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Macau Project Meets Obstacles

22 June 2005

MACAU – As reported by the China Standard: "Failing to meet the deadline on any construction project is bad news for the contractors and the client, but when the project in question is a cash machine like a casino, the costs of being late are almost too high to contemplate.

"Building a casino, in fact, is almost as risky as entering one.

"…Getting the timing right is a struggle, even for the most experienced of operators. Take Las Vegas Sands, the American gaming firm whose Cotai Strip megaproject in Macau ranks as the biggest construction undertaking in Asia since Hong Kong built its new airport in the 1990s.

"Last November, in the fine print of a filing with United States securities regulators, Las Vegas Sands said it expected to spend US$1.8 billion (HK$14 billion) - almost double its previous estimates - on the Venetian Macau, the anchor resort among the more than 20 casino hotels envisioned for the Cotai Strip.

"It also said the resort will open only in the first quarter of 2007, breaking the promise it made to the Macau government of a June 2006 completion.

"…People with experience of projects on this scale say they inevitably produce a tangle of risk-management issues where meteorology, geography and economics overlap with plain, old-fashioned, human unpredictability.

"…Inflation, of course, can have an unpredictable impact on material and labor costs, but such risks can be transferred by subcontracting, according to Tam Chi-ming, an associate professor of building and construction at the City University of Hong Kong.

"…One risk that can never be hedged is government red tape…"

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