CONFIDENTIAL
(2)
We would strongly advise that the application of a ceiling figure
can only inhibit the production of the optimum design solution
and could also present the Steering Group with a very difficult
task in evaluating competitive design solutions each of them
different because of the need to meet a predetermined price.
Escalation
which is the
About 85% of the M & E costs will be incurred in the U.K., the
balance in Hong Kong. We hope we have already defined clearly
the proposed provisions for escalation both in our proposals and
subsequent correspondence with Mr. Lau Wah Sum. Your requirement
for a fixed limit to escalation against a formula leaves the
contractor in a situation where he at best can break even, will
probably lose, but can never gain. If you do not accept the
application of the formula we have suggested
fairest and most economical method for both contractor and client
then we might consider a fixed price for all U.K. costs where we
took the escalation risk venytebaky in our price for which of
course we would have to provide a very adequate contingency.
As far as Hong Kong escalation is concerned we would consider
that these costs which are wholly outside our control should be
met by the client against an agreed formula and price escalation
indices.
Unforeseen Circumstances
We assume that this term relates in the main to the Civil work
and covers adverse physical conditions and artificial obstructions.
For M & E work it is only fair to state that for this clause and
遮
other normal force majeure provisions it would be impossible to