TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 97

being handled by a group of merchant bankers specially retained for

the purpose.

Judging from the proposals received by the Steering

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Group, and from the exploratory discussions subsequently held by the

Group with certain proposers, it is clear that both of these approaches

that is to say, a single-contract approach and a multi-contract approach

would be equally feasible. It is clear also that the advantages and

disadvantages are finely balanced as between these two approaches,

having regard to such considerations as the availability and terms

of export credit finance, the likely price of the project, the likely

starting date and the overall period of construction; and to the whole

range of problems connected with the management of the project during

the construction phase.

..

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The Steering Group gave very careful consideration to the

question whether to recommend a single-contract approach or a multi- contract approach. The multi-contract approach has many attractions: in

particular, this approach is likely to generate a greater amount of

competition which, in turn, might lead to a lower overall contract price.

On the other hand, the Mass Transit Railway is the first project of its

kind in Hong Kong, in terms both of the magnitude of the capital required

and of the length of the construction period. A degree of certainty

over the amount and terms of export credit finance available, which is

one of the main advantages of the single contract approach, could be

of some importance and, within limits, could well offset the disadvantage

of a higher contract price. A final decision on which of these two

approaches to adopt cannot now be made with confidence because the

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information available on the prices and credit terms likely to be

available from the various consortia which have put up single-contract

proposals is as yet insufficient to enable this to be done.

./In the circumstances