aef1.1g/bgm/2.20.7
explained that these stages changes being examined.
will be
unaffected by any of the
4. The investment appraisal convincingly indicates that new build is indeed the best option, due to the extremely favourable terms on which the Colvin House site has been obtained, with the Private Treaty Grant terms meaning that the opportunity cost of the site is effectively zero. We also agree that the building option comes out best in the comparisons, supplied with your letter of 22 June, between building and renting accommodation the passport. work peak in 5 out of 10 years.
for
5. When we discussed this by telephone, you explained that the option of possibly reducing further the accommodation requirements, including the MRS review, had now been virtually settled: the staffing level was unlikely to be reduced and the comparisons you provided with your letter of 22 June effectively ruled out renting. We also discussed that the second option, omitting all the residential accommodation and amenities, was most unlikely to represent value for money compared to renting. Thus, the only option for further cost reduction that might be pursued is reducing the building specification.
6. There is no indication of the extent to which the costs could be reduced by changes in the building specification. This, together with the more remote possibility of an alteration in the requirements leads us to conclude that we should withhold approval for the main works stage, until the requirements are finalised.
1.
We should be grateful if you would re-submit for approval the main construction works well before your target date of February 1994 for going to tender for that. At that stage, please will you also explore the scope for phasing the development and whether that would have a favourable bearing on the economics/
costs.
8.
As I have mentioned by telephone, we should be interested
to know how this project will be managed on the ground in Hong Kong from your position as client. It is important that the management of all projects should reflect cost effective, viable and professional standards and we need to know how that will be achieved for the Hong Kong project. For example, what will be the relationship between you, as project sponsor, and Swire Pacific Properties Ltd, as Project Managers?
How will the responsibilities and decisions of the client be carried out in Hong Kong?
9. Finally, Kim Elliman will be discussing with you by telephone some more detailed points about the material you have submitted, including the way in which some parts of the CUP pro forma have been used.