CONTRACT PROPOSALS
6.1
It is likely that all international contractors will require price escalation in one form or another in view of the serious difficulties of anticipating the effects of inflation at the present time. Nonetheless, the tender docu- ments will call for fixed prices as well as prices providing for escalation. It may be possible to obtain fixed prices in some instances for contracts particularly in the electrical and mechanical field to compare with the anticipated cost of contracts providing for escalation. In any event, contracts that do allow for escalation will include the maximum safeguards to ensure that escalation is confined to labour and material cost increases that cannot be anticipated when tendering and do not allow escalation of profits or overheads or in any other way encourage inefficiencies.
6.2
It is also proposed to leave open the question of the currency in which contract payments are made. There is danger in importing overseas inflation into contract costs particularly where the weaker currencies are involved. There are considerable attractions to payment in Hong Kong dollars the same currency in which the Corpora- tion will earn its revenue and whereby inflation of construction costs and revenue would be subject to the same factors.
6.3
The total contract has been broken down into sections that will allow the maximum amount of work to be carried out simultaneously, and at the same time are sufficiently large in themselves to attract favourable export credit terms.