At first, contractors and their advisers exploited other obvious means of recovery. Claims were brought for negligent misrepresentation in respect of information given in the invitation to tender. The variation clause in the contract was relied upon as imposing an obligation on the engineer to vary the works when unforeseen conditions were encountered. The ultimate attempt to circumvent the absence of the unforeseen physical conditions clause has been the increasing reliance upon an argument of impossibility of performance, deployed in a number of major public works contracts such as the Tsing Ma Bridge.

Government’s policy, which developed in a piecemeal fashion over the years, had its origin in an entirely legitimate objective—to ensure that public money was not wasted and could be accounted for in a transparent manner. Quite rightly, certainty of price, value for public money, and timely completion were government’s overriding aims; and it was considered that these aims could be achieved by transferring material risks to the contractors.

In recent years several significant developments have cast doubt on this policy and suggest there is a need to reform the Hong Kong construction industry fundamentally. The publication of the Report of Jesse B Grove III, and the work of the Construction Industry Review Committee under the chairmanship of the Hon Henry Tang, have focused attention on reform. Various criticisms of the industry have been voiced with increasing volume— for example, that it is fragmented, does not give sufficient priority to safety and is relatively inefficient and costly by international standards. Any agenda

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