TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 119

CONFIDENTIAL

(2)

We would strongly advise that the application of a ceiling figure

can only inhibit the production of the optimum design solution

and could also present the Steering Group with a very difficult

task in evaluating competitive design solutions each of them

different because of the need to meet a predetermined price.

Escalation

which is the

About 85% of the M & E costs will be incurred in the U.K., the

balance in Hong Kong. We hope we have already defined clearly

the proposed provisions for escalation both in our proposals and

subsequent correspondence with Mr. Lau Wah Sum. Your requirement

for a fixed limit to escalation against a formula leaves the

contractor in a situation where he at best can break even, will

probably lose, but can never gain. If you do not accept the

application of the formula we have suggested

fairest and most economical method for both contractor and client

then we might consider a fixed price for all U.K. costs where we

took the escalation risk venytebaky in our price for which of

course we would have to provide a very adequate contingency.

As far as Hong Kong escalation is concerned we would consider

that these costs which are wholly outside our control should be

met by the client against an agreed formula and price escalation

indices.

Unforeseen Circumstances

We assume that this term relates in the main to the Civil work

and covers adverse physical conditions and artificial obstructions.

For M & E work it is only fair to state that for this clause and

遮

other normal force majeure provisions it would be impossible to