TNAG-2593-FCO40-3781-Appointment-of-Chris-Patten-as-new-Governor-of-Hong-Kong--Ap-1992 — Page 49

1992-05-20 16:31

I C/C S O

852 845 2129 P.05/12

allowance

of

$2.5 bn (i.e. to within $2.5 bn of the

$45.6 bn to be

spent by Government on public works.)

We have set up

rigorous cost control system. The

degree of discipline is

much greater than for normal public works projects in the past. Contracts are being awarded on a fixed price lump sum basis, which shields

the Government from the uncertainty of future

inflation.

It would be unrealistic to suggest that these

costs are immutable: estimates are estimates. But they

have been made after careful design and assessment:

they are not initial guesstimates.

Consultation on the Airport and Airport Railway financing packages is under way. We are optimistic · that the ACP can be completed by mid 1997.

The Government is presenting all its figures on the ACP in March 1991 figures in order to achieve as

much transparency as possible on costs in real terms.

money of the day figures are sometimes used by the MTRC and PAA when talking to bankers, and by the Government when placing fixed price lump sum

However,

is

no price increase in real terms

contracts. There

involved in these figures.

****