South China Morning Post - Hong Kong feedToday, 06:45
Concerns have been raised over the effectiveness of the MTR Corporation's plan to manage its contingency fund for the construction of the high-speed railway to the border, with fears that having the money controlled by three parties could create further delays and higher costs.
A report last month from a panel of experts the MTR Corp commissioned to investigate the multibillion-dollar project's two-year delay warned that the rail operator's budget was too tight.
It suggested the MTR Corp apply for a larger contingency fund, to better prepare for unforeseen problems.
It also called for the government, the MTR Corp and the project team to jointly control the contingency fund, "signal[ling] that access to contingency funds is increasingly difficult" and therefore preventing the overuse of that fund.
The fund had previously been controlled by the project team.
The cost of the project has risen to HK$71.5 billion, about 10 per cent more than the original estimate, according to the MTR. It is expected to be completed in 2017.
But Professor Chau Kwong-wing, head of the University of Hong Kong's Department of Real Estate and Construction, worried that the MTR Corp's new money-management plan could backfire.
"It may take some time for the contractors to get used to the new approach as it is not the way it was done," he said.
"The contractors may hesitate when they bid for tender as they are worried it would be more difficult for them to get the money when there are changes in the design."
Chau said the tender price could rise as a result because contractors had to include the risks in their offer.
"When it's difficult to get the money, the chance of delay will increase. There's a trade-off between time and cost, you can't have it both" ways, he said, adding that leaving the money under the project team's control could give contractors flexibility in coming up with remedial measures.
Albert Lai Kwong-tak, the policy committee convenor of think tank The Professional Commons, said even if the money was controlled by three parties, it would still provide little incentive to avoid it being used up.
"Although the last bit of the contingency fund is controlled by the government, the project team is fully aware that the government has already got the money there. So I see there's little incentive for them to save money simply because they need to write up a few more papers to get the money used up."
Lai said the model would also provide a convenient excuse for the government to get more money because officials could try to convince the Legislative Council that this was recommended by experts.
"This approach will not be of any value in minimising budget overrun, but it will have a lot value in the government's perspective in getting extra funding from the Legislative Council," he added.
The MTR Corp said it had accepted the recommendations in the experts' report, including the proposed new contingency fund, and was reviewing them and exploring ways to implement them.
A spokeswoman added that the corporation would re-evaluate the project cost, particularly the level of contingency.
The MTR Corp is expected to submit its request for extra funding to complete the high-speed rail link early next year.
http://www.scmp.com/news/hong-kong/article/1641572/worry-over-high-speed-rail-contingency-fund -- gReader
