6
FIXED PRICE LUMP SUM CONTRACTS
18.
Fixed price lump
sum contracts should Approval should be
adopted for ACP projects.
D, NAPCO for any exceptions to be made.
normally be sought from
Provision for Price Escalation in Fixed Price Contracts
of the contract Officers contract,
Under
19.
the fixed price contract system, sums tendered are expected to be higher than the original project costs at constant prices. Where projects are upgraded or reviewed in anticipation letting a fixed-price contract, regardless of whether the is a lump sum or re-measurement contract, Controlling should highlight the estimated time of awarding the
as well as
the current project cost and cash flow at (March 1991) prices. Finance Branch in consultation with D, NAPCO will adjust the project cost by
by applying an appropriate price escalation rate, and propose this to PWSC/FC for acceptance as the APE for the project. Controlling officers should ensure that in the context of PWSC submissions, project managers and consultants do not make their own adjustments for price escalation.
constant
TRANSFER OF WORKS
ACP
20.
ENTRUSTMENT, AND PROJECTS FUNDED OUTSIDE THE
Where, for any reason, the works of one project have to be carried out under a contract for another project, PWSC submissions should propose that those works should become part of the scope of latter project. The scope and estimates of both projects should be adjusted accordingly.
21.
Where works are entrusted to the Government by external agencies (e.g. the MTRC), the fact should be identified in the appropriate PWSC submission.
Controlling Officers should approach FB for advice on accounting arrangements for such projects case by case. All such entrustments must be approved in advance by D, NAPCO and FB.
22.
Certain works will be carried out by the Government but paid for in part by another body (e.g. the sewage treatment plant at North Lantau which will be partly funded by the PAA). In such cases, the PWSC submission should describe the scope and estimate of the project in full, as well as the funding arrangements Reimbursement from the contributing entity will be credited to the Capital Works Reserve Fund Works Account.
involved.