Airport Authority Hong Kong completes third NEC contract

Authority Hong Kong (AAHK) has used NEC4 to procure a major newly completed office building in the middle of Hong Kong International Airport. It is the third NEC contract let by AAHK following successful use of NEC3 and NEC4 ECC Option D (target contract with bill of quantities) for civil engineering works on the HK$141 billion (£14 billion) new third runway project, which is due for completion in 2024. These include the new north runway pavement and 2.2 km of tunnels for a new automated-people-mover and baggage-handling-system (see Issue 115). A total of four NEC contracts have now been let. Completed in January, the new sevenstorey structure has provided much-needed additional accommodation for AAHK and a new headquarters for Aveseco, an aviation security company jointly owned by AAHK and the Hong Kong Special Administrative Region Government.

Completed on time and budget

AAHK let the HK$794 million (£77 million) design-and-build works to contractor Dragages in June 2019 under an NEC4 Engineering and Construction Contract (ECC) Option C (target contract with activity schedule). Despite the onset of the Covid-19 pandemic, the building was topped out in April 2021 and completed on time and budget in January 2022. During construction it was highly commended for the 2021 NEC Building/FM Project of the Year award.

Designed by architect Ronald Lu and Partners, the 12,000 m2 glass-clad building is located in a taxi staging area near the entrance to Terminal 1. The site is constrained horizontally by two curved flyovers, with an elevated section of Cheong Hong Road to the west and an MTR Airport Express viaduct to the east, and vertically by airport height restrictions.

Dealing with uncertainty

SS Kong, general manager of AAHK’s Capital Works Construction Department, says NEC was chosen to procure the new office building due to site constraints and uncertainties about buried assets and traffic planning.

‘The building foundation was very close to substantial underground utilities that could not be accurately located in the planning stage. It was also unclear how construction works would impact on traffic management within the existing taxi staging area. Due to these and other planning uncertainties and constraints, we decided that ECC Option C would be a desirable procurement method, with the client and contractor collaborating to develop solutions that would ultimately benefit both parties.’

Achieving mutual objectives

Kong says that in following the NEC obligation to work in a, ‘spirit of mutual trust and co-operation’, the client and contractor demonstrated a willingness to work towards achieving mutual project objectives. ‘Both teams discussed, compromised and took action with an open-minded attitude in the NEC contract processes for early warnings, compensation events and budget and programme control.’

He says the contractual arrangement provided the client with full transparency of the contractor’s progress and expenditure. ‘It also offered more opportunity for the project manager to manage risks, develop alternative solutions and minimise the impact of any changes on programme and cost.’ Kong adds that the NEC pain/gain share mechanism provided a common objective for the contracting parties to undertake the works with better cost control, quicker turnaround and more efficient operation.

Benefits of using NEC

• NEC obligation to work in a, ‘spirit of mutual trust and co-operation’ encouraged the client and contractor to develop collaborative solutions for project uncertainties and constraints.
• NEC contract processes for early warnings, compensation events and budget and programme control provided the client with full transparency on costs and progress.
• NEC pain/gain share mechanism provided a common objective for the parties to undertake the works with better cost control, quicker turnaround and more efficient operation.