Let developers bear cost overruns, urges academic
A prominent academic has proposed that the government transfer the risk of over-expenditure in the “Lantau Tomorrow Vision” project to property developers so as to save up considerable financial reserves.
Chau Kwong-wing — chair professor of real estate at the University of Hong Kong — suggested that developers be made to bear the risk of over-spending when contracting reclamation works.
The builders could also pocket the profits generated by the project and better manage it, thus avoiding possible extra expenditure generated by frequent changes to design and construction plans — a major cause of cost overruns.
In recent years, several large-scale infrastructure projects in Hong Kong have encountered significant cost overruns. Among the cases, the government has to shoulder part or all of the additional expenditure according to different contracts signed with developers.
Professor Chung Kwok-fai — another renowned academic and structural engineer — however, doesn’t think that Chow’s proposal could really solve the problem.
He reckoned that the overrun risk, which may be unaffordable for many developers, could deter them from bidding for the project, especially when they’re uncertain of future profits.
Instead, Chung believes that the reclamation work for “Lantau Tomorrow Vision” could cut much of the expenses by taking advantage of the facilities and services of experts involved in the reclamation project.
Some advanced equipment and world-class engineers and planners — indispensable for many reclamation projects in the city — are from foreign countries.
“By making use of their expertise in consecutive projects, we could save a lot of spending in getting them here and in travel,” said Chung.
Reclamation work for the “Lantau Tomorrow Vision” project, to the east of Tung Chung on Lantau Island, is expected to be completed by 2023.
The first batch of housing units created by the development is projected to be ready by 2032.
Taishan has used construction waste from Hong Kong to reclaim about 660 hectares of land, equivalent to more than 34 Victoria Parks.
A reclamation site in Taishan, Guangdong province. Hong Kong has been paying hundreds of millions of Hong Kong dollars every year to transport construction waste to Taishan since 2007.