the industry's feedback and have taken action on a few major fronts, including extended usage of marking schemes in evaluating public works contracts, wider application of design and build contracts to encourage product innovation, and addition of past performance as an important attribute in assessing the quality of tenderers.

Combined price and quality assessments are at present being used in respect of major public works contracts, subject to approval given by the concerned tender boards. We will seek to streamline the approval process through a standard marking scheme, and are actively exploring the feasibility of combined assessment for smaller contracts by way of a simplified marking scheme based on the Contractor's Performance Index.

Furthermore, we look forward to working together with the industry to identify possible ways to tackle the problem at source by preventing the emergence of unreasonably low bids, rather than examining how to screen them out.

Before closing, I would like to add that to achieve our vision of an industry that strives for excellence and seeks to surpass expectations requires not just a lead from government regulators and public sector clients, but an impetus generated from the industry itself. It is only with this partnering spirit that we can continue to make Hong Kong tick.

Looking at the conference programme, I am sure you will have an interesting and thought-provoking session ahead. May I wish you all a successful and productive conference.

Thank you.

End/Wednesday, January 16, 2002