6.
7.
CONFIDENTIAL
3.
the cost of the project. This indication exceeded $5000
million dollars although inflation at only 5% per annum from
mid-1972 was included.
We are in no better position now to make a more accurate
estimate and whereas our indicative price may be too high
or too low it is clear that the effect of only a small change
in the rate of inflation can be very significant.
Turning to the Steering Group's proposals for the sequence
of events leading to the conclusion of a contract we consider
that the periods allowed for issue of all technical
information by the Client to the Consortium and the
execution of necessary design, quantity surveying,
programming and pricing, i.e. October 1973 - March 1974
and October 1973 - May 1974 are quite inadequate.
To produce a firm price estimate one would require detailed
drawings and bills of quantities and these might normally
cost something of the order of £2,500,000 1% of the
cost of the job. We have grave doubts that the organisation
can be set up to do this work and spend that amount of money
in the time allowed. Considerable slippage of the Steering
Group's programme appears inevitable.
The British Group submission of June 1973 proposed
completion of Stages 1 4 in November 1979 based on
a Letter of Intent being issued 1/10/73. The Steering
Committee now propose a Letter of Intent on 1/7/74.
This
is already a nine month delay and completion is unlike'y
to be earlier than August 1980 as the effective
construction period begins when a Letter of Intent is
...../Continued