Clarification on Estimated Construction Cost of Three-runway System

Press Release - 02/12/2015

(HONG KONG, 2 December 2015) – Airport Authority Hong Kong (AA) would like to clarify media reports regarding the estimated construction cost of expanding Hong Kong International Airport into a Three-runway System (3RS), specifically the assertion in certain outlets that the project has seen a 60% cost increase compared with 2010 prices.

According to the “Hong Kong International Airport Master Plan 2030” released by the AA in 2011, the estimated cost of the 3RS was HK$86.2 billion in dollars of the fourth quarter of 2010. While it takes more than 10 years for the planning, design and construction of the 3RS project, there are changes in the inflation rate as well as labour and material costs that naturally occur during the course. As a result, it is necessary for AA to work according to money-of-the-day (MOD) prices that take these adjustments into account. This follows the same practice of Government capital works. After the calculations, the estimated construction cost for the 3RS was HK$136.2 billion in MOD prices.

The latest cost for the 3RS as estimated by the AA is HK$84.5 billion in 2010 dollars and HK$141.5 billion in MOD prices. This estimate takes into account further developments in the 3RS’s design and the completion of Environmental Impact Assessment, and it takes references to the latest price adjustment factor released by the Government on March 2014. (Note: The Government updates the price adjustment factor every six months, which will take reference on the data of the adjustment trend of the public sector building and construction output price, latest changes on salary levels of construction sector and price of construction materials, as well as the trend of global and local economic performances)

When examining the change in the estimated construction cost of the 3RS, it is more appropriate to compare the latest estimated MOD prices of HK$141.5 billion with the estimated MOD prices of HK$136.2 billion as published in the “Hong Kong International Airport Master Plan 2030” in 2011. Details are as below:

Estimate of Construction Cost of Three-runway System

  Estimate in Hong Kong International Airport Master Plan 2030 Latest estimate of construction cost of Three-runway System
  In Q4 2010 dollars Money-of-the-day prices In Q4 2010 dollars Money-of-the-day prices
Total construction cost HK$86.2 billion HK$136.2 billion HK$84.5 billion HK$141.5 billion

The AA added that this project estimate was determined as part of a vigorous process involving scheme design consultants, a professional independent quantity surveying consultant and the AA management team, and the project will be cost-effective.

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