Our Ref:
Tour Ref:
pa
22 June, 1993
Mr B G Marr
HM Treasury
Parliament Street
London SW1P 3AQ
HKD 406/2
29. 1993
Foreign & Commonwealth
Office
Overseas Estate Department
Apollo House 36 Wellesley Road
Croydon
Surrey, CR9 3RR
Telephone: 081-760-8245
Facsimile:
081-686 4951
152
Dear Brian,
HONG KONG : NEW CONSULATE-GENERAL
1. As advised in para 6(a) of my letter of 7 June 1993 we have been appraising the economics of constructing a building which would be marginally on the larger side for our current requirements for five out of every ten years of the passport issuing cycle.
2. We have now completed a comparison in Net Present Value terms between the cost of building this "spare" space with the cost of renting and fitting out an equivalent area in the peak years of the cycle. The attached DCF appraisals show that it is more economical to build and run the risk of having under-used space (if it cannot be used for an alternative purpose) for the years 1997 to 2001 compared to renting it in the peak years (2002 to 2006). The comparison only covers the first ten year cycle: in subsequent peak periods the rent costs would continue thus increasing the margin between the two options. We also did not include in our calculations the potential cost of fees for a redesign to eliminate this space and penalties and repercussions of delays to the project eg escalating construction costs (please see para 8a of my letter under reference): their inclusion would strengthen further the case for providing the space now.
3. This letter (and enclosures) has been agreed by RFD and our Economic Advisers. I should be grateful for your approval to proceed at a total estimated cost of £27.55M.
Your sincerely
Alex Smith
A D Smith
PJADS.282
CC Mr Wootton RFA
Mr Love Economic
Adviser при
Mrs Barnes-Jones HKD
My whittle / Me Riding MPG My Savage Area I