TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 263

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ANNEX E to XCS(73)8

PROPOSALS RECEIVED FROM THE BRITISH GROUP

Part I Summary of Proposals

Consortium's Organisation

The British Group comprise a civil engineering sub-group led by Costain Civil Engineering Ltd, an E & M sub-group led by GEC-Elliott Automation Ltd, and Lazard Brothers & Co Ltd as financial advisers. They are a national consortium supported by the British Government. They are represented in Hong Kong by Hutchison International Ltd.

2

Should they be awarded the contract to construct and equip the MTR, the Group will establish a special company in Hong Kong to deal with all aspects of the contract.

Contractual Arrangements Proposed

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The Group propose to negotiate, on the civil engineering and building side, a target contract' whereby a series of 'target rates' for various types of work would be progressively established and agreed over a period. These 'target rates', when applied to quantities of work as measured, would yield a 'target price'. Actual costs of works would be controlled by the civil engineering sub-group (but would be made known to the client), and any difference between the final 'target price' (i.e. agreed 'target rates', as escalated, multiplied by finally remeasured quantities) and actual costs would be split between the contractor and the client in pre-agreed proportions. As regards E & M plant and equipment, a lumpsum price (which would be subject to variation on grounds of cost escalation) would be agreed.

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The Group propose generally to adopt conditions of contract drawn up by the Fédération Internationale des Ingénieurs-Conseils (FIDIC), but have specified a number of special requirements, the main ones being that:

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(a) the Group should be protected against fluctuations in exchange

rates; and

(b)

the client should provide free of charge the necessary work, storage and other sites, including land for the accommodation of expatriate workers, to enable the Group to undertake construction.

The Group would be prepared to provide a performance bond if required by the client.

Pricing

(a) Price indications

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The Group have estimated the total contract price at mid-1972 prices to be as follows (based on the exchange rate £1

HK$14.55):

HK$ mn

Civil engineering and building

Supply and installation of E & M

plant and equipment

2,806

1,000

Project management, insurance, etc.

241

4,047

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