6 June 2002
Yuen Long and Long Ping stations contract
Commenting on a magazine article published today (Thursday, 6 June) on the contract for building Yuen Long and Long Ping stations of West Rail, a spokesman for the Kowloon-Canton Railway Corporation (KCRC) said there was no question of any attempt to cover up extra costs on the part of the Corporation.
"We had earlier announced that a Supplemental Agreement, valued at $89.2 million, had been reached with the contractor.
"This Supplemental Agreement dealt with payments to the contractor for delay recovery measures and for overcoming problems arising from unforeseen ground conditions. The agreement resolved these problems up to and including 31 October 2000.
"Until a project is completed, no one can say with certainty that there will not be any further payments owing to unforeseen circumstances.
"At the time the Supplemental Agreement was concluded, there were still a number of unresolved problems. Further unforeseen factors had resulted in additional work having to be carried out by the contractor, payment for which the Corporation is responsible.
"This included the fact that the original tender documents produced by the Corporation’s consultants (Ove Arup) had significantly underestimated the amount of rock to be excavated during the process of piling.
"This opened the way for the contractor to claim extra costs for having to excavate extra rock in the process of piling.
"The same unforeseen ground conditions had also resulted in the need for additional testing of piles, significant increases in pile lengths, and the casing of the piles over their full length (instead of over part of their length, as originally intended).
"All these factors – wrong quantities, additional casings, and much deeper piles – resulted in additional costs finally determined at $132.6 million.
"Since these additional costs are valued and can be dealt with under the provisions of the contract, they do not form part of the Supplemental Agreement.
"This is not money wasted. The contractor has had to carry out extra work partly because of unforeseen ground conditions and partly because of the miscalculation of rock quantities by Ove Arup, and is entitled under the contract to be paid for the extra work.
"If Ove Arup’s calculations of rock had been correct, the extra costs would have been reflected in all the original tender prices," he said.
The spokesman added that the Corporation was holding Ove Arup responsible for the wrong calculation, and considering taking appropriate action.
On property development, the spokesman said the original plan was to build six tower blocks above Yuen Long Station.
"We discovered later that the site of one of the blocks was above an area that would require piles of up to 170 meters in length.
"This would technically be very difficult. Piles of such depth have never been driven in Hong Kong before. It would have involved enormous costs, with no certainty of completion.
"This would make the development of this block financially unviable because the total cost of accommodation would have exceeded the expected selling price. It was therefore deleted from the development plan. It was not because the Corporation was trying to make up for time lost," he said.