Instead the MTRC has adopted a radical approach with its contractors and suppliers which allows it to continue to invite tenders for contracts which will only be awarded once the political impasse has been resolved.

Under the arrangement, tenders are invited and assessed normally. But instead of awarding the job MTRC sends a letter asking if the favoured firm will hold its price for 12 months.

In return for agreeing to this option, MTRC tells the contractor it will make the tender inflation proof, automatically increasing the price.

''There are several benefits associated with these option letters: they identify who the successful contractors will be; other bidders know they have lost out so they can commit resources elsewhere; we know which firm have got the jobs and whether there is a risk of them becoming over-committed'', Mr Black said.

But the major advantage is that they only need to be converted into formal contracts before work can start.

Mr Black believed firms who had letters could start work within four to six weeks of Britain signing an agreement with China.

MTRC expects to issue the third option letter this week for the design and construction of the Rambler Channel bridge.

Others have gone to AEG/CAF, a consortium of German and Spanish engineering firms, for the supply of 11 five-car trains for the airport express and 12 six-car trains for the Lantau line; and GEC-Alsthom, the Anglo-French transport company, for the installation of signalling equipment.

MTRC refused to say how much either contract is worth, but industry sources said the train order would be more than $3 billion, while the signalling job would be about $400 million.

The train contract is one of the most critical on the whole project and cannot be completed in much less than 43 months.

Tenders for five more construction contracts covering tunnels on the Kowloon side, station and tunnels at Lai King, Kwai Chung Park viaduct, Tung Chung station and overhead power lines, are being evaluated and option letters could be issued in the next few weeks.

Tenders have also been returned for the construction of foundations at Tsing Yi and Kowloon stations.

The MTRC is also close to a deal for the immersed tube crossing of Victoria Harbour, but Mr Black said he was unable to issue a option letter because construction was closely linked with progress on the Western Harbour Crossing.

Mr Black said the MTRC had made a conscious decision to do as much planning and pre-construction work on the railway as it could while Britain and China hammered out the financing.