TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 123

6.

7.

CONFIDENTIAL

3.

the cost of the project. This indication exceeded $5000

million dollars although inflation at only 5% per annum from

mid-1972 was included.

We are in no better position now to make a more accurate

estimate and whereas our indicative price may be too high

or too low it is clear that the effect of only a small change

in the rate of inflation can be very significant.

Turning to the Steering Group's proposals for the sequence

of events leading to the conclusion of a contract we consider

that the periods allowed for issue of all technical

information by the Client to the Consortium and the

execution of necessary design, quantity surveying,

programming and pricing, i.e. October 1973 - March 1974

and October 1973 - May 1974 are quite inadequate.

To produce a firm price estimate one would require detailed

drawings and bills of quantities and these might normally

cost something of the order of £2,500,000 1% of the

cost of the job. We have grave doubts that the organisation

can be set up to do this work and spend that amount of money

in the time allowed. Considerable slippage of the Steering

Group's programme appears inevitable.

The British Group submission of June 1973 proposed

completion of Stages 1 4 in November 1979 based on

a Letter of Intent being issued 1/10/73. The Steering

Committee now propose a Letter of Intent on 1/7/74.

This

is already a nine month delay and completion is unlike'y

to be earlier than August 1980 as the effective

construction period begins when a Letter of Intent is

...../Continued