TNAG-2961-FCO40-4240-Future-of-Hong-Kong-British-Consulate-General-building-incl-1993 — Page 88

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7.

will continue to look for ways of reducing the

specifications without unacceptably detracting from the quality of the building, when we receive the Final Sketch Designs and Report.

I attach a completed Project Approval Proforma. I also attach DCF appraisals of both this project and the only other realistic option i.e. renting. As stated in para 3 we fully appraised in 1989/90 other options and all those that included land cost elements remain relatively much more expensive in comparison with building on the free Colvin House Site. The terms of the PTG prevents the use of our site for "Commercial" purposes and as such Developer/Joint Ventures are not advantageous to HK Development companies for the Colvin House site. There never was a "do nothing" option given (i) the transfer of sovereignty, (ii) the political decision to use the form of the UK's representation in Hong Kong post 1997 to demonstrate our continued confidence in and commitment to Hong Kong and (iii) the practical need to enlarge on the present British Trade Commission accommodation as we take on extra functions - notably immigration, passport and consular work - from the Hong Kong Government. The summary below of the build and leasing options serves to demonstrate conclusively that building is much the more economical solution.

Build new Offices (all Consulate-General

NPV £34,260,000 Appendix A

functions and British Council) and 7 UK staff flats:

Lease new offices

(Consulate NPV £79,531, 75 Appendix B

and British Council) and 7 staff flats.

We have carried out a risk analysis of the project: the main risks are:

8.

(a)

Escalating construction costs resulting from increased activity in the local construction market once the current political constraints on the new airport and other work are lifted. If we can maintain our current programme and invite tenders before construction costs escalate we could well be the gainers from particularly competitive bidding for the contract.

(b) The British Council's Direct Teaching of English

Operations could be vulnerable after 1997 e.g. closure of the English classes by the Chinese. This would reduce their requirements by 80% and would subsequently mean that less than 2 floors of the proposed Council wing would be needed for the remaining functions. The Private Treaty Grant for the Colvin House site currently prevents

PCAS3.784

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