The government deviated from important management principles in its monitoring of the Hong Kong Harbour Fest, according to the Director of Audit's latest report.

The report maintained that many of the problems besetting the festival resulted from insufficient time to achieve its objectives. The government and organizer AmCham admitted that it was "extremely ambitious to put together 16 concerts in 3 months".

The Audit Commission said it considered the average attendance rate of 43 per cent unsatisfactory, and was concerned about the distribution of a large number of free tickets, which represented 30 per cent of the audience turnout.

The report attributed the low attendance rate to a lack of market receptiveness, a shortage of time to organize, promote and distribute tickets for the festival.

While Harbour Fest aimed to generate positive publicity and boost morale in the aftermath of the SARS outbreak, the festival was wrought with problems, resulting in negative media reports that undermined the public's perception of the event, the report noted.

The majority of negative media coverage was focused on problems in concert arrangements and organization, such as the confusion leading up to the Rolling Stones concerts and significant changes in the artist line-up, which gave the impression that the event was not well co-ordinated.

The Audit Commission also disclosed that the festival's television promotional film had only achieved a total viewership of one million American households with limited airings on television networks. The target viewership had been 100 million homes in the US.

The report, therefore, questioned the effectiveness of the event in meeting its objectives.

The Commission said the government should have evaluated the viability of the Harbour Fest concept, the timeframe for organizing the event and the budget submitted by the American Chamber of Commerce.

It considered sponsorship an inappropriate form of financing the project as the government paid for the bulk of the festival's costs, while effective monitoring and risk management mechanisms should have been set up to address potential problems.

The government's "hands-off" approach in monitoring and overseeing the festival was also inadequate, the report added.

'Extraordinary circumstances'

Responding to criticisms in the report, Financial Secretary Henry Tang Ying-yen said extraordinary circumstances prevailed at the time when the Harbour Fest project was proposed, and the administration will take note of the lessons to be learned and follow up outstanding tasks.

Director-General of Investment Promotion Mike Rowse said the report's recommendations will serve as useful guidelines for managing large-scale innovative government projects in the future.

Meanwhile, former AmCham chief Jim Thompson said the chamber had no time to review the concept of the festival.

"The Habour Fest was organized during an emergency situation when the territory was under the threat of the SARS outbreak," Thompson said.

"Our statistics indicate that the average attendance rate exceeded 50 per cent," he added