TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 232

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A single-contract approach would involve letting the entire construction and equipment of the MTR to one consortium, either by an invitation to tender or by negotiation. The advantages of this approach are:

(a)

(b)

(c)

it would enable the maximum amount of export credit finance to be obtained (probably not far short of 70% of the total capital cost of the project) on the best possible terms;

it would probably permit the shortest overall period of construction because a consortium would provide maximum co-ordination of construction and supply of equipment and should be able to move from phase to phase with no delay;

it would require less co-ordination and management on the part of the operating authority and its agents.

These advantages are, however, offset by the following disadvantages:

(d)

(e)

(f)

(g)

because competition will be limited to fully- fledged consortia, each largely dependent on one or two countries, this method would probably lead to higher prices;

the first four stages would, in effect, constitute the minimum viable package for a turnkey contract. It is unlikely that a price for the contract could be obtained until the design and specifications for the first four stages had been drawn up, at least in outline. It might be difficult even then to obtain a firm price without escalation clauses to cover various contingencies;

the starting date of construction would most probably have to be delayed by as much as 12 months because of the longer time required for concluding the contract (although delays might, in any case, occur in obtaining land and wayleaves for working sites and other purposes); and

the approach would be inflexible, and would result in Government and the operating

authority being commited entirely to a single consortium.

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