The hospital commenced operation in 1964 and its hospital blocks had over the years become old, dilapidated and sub-standard. Hence, the government decided to redevelop CMC in two phases. Phase one redevelopment was completed in 2002. CMC Phase two commenced in 2007 and was substantially completed in October 2015.
41% increase in Approved Project EstimateIn May 2007, Legislative Council’s Finance Committee (FC) approved funding of $1,218.1 million for implementing CMC Phase 2. The Food and Health Bureau (FHB) informed the FC that the new hospital block and the rehabilitation garden would be completed by August 2011 and March 2012 respectively. The HA planned to implement CMC Phase 2 under a single works contract with a total construction period of 56 months.
In July 2007, the HA invited tenders, but the bids of all five conforming tenders received were 47% to 56% higher than the original estimate, resulting in the HA cancelling the tender exercise in November 2007.
In June 2011, the FHB resubmitted a funding application and the FC approved increasing the Approved Project Estimate (APE) of CMC Phase 2 by $501.5 million (41%) from $1,218.1 million to $1,719.6 million, mainly due to the increase in construction costs and higher provision for price adjustment.
In the event, the new hospital block and the rehabilitation garden under CMC Phase 2 were substantially completed in November 2013 and October 2015 respectively, 27 months and 43 months later than the original target completion dates for which the FC was informed in 2007.
Saving at least $236 million by splitting the works into three works contractsOwing to the higher-than-expected tender prices, from November 2007 to October 2008, the HA and its consultants conducted a design review (2008 Design Review) with a view to identifying savings in respect of the project design, project specifications and contract strategy.
The 2008 Design Review identified cost savings of at least $236 million (19% of the original APE of $1,218.1 million) and improved competitiveness of tenders by revising the building design and the contract strategy (i.e. splitting the works into three (instead of one) works contracts).
In Audit’s view, the HA needs to take measures to enhance the vetting of its consultants’ design and contract strategy. MIMS
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