Let de­vel­op­ers bear cost over­runs, urges aca­demic

China Daily (Hong Kong) - - CRITICAL HK ISSUES - By LI BINGCUN in Hong Kong [email protected]­nadai­lyhk.com

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.

PRO­VIDED TO CHINA DAILY

Tais­han has used con­struc­tion waste from Hong Kong to re­claim about 660 hectares of land, equiv­a­lent to more than 34 Vic­to­ria Parks.

PRO­VIDED TO CHINA DAILY

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.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.