Hong Kong Underground Stormwater Storage Scheme

Context^[1]

Over the past decades Hong Kong’s Wan Chai district has been hit by heavy rainstorms and typhoons bringing high levels of precipitation to a fully urbanised and densely populated location and resulting in a flood depth of approximately 1 m in some areas. The low-lying areas of Wan Chai and Happy Valley witnessed frequent flooding during heavy rains. Severe flooding incidents occurred in August 2000, April 2006, and June 2008.
In these densely populated areas, conventional drainage improvement schemes would require extensive upsizing of existing drains or laying of new drains, leading to disruption to public and commercial activities. Congested underground utilities would also jeopardise the viability of the conventional schemes.
The Drainage Services Department (DSD) of the Hong Kong SAR Government developed a long-term flood-prevention solution by constructing an underground stormwater storage tank to temporarily store part of the stormwater collected from the upstream catchment during heavy rainstorms. After the heavy rainstorms, the temporarily stored stormwater would be discharged to the sea via the drainage systems.
The Happy Valley Underground Stormwater Storage Scheme (HVUSSS) primarily involves the construction of an underground stormwater storage tank with a capacity of 60,000 m³ located beneath the sports pitches surrounded by the horse racing track of the Happy Valley Racecourse. The storage tank is sized to accommodate a 50-year flood event.
The project draws on the invaluable experience gained and the lessons learnt from the DSD’s first New Engineering Contract 3 (NEC3) Engineering and Construction Contract (ECC) Option C contract, the Fuk Man Road Nullah Improvement project, completed in 2012.

Problem^[2]

Use of highly prescriptive and inflexible contractual models and an overreliance on the contractual model to solve construction and delivery issues has traditionally limited the capacity for the client and contractor to resolve issues in a collaborative and efficient manner. This can result in biased budget comparisons for delivery models selection, rigid contractual model choices, and an overreliance on the contractual form to solve issues.
Additionally, this prescriptive and inflexible approach can lead to an imbalanced risk allocation between the client and contractor, leading to low contractor appetite to deliver large and complex projects such as HVUSSS, substantial risk premiums being priced into contractors’ tenders, and a reactive approach to managing unexpected or non-quantifiable risks such as utilities, ground conditions, and contamination.

Improvement^[3]

HVUSSS was contracted using the NEC3 ECC Option C approach (which is a target cost contract with an activity schedule) that at the time was the largest such contract awarded by the Hong Kong SAR Government.
By adopting this contracting approach, DSD was able to incorporate a painshare / gainshare mechanism (whereby the final cost above or below the target is shared between the client and contractor) in this contract to motivate the contractor to propose innovative or alternative cost-reduction solutions. The open book accounting provided cost transparency between the client and contractor.
The contract required early warning notices to be issued as soon as either the client or contractor became aware of any major issues, and meetings to discuss these within 24 hours to ensure they would be appropriately mitigated.
A collaborative environment was promoted between the client and contractor through co-location of teams, promotion of a unified team identity though use of a common project logo and uniform, and daily morning briefings between the client, contractor, and subcontractors to provide a platform for exchange of updated information and identification of issues requiring early warning.

Stakeholders involved^[4]

DSD, the Hong Kong SAR Government
Chun Wo Construction & Engineering Co. Ltd
ARCADIS Asia Ltd
Mott MacDonald Hong Kong Ltd
Ivanho Architects Ltd.

Timeline^[5]

September 2012 – Work commenced
Early 2015 – First phase of the scheme completed
October 2017 – Overall completion.

Results / impact^[6]

Use of the NEC3 contract suite promoted a strong spirit of mutual trust and co-operation between the contracting parties and key stakeholders. The collaboration contributed to the project being completed a year early with approximately HKD90 million (USD11.6 million) of savings against the project budget.
The efficiency of the ECC early warning and variation event process (or compensation event as it is known under the NEC terminology) assisted the project manager and contractor in resolving contract issues promptly and managing risks properly without impacting the overall program.
- An example of this was where an alternative foundation design was proposed by the contractor that achieved a key project stakeholder requirement of not obstructing the views of the Hong Kong Jockey Club, and also achieved a 7-month time saving in the project completion time and a 10% reduction in the original target cost. It also resulted in a sustainable outcome by reducing the structural steel required.

Key lessons learnt

The painshare / gainshare mechanism in the NEC3 EEC target cost contract sets common goals for employers and contractors, encouraging collaboration, innovation, and cost saving. The alignment of commercial incentives motivates the contractor to propose innovative or alternative cost-reduction proposals in collaboration with the project manager and other stakeholders, with both parties working towards solutions that carry the least cost and time impact, as well as minimising disruptions to the public.
The ‘open book account’ under the contract form allows budgetary control and transparency and facilitates the timely settlement of disputes, with anything involving compensation promptly assessed and resolved. The establishment of a direct line of communication with subcontractors means issues can be identified and resolved more quickly.
Early warning notices used through the NEC3 EEC target cost contract promote a collaborative approach to managing unknown risks and help parties to promptly resolve compensation events without impacting the overall program.

Notes

[1]	https://www.neccontract.com/NEC-in-Action/Case-Studies/Happy-Valley-underground-stormwater-storage-scheme#:~:text=Designed%20to%20alleviate%20flood%20risk,of%20sports%20pitches%20and%20landscaping.
[2]	"
[3]	"
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[5]	https://www.neccontract.com/NEC-in-Action/Case-Studies/Happy-Valley-underground-stormwater-storage-scheme#:~:text=Designed%20to%20alleviate%20flood%20risk,of%20sports%20pitches%20and%20landscaping.
[6]	"

Last Updated: 17 October 2021

Hong Kong Underground Stormwater Storage Scheme

Context[1]

Problem[2]

Improvement[3]

Stakeholders involved[4]

Timeline[5]

Results / impact[6]

Key lessons learnt

Notes

Context^[1]

Problem^[2]

Improvement^[3]

Stakeholders involved^[4]

Timeline^[5]

Results / impact^[6]