SKYLINE Technologies -- News Update ( 3 June 2004 )

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1. “Through Partnership – A Vision for Hong Kong’s Environment”
Skyline Technologies, 3 June 2004

The Hong Kong Construction Association together with the Environment, Transport & Works Bureau and the Environmental Protection Department convened an Environmental Conference at the Convention and Exhibition Centre on Tuesday June 1, 2004. The conference title was “Through Partnership – A Vision for Hong Kong’s Environment” which acknowledged that to drive environmental excellence into our construction industry we must work closely in a spirit of partnership. Such a partnership forged between these three organisations will greatly encourage improvements in the environment in which we live and work and will make a positive difference to the quality of life for all in Hong Kong. The conference was facilitated by Lappord Leadership Ltd with a number of interactive rounds interspersed with interesting and informative presentations. The photos below are provided courtesy of Lappord Leadership Ltd.

The conference theme of the sustainable development considered issues associated with our society, the economy and the environment.

Metaphor mapping techniques were enhanced by professional cartoonists who produced a cartophor of Hong Kong’s development history from its 1841 beginnings to guide the facilitated discussions. The cartoonists then used the results of the work of the participants to derive a cartophor of the conference’s vision of Hong Kong’s struggle towards sustainable development. This cartophor was unveiled after dinner and signed by all participants.

Ms Christine Loh, Chief Executive Officer of Civic Exchange made a plea for sustainable development in her after dinner speech which was reinforced by many photographs showing the beauty of Hong Kong and unfortunately its environmental disasters.

“Through Partnership - A Vision for Hong Kong's Environment”
Mr. Billy Wong, President of Hong Kong Construction Association

Permanent Secretary for the Environment, Transport and Works Mr. Thomas ChowThe Honourable Dr Sarah Liao, members of the Provisional Construction Industry Coordination Board, our guests from a wide cross section of construction industry backgrounds and fellow contractors, … welcome to our Hong Kong Construction Association Environmental Conference.

In particular I would also like to convey a warm welcome to our colleagues from ETWB and EPD who in the true spirit of partnership have joined hands with us to organize and sponsor this conference.

I would also like to single out our corporate sponsors for a special thank you. Budgets are often stretched as we seek for continuous improvement and raise the standard of our conferences. I am particularly grateful to a number of corporate sponsors who have contributed financially to what I am sure will be a most successful afternoon and evening.

There is without doubt a growing emphasis on the protection of the environment in which we live and work and the need to enhance the quality of life of our workforce and the community. It is with this objective in mind that the HKCA established an Environmental Committee to develop construction industry initiatives and to work with you all in bringing about change.

Whilst much of the work of HKCA’s Environmental Committee involves assistance to members on regulatory and environment protection standards we strongly believe this has to be done in a constructive and pro-active manner.

Many of our members give freely of their time to work alongside EPD, Civil Engineering Department, Housing Authority, Government departments and statutory bodies to enhance Hong Kong’s construction environment.

Expert advice from our members contributes to the EPD’s Environmental Impact Assessment Ordinance Contractors Liaison Group and Wasteter Reduction and Water Pollution Control Committees. There is an ongoing Housing Department / HKCA Environmental Forum and members We have contributed constructively to ETWB and EPD on the proposed Landfill Charging Scheme. There is also an ongoing Housing Department / HKCA Environmental Forum.

Training and education is a key ingredient to changing the minds and attitudes of our industry and I would like to draw your attention to our HKCA web-site where we are advising the industry, in a joint project with EPD, on “Green Construction Equipment”.

Through the Environmental Committee the HKCA has also developed a “Best Practice Guide for Environmental Protection on Construction Sites” to encourage an environmentally responsible attitude across our members and the industry …. and

Training and experience sharing is a key ingredient to changing the minds and attitudes of our industry and in this regard I would like to draw your attention to our HKCA web-site where we are advising the industry, in a joint project with EPD, on “Green Construction Equipment”.

We remain keen to work with the EPD and thank them for their support in organizing with us a series of workshops in 2003, attended by over 400 participants that focused upon experience sharing and environmental good practice.

This year’s, inter-active, conference today will build upon these activities by taking a more strategic look at where we should be in four years time with respect to our environmental responsibilities … and indeed how we will attempt to get there.

We have two underlying themes for this Our Environmental Conference this afternoon “Through Partnership - A Vision for Hong Kong's Environment” will have two underlying themes … first in considering “a longer term vision for Hong Kong’s environment” and second by addressing … “the bringing about of change through industry wide partnerships”.

Change, particularly positive change, does not happen overnight and to bring about lasting change we need to have clear long term goals and targets. Such goals and targets need to draw upon world best practice and to be set in such a way that the steps to change are steady and irreversible.

To be successful many sectors of the industry must “buy in” to the ideas, concepts and commitments that will be discussed. It is your conference and today and I we look forward to your contribution, to share your ideas and pledge your commitments.

In attempting to identify the road to our long term environmental responsibilities we have an excellent selection of speakers from Hong Kong and overseas who represent a wide range of construction industry interests to share their views with us.

After hearing the wise words of our speakers and armed with your ideas you will debate arrangeamong yourselves to set the short and long terms goals and objectives for our vision through the facilitation process of our charismatic facilitators. From their presentations we will be asking you to debate and help through the facilitation process in the setting of short and long term goals and objectives.

The second focus of today’s conference is to demonstrate the “power of long term partnerships”.

It is not possible to realize the vision however committed we maybe to “go it alone”. Wwe need to work with the developers, the various Government organizations, interest groups and general public to constantly drive home the message that the quality of our environment is important to all of us.

We welcome the Ppay for Eenvironment Schemeinitiatives that isour now becoming part of the ETWB Contract tender process., Wwe welcome the innovative approaches encouragedrequired by our Clients, and we at HKCA are keen to learn and prepare ourselves contribute as the environmental sustainability causesissuesdebate rises higher on the agenda.

“Vision to Reality through Partnership”
Mr Thomas Chow, JP, Permanent Secretary for Environment, Transport and Works (Environment) (Acting)

Like many other major world cities, Hong Kong faces the same challenge of maintaining a fast growing economy without compromising the quality of the living environment. Public private partnership neatly provides the Government a window to tap into the innovation, flexibility and efficiency of the private sector. Mr Chow will share with participants the Government’s thinking on engaging the private sector on environmental initiatives, and its direction on waste management. The ultimate objective of the Government is to see environmental protection, economic gain and social benefits as being complementary rather than mutually exclusive.

“Sustainability – added value for all”
Mr Greg Chant-Hall, Project Director, Construction Industry Research and Information Association (CIRIA)

Responsible for creating the spaces in which we live and work, the construction sector has a key part to play in achieving sustainability. The sector has the unique opportunity of being able to provide buildings, whilst at the same time creating employment and improving our natural environment, helping to achieve a better way of life for all. However, the manner in which natural resources are consumed, both in the construction process and during the use of the built product, combined with the polluting emissions caused by the sector, result in a track record that is anything but sustainable.

Stimulated by the possibility of climate change, we have over the past fifteen 10-20 years, witnessed a change in thinking of the governments of most developed countries. Environmental and sustainability issues are now a key priority. This has led to increasing legislation and taxation to encourage industry to adopt more sustainable working practices. There is now a strong business case for companies to consider the environmental and social aspects of their activities, in addition to the economic issues.

Responding to the sustainability agenda is a challenge for the construction sector. The sector has significant environmental, social and economic impacts. We undertake work from geographically dispersed sites, bringing together teams of individuals that may not have worked together before, to create structures that may not have been built before. Our challenge is to provide buildings and infrastructure that meet the needs of society and stimulate the economy, but with higher environmental performance.

In practical terms, achieving a more sustainable construction project needs to engage with all the organisations involved in the construction process, from the initial project conception, through to its design, construction and use. Without the involvement of all organisations, truly sustainable construction cannot be achieved. However, it is possible for any organisation involved in the construction process to actively engage and ‘make a difference’ within their sphere of influence. For example a construction contractor may benefit from reducing the amount of waste created on site. Even for this to be achieved, many individuals from Directors to Site Operatives, will need to understand the benefits and their own role and responsibilities.

What constitutes more sustainable construction needs to be assessed on a project by project basis to identify the most important issues. These issues can then be focused upon and managed to improve project performance. Leading organisations are taking on-board elements of the sustainability agenda and are gaining business benefits such as cost savings, a marketing edge and increased improved relationships with regulators and investors.

Understanding the practicalities of achieving sustainable construction, and how relevant issues have been incorporated into projects around the globe, will help other companies to put these elements into practice. Techniques that have proven to be successful include:

In summary, the presentation will outline the practical steps that are being taken by leading companies in the construction sector to engage with the sustainability agenda and achieve business benefits. As governments increasingly recognise the importance of sustainability, companies adopting more sustainable working practices will gain the competitive advantage.

"Where are we now - an industry view from REDA?"
Stephen Fong, General Manager, Swire Properties Limited

After the environmental abuses of the Eighties and Nineties, major developers and contractors are now taking a more proactive role in managing the construction environment in Hong Kong. Mr. Fong’s presentation will illustrate how measured improvements have been achieved in partnering, reducing noise, dust, waste, accidents, with positive gains in the environment, hygiene, recycling, built quality, and the city's living environment. However, these improvements represent too small a percentage of the overall environmental problem. For Hong Kong to become a true world class city, all developers and contractors, especially those that make up the renovation trades, must also participate in these improvements. They create up to 40% of city's construction waste. For the industry to improve as a whole, everyone, including the general public must work together to combat the city's environmental problem."

“Sustainability in Construction: The Upside”
Mr Thomas Ho, Executive Director, Gammon Skanska Limited

Gammon Skanska as a company are fully committed to implementing the principles of sustainable development throughout their business. This commitment is founded on the company’s strong belief that embracing sustainability is not only good for the community, company employees and business partners but also makes good business sense.

In this talk, Mr. Ho will briefly discuss some of the common misconceptions regarding the role of sustainability in the construction industry, as well as the reasons why these must be overcome. Mr. Ho will then touch upon sustainability in construction (the upside) in terms of the benefits to the Hong Kong’s construction industry, the importance sustainability will play in the future of industry and the resulting benefits to be gained by Hong Kong in general.

Examples of the benefits will be discussed including the encouragement of partnerships, better business management, continued industry improvement and the need to ensure the industry is aligned with Hong Kong’s and international sustainable development agendas. The theme will emphasize the industry’s moral obligations can be consistent with enhanced shareholder value.

Mr. Ho will also present some of the experiences of Gammon Skanska in embracing sustainability, such as the use of the Balanced Scorecard as a management tool and why Gammon Skanska’s commitment to partnering and long-term procurement models such as PPP/PFI are key sustainability considerations for the future of us all.

“Lead by Example – the Shell Experience”
Mr Andy Ku, Director, Shell Hong Kong Ltd.

Partnership is key to sustainable development. Shell partners on many fronts with government and other stakeholders, always integrating economic, environmental and social considerations into its management process and decision-making. Shell’s General Business Principles embody fundamental values of honesty, integrity and respect for people, together with contributing to sustainable development as a way of doing business.

Shell operates to ISO accredited standards and monitors its processes and premises against agreed environmental benchmarks, publishing our performance against preset targets. We also train staff and cooperate with contractors and customers to ensure that we all contribute to improving and protecting our environment and quality of life. Our health, safety, security and environment (HSSE) policy is part of our standard contract with goods and services suppliers, and non-conformity can result in termination of agreements. With Shell sponsorship, three suppliers have developed their own environmental management systems and one will apply for ISO 14001 in 2004.

Shell also works to develop cleaner and more efficient conventional fuels with low sulphur and low carbon content, partnering with government to promote the benefits of energy efficiency amongst end-users. We are pleased to play an active role on the Petroleum Industry Automotive Fuel Steering Committee, bringing cleaner fuel technologies and solutions to Hong Kong.

Illicit fuel trading is a problem in Hong Kong, resulting in retail and tax revenue losses and creating a significant fire and environmental pollution hazard to the public. Government and the oil industry together have combated illegal diesel since 1996. New initiatives clamp down on illegal supplies, verify legitimate end-users and ensure compliance with the law.

Renewable energy is a core Shell business. Shell Solar uses solar panels to convert sunlight into clean electric power without emitting CO2, working closely together with contractors in applying and integrating photovoltaic technology for the construction and building industry.
Partnership with contractors and customers

We value our partnerships with contractors and customers. Our health, safety, security and environment, or HSSE, policy is an integral part of our standard contract with goods and services suppliers. The importance of environmental protection is emphasiszed through regular and methodical screening of the operations of contractors. We ensure that external service providers dispose of any waste material, such as sludge or batteries, in accordance with the laws of Hong Kong. We also conduct site visits to the factories of major product suppliers to assess their manufacturing processes including waste disposal and pollution control measures. Any non-compliance may result in termination of an agreement.

As part of our ongoing efforts in green procurement, we have assisted three of our SME suppliers to develop their own environmental management systems, or EMS, by sponsoring them to join Project Acorn, a support programme aiding EMS design and implementation. All of them plan to develop their EMS within 2004, and our LPG supplier will also apply for ISO 14001 accreditation in 2004.

Training remains a priority in order to ensure both our contractors and customers contribute to improving the quality of the environment. For instance, our recent Oil Spill Awareness training, which involved 150 people, helped our contractors and their drivers to refresh awareness about how to handle oil products. This was followed by site visits and a post-implementation review to assess the effectiveness of this effort.

We also organise training and seminars for our customers’ staff on handling dangerous goods, contingency response to oil spillage and updates on environmental regulations. And wWe also share our experience of acquiring ISO 14001, hoping to promote higher standards in various industries.

On a broader scale, Shell partners with government, contractors, and with the construction industry in particular, and local communities to build facilities which incorporatehas the latest in effluent treatment and environmental protection practic facilities. The $4.3 billion Nanhai petrochemicals plant in Daya Bay is a major construction project being built by a Shell JV, with strict guidelines to ensure reduced environmental impacts at all stages of development. This project offers many benefits and sets a benchmark for futuresimilar cross-boundary projects in China.i n Mainland China, which has a strategic significance for Hong Kong.

Achieving sustainable development means we must all work together. Economic, environmental and social considerations must be implemented through strategic partnerships between government and other parties today, if we wish to live in a better environment in future.

“Sustainability in Major Infrastructure Projects”
Glenn Frommer, Sustainability Development Manager, MTRC

Contractors and clients alike are searching for ways to continually improve the performance of their projects. Clients are looking for ways to have projects delivered to the appropriate quality, at cost and on programme, while contractors are searching for ways to deliver projects to the required degree of quality, on programme while making a profit. While the two groups appear to have similar outcomes in common, adversarial relationships can develop. No where is this more costly or damaging as in major infrastructure projects.

Sustainability has been touted as one measure that could cure the ills of our modern society. For example, the Hong Kong Government requires all funding requests for major infrastructure projects to include a section on sustainable development and EPD is using the mantle of sustainability to develop stakeholder engagement as Continual Public Involvement (CPI). With so little known and understood about sustainability, it would seem that this is an appropriate time to examine sustainability in the context of major infrastructure projects as the type developed and operated by the MTRC,

This paper attempts to set up an understanding of sustainability in terms of risk management, a methodology that is well known and understood both by projects proponents and contractors. Within that context, sustainability is considered as increasing long-term shareholder value based on mitigating or optimizing economic, social responsibility and environmental risks. A distribution of risks in the form of a football results.

The paper then moves to consider compliance issues in terms of legal compliance to Hong Kong law and to companies’ own policies and statements. Social responsibility issues are discussed in this context and the main conclusion is that clients and contractors must provide reports on their economic, social and environmental achievements to improve their transparency and accountability. A typical project is considered where the contractors are appointed well after the initial design is completed and arguments are presented for breaking down the silo mentality by decreasing the degrees of separation.

As the understanding and management of stakeholders is seen to be a critical element, two examples are illustrated from current MTRC projects, the development of the Ngong Ping to Tung Chung Cable Car and the West and South Island Lines.

It is concluded that sustainability is dependent on clients and contractors working more closely with each other to develop synergies, and clients and contractors reporting on their economic social and environmental achievements.

2. Contractors hit government with $280m bill for reclamation delays
CHEUNG CHI-FAI, SCMP 3 June 2004

The government faces a $280 million compensation claim from the contractors involved in the Central Reclamation because of the delay caused by a dispute over the legality and size of the project.

But it does not plan to seek any money from the Society for the Protection of the Harbour, whose lawsuit caused the delay.

The claim, lodged by the joint venture of Leighton Contractors and China State Construction Engineering Company, is $180 million more than the amount estimated by the Territory Development Department as the cost of the delay.

Secretary for Housing, Planning and Lands Michael Suen Ming-yeung told legislators yesterday that the claim, lodged on April 17, was caused by a partial suspension of reclamation work between last September and March 9 this year.

During that time, the government was brought to court by the Society for Protection of the Harbour, which claimed the $3.79 billion project breached the Harbour Protection Ordinance.

After public campaigns against the project, the government was forced to suspend the piling work but pressed on with the dredging.

Work resumed fully after the Court of First Instance rejected the society's case on March 9.

Mr Suen said the government was asking the contractor to provide more details about, and justification for, the claim.

"[The process of seeking compensation] has not started and we are checking the information we have," he said, adding it was possible that adjustments to the work schedule could reduce the claim.

Society chairwoman Christine Loh Kung-wai told ATV her group was not liable for the claim.

She also questioned its size, saying it was significantly higher than the original estimate.

Ms Loh said she could not believe there was not a clause in such a major infrastructure contract covering the circumstances under which a claim could be made and how to calculate any claim.

A spokeswoman for the bureau said the government would not make a claim against the society for the extra costs due to the delay.

Chris Gordon, a spokesman for Leighton, said it was "just an interim claim and we are required to substantiate it".

Mr Gordon said the claim included higher costs for the mobilisation of equipment, materials and storage. It also included legal costs but it could be adjusted after the remaining work programme was changed.

With market talk suggesting land premiums are on the rise, New World Development (NWD) seems to have snapped up a bargain, concluding years of negotiations over land use for a Yuen Long agricultural site and taking advantage of a land premium offered before last week's land auction.

It has been reported that NWD agreed to a land premium of about $200 million, representing an average $780 per square foot. The firm plans to build a low-density villa complex on the 2.4 hectare site in Tong Yan San Tsuen.

An industry source said the government had been encouraged to increase land premium asking prices by more than 30 per cent after unexpectedly vigorous bidding at the auction.

"While developers have shown that they are willing to pay land prices that roughly translate into a cost as high as the current market price of completed projects, developers have much less bargaining power in negotiating the amount of land premium with the government," he said.

Sun Hung Kai Properties recently agreed to a land premium of about $596 million, or $865 per square foot, for a site in To Fung Shan, near the Sha Tin auction site, which sold for more than $3,300 per sq ft last week.

Market observers said the relatively low land premium offered to NWD was one of the last of its kind. The government's offers normally expire after about a month.

Derek Cheung, an HSBC analyst, said the government had no choice but to increase the land premium. "The government has to raise the land premium or it will be inconsistent with the high land price set in the auction."

However, he said, the government would also consider the valuation of nearby properties when setting land premiums.

Following is a question by the Hon Martin Lee and an oral reply by the Secretary for Housing, Planning and Lands, Mr Michael Suen, in the Legislative Council today (June 2):

(a) of the number of claims for compensation received so far in respect of the Central Reclamation Phase III ("CRIII"), as well as the nature and amount of each claim, and the percentage of the amount in relation to the value of the contract concerned;

(b) whether it will undertake not to allow the redevelopment or conversion of the buildings on the existing waterfront into high-rise buildings upon completion of the reclamation project and construction of the new waterfront; if so, of the details of the undertaking; if not, the reasons for that; and

(c) whether it will consider holding an open competition in respect of the design of the above new waterfront and appointing private sector organisations to manage the new reclamation area; if so, of the details; if not, the reasons for that?

(a) The main contract of the Central Reclamation Phase III ("CRIII") works was awarded to the Leighton - China State - Van Oord Joint Venture ("the Contractor") on 10 February 2003 with an awarded contract sum of $3,790 million. Pending the outcome of the CRIII judicial review, the Government suspended the scheduled marine piling and reclamation works under the CRIII contract from 28 September 2003 to 9 March 2004. In addition, the marine works had been disturbed by a green group. The Contractor submitted on 17 April 2004 a consolidated claim, the contents of which concerned the delay and the related expenditure resulting from the suspension of works. According to the preliminary information provided by the Contractor, the amount claimed is estimated to be $280 million, which is about 7% of the awarded contract sum. Territory Development Department has asked the Contractor to provide detailed information and justifications, and will consider and process the claim in accordance with the established procedures.

(b) Developments in the existing Central waterfront are covered by the approved Central District (Extension) Outline Zoning Plan ("OZP"). The OZP has clearly stipulated the land use, development restrictions and building height restrictions regarding any new developments or redevelopments.

(c) The open space of the future Central waterfront will be developed into a vibrant and accessible waterfront promenade for the enjoyment of citizens and tourists alike. The newly formed Harbour-front Enhancement Committee ("HEC") will advise the Government on the planning, land use and development of the existing and future harbour-front. Members of the public are welcome to give their views to the HEC on areas including the design of the Central waterfront promenade, the best implementation method and the management issues, including the proposal on private sector participation.