CONFIDENTIAL
XCC(92)58
Cost Control
10
In the process of carrying out the review, considerable work has been done on cost control mechanisms. The new estimates will form a benchmark for the imposition of cost control in the future. (Nevertheless, in reaching the present, up-dated estimates, every effort has been made to keep close to last year's estimates.)
11
ACP projects have now been cash-limited with reference to the up-dated estimates. A rigorous reporting system has been put into place, under the supervision of the Director, NAPCO, and early indications of deviations from original plans must be approved by his office. Major items must be submitted for approval to a committee chaired by the Chief Secretary. Any increase in estimated costs must, as far as possible, be offset by savings in the same or associated projects. It is expected that the net increase in the Government capital expenditure on the ACP projects should be contained within the estimated $2.5 billion margin of ACP contingency.
FINANCIAL AND STAFFING IMPLICATIONS
12
The recommendations in the Memorandum have no direct financial or staffing implications.
13
Of the revised costs identified here, $59.3 billion will be met from Government expenditure. This figure is made up of expenditure under the Public Works Programme and equity injection from the Capital Investment Fund. Based on the Medium Range Forecast published in this year's Budget Speech, total Government expenditure on the ACP between now and 1997 is still expected to be about one quarter of the Government's total capital expenditure over the same period. We forecast that adequate reserves will be available over the period to cover the Government's commitments, including both existing and new contingent liabilities.