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That, ladies and gentlemen, in our project. We have had our difficulties and cannot promise there will be no more. In 1987 we issued a prospectus hoping to open the project at a cost of £4.8 billion sterling; last November we issued a further prospectus to raise further capital to finish the project, at a
forecast cost now of £7.66 billion - a forecast which now has not
changed significantly for a year since it was made.
Beneath that overrun of 60% - from £4.8 to £7.66 billion - lies a forecast increase of 46% in construction and equipment
cost at constant prices. The balance of the increase was in
higher inflation, higher interest rates and owner's costs, the
latter including huge financing fees.
Some of you will say a 46% increase in real construction costs over initial estimate is not surprising in a 6 year construction project. You may say so particularly since that project, 3/1⁄2 years after launch, is very much on schedule, to open on June 15, 1993 - just one month behind the original target date. I do not agree, but I shall not bore you with war stories of the project. Let me just say two things which may help the promoters of the PADS projects.
First, the 10 contractors and we, the client and future
operator Eurotunnel, would all agree that it has proved much less than satisfactory to have a single turnkey contract, for design, construction and commission; it has proved even less satisfactory that the turnkey contract was negotiated, and accepted by the lead banks, before the client and future operator was established with a capability to assess independently the obligations of the contractor. We and the contractors struggle, most of the time with good sense and good humour, to overcome those disadvantages.
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