Project management final report ENG3004 Griffith University Guri Dam & Chunnel Project

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3004ENG: Project Management Principles …

3004ENG: Project Management Principles
Griffith School of Engineering
Griffith University Gold Coast
guri dam venezuela
chunnel project case study
The Chunnel Tunnel Project
project management report engineering

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  • 1. Final Report Chunnel Project & Guri Dam The report presented is the sole work of the authors. None of this report is plagiarised (in whole or in part) from a fellow student’s work, or from any other un-referenced outside source.
  • 2. Table of Contents 1. Executive Summary ........................................................................................................................... 2 2.1 Project A: The Chunnel Project ........................................................................................................... 3 2.1.1 Project Background .......................................................................................................................... 3 2.1.2 Project Stakeholders ............................................................................................................................ 5 2.1.3 Project Life Cycle .................................................................................................................................. 6 2.1.4 Project Selection................................................................................................................................. 10 2.1.5 Project Delivery Systems .................................................................................................................... 14 2.1.6 Major Areas of Strengths and Major Opportunities for Improvement.............................................. 16 2.2 Project B: The Guri Dam Project........................................................................................................ 17 2.2.1 Project Background ........................................................................................................................ 17 2.2.2 Project Stakeholders .......................................................................................................................... 19 2.2.3 Project Life Cycle ................................................................................................................................ 20 2.2.4 Project Selection................................................................................................................................. 22 2.2.5 Project Delivery Systems .................................................................................................................... 23 2.2.6 Major Areas of Strengths and Major Opportunities for Improvement.............................................. 25 3. Comparative Analysis & Summary .......................................................................................................... 26 5. References ............................................................................................................................................... 29 6. Appendix.................................................................................................................................................. 31 1|Page
  • 3. 1. Executive Summary The main aim of this report is to investigate the project management principles used during the construction of two major civil works construction projects: The Guri Dam Project and the Chunnel Project. Key findings of this report will be summarized and compared with one another to determine which project was more successful in terms of project management. As this was a group assignment, the process followed to write this report became more involved. Each member researched a specific section of this report for both cases. All the information was then summarized and compared with one another. Results and key findings of this report follow in the next paragraph of this report. The idea for the Chunnel Project was conceived in the early 1802’s. For the next 150 years numerous ideas for the tunnel were discussed and dismissed. However several years after 1974, the British and French governments finally announced an official request for proposals which in turn, resulted in hundreds of bidding proposals flooding in. The Chunnel management team set out requirements that had to be met by potential bidders. This helped control the amount of proposals coming in, but due to a lack of detail during the definition stage of this project, poor resource management during construction, governments disputes and several other mistakes, the Chunnel project’s completion day was delayed by 19 months and initial costs of US$5.5 billion were well exceeded, reaching a mere US$ 15 billion. From a project manager point of view this project unfortunately failed to deliver in every aspect. The Guri Dam idea was conceived out of the Venezuelan government’s desire to move the country away from hydrocarbon electricity but instead using hydroelectric energy. The project was funded by the government and the World Bank, which set the project up for a good start. When the project started in 1963, specific criteria regarding the Guri Dam construction had been set out by the managers which resulted in a well-defined project scope. The Guri Dam project team set up a very detailed and dynamic project scope, which may well have been the reason behind its success. As lessons were learnt from passing stages, the scope was reassessed and edited where needed. As a result, the Guri Dam construction team finished work on time and well within budget. From a project manager point of view this project was a major success. 2|Page
  • 4. 2.1 Project A: The Chunnel Project 2.1.1 Project Background Europe's Chunnel Train, also known as the Channel Tunnel and Eurostar, is an underwater rail service linking England and northern France. Constructed beneath the English Channel, the rail system has been named one of the Seven Wonders of the Modern World. Since opening in 1994, it has become a vital transport link for both passengers and goods. The first proposed tunnel underneath the channel was in 1802 (Groupe Eurotunnel, 2012)since then numerous attempts had been made in the following 150 years. Finally in 1985 the British and French governments asked for proposals of an alternative connection between the two countries. Due to the scale of the project the British and French governments were not prepared to publicly fund the project. The proposals were to include the sourcing of private funding; in return a concession would be granted over the tunnel. The next year the contract was awarded to Channel Tunnel Group/France–Manche (CTG/F–M) with a winning bid price of US$5.5 billion. In return the company received a 55-year concession for the link. All final quality and safety standard decisions were to be made by the intergovernmental commission set up between the French and British governments. To fund the project the company listed on the stock exchange, selling shares to the public. This, along with a consortium of banks, was the main sources of funding for the project. From its initial bid of US$5.5 billion the final cost of the project ballooned to nearly US$15 billion (Politics UK, 2011) due to a 19 month delay and extensive changes to the safety standards. The construction contract for the tunnel was awarded to the Transmache Link Group and was completed using large tunnel boring machines (TBM’s). Starting from either side of the channel, two teams set out constructing two 32 mile rail tunnels. A third service tunnel completed the tunneling, making it a total of 95 miles of railway (Jennifer Rosenberg, 2012). The two main tunnels are 25 feet in diameter with the third service tunnel being 16 feet in diameter. The tunnel walls are reinforced with high strength concrete blocks with a finished thickness of 5 feet. For the 3|Page
  • 5. more geologically unsound areas an additional layer of cast iron panels were added (Mega structures, 2004). On average the British side tunneled 150 meters weekly, while the French tunneled 110 meters. In total 4 million cubic meters of chalk was excavated. The British side used six machines while the French side only used five. In total, 11 TBM’s were used on the entire project. Every 250 meters there are horizontal shafts connecting the three tunnels. These shafts were installed to relieve the pressure caused by the high speed trains. A refrigeration system was installed along the length of the tunnel with a series of water and air pumping stations. These were to ensure no major temperature fluctuations were caused by the trains passing though the tunnels. At its deepest point, the tunnel is 75 meters from the ocean’s surface (Groupe Eurotunnel, 2012). State of the art satellite positioning was used to ensuring the two ends of the tunnel met up. Despite the overall delay, the actual tunneling finished three months ahead of schedule. The manufacture, installation, testing of the utilities and rolling stock caused most of the major delays. The original goal of the Channel Tunnel was to provide a competitive alternative to those transport methods already available between England and France (ferry and air). The Eurotunnel’s rolling stock is fully capable of transporting passengers, commercial goods and vehicles across the channel. However with the finished link, tourists can travel directly between the cities of London and Paris in under two and a half hours, linking England’s vast rail network with that of Europe’s. For many travelers this has proven to be a much more convenient and stress free option with it only taking 35 minutes to travel the length of the tunnel. In comparison to flying or ferrying, the Chunnel Tunnel connects travelers to the heart of the cities allowing them to transfer directly across to the vast transportation hubs. Since its completion, several other direct destinations have been added such as Brussels, Disneyland Paris and the ski town of Bourg St Maurice (Ferne Arfin, 2012) with multiple more destinations set to be added in the coming years. Initially the use of the tunnel was lower than predicted, but after the completion, usage of the tunnel has steadily been increasing, leading to economic spur development between the two countries. 4|Page
  • 6. There have been three major fires since the tunnel’s opening, but thankfully none of these fires resulted in any casualties. However, the fire of 1996 resulted in major damage to the tunnel wall. The fire was caused by a truck that had caught fire on a freight train entering the tunnel. After the incident, better fire detection sensors were installed and a fresh commitment was made to reducing the response time of emergency vehicles. 2.1.2 Project Stakeholders Stakeholders are anyone who has an interest in the project. Project stakeholders are individuals or organizations that are actively involved in the project, or whose interests may be affected as a result of project execution or project completion. They can have a varying level of influence over the project’s objectives and outcomes. The Channel Tunnel represents a three tunnel system twenty three and a half miles long (Eurotunnel, 2012) underneath the English Channel. It is one of the largest privately funded infrastructure projects creating a direct connection between England and France. To complete this project it required the cooperation of two national governments, a consortium of banks, numerous contractors, and several regulatory agencies. Stakeholders are generally broken up into two groups: primary and secondary. Primary stakeholders are directly related to the project, have a higher level of influence and may be directly influenced by it. These usually include the project team, project champions and financers. Secondary stakeholders are not directly related to the core of the project but have an interest in it, these groups usually include local authorities, community groups and unions. Primary stakeholders: The British Chunnel Tunnel 5|Page
  • 7. Groupconsisted of two banks and five construction companies, while their French counterparts, France–Manche, consisted of three banks and five construction companies. The role of the banks was to advice on financing and secure loan commitments. On 2 July 1985, the groups formed Channel Tunnel Group/France–Manche (CTG/F–M). The project involved 700,000 shareholders, 220 international lending banks (Genus, 1997, p.181) 46 contractors to complete the design requirements, many construction companies and many suppliers. The Channel Tunnel project had to be financed from private sources with no public finding to aid or guarantee the loans. Financing was mainly raised through the selling of shares and a consortium of 220 banks worldwide, all of whom had a major stake in the project. Secondary stakeholders: Secondary stakeholders are those affected someway by the construction of the tunnel but not directly related to the core of the project. For such a large project there were many people affected by the construction of the Channel Tunnel. Secondary stakeholders in the project would include the inter-governmental commission overlooking the quality and safety and the competing ferry and air transportation companies. The 15,000 workers consisting of laborers, mechanists, engineers, surveyors all working to complete the construction, potential customers and local residents and business owners would directly benefit from cheaper and faster transport which would ultimately increase tourist revenue. Generally speaking, the secondary stakeholders had very little influence over the construction of the project, but represent most of the potential customers for the tunnel. Hence their opinions are valid and important as part of the planning process. 2.1.3 Project Life Cycle The project life cycle is a series of sequential, sometimes overlapping, phases that most large projects go through from initiation to completion.Project life cycle provides a basic framework for those managing the project, regardless of specific works and details involved. Project life 6|Page
  • 8. cycle is broken up into three main phases Conception, Definition and Execution. (Panuwatwanich, 2012). Conception Phase: The conception phase is initiated when a customer, stakeholder or user perceives a problem, need or opportunity. An initial investigation is undertaken to clarify the specific needs and the feasibility of solutions evaluated. Suitable consultants are contacted with a Request for Proposal (RFP) and have the opportunity to tender for the project (Panuwatwanich, 2012). The function of the Channel Tunnel conception phase was to create a fixed transportation link between Great Britain and France in hope to spur economic development and trade. The Tunnel would also have provided a competitive alternative for international transport (Anbari, 2006b). Initial attempts at building a link between Brittan and mainland Europe failed in the conception phase due to political and economic issues. British and French discussions resumed in 1978 and after some common safety, environmental and security concerns were agreed to among the participating governments, the project was announced open for tendering. In 1986 the British and French governments awarded the project to the Channel Tunnel Group/FranceManche (CTG/FM) (Anbari, 2006b). A Request for Proposal should describe the client’s needs, seek solutions and inform possible contractors how to respond. Responses include a statement of work, proposal requirements, and contractual provisions and any additional information or disclosures (Panuwatwanich, 2012). Typical responses to a project proposal include conceptual designs for each practical option with strong reasoning of the best method to adopt. Contents of the project proposal should include headings such as: Executive Summary, Technical Section, Cost and Payment, Legal Section and a Management Section (Panuwatwanich, 2012). As there is a direct correlation between scope definition and cost estimates with respect to project management, larger projects usually face challenges with initial estimates, scope management and the contract type. A defined scope is essential to ensure that resource planning, cost estimates and budgeting can be managed and calculated as accurate as (Anbari, 2006b). 7|Page
  • 9. The successful applicant for the Chunnel project had proposed a 51.5km double rail tunnel which would accommodate both through-trains and all new undersigned transport trains with an initial bid price of US$5.5 billion. Throughout the conception phase, cost estimates were changed due to scope changes and delays and the eventual cost of the build calculated to be just short of US$15 billion (Anbari, 2006b). Despite the high level of design and in-depth bill of quantity estimates preformed, large increases in cost did occur mostly due to the lack of communication between parties on the definitions of certain processes involved. Such as the need for tunnel climate control which was overseen during the initial conception phase, but resulted in a $200 million addition to costs (Veditz, 1993). Many other issues such as differences between Great Britain’s and France’s railway widths which had to be taken into account when designing the rolling stock for tunnel, voltages and signaling systems were noted but overlooked during the conception phase (Anbari, 2006b). Definition Phase: The definition phase ensures the clients requirements are met through determining and planning the projects objectives and integrating them with suitable procedures. Project Scoping, Work Breakdown Structure and a Project Master Plan are all part of the definition phase (Panuwatwanich 2012). The Chunnel project consisted of detailed planning, communication agreements and government approvals. Two different companies, one in Britain (Translink) and one in France (Transmanche) did the planning; having two separate entities made this phase difficult. A large part of the struggles that the project incurred were due to failures in the definition phase (Anbari, 2006b). Project scoping phases include identifying, planning, defining, verifying and controlling the scope of the initial concept/idea (Panuwatwanich 2012). During the definition phase, the projects scope was not fully assessed and adequate precautions to prevent scope creep were overlooked. The project team did a reasonable job with respect to the 8|Page
  • 10. planning of equipment required, however the Chunnel project was challenged with respect to cost management. Schedule planning included activities related to activity definition, activity sequencing and activity duration times. As the tunnels were excavated by 11 tunnel boring machines, the complexity and required planning did not go unnoticed. Experience in work breakdown structures became essential. Work breakdown structure is a product-orientated subdivision of hardware, services and data required to produce a final product. All tasks are broken down into finer levels of detail until all have been identified (Panuwatwanich, 2012). A Project Master Plan should include a scope statement, detailed requirements, detailed work definition, responsibility for work tasks, detailed schedules with milestones, project budget and cost accounts, a risk plan, performance tracking and control and other elements of plan as needed (Panuwatwanich, 2012). IGC was given free reign of the project, as a result quality aspects of the project were handled well for most aspects, using the “better of the two methods” (Anbari, 2006b).However, better definition in the beginning on certain common standards would have allowed teams, such as those working on the rolling stock and communication equipment, to complete their work without delay. As the two teams worked seemingly independently towards a common goal - meeting in the middle - communication lacked during the early stages of construction. This led to difference in opinion later on in regards to the continual development and design of the project.(Anbari, 2006b). “The project office did an adequate job during the development phase. It followed some of the planning, designing, and detailing phases required in the development phase of a project, but its work was far from superior. It did take data from past projects, but perhaps not the lessons learned when planning the Chunnel project” (Anbari, 2006b). 9|Page
  • 11. Execution Phase: The execution phase of the project life cycle includes a complete detailed design, construction, implementation and finally the termination and handover of the project (Panuwatwanich, 2012). The execution phase of the project began late 1987, being handed over fully functional toChannel Tunnel Group/ France–Manche, known as Eurotunnel since December 15 1994. Upon completion the project was nineteen months late and over budget by approximately three billion 1985 British pounds. The project was being fast tracked, with design and construction happening at the same time. Political problems and government approvals caused delays and problems from the beginning. 2.1.4 Project Selection Project Selection can be defined as the process of assessing projects, individual or grouped, then choosing to implement it in part or in whole so that the objectives stated by the parent organization will be achieved and satisfied. (Meredith and Mantel, 2009) Different projects bring different challenges regarding cost, benefits and risks. As none of these variables are ever known with complete certainty, it makes the task of project selection very difficult. However, throughout the whole process the main deciding factor should be to make sure the project is closely aligned with the organization’s strategy. Therefore, to help the process of project selection, governing parties make use of project selection models. These models are used to convey the complex reality of a project in a simpler, easy to understand manner. In order to simplify these models, they are generally designed to only look at the key variables that actually affect the decision-making process. See Appendix 1 for Table 1 that will describe each of these Models in greater depth. 10 | P a g e
  • 12. Model Type Model Description These are known as common sense or minimum cost physical models. These Heuristic inexpensive models are used to convey the relative size and interrelationships of Modeling individual elements so that different problems associated with interfaces and interferences can be resolved. This is the process of writing mathematical expressions that model the behavior of physical systems. Mathematical modeling begins with assuming that the system Mathematical under consideration does obey the basic laws of physics, such as Newton’s Law. Modeling Once a reliable mathematical model has been formulated the process concludes with obtaining a solution. Dimensional Analysis is used to obtain a valid scaling law in conditions where the Dimensional principal equations of the system are unknown. To obtain the correct relationship, Analysis physical properties such as length, motion, material properties and different phenomena (such as surface tension) involved needs to be identified correctly. It’s not always possible to know the solution to the partial differential equations that Numerical govern the structure’s behavior. Therefore other methods need to be used to Modeling approximate the solutions. These methods are 1) the finite difference method and 2) the finite element method. The Monte Carlo simulation is defined as experimental mathematics with random Monte Carlo numbers. The simulation of random quantities obtains an approximation of the Simulation physical and mathematical problem solutions. Wind and Water tunnels use the same principals to evaluate the situation under consideration; the one just uses water as the fluid instead of air. Every closed looped Wind and Water testing system has the benefit of providing a three-dimensional flow field; however, Tunnels the model can only be subjected to discontinuous, limited duration testing, which is a major disadvantage. Knowledge-Based Systems represents the knowledge of an expert in an automated electronic medium. The system stores away this knowledge and then uses it when Knowledgeneeded. The system can handle incomplete and inconsistent information and Based Systems therefore has become one of the most valued systems in the engineering design process. This is a form of descriptive modeling that explores the behavior of the intended Discrete Event system. Discrete Event Simulation is basically a computer program that’s used to Simulation simulate the behavior of the system under study. 11 | P a g e
  • 13. There are many types of project selection models that engineers can use to base their decisionmaking on, for example: Heuristic Modeling, Mathematical Modeling, Dimensional Analysis, Numerical Modeling, Monte Carlo Simulation, Wind and Water Tunnels, Knowledge-Based Systems and Discrete Event Simulation. A single model or a combination of these models can be used in the selection process. The following table briefly outlines and describes some of these different methods. In 1984 the British and French governments finally came to an agreement about the Chunnel Project specifics. As a result, four basic requirements were established that bidders had to satisfy in order to take part in the bidding process. They were: - The proposals had to be technically feasible - It also had to be financially viable - The proposal had to be Anglo-French - And last but not least, the proposal had to be accompanied by an Environmental Impact Assessment. By October 1985, bidders had submitted ten proposals, but only four made it to the decision making table. The four that passed the first round of the project selection phase were the ones that best satisfied and achieved the parent organization’s needs, i.e. satisfying the four expectations laid down during the definition stage. The proposals were as follow: 1) Channel Tunnel Group/France-Manche (aka Eurotunnel) – The Eurotunnel group proposed a double rail tunnel that accommodates both through-trains and special carand-truck-carrying shuttle trains. The project price was estimated to be US $5.5 billion. 2) EuroRoute – EuroRoute proposed a bridge/tunnel scheme. Rode bridges would stretch out from the British and French coasts to artificial islands. These bridges would span approximately 8 km in length each. The artificial islands would then be connected with a 21 km long submerged tube tunnel. In later stages, a separate twintrack rail tunnel for through-trains would be built. The estimated project price was US $11-14 billion. 12 | P a g e
  • 14. 3) Eurobridge - This bridge scheme comprised of an enclosed tube, supporting a 33.8 km long motorway inside of it. The motorway would be suspended in 4.8km spans from 275m height towers. An additional rail link could be provided either on the bridge or in a small diameter tunnel. The estimated project price was US $11.5 billion 4) Channel Expressway - The Channel Expressway proposal was the least expensive bid. The estimated price was only US $2.9 billion compared to all the other bids that stretched over a budget of US $5 billion. All that the Channel Expressway entailed was 2 very large bored tunnels, containing a two-lane expressway for vehicles and a train track. It was as simple as that. Two months after all four proposals under consideration were thoroughly analyzed and researched, the Eurotunnel proposal was pronounced the winner. This was largely due to the fact that the project was found to be relatively safe and financially viable. It also depended on proven technologies, which meant the project would have a sufficient amount of data to model new designs off. This advantage dramatically lowered the risk of the project as a whole. For the Chunnel Project, it is most likely that the engineers used a Numerical Modelas part of their decision-making methods. Numerical Modeling has proved to be a perceived need by the tunneling industry. For the analysis of tunneling the continuum analysis is generally accepted, and it most often includes using the Finite Element Method and Finite Difference Method as explained earlier in Table 1. The Numerical Model can calculate the vital loads on the concrete liner of the tunnel such as the axial forces, bending moments and the shear forces. Some examples of what such an analysis might look like are shown in Figures 1(a), (b) and (c). (Australian Dept. 2012) 13 | P a g e
  • 15. Figure 1: Loads on a concrete Lining Calculated by Finite Element Analysis: (a) Axial Force, (b) Bending Moment, (c) Shear Force 2.1.5 Project Delivery Systems Project delivery system describes how various participants in a project are organized to interact based on the owner’s goals for completing the given project. In large construction projects there are a variety of different delivery systems all based on contractual documents that defines the role of each party and their level of control. There are four common project delivery systems: Owner-provided delivery-most or all of the work is completed by the owner which can include the design. This type is commonly used in small projects. Traditional design bid build - Design bid build is used when the owner requires both design and construction services. It gives the owner a high level of control over the project, making it a common system used for public works. Design builds - The owner contracts with a single entity that will provide the design and construct according to the owners specification. The contract is usually determined based on a bidding system typically consisting of multiple proposals. This type gives the project manager a great degree of control over the process taking away from what would usually be the owner’s responsibility. 14 | P a g e
  • 16. Design build variations - Similar to design build in that the owner contracts a single entity but are used where the owner may have other stipulations such as not have the capital to fund the project leaving the responsibility of raising the necessary funds to the contracted entity. In return certain rights may be granted and/or operational possession of the completed facility will be granted for a certain period of time also known as a concession agreement. This approach is mainly used on large public infrastructure projects were public funding is not available. Transferring a lot of the risk away from the public sector and placing it on the contractor. Within these four delivery systems there are four major types of contracts determining the payment method. Fixed price or Lump sum – This is a total set price used for a well-defined scope which may include incentives. Usually it includes a variation clause for unforeseen scope changes which the contracted can use to gain compensation. Rates based contracts - Are based on a bill of quantities the contractor is paid in portions based on completed work. Guarantee maximum price -Similar to lump sum however, there will be no adjustment to the tender price unless the owner changes the scope of the work; any costs over the tender price will be absorbed by the contractor. Cost-plus contract- The contractor is reimbursed for the cost of the construction plus a fee or percentage representing the contractor’s profit. There are usually possible incentives within the contract for reaching or exceeding targets. Taking these different project delivery systems into account then observing the systems used on the two chosen case studies the Channel Tunnel project and the Guri damn project we can observe the complex structure of delivery systems used linking the various project stakeholders together. In undertaking the Channel Tunnel project the cooperation of two foreign governments, multiple contractors, several regulators and banks was needed. There were several major project stakeholders in this project with multiple types of contracts linking them. Prior to opening the project to bidding the British and French governments first established common safety, 15 | P a g e
  • 17. environmental and security concerns this would be followed as a criteria.The project was then open for proposals which would include the design construction and operation while being completely privately funded. After major consideration the contract was awarded to Channel Tunnel Group and France Manche (now named Eurotunnel) the type of project delivery system used between these two bodies was a design-build variation known as a BOOT (build-ownoperate-transfer) with a fifty five year concession agreement. The regulating group intergovernmental commission (IGC) setup between the two countries standardized and regulated the construction of the tunnel making all final quality and safety decisions. From there the tunnel group sought out various investors mainly through listing shares and a consortium of banks. The large input of money from the banks made them a major stakeholder giving them a great deal of control over the project. The construction contract was then awarded to Transmache Link (TML) with the main stipulations being the tunneling would be a cost-plus fixed-fee (sellers actual cost plus a fixed fee representing profit) lump sum contract for all the terminals,their mechanical and electrical works, and a procurement contact for the rolling stock (carriages and trains). All associated equipment was cost-plus-percentage-fee(actual cost plus a fee based on the percentage of cost). Two teams were setup by Transmache link one on either side on the channel Translink Joint venture on the English side and G.I.E Transmache Construction on the French each representing a consortium of construction companies. Fundamentally the use of a BOOT system made complete sense for the public sector eliminating all risk to the public sector. But the fact that TML used a fixed price contract for a project that had never been attempted with a scope that was not fully defined forced those contracted to pursue all change orders. Leading to major delays and massive cost overruns the major delays could have been avoided if the scope had been better defined in combination with a cost-plus contract. This would have allowed the contracted to better understand what was expected of them and not have to worry about chasing up details that were inadequately defined leading to cost overruns. All of this resulted in the concession agreement being extended to 2086 which was originally set to expire in 2076. 2.1.6 Major Areas of Strengths and Major Opportunities for Improvement STRENGTHS 16 | P a g e
  • 18. SELECTION PROCESS: The engineers set certain requirements in place for construction companies who participated in the bidding process. These requirements had to be satisfied in order for the company to submit a proposal. The purpose of these requirements was to control the amount of proposals flooding in and to make them more manageable. WEAKNESSES FINANCING: The Channel Tunnel project had to be financed from private sources with no public finding to aid or guarantee the loans. This put major pressure on the project and increased the risk involved. CONTRACT AGREEMENT: A major contractual downfall that influenced the success of the Chunnel construction was the contractual errors that were made in the estimates and risk allocation method. These errors added to an additional cost of US$ 2.25 billion. Instead of establishing specific criteria for the Chunnel Tunnel’s contractors in their initial contract, later adjustments had to be made to the contract to ensurethe quality and reliability of their work. This “merging” of contract criteria led to the contract being very complex. MANAGEMENT TEAM: The Chunnel project management team did not utilise their resources and technology properly due to lack of scope definition. Very slow decision making processes during the Chunnel Project construction lead to situations where significant budget over-expenditures occurred. Not only was this a result of poorly managed finances, but it was also partially due to an out-of-control amount of changes made to the management team 2.2 Project B: The Guri Dam Project 2.2.1 Project Background 17 | P a g e
  • 19. Located in Bolivar State, Venezuela on the Caroni River its official name is Central Hidroeléctrica Simón Bolívar owned and operated by the Venezuelan government.It is considered one of South America’s greatest infrastructure projects, creatingreliable green electricity for the region. It isalso Venezuela’s largest source of hydroelectric power, a large percentage of which is exported to neighbouring Brazil. The Guri dam is known asthe world’s third largest hydroelectric power producerand the eighth largest dam for water retention. The dam was completed in several stages over the course of twenty three years, from 1963 to 1986. Its inception was due toVenezuela’s government recognizing in the 1940’s that the country’s oil reserves would be fundamental to long-term economic development and stability.In order to free up a greater proportion of the country’s oil reserves, the Venezuelan government in 1949hired an international consulting firm to develop a plan to move the country away from its dependence on oil for electricity generation. International firms were needed due to the lack of educated national expertise in the field of dam construction. From the plan several recommendations were made, one being the construction of a hydroelectric dam on the Caroni River.Due to its large potential for electricity generation theproposedwould help transition the country from ahydrocarbon electricity producer to hydroelectric. The Necuima Canyon on the Caroni River was chosen as the site for the Guri Dam. In 1960 the Venezuelan government created Corporation Venezolana de Guayana (CVG) to lead the development of the region.In 1961 the initial feasibility studies for the construction of the dam were conducted by a North American companyand were completed in 1962. Funding for the project was mainly from the Venezuelan government and loans from the World Bank. A bidding process - setup by CVG - was used for the selection of the contractors competing for the job. A strong emphasis was put on the quality of work and materials that were selected for the construction.Despite knowing that dependence on the expertise of international servicescould not be long term, the Venezuelan company CVG still relied heavily on these expertise to complete the entire first phase of construction . ConsequentlyCVG establisheda national plan to train employees for dam operations who would progressively take over. The dam construction site was located in an extremely remote location of Venezuelaand infrastructure needed to be installed before major work could be started on the dam. The company had to initially set out building roads and communication lines. The first phase included the construction of 10 power units 18 | P a g e
  • 20. totaling a generating capacity of 2865 MW (Case study, 2012). These power units had a wall height of 215 meters above sea level which, when completed in 1978,costclose to US$ 210 million dollars.The final stage, which was funded by the energy sales generated from the completed first phase and the World Bank, consisted this time of a majority of Venezuelan contractors. This final stage was completed in 1986,a total of23 years after construction first started. In comparison to other energy creation methods, the large scale hydroelectric generation of the Guri Dam is an extremely reliable, clean and inexpensive source of electricity. In 2006 it was estimated that CVG Edelca was generating 70% of Venezuela’s electricity needs from hydroelectric sources. More specifically, the Guri dam saves the country near 300,000 barrels of oil a day (which equates to 10,000MW of power), consequently preventing 20 million tons of Carbon Dioxideper year from entering into the atmosphere. The dam has been promoted as being an “environmentally friendly”form of power generation, and it surely has managed to maintain this title. It should be noted however, that the construction of the dam caused massive destruction to the surrounding areas while flooding of the reservoirdestroyed habitats and displaced any wildlife living in the area prior to flooding. The dam also reduced river flow downstream, ultimatelyhaving a great effect on nutrient deposition, animal migration and water quality of the surrounding area.Venezuela - being one of the top ten oil-producing countries in the world - has profited greatly from the dams construction which has lead to a reduction of oil consumption from the domestic market, freeing up large volumes for export, whilst also creatingopportunities for Venezuela to sell excesselectricity to neighbouringcountries such as Columbia and Brazil. 2.2.2 Project Stakeholders (See section 2.1.2 for Project Stakeholder Definition) The Guri dam is the third largest hydroelectric power generation plant in the world. To complete this project it required the cooperation of the Venezuelan government withvariousnational and international firms. This resulted out of a realization in the 1940’s the need to shift to an alternative form of power generation to ensure the nation’s future success. The construction and 19 | P a g e
  • 21. development of the dam spanned over 23 years, from 1963 to 1986, which alone demonstrates the sheer size and complexity of the project. Primary stakeholders for the Guri dam include a company called CVG-Edelca which was setup by the Venezuelan government to overlook the development of the Caroni river area where the dam was to be built. Other primary stakeholders included the financers also being the Venezuelan government and the World Bank. The project core team consists of over seventyoverseas constructions, manufacturing and consulting firms including their national sources of labor. The general population of the country is the secondary stakeholders of this project.Being a huge utilities project, the Guri dam construction created thousands of jobs for the region while also leading to better energy security in helping relieve dependence on imports.The cheap source of energy also sparked several metal smelting and manufacturing plants to relocate to the area.In a country where all major utilities are state owned, competing electrical producers could be seen to have a minimal stake in the project. 2.2.3 Project Life Cycle (See section 2.1.3 for Project Life Cycle Definition) Conception Phase: In 1949 the Venezuelan government’s decision to switch the country’s electric power generation from hydrocarbon to hydroelectric resulted in an international consultant firm being hired to develop a national electrification plan. Throughout 1953-1963 the initial feasibility plan was carried out and included studies of the potential hydroelectric development of the Caroni River. “An organisation responsible for the development of the Guayana region, called Corporacion Venezola de Guayana (CVG), was created in 1960” (Anbari, 2006a). In 1961, CVG authorised a North American company to undertake a feasibility assessment of the construction of the hydroelectric central guru. The assessment was completed in 1962 (Anbari, 2006a). 20 | P a g e
  • 22. As the project was to be funded by the World Bank, the organisation Electrificadora del Caroni, C.A. (Edelca) was formally created as a company of the CVG group in 1963 (CVG Edelca, 2003). The conception phase of the guru dam project included detailed studies of the hydroelectric potential of the Caroni River and the description of the project extent. Cost estimates appear to have been carried out thoroughly including detailed information of the subprojects requirements. Alternative bids from multiple consortia were included which allowed for comparison. It was concluded in this phase that the first stage of the project would be completed by international companies due to lack of local knowledge in dam construction. Quality and sustainable development were considered of highest concern with respect to the project (CVG, 2003b). Definition Phase: The project scope for the guru dam project was well defined and covered most significant essentials of the project. A cost estimate, schedule, contract requirements, bid policies, payments, regulations, a risk mitigation plan, a quality standards code, administration systems, employees training systems, communications developments, environment protection plan, a relocation strategy and an allowance for other matters were all allocated for in the scope (Anbari, 2006a). Edelca selected the companies and consortia involved in the Guru Dam Project based on a select criteria being: A minimum of five years of operation on the market. Verifiable executed work curriculum. The company’s credit line to ensure their ability to respond for obligations Quality guarantees Over seventy national and transnational organizations were involved in the Guru Dam project. Execution Phase: 21 | P a g e
  • 23. The guru dam was to be broken down into two stages, the first stage and the final stage. In August 1963, development of the first stage was underway; the initial phase of the first stage was completed in November 1968 with completion of Stage 1 in January 1978 (CVG Edelca, 1994). First phase cost estimates were US$185,714,715 with completed costs over budget by 11%. With the “unexpected expenses fund” allowed for in the initial scope, the project was right on track. With funds left over in the unexpected expenses fund, the final stage of the project was able to commence ahead of schedule (CVG Edleca, 1994), (Anbari, 2006a). During the execution phase, between the first and final stage, the scope was changed due to the functional success of Stage 1. The scope change was formally authorised, which included expanding the initial five power units to ten power units (The World Bank, 1976),(Anbari, 2006a). The final stage commenced in August 1978 and ended in November 1986, some 23 years after initial construction. With lessons learned from the first stage, the scope schedule and master plan were improved. Scope implementation was closely monitored which ensured the project was completed to all standards and regulations, within budget and on time. 2.2.4 Project Selection (See section 2.1.4 for Project Selection Definition) In 1963 an official company was formed from the CVG group and they became in charge of the construction of the Guri dam. The bidding process started and as the proposals started flooding in, the CVG group laid down some preliminary selection criteria that had to be met by each bidding company. They were as follow: - For any contractor to submit a proposal, the contractor had to have a minimum of 5 years of operation in the market. - They also had to have a verifiable executed work curriculum 22 | P a g e
  • 24. - The selected company also had to have an appropriate credit line to ensure their ability to respond to the project’s financial obligations. - Last but not least the contractor had to supply defined guarantees for quality. As the Guri dam project is quite a historically old construction project, not much information could be found on the specific design models used for the selection phase of this project. However, by drawing some resemblances to more recent projects, one could try and predict what the most likely models to be used would have been given the time set in history and the available technologies. Simple Decision-Making Models of any sort would have been used to help the engineers to determine the best-fit construction technique to choose given any site location. This model works by asking the engineer some questions regarding construction and site specifics. From the questions and other contributing factors the program can then suggest the best fit construction technique for that given site location. As the Guri dam was built in an extremely remote location, the Decision-Making Model would have suggested some possible solutions to this challenge. Another possible model that would have been used is Heuristic Modeling. Heuristic Modeling or Conceptual Modeling can be used to simulate groundwater flow. Therefore we can assume that since these models are known as common sense or minimum cost physical models, this inexpensive model would most likely have been an obvious choice for the engineers constructing the Guri dam. Alongside the Heuristic Models and the Decision-Making Models it is quite possible that though not as advanced as today’s models, the Guri dam engineers would most likely have made use of Numerical Models too. These models could have been used to calculate stresses and strains that the dam embankment might possibly have experience. (Idosi 2012) 2.2.5 Project Delivery Systems 23 | P a g e
  • 25. (See section 2.1.5 for Project Delivery Systems Definition) The collaboration of the Venezuelan government, their various regional offices, and utility planning companies as well as seventy national and transnational organizations over three decades ensured the success of the Guri dam. In 1960 preliminary studies for hydroelectric potential had been completed on the Caroni River, specifically the Necuima Canyon. The Venezuelan government established the Corporacion Venezolana de Guayana (CVG) whose main objective was to study develop and organize the Caroni River region. The corporation hired a North American company to conduct feasibility studies on the area completed in 1962. The following year Electrificadora del Caroni, C.A. (Edelca) was created as a sub company of CVG (CVG Edelca), the purpose of which was to oversee specifically the construction of the Guri dam. Edelca, funded by Venezuelan government, was to be in charge of contracting the necessary services and overlooking the construction. To prevent corruption the World Bank would then pay directly to the contracted. The delivery systems used between the Venezuelan government CVG and Edelca can be classified as a design build variation with the customer leaving the entire design and construction of the dam up to the CVG Edelca Corporation with funding being shared by the customer and the World Bank. The contract between the Government, World Bank and Edelca would have been some variation of cost, since no funds were transferred directly from the World Bank to Edelca which technically represented a branch of the government. All profit generated by the company would have been from the operation of the dam. Allot of which was injected right back into the project for phase two and similar hydroelectric projects. 24 | P a g e
  • 26. 2.2.6 Major Areas of Strengths and Major Opportunities for Improvement STRENGTHS FINANCING: The Guri Dam Project was funded by the Venezuelan government and the World Bank. This resulted in the project being less vulnerable to a lack or shortage of finances. CONTRACT AGREEMENT: Specific criteria were established for the Guri Dam’s contractors in their contract to maintain the quality and reliability of their work. This clear and effective form of communication made for a problemfree built with the team finishing on time and within budget. MANAGEMENT TEAM: Although the Venezuelan Government itself went through an economic crisis during which the national currency had faced infatuation, corrective action were taken to improve cost surplus and finally allowed them to complete the project within the expected budget. Communication systems werevery effective in terms of respect and team work. SCOPE DEFINITION: The project scope for the Guru Dam project was well defined and covered most significant essentials of the project.With lessons learned from the first stage, the scope schedule and master plan were improved for the final stage. Scope implementation was closely monitored which ensured the project was completed to all standards and regulations, within budget and on time. PROJECT SELECTION: The engineers set certain requirements in place for construction companies who participated in 25 | P a g e
  • 27. the bidding process. These requirements had to be satisfied in order for the company to submit a proposal. The purpose of these requirements was to control the amount of proposals flooding in and to make them more manageable. 3. Comparative Analysis& Summary A comparative analysis has been carried out on the Guri Dam Project and The Chunnel Project. The decision to research these two specific case studies was based on their similarity of being civil works projects and also the major impact both these projects had on the economic development and growth in their different countries. The earliest ideas for a link between Britain and mainland Europe began as early as 1802, with numerous ideas following 150 years later. With the expectation that the tunnel would spur economic development, improve European trade and provide an alternative high-speed transportation tunnel, ideas were once again gathered in 1974, only to be abandoned in that same year. Several years later, the British and French governments requested a proposal of what became the Chunnel Project. The Guri Dam Project however was a by-product of the 1940’s Venezuelan’s government plan to move the country away from its dependence on oil for electricity generation. The recommendation for the construction of a hydroelectric dam on the Caroni River was made due to its large potential for electricity generation, the solution to help transition the country from a hydrocarbon electricity producer to hydroelectric. The Channel Tunnel project had to be financed from private sources with no public finding to aid or guarantee the loans. The British Chunnel Tunnel Group consisted of two banks and five construction companies, while their French counterparts, France–Manche, consisted of three banks and five construction companies. The role of the banks was to advice on financing and secure loan commitments. On 2 July 1985, the groups formed Channel Tunnel Group/France– Manche (CTG/F–M). Financing was mainly raised through the selling of shares and a consortium of 220 banks worldwide, all of whom had a major stake in the project. 26 | P a g e
  • 28. The Guri Dam Project however was funded by the Venezuelan government and the World Bank. An organisation, Electrificadora del Caroni, C.A. (Edelca) was formally created as a company of the CVG group in 1963 (CVG Edelca, 2003) to control the project. A major contractual downfall that influenced the success of the Chunnel construction was the contractual errors that were made in the estimates and risk allocation method. These errors added to an additional cost of US$ 2.25 billion. Specific criteria were established for the Guri Dam’s contractors in their contract to maintain the quality and reliability of their work. However, for the Chunnel Project they used fixed contracting processes which later had to be reassessing to meet specific criteria regarding the Chunnel Design. This “merging” of contract criteria led to the contract being very complex. Very slow decision making processes during the Chunnel Project construction lead to situations where significant budget over-expenditures occurred. Not only was this a result of poorly managed finances, but it was also partially due to an out-of-control amount of changes made to the management team. Although the Venezuelan Government itself went through an economic crisis during which the national currency had faced infatuation, corrective action were taken to improve cost surplus and finally allowed them to complete the project within the expected budget. The conception phase of the guru dam project included detailed studies of the hydroelectric potential of the Caroni River and the description of the project extent. Cost estimates appear to have been carried out thoroughly including detailed information of the subprojects required. Alternative bids from multiple consortia were included which allowed for comparison. The successful applicant for the Chunnel included a high level of design and respective bill of quantities estimates. Despite the high level of design and in depth bill of quantities estimates preformed, large increases in cost did occur mostly due to the lack of communication between parties and processes involved, such as the need for tunnel climate control which was overseen during the initial conception phase. During the definition phase, the project’s scope was not fully assessed and adequate precautions preventing scope creep were overlooked. The project team did a reasonable job with respect to 27 | P a g e
  • 29. the planning of equipment required, however the Chunnel Project was challenged with respect to cost management. The project was being fast tracked, with design and construction happening at the same time. Political problems and government approvals caused delays and problems from the beginning. Upon completion the project was nineteen months late and over budget by approximately three billion 1985 British pounds. The project scope for the Guru Dam project was well defined and covered most significant essentials of the project.With lessons learned from the first stage, the scope schedule and master plan were improved for the final stage. Scope implementation was closely monitored which ensured the project was completed to all standards and regulations, within budget and on time. When comparing the project life cycle phases for each project, it is clearly identifiable that not enough time or detailed design and planning was allocated for the Conception Phase of the Chunnel project which in the end created a domino effect. As the project progressed the cost overruns rose and the expected completion date was pushed further and further back. To revisit the definition of project selection: it was defined as being the process of assessing projects, individual or grouped, then choosing to implement it in part or in whole so that the objectives stated by the parent organization will be achieved and satisfied. After the two case studies were analyzed, information were found on what methods and models these construction projects used in order to assist them in the Project Selection phase of the project. As both projects were civil engineering projects, some similar models were used across both these projects. However since the Guri Dam construction began almost 2 decades prior to the Chunnel construction, certain technologies might not have been available during the Guri dam construction in 1963 as with the Chunnel project construction in 1984. Both case studies’ engineers made use of setting certain requirements in place for construction companies who participated in the bidding process. These requirements might not have been the same, but they served the same purpose in both cases: to control the amount of proposals flooding in and to make them more manageable. For both cases, a Numerical Model was used to do preliminary calculations on how the constructed dam wall and tunnel liner would react under the stresses and strains applied. This 28 | P a g e
  • 30. could have been predicted, for the successful design of any civil works project needs preliminary calculations to predict what the different outcomes will be under different loading conditions. Although the Guri Dam Project started 2 decades earlier than the Chunnel Project, the communication systems were better and more effective in terms of respect and team work. The Guri Dam site was located in a rural area which meant communication services first needed to be installed before work could even begin, however the engineers still managed to achieve a successful completion of the project. The Chunnel Project on the other hand, had newer communication technologies at their advantage, but a lackof learning from past project experiences led to the project’s downfall. From a project management perspective, even though there were no local qualified laborers working on the Guri Dam project, the management team decided to use technical expertise from foreign countries whilst their local workers were still receiving training. The Chunnel Project managers however, were completely unable to effectively manage the modern techniques and expertise they had at hand. For the Guri Dam project, the Edelca project management team was real dynamic and progressive. The Chunnel project management team on the other hand did not utilise their resources and technology properly due to lack of scope definition. For the transparency and controlling of corruption during the Guri Dam project construction, assignments where divided between Edelca and the World Bank. Whereas, due to lack of maturity in logistical planning and somehow inexperience in WBS development, the ChunnelProject management team has faced serious challenge in planning and detailing. 5. References 1. Anbari, F T, Dwiharto, S, Gicpoor, K, Nandyala, C & Perez G, E C 2006, Project Management Institute, The Guri Dam, A case study, The George Washington University, Washington 2. Anbari, F T, Giammalvo, P, Jaffe, P, Letavec, C & Merchant, R 2006, Project Management Institute, The Chunnel Project, A case study, The George Washington University, Washington 29 | P a g e
  • 31. 3. CBS Interactive 2012, National Geographic Channel, MegaStructures, Channel Tunnel, San Francisco, California, 09/10/12, <http://www.tv.com/shows/national-geographic-channelmegastructures/channel-tunnel-535735/> 4. Eatas, A & Jones, J C 1996, The Engineering Design Process, 2nd edn, John Wiley and Sons 5. Eurotunnel 2012, How the channel tunnel was built, Eurotunnel, Kent, England, Cedex, France, 09/10/12, <http://www.eurotunnel.com/build/> 6. Eurotunnel 2012, History, Eurotunnel, Kent England, Cedex France, 09/10/12, <http://www.eurotunnelgroup.com/uk/the-channel-tunnel/history/> 7. Fetherston, D 1997, The Chunnel: The amazing story of the undersea crossing of the English Channel, 1st edn, Crown 8. Idosi 2012, Dam construction by GA’s, Dubai,09/10/12 <www.idosi.org> 9. Meredith, J R & Mantel, S J 2009, Project management Institute - A managerial approach, 7th edn, John Wiley and Sons 10. Panuwatwanich, K 2012, 3004ENG, Project Management Principles, Project Life Cycle, Griffith University, Queensland 11. Project Management Institute 2012, Guri Dam: Project Management Brings Reliable Power and Growth To Remote Venezuelan Region, Project Management Institute, Newtown Square, 09/10/12, <http://www.pmi.org/businesssolutions/~/media/PDF/Case%20Study/Guri_Dam_Case_Study_New.ashx> 12. Salzmann, A 2012, 3004ENG, Project Management Principles, Project Procurement Management, Griffith University, Queensland 13. Square Digital Media 2012, Channel Tunnel, 29/10/12<http://www.politics.co.uk/reference/channel-tunnel> 14. United States Department of Transportation - Federal Highway Administration 2011, Technical Manual for Design and Construction of Road Tunnels - Civil Elements, Washington, DC, 09/10/12, http://www.fhwa.dot.gov/bridge/tunnel/pubs/nhi09010/index.cfm 15. Veditz, L A 1993, The Channel Tunnel: A case study. Executive Research Report, Washington, DC: The Industrial College of Armed Forces 30 | P a g e
  • 32. 6. Appendix 31 | P a g e