(6)
Alternative Three
It is possible that after starting negotiations on the basis
of Alternatives One or Two (and therefore under the protection of
a ceiling price), the acquisition of the complete soil information
and of the final design elements may enable the Steering Group,
assisted by its Consultants, to find that the level of physical
risks and construction contingencies has been sufficiently
redefined to doubt the attractiveness of covering them through
the Contractor on the basis of a lump sum contract.
In that case
we are prepared to offer the Steering Group the option to revert
to a normal unit price contract with quantity remeasurement for
the Civil works. The M and E part of the contract would still be
on a lumpsum basis, but would not include escalation.
would be charged based on formulae to be negotiated.
All escalation
The price for
a contract of this type could be in the order of HK$3,500M but the
ceilings would no longer apply.
As all this implies that the Contractor would then be willing to
relinquish the prospect of a greater profit, we would not wish the
credibility of our proposal to be undermined.
It rests on two basic
considerations: we are deliberately attempting to offer advantageous
options to offset a ceiling price which we must at this time for
reasons of self-protection, place at a somewhat high level;
and we much prefer to have our contract on a straightforward unit
price basis uncomplicated by conflicting profit motivations
stemming from having accepted unusual risks.
Clearly a large number of further details as well as agreement on
contract conditions needs to be settled, which would of course
properly be done during contract negotiations.
We believe that we
have put forward sufficient definition of our counter-bid to justify
its being found responsive and capable of evaluation, in accordance
with your requirement.
Once that is determined, we are at your
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