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Statement by PCICB Chairman on KCRC's Investigation Report on West Rail contracts

The following is a statement by Chairman of the Provisional Construction Industry Co-ordination Board (PCICB), Honourable Henry Ying-yen Tang, on the investigation report on West Rail contracts released by the Kowloon-Canton Railway Corporation (KCRC) today (May 16):

"As a pan-industry discussion forum, PCICB will examine carefully the findings and observations contained in the investigation report released by KCRC, particularly from the perspective of project supervision and dispute resolution.

Since risks and uncertainties are inherent in all projects, the Construction Industry Review Committee (CIRC) has suggested that systematic and effective risk management should be promoted as an effective tool to bring about satisfactory achievement of project objectives. The major public sector clients are driving this initiative by developing guidance notes to put in place an integrated approach on the assessment and management of prominent construction risks.

In a highly competitive business environment, I would like to urge that greater vigilance be exercised against the tendency of some bidders to make an inadequate allowance to cover risks. Public sector clients should take the lead by taking steps to accord due weight to both quality and past performance in the tender evaluation process, and by promulgating concrete measures to screen out exceptionally low bids.

There is also an emerging consensus among industry stakeholders on the advantages of resolving claims proactively and on the merits of adopting a partnering approach to ensure timely project completion. Supplemental agreements and alternative dispute resolution techniques, if administered properly, should continue to be deployed in addition to arbitration and litigation.

The PCICB will take a close interest in developments arising from the investigation report and will collaborate with public sector clients in pursuing the new initiatives on risk management and dispute resolution."

End/Thursday, May 16, 2002

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