LCQ5: Funding proposals for public works projects

Following is a question by the Hon Michael Tien and a reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (June 10):


I have noticed that since the Finance Committee (FC) of this Council scrutinised the funding proposal in relation to the North East New Territories New Development Areas last year, FC and the Public Works Subcommittee (PWSC) have been slow in their progress of scrutinising funding proposals for public works projects. The Government originally expected to submit 89 funding proposals for public works projects to PWSC and FC in the current legislative session, but up to the end of last month, these two committees passed respectively merely 28 and 22 funding proposals, i.e. less than 32 per cent and 25 per cent of them. In this connection, will the Government inform this Council:

(1) of the time required in general for a public works project from initial planning to completion, and the time required for each procedure involved; how such lengths of time compare with the relevant time lengths of the public works projects for which the authorities submitted funding approvals to FC last year and this year; if the time lengths involved in those projects are longer than those of the projects in the past, of the amount of the relevant additional expenditure; among the funding proposals for public works projects submitted by the Government to PWSC and FC in each of the past five legislative sessions, of the respective percentages of them approved;

(2) of the number of public works projects the tendering exercises for which were deferred due to the failure in obtaining funding approval in time, and the number of public works that were delayed due to the failure in obtaining approval for supplementary provisions in time, since last year, and whether the Government was required to pay any compensation to the contractors for such delays; if so, of the amounts and sources of the funds involved; and

(3) as it has been reported that the poor relationship between the executive and the legislature has posed many obstacles to funding proposals for public works projects and other work of the Government, whether the Government has assessed if the far-below-target number of projects passed by PWSC and FC so far involves any maladministration; of the measures that the Government has in place to ameliorate the situation, such as whether it will review the tendering system, or adopt the arrangement of "tendering before funding application" for certain public works projects, so as to enhance the efficiency of policy implementation?



The HKSAR Government keeps on investing in the Capital Works Programme (CWP). Over the past three years, the annual capital works expenditure has maintained at a level of about $70 billion and accounted for around 3.3 per cent of the local GDP. This plays a crucial role in promoting economic growth, improving the quality of living, creating employment opportunities and sustaining Hong Kong's competitiveness in the long term.

The Government has all along been implementing capital works projects in an orderly manner. Nonetheless, the progress of the funding approval of Legislative Council (LegCo) on new projects will directly affect the annual expenditures in CWP over the coming few financial years. Should there be sustained impact on the annual expenditure in capital works, the economic development of Hong Kong in the next few years, the livelihood of construction workers and the aspiration of trainees to enter into the construction industry would be affected. It would also cause a severe blow to other related industries such as materials supply, procurement and logistics. Delay in project implementation may also create an acute construction peak with numerous projects in progress concurrently several years later, resulting in more severe labour shortage.

My reply to the question of the Hon Tien is as follows:

(1) After project initiation, a capital works project needs to go through the stages of design, public consultation and approvals in respect of planning and environmental protection requirements etc. When the planning and design of the project has substantially completed, further consultation with the relevant LegCo Panel will be conducted before submission to the Public Works Subcommittee (PWSC) for consideration and, ultimately, the Finance Committee (FC) for funding approval for implementing the project. Generally speaking, it takes around 50 months for a project to proceed from project initiation to funding approval. There is no general estimated period from works commencement to project completion as it varies according to project scale and complexity.

The progress of scrutinising the capital works projects by FC and PWSC has slowed down since last May. FC only approved 13 new projects in the 2013-14 legislative session as compared to 39 projects in the 2012-13 session while the approved funding also shrunk from $90.9 billion to $3.6 billion over the same period. Indeed, many projects submitted in the previous legislative session were only approved in recent months. The funding approval of these projects has delayed by more than six months on average.

For the current legislative session, the scrutinisation progress by PWSC and FC still fell behind schedule, leading to various degrees of delays in a number of projects. But the statistics on the overall situation can only be compiled at the end of the current legislative session.
The table below shows a comparison of the percentages of endorsement for new projects by FC and PWSC over the past five legislative sessions:

                      PWSC       FC
                       ----          --
2009-10         100%       100%
2010-11         100%       100%
2011-12         100%       100%
2012-13          95%        95%
2013-14          44%        68%

(2) A total of 23 projects failed to obtain funding approval in 2013-14 legislative session and only managed to secure the approval in the current legislative session. As a result, their works commencement had to delay by more than six months on average while the project costs also increased by about $2.4 billion. Two of these projects needed to re-tender as their tender validity periods had expired. Five projects had extended their tender validity periods. The remaining 16 projects could not conduct their tender exercises as scheduled. According to the current practice of the Government, tender documents do not contain any provisions on tender compensation. Hence the Government has not paid any compensation to the tenderers concerned.

(3) The HKSAR Government attaches great respect to the LegCo for their efforts in scrutinising capital works projects and monitoring the uses of public money. We have made timely submission of these projects to the relevant LegCo panels and committees for consideration. Government officials have also duly attended the meetings to answer questions and provided supplementary information as requested by Members. Although FC and PWSC have also held additional meetings in the current legislative session, the funding approval progress remains unsatisfactory.

Generally, funding approval from the LegCo must be obtained prior to commencing tender exercise for the projects. Nonetheless, under special circumstances, for instance where some projects need expeditious implementation due to urgency, the Administration may conduct tender exercise prior to funding application to the LegCo. To mitigate the impact of delay in funding approval, we would consider various practicable measures as appropriate in individual projects including "tendering before funding approval" after conducting comprehensive risk assessment for expediting the commencement of works.

Last but not least, I would like to urge all Members to uphold the interests of the whole society and respond to the public's aspirations by seizing the time to vet the funding proposals for the capital works projects in a practical manner. This would facilitate the smooth delivery of the projects, which are closely related to people's livelihood.

Ends/Wednesday, June 10, 2015
Issued at HKT 15:50