TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 235

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Thus, if the overall contract price under large separate contracts were more than 5. 25% cheaper than the price obtainable from a consortium, it would probably be better to adopt the multi-contract approach and tender for relatively large packages. Likewise, if a further 3. 25% or more could be saved, it would seem preferable to tender for a series of relatively small contracts.

26

Whether these figures would be achievable is a matter of judgment, as it would not be possible to operate on both systems simultaneously; in any case, the figures are calculated on the basis of certain assumptions, and cannot be taken too literally. However, experience elsewhere has suggested (and some proposers have said) that the difference between the overall price resulting from multiple large contracts and that from a single contract is likely to exceed the margin quoted above. Whether a further saving of more than about 3% could be achieved if small contracts were let instead of large contracts is more difficult to judge, but the flexibility inherent in a multi-contract approach would enable the size of individual contracts to be varied, if necessary, in the light of changing circumstances.

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Taking into account all the points set out in paragraphs 22-26 above, and considering, in particular, that:

(a)

a degree of flexibility would be an advantage in respect of such a large and long-term project as the MTR;

(b)

(c)

(d)

the larger export credit coverage and possibly better credit terms available under a single- contract approach would not be absolutely necessary to finance the system (see paragraph 19 above);

one of the main advantages of the single-

contract approach, namely a shorter construction period, does not arise from the approach as such, but in part from the project management function which has been built into it; such

project management could equally well be

undertaken by the operating authority itself,

possibly strengthened by engaging the services

of specialists in this field; and

above all, a single-contract approach would probably lead to higher prices,

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