RESTRICTED
MANAGEMENT IN CONFIDENCE
ROUTINE
the car park adjacent to the British Council to a site which
would be easier to excavate and therefore less expensive. The
big reduction in CP2 for quote external walls unquote (19 mHKD in
CP1 and 50 m HKD in CP2 ) was made possible by changing the
purpose-made stone cladding proposed by Widnells for a good
quality quote off the peg unquote French limestone. Significant
savings were realised by removing features inappropriate for a
building in Hong Kong eg double-glazing. Further significant
savings were made by cutting the price and design risk from 10
per cent to 5 per cent, a normal procedure at this stage in a
project. We can now put hand on heart and say that the current
estimate gives the right balance between construction costs and
quality for a prestige building for HMG in Hong Kong.
5. I hope that this answers your questions about how we
able to reduce the estimates in Widnell's initial CP1. I am
conscious that it does not explain why you were told at an
earlier stage that increases in the estimated building costs
would not/not result in reducing the scope of the building and
changing the schedule of requirements. As you are aware, our
original 1990 PES estimate was for 20 million pounds. Farrel's
competition bid came in at 24.2 million. After revisions
commissioned by you/us, this rose to 26.5 million. The effect of
black Wednesday was to bring this figure up to 30.6 million
pounds. Our original PES estimate, allowing for application of
the upward adjustment mechanism comes out at
pounds in 1992 money. Adding in the black Wednesday currency
fluctuations, this brings our 1992 PES bid in at ........million
pounds in 1992 money. This Leaves a shortfall of
pounds.
6.
•
•
illion
..million
On costs arising from the devaluation of sterling, I can
confirm that we will indeed be seeking the full amount from the
Treasury. We are fairly confident that, we can marshall
persuasive