TNAG-2959-FCO40-4238-Future-of-Hong-Kong-British-Consulate-General-building-incl-1993 — Page 63

CONFIDENTIAL MANAGEMENT IN CONFIDENCE

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MDAN 5190

BIDS, YOUR PROJECT MANAGER (SWIRES) ASSESSED THE FARRELL PROPOSAL AS COSTING POUNDS 29 MILLION, I.E. WELL ABOVE THE PES BID BUT NOT DRAMATICALLY SO. WHAT IS THE EXPLANATION OF THE LARGE DISCREPANCY BETWEEN THE SWIRES ESTIMATE AND THAT SUBSEQUENTLY PRODUCED BY WIDNELLS QUERY. DID FARRELL'S ORIGINAL DESIGN REALLY EXCEED THE PARAMETERS BY SUCH A LARGE MARGIN QUERY. OR DID SWIRES OR WIDNELLS GET IT WRONG QUERY.

C) IN ANY EVENT, THE DISCUSSIONS IN HONG KONG BETWEEN 5-9 DECEMBER APPEAR TO HAVE PRODUCED SAVINGS OF JUST OVER POUNDS 14 MILLION. MY COMMITTEE ARE ANXIOUS TO KNOW HOW SUCH MASSIVE SAVINGS WERE ACHIEVED. WE ASSUME THAT THE SAVINGS ARE REAL (I.E. RESULTING FROM A DOWNGRADING OF SPECIFICATIONS AND A REDUCTION IN RATES) RATHER THAN COSMETIC. IN THAT CASE, WE HOPE THAT YOU CAN REASSURE US THAT THE SAVINGS SO FAR HAVE NOT BEEN SECURED AT AN UNACCEPTABLE PRICE IN TERMS OF QUALITY AND APPEARANCE. WE NEED TO KEEP IN MIND THAT THE ORIGINAL CONCEPT ENDORSED BY MINISTERS WHEN THEY DECIDED TO BUILD A NEW CONSULATE GENERAL WAS THAT THE BUILDING WOULD BE A STATEMENT OF HKG'S CONTINUING COMMITMENT TO HONG KONG. IT WOULD BE A SHAME IF THE IMPACT OF THAT STATEMENT WAS REDUCED BY COST CUTTING TO THE POINT WHERE IT SUGGESTED THAT OUR COMMITMENT WAS A HALF-HEARTED ONE.

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THE COMMITTEE WOULD FIND IT HELPFUL TO HAVE A COPY OF THE ORIGINAL DRAFT ESTIMATES OF POUNDS 43.74 MILLION PRODUCED BY WIDNELLS AND A COPY OF THE REDUCED ESTIMATE OF POUNDS 29.68 MILLION AGREED IN EARLY DECEMBER, IN ORDER THE BETTER TO UNDERSTAND THE PROCESS WHICH HAS BROUGHT US TO THE PRESENT POSITION. PERHAPS YOUR PROJECT MANAGER COULD BE AUTHORISED TO PASS THESE TO US LOCALLY QUERY.

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TURNING TO THE SUBSTANCE OF YOUR TELNO 2, MY COMMITTEE NOTES THAT, EVEN AFTER THE POUNDS 14 MILLION COST REDUCTIONS AGREED IN HONG KONG IN DECEMBER, THE CURRENT ESTIMATE IS STILL SOME POUNDS 4 MILLION ABOVE THE PES BID. IN COMMENTING ON THE SCOPE FOR AND MERITS OF FURTHER COSTS, WE FEEL IT WOULD BE HELPFUL, IF NOT ESSENTIAL, TO KNOW HOW MUCH SAVING EACH PROPOSED CUT WOULD GENERATE, AND THEN TO SET THIS SAVING AGAINST THE LONG TERM COST OF THE CUT, AS YOU HAVE CLEARLY DONE IN REJECTING THE OPTION OF DELETING THE RESIDENTIAL COMPONENT OF THE CONSULATE GENERAL.

WE SHOULD BE GRATEFUL IF YOU COULD SHARE WITH US YOUR ESTIMATES FOR THE SAVINGS THAT WOULD ACCRUE FROM DELETING:

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