The eye-watering HK$260 million price tag for the Garden Vista estate renovation was based on inaccurate and inflated estimates, a report from a consultancy firm has revealed.
The unprecedented cost of the large-scale Shatin private estate refurbishment has made headlines for years, but authorities have closed their investigations into suspected bid rigging.
For the past six years, homeowners have been trying to look for clues that would shed light on the high price. Now a newly revealed estimation document discovered by FactWire provides some answers.
According to the estimation document, errors such as the overestimation of the size of the estate’s phase two platform and swimming pools led to the inflated renovation cost.
The document was exposed in a response from consultancy firm Wong Pun and Partners Limited to a complaint lodged by 101 owners against its director and shareholder Wong Chi-kwong, for professional misconduct.
The estimation report submitted by quantity surveyor Clement Lin Wing-lok on April 16, 2013, showed that the total price for 11 renovation projects homeowners had chosen would amount to HK$250 million.
The report’s estimate of HK$49.25 million for waterproofing the phase two platform, which includes work on two swimming pools, road surface areas and others, took up 20 per cent of the whole project’s cost.
According to the report, the phase two platform includes 9,600 sqm of road surface area and 2,000 sqm of surface area for the swimming pools.
However, Buildings Department (BD) records show the entire area of phase two is only 8,101 sqm, less than the 9,600 sqm estimate in the report.
Lin’s estimate showed that the road surface area for the phase two platform waterproofing project was almost 90 per cent more than the BD’s record of less than 5,136 sqm.
The department’s records also show the surface area of the swimming pools is 1,120, about half of Lin’s estimate.
Combining the BD’s surface area figures together with Lin’s unit prices, plus extra work insurance and construction site management fees, the total price of the phase two waterproofing works should be HK$33.13 million, which is 70 per cent less than Lin’s estimate.
Questionable figures
The valuation notes of both Wong Pun and Partners and Lin contained memos which stated the project valuation may have a positive or negative deviation of 12 to 15 per cent.
For instance, Lin’s report said waterproofing for the phase two platform would cost HK$49.25 million, while Wong Pun’s’ estimate was HK$42.91 million. Hong Dau Construction Co. Ltd. won the bid for HK$40.97 million.
Although the three estimates for the platform waterproofing project were similar, the deviation of the material range and the unit prices were far more than 15 per cent.
Both estimates from Wong Pun and Hong Dau did not display details such as the quantity and unit prices of the materials.
It was not until 2013 when a Garden Vista’s owners’ concern group sent a letter to question Hong Dau’s figures that the company mentioned a figures breakdown of the waterproofing project.
Based on Hong Dau’s figures from a lawyer’s letter in response to the concern group’s letter, the road surface waterproofing project would cost HK$3,711 per sqm, 50 per cent higher than Lin’s report.
Hong Dau’s cost for the swimming pools’ waterproofing project was HK$3.696 million, less than half of Lin’s estimate of HK$8.05 million.
Optimum Engineering Limited, a subsidiary of the then management company for Garden Vista, Synergis Holdings Limited, also entered an HK$396 million bid for the estate’s renovation project, the highest bidding price among 19 companies.
Insufficient evidence
The Garden Vista case made headlines in 2013 as homeowners had to pay an unreasonable HK$300,000 each for the renovation. The saga was subject to an Independent Commission Against Corruption (ICAC) bribery case for big-rigging activities.
The ICAC arrested 20 people over the incident, including those from Synergis, Wong Pun, Hong Dau and at least one member of the management committee of Garden Vista’s incorporated owners. However, the ICAC terminated its investigation in July last year.
In a reply to FactWire’s queries, the ICAC said the Justice Department would not prosecute the related people due to insufficient evidence. ICAC’s Advisory Committee on Corruption also agreed that there was no need to proceed with the investigation.
The police said it received 165 complaints in relation to Garden Vista’s renovation project since 2013. Among them are 13 criminal cases including alleged criminal intimidation, theft, criminal damage, allegedly using false instruments and making false statements under oath.
Aside from a criminal intimidation case which is still under investigation, the police have completed its investigations into other related cases.
The final phase of the HK$12 million loan through the Building Safety Loan Scheme, which 200 owners applied for, was also approved last month by the BD.
As investigations by authorities wrapped up at the end of last year, new evidence emerged as Garden Vista owners continue to look for answers.
In January 2014, two dozen owners of Garden Vista requested a report on the tender process, quotation analysis, interview process and estimation from Wong Pun, however, Lai Kwok-leung, the then chairman of the estate’s incorporated owners advised the firm to not provide the document.
Six months later, 101 Garden Vista owners filed a joint complaint to the Hong Kong Institute of Architects (HKIA).
In early 2017, HKIA initiated a disciplinary inquiry against Wong Chi-kwong, director and shareholder of Wong Pun and Partners Ltd.
During this process, Wong for the first time revealed that Lin was hired to provide an independent material survey for the project and submitted the estimation report that was not disclosed to owners.
Wong added that he had provided the “project estimation signed by authorised persons” to the estate’s incorporated owners and the management company.
When asked if he thought the estimates were unreasonable, Wong said Lin’s estimate should be professional, so the company had no reason to question his work.
Limited access
The estimation document revealed was part of the contract between the incorporated owners and Wong Pun.
In a letter in response to the inquiry, Wong also for the first time revealed that the estimation report was submitted to the management committee of incorporated owners through Synergis Holdings Limited in early 2013.
The letter mentioned that Wong Pun had provided estimation reports to Synergis Holdings Limited in February, March and May of the same year. The letter also claimed that Synergis had put up the estimation figures in the lobbies of Garden Vista buildings for owners’ reference. However, many owners said they never saw the documents.
In another court case involving Synergis in 2015, the management company told the court that Wong Pun did not provide any estimation report. It also stated that it is rare in the industry to hire surveyors for estimation as it is a very expensive practice.
In 2015, the Lands Tribunal instructed Garden Vista’s management committee of incorporated owners to allow owners to check its financial records after more owners filed complaints.
The incorporated owners then acquired a material ordering document from Hong Dau, but without actual numbers. Hong Dau replied that the receipt required by the contract was only used to check the quality and quantity of the materials instead of checking the cost. The company refused to provide the figure due to commercial considerations.
When FactWire approached Lai Kwok-leung, he said it is the committee’s decision to conceal the report and then abruptly ended the interview.
According to a contract signed by Wong Pun and incorporated owners in 2012, the firm must submit the estimation form provided and signed by registered material surveyors.
In response to FactWire, Synergis said what it told the court was true and did not make any further comments. The HKIA said the disciplinary inquiry is a confidential internal matter and did not comment on the case. FactWire has so far been unable to contact Clement Lin and Wong Pun.
Necessary details
A spokesman for the Property Owners Anti-bid Rigging Alliance Winfield Chong has been following house management problems for many years. He said an inaccurate consultant report not only affects the bidding price, but is also misleading for owners.
Chong reminded owners that as many details as possible should be made clear when making a tender. For example, the types of lights used and even the brand of the light manufacturer should be provided.
He also suggested that estate owners hire independent consultants for such projects to provide a neutral opinion.
The ICAC has so far prosecuted two people over the incident.
In 2016, renovation subcontractor Yau Shui-tin was sentenced to two years and 11 months for conspiracy to offer an advantage to an agent.
The court heard that Yau acted as a middle-man in the Garden Vista incident.
He had conspired with the then director of Synergis, the then chairman of Garden Vista’s incorporated owners and the then director of Wong Pun and Hong Dau for bid-rigging, along with helping secure the consultancy contract and renovation for Wong Pun and Hong Dau.
The court heard that these people discussed bid-rigging details, including the division of labour and rewards for those involved during a meal.
It was also heard that a Hong Dau shareholder would arrange ghost companies to participate in the bidding, while Lai suggested to the incorporated owners that they should choose the consultancy firm with the third highest price and the construction firm with the third lowest bid.
In the end, Wong Pun and Hong Dau won the bid as planned.
The then manager of Synergis was also sentenced to six months for taking HK$200,000 in bribes from a construction company after disclosing the bidding prices of the 19 companies.
