Use of Resources

144.    Government has to contain expenditure growth in the face of an ageing population, a shrinking labour force and the slowing economy.  I initiated a three-year measure as from 2015-16 to contain expenditure by requiring policy bureaux to achieve more efficient use of resources through re-engineering, phasing out dated procedures and re-prioritising.  We aim to reduce operating expenditure by two per cent in three financial years.  Resources saved have all been re-allocated to policy bureaux for new services.

145.    Recently the community has aired concerns about cost overruns of infrastructure projects.  The progression of a project from planning and study, design and construction to commissioning takes years.  It involves a host of uncertainties such as ground conditions, surges in prices of construction materials, wage hikes, economic fluctuations, as well as unforeseen circumstances in the course of construction.  All these may lead to cost overruns.  Large-scale infrastructure projects face even greater challenges.

146.    To strengthen cost control of public works, the task force I set up last year has examined the causes for the rising costs of works projects and formulated improvement measures.  I have asked the Development Bureau to establish a multi-disciplinary office to conduct a comprehensive review of the guidelines on public works, reduce unnecessary design and contractual requirements, and scrutinise closely the cost estimates of 300 major new projects in the next three years.  It will report progress to me on a regular basis with a view to controlling project costs.

147.    We shall introduce more competition, and seek to fine-tune the works procedures and enhance training to improve productivity.  Subject to safeguarding priority employment of local workers and their wage levels, we shall rely on the enhanced Supplementary Labour Scheme to alleviate the delays and cost overruns caused by labour shortage.

148.    Recent fluctuations in construction costs have occasionally resulted in higher-than-expected tender prices.  To avoid the need to seek additional funding for unexpectedly high tender prices, we have urged departments to invite tenders before submitting funding applications to LegCo for less controversial projects, such as schools and hospitals, which are livelihood-related.  We can then present more accurate project estimates to LegCo.