TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 66

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of practical interpretation (and even some possibi-

lities for trade-off).

(d) He had taken note of Lazards' comments on the overall

financial picture, particularly those concerning the

various escalation factors assumed by the MTSG. The

choice of what escalation factors to use was a matter

of judgment which, at the end of the day, must be made

by the Government. However, the TSG was prepared to

look at Lazards' calculations.

(e) Finally, he said his comments were necessarily tenta-

tive at this stage, as the MTSG could only assess the

British Group's response after it had obtained the

responses of the other three consortia. However, he reiterated that the Government would be quite pre-

pared to abandon the project if the alternative were

to mean putting the Colony's fiscal position seriously

at risk.

MTSG's Summary of the British Group's Proposals

13. The two sides went over the MTSG's summary of the British Group's proposals. The British Group confirmed that the summary was substantially correct, subject to the following observations:

(a) the British Group had specified a number of special

requirements additional to those summarised in para- graph 4;

(b) as regards paragraph 8, a number of other factors

apart from cost escalation and unforeseen circum- stances had been excluded from the British Group's price estimates;

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