THE OTAGO DAILY TIMES SATURDAY, JANUARY 11, 1902. THE TRAMWAYS: CONTRACT OR COMMISSION?

Otago Daily Times, Issue 12248, 11 January 1902, Page 6

THE OTAGO DAILY TIMES SATURDAY, JANUARY 11, 1902. THE TRAMWAYS: CONTRACT OR COMMISSION?

The time lias come for the City Council to decide whether it shall itself undertake the construction of the electric tramways, paying a commission on tho cost to a linn of electrical engineers for the supervision of the work, or whether it shall let a contact for the worlc to the firm whose tender may be regarded as the most satisfactory. It is hoped that this question will be settled definitely at the special meeting to be held next week for the purpose. The Council has secured from Messrs Noyes Bros, an offer specifying tho terms upon which they are prepared to act as the Corporation servants in carrying out the work. These terms have been withheld from publication by the Council; —why we are unable to see, because their publication cannot possibly be held to prejudice Messrs Noyes Bros, in the event of the adoption of the tendering system in preference to the commission proposal. They have, however, leaked out to such an extent that they may fairly be treated as public property. In the first instance Messrs Noyce Bros, stipulated for the payment by the Corporation to them of a commission of 12i per cent, upon a sum which should be named by them as the limit of the cost of construction of the service, subject to their submitting to a penalty of 20 per cent, upon the amount of their commission upon any sum in excess of the sum fixed. But this offer was subsequently modified. For it Messrs Noyes Bros, substituted a fresh proposal in which their commission was reduced to 10 per cent, and the amount of the penalty to be imposed upon them in the event of the cost exceeding the

limit was increased to 50 per cent. That is, wo understand, in general terms, the proposal with which the City Council will have to deal next Wednesday. Will its acceptance represent Hie best arrangement that the cit> can make? If it will, the citizens will hold that the Council will be perfectly justified in closing with Messrs Noyes Bros. But the matter is one that is surrounded with a good deal of difficulty. The Council does not know what the work can be done for under the tendering system. What it does know is that when it obtained a report from Messrs Noyes Bros. 13 months ago on the whole scheme for the construction of electric tramways on plans practically the name as thoso which have been'adopted, the firm gave £IoU,OOO as their estimate of the cost of electrically equipping the service, of installing a power station, and of bringing the power into Dunedin. In that estimate allowance was, of course, made for contractors' profits. The Council will have formed its own ideas as to what proportion of the total cost these would represent. A local engineer, from whom wo published a communication on the subject yesterday, allows 20 per cent, for them, and upon that basis Messrs Noycs' Bros.' estimate of the actual cost of the work would be reduced to £150.000. This may, however, be a liberal estimate. In view of (he substantial fall which has occurred in the past 12 months in the values of copper and rails it is, indeed, not unreasonable to so regard it.

Whatever the cost of construction may bo—whether it be £150,000 or £130,000— the principal benefit the City Council will derive from undertalcing the work itself will lake the concrete shape of the difference between the amount with which a contract price would be loaded for contractors' profits and the amount of the commission to be paid to the engineers carrying out the scheme for the Corporation—the difference, that is, between a possible 20 per cent, upon the cost and such percentage as may be decided to be fair remuneration foi-l-he engineers. As to the amount of the engineers'commission, 10 per cent, may be taken to be the maximum that should be allowed, that being the proportion now fixed by Messrs Noyes Bros. But the question presents itself, whether, in view of the total free-

dom from contractors' risks which a firm of electrical engineers, supervising the work as Corporation servants, would enjoy, 10 per cent, is the lowest : sum for which competent electrical supervision of the construction of the tramwavs can be secured. And the I only way of settling that question ! would be for the Council to approach i other electrical firms with an inquiry I as to the terms upon which, on the ' plans submitted to them, they would . be prepared to supervise the work, . the Corporation being its own contractor. In effect this would amount to the Corporation inviting tenders for i the right to supervise the construction. If it be urged that the adoption of this course would be unfair to , Messrs Noyes Bros., the answer is that to offer to one particular firm an im- , portant and lucrative commission ; would be scarcely fair to other firms that might be disposed to accept the commission on terms more favourable to the Corporation than any that have yet been proposed to them. Other things being equal, the preference would naturally be bestowed upon Alessrs Noyes Bros., for their intimate knowledge of all the details of the scheme and their complete grasp of all the requirements inspire the public with confidence in their ability to execute the work satisfactorily. . But it is the concern of the Corporation to liave the construction carried out on J the best terms compatible with the i efficient and expeditious installation of electric traction. Therefore, while it seems to us that the Council will be well advised if it resolves—as we believe it will—to undertake itself the construction of the tramways, we are not so clear that it is desirable to entrust to any firm, without competition, the supervision of the work on its i behalf.

It is to be feared that the avoidance of delay which we wero disposed to regard as a feature of some consequence in favour of the adoption of the commission method of constructing the electrical service may, after all, not be secured to anything like the extent that has been counted upon. The City Council has not yet succeeded in getting its agreements with two of the suburban borough councils settled. Moreover, there is some reason to fear obstructiveness on the part of one of these suburban councils which is credited with harbouring an ambition of owning its own tram lines. Until the negotiations with these councils have been concluded, the Corporation cannot make much progress with its proposals. If the suburban boroughs desire, as we should suppose they do, to share with the city in the advantages which the introduction of an electrical tramway service will confer, it will be a mistake on their part to exhibit a grasping and greedy spirit, for the City Council may bo indisposed to tolerate it. In the meantime, while these negotiations are pending, it would be unwise on the Corporation's part to enter upon the construction of the proposed hydraulic works. The water power transmission scheme will be unnecessary if the tramway service is not to foe carried through South Dunedin and Caversham.