Industry specialists have warned that the Hong Kong government’s plan to reclaim 1,700ha of land to ease land shortages will bring major risks for contractors unless contractual issues are carefully managed.
Construction law expert Alvin Ho of Pinsent Masons said the government’s Lantau Tomorrow Visio’ plan could lead to immense demand for materials, particularly sand.
“The overall market for manufactured sand is experiencing competing demands, particularly from the construction industry in the mainland,” Ho said.
“The cost of the reclamation works will continue to rise due to a shortage of sand supply from China and subsequent rising prices, easily leading to serious budget overrun and delays.”
Ho said the 2018 construction of an artificial island during the development of the Hong-Kong-Zhuhai-Macau Bridge, the world’s longest sea crossing, was delayed due to insufficient supply of marine sand.
“Contractors bidding for reclamation projects should carefully assess the risks relating to the supply of sand and ensure that the contract provides for an appropriate mechanism for claiming additional payment due in price fluctuation of sand,” Ho said.
“Shortage of construction materials should be considered as one of the delaying events entitling contractors to an extension of time. Contractors should also be prepared to face more challenges in procuring sand up to the standard required by the environmental permit and a robust inspection mechanism has to be put in place to check materials supplied by the subcontractors.”
Secretary for development Michael Wong said the government would bring together relevant departments and adopt an “infrastructure-led and capacity creating approach” to planning to ensure Hong Kong had a sustained supply of land.