Expansion of Sha Tau Kok Sewage Treatment Works, Hong Kong

The Drainage Services Department (DSD) of the Government of the Hong Kong Special Administrative Region of the People's Republic of China has used NEC to triple the capacity of its Sha Tau Kok Sewage Treatment Works (STW). Treatment capacity has been increased from 1,660 m³/day to 5,000 m³/day to allow for future population growth in Sha Tau Kok town, which is in the north-east corner of Hong Kong’s planned Northern Metropolis development.

DSD let a HK$1,123 million (£110 million) NEC3 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule) to Build King–Kum Shing joint venture in November 2018. The contract was completed on time and within budget in 2025. DSD’s Consultants Management Division was the NEC project manager and Binnies Hong Kong Limited was the NEC supervisor.

The first stage was the provision of a temporary STW at the existing confined waterfront site, which started operating in July 2020. This was followed by installation of a 1.7 km long sea outfall, finished three months ahead of schedule in February 2022, and construction of the new STW in place of the old one. The contract also included 1 km of new sewers in Tong To village, which were completed four months early in December 2022, and 0.5 km of new sewerage in Sha Tau Kok Town. 

The project has won several awards including the 2023 NEC Contract Innovation Award and the 2021 DSD Construction Site Safety and Housekeeping Award. 

Pioneering innovation

DSD, an NEC Users’ Group Silver Member, is an experienced and pioneering user of NEC, having first used it for public-sector works in Hong Kong in 2009 (see case study). Its second pilot project in 2012 was for construction of new sewers in Sha Tau Kok (see case study), which were connected to the newly expanded STW. One of its largest current NEC projects to date is a HK$4,221 million (£416 million) NEC4 ECC Option C for building 14 ha of caverns to rehouse Sha Tin STW by 2031 (see access tunnel case study).

Engineer Alex Lam says the Sha Tau Kok STW project has continued to break new ground by implementing recommendations of the government’s 2018 Construction 2.0 report from the outset. ‘This aimed to develop an industry culture that embraces change, innovation and new technologies to drive forward productivity, efficiency and enhanced project delivery outcomes.’

He says in line with the NEC requirement to ‘act in a spirit of mutual trust and co-operation,’ the project team collaborated to improve contract performance by using innovative technology. ‘For example, before promulgation of the Development Bureau’s technical circular for a Smart Site Safety System in 2023, more than 11 smart safety devices had been adopted. These included artificial intelligence cameras for identifying unsafe acts on site, virtual reality programmes for interactive and immersive training of workers, and augmented reality with building information modelling for planning safe construction methods.’ 

Lam says design for manufacture and assembly (DfMA) was also adopted for construction of the new STW concrete structure and associated mechanical, electrical and plumbing equipment. ‘DfMA shortened the construction period and provided better quality control as off-site fabrication of components could be carried out concurrently with in-situ construction activities. It also required a smaller works area, less labour and enhanced safety by reducing working at height and site welding.’

Key performance indicators 

He says the ECC Option C contract included option X20 on key performance indicators (KPI). ‘The project manager assessed the amounts for KPI-related payment items and certified these once the contractor achieved the agreed targets. This included a list of targets under the Safety Performance Merit Scheme.’

Lam says there was regular coordination meeting to monitor the status of implementation of NEC compensation events for scope changes. ‘It was agreed by all parties that fair and prompt assessment of compensation events would help both the client and contractor understand the current project status, enabling better time and cost management. The compensation events could be timely implemented, reflecting successful changes to the scope, avoidance of delay and delivery of better project outcomes.’  

He says a further innovation was the use of option X14 on advanced payments to the contractor. ‘In response to the Covid-19 pandemic and to minimise the impact on the supply chain’s cash flow, the client added option X14 into the contract. Advance payments were certified to the contractor, who in turn shared these with its subcontractors to ease their burden in such a difficult time.’ 

Lam adds that option X14 helped to maintain adequate resources for the construction works and minimise the impact on progress during the pandemic. ‘The advance payments were gradually repaid to the client in instalments after March 2022, reflecting the NEC-inspired mutual trust between the client and the contractor.’ 

Benefits of using NEC

• NEC requirement to ‘act in a spirit of mutual trust and co-operation’ inspired the project team to collaboratively improve performance through innovation, in line with Construction 2.0.
• NEC compensation event process ensured fair and timely assessment of additional payments to the contractor for changes in scope.
• NEC option X14 on advanced payments to the contractor minimised the impact on Covid-19 on the supply chain’s cash flow and overall project progress. 
• NEC option X20 on KPIs encouraged the contractor to achieve agreed performance targets, including safety-related targets. 

Project highlight video