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The Chunnel Project
A learning out of Failure
                                         By
                            Garvit Bharadwaj
                                Piyush Tyagi
                              Pranay Karthik
                               Rachit Anand
                               Rajesh Bhatia
                            Sankarshan Joshi
                              Sumeet Gupta
Channel + Tunnel = Chunnel
19
The Chunnel                                                Months
                                                           Delay




 One of the world’s Largest Privately Funded
  construction project involving
    2 Governments – French and British
    220 banks
    Numerous contractors
    Regulatory Agencies (IGC)
 The project was bid at $5.5 b but completed at $14.9 b




                                                     $8.4b
                                                       Scope creep
The Chunnel - Contracts


French + British   BOT-Contract   CTG/FM
     Govt




    CTG/FM           Contract      TML
Next 15 Minutes


Inception

Development

Execution

Closeout
What is expected?

• Proper risk management

   • Engineering risks

   • Process risks

   • Approval risks

   • Financial risks

   • Business risks
Inception        Development         Execution   Closeout




   • Inception

       • Historical background of the project

       • Objective

       • Political climate

       • Pre-feasibility study
Inception        Development        Execution           Closeout




   • Scope:

       • Fixed transportation (51.5kms)

       • Economic development

   • Pressures causing mishaps:

       • Lack of scope causes resource planning, cost
         estimating & budgeting difficult.

       • Air-conditioning costs

       • Formation of intergovernmental commission
Inception          Development          Execution              Closeout




   • Finance aspects:
       • Treaty says to no government aid
       • Pursued via equity &loan capital markets.


   • Scheduling:
       • Activities related to activity definition, activity
            sequencing, activity duration estimates.
       • Planning 3 tunnels which required 46 contractors to
            complete the design requirements.
       • Changing safety rules created negative variances.
Inception        Development         Execution             Closeout




   • Incompatibility issues could have been avoided by
     stating Initial quality requirement in more detail.

   • Areas of improvement There was much interpretation for
     the agency like IGC .The IGC decision to change 600mm
     doors to 700mm doors itself delay the project to 9
     months.

   • Teamwork & cooperation considering the scope of the
     project was very important.

   • Contractual agreements made teamwork a complex
     activity.

   • It was very difficult to come to a mutually agreeable
     solution to material issues due to incomplete
     requirements, scope changes and thus , risk response
     strategies should have been considered.
Inception        Development         Execution           Closeout




   • Efficient communication is very important in
     preplanning, contract negotiations, financing and
     technical issues during the inception stage.


   • Communication seemed to breakdown in case of issues
     regarding organizational structure , finance and
     contracts as the issues were not timely solved.
Inception        Development         Execution             Closeout




   • Communication plan addressing horizontal and vertical
     communication channels should be in place.

   • Plan should also include information sharing, issue
     tracking and performance reporting.

   • Although , advanced project management tools and
     techniques were used, the decision-making ability to
     address critical issues from centralized position seemed
     insufficient
Inception        Development         Execution           Closeout




   Some critical aspects in development phase:

   • Massive communication barriers.

   • Problems due to huge scope of the project.
      • IGC played critical and detrimental role.

   • Cost planning.
      • Banks played an important role from start.

   • Scheduling was well done but project still faltered on
     deliver date.
      • IGC’s highest standard norm.
Inception        Development          Execution        Closeout




   • Better risk management could have been done.

   • Lack of investment in team building.
      • Two Government's denial to provide financial
         guarantee.

   • Project office’s work lacked detail.

   • All in all, given the facts, the project delay and cost
     overrun were almost foregone conclusions
Inception        Development     Execution          Closeout




  Too Early A Start


                                                          New
                            Approval Issues               Technology
Design
                                               Underground
         Construction       Enggineering       Construction
                            Risks
Inception            Development              Execution                Closeout




   Bureaucratic Pressures

        French + British                               Fixed Price
                              Control Costs          Implications for
        Govt. Pressures                                    TML




           Squeezing         Low Bid Prices
                                                      “Winner Takes
          Revenue via        with Best Case
                                                        All” Issue
         Change orders          Scenario




        Project cost Rise          TO                     $7 billion
        from $4.3 billion
Inception          Development     Execution           Closeout




Controls in Wrong Hands

                            Controls
                                       Construction
             Financing Banks
                                       Companies


            Profit Maximization    Risk Minimization




                  NO IMPORTANCE TO OPERATIONS
Inception     Development        Execution      Closeout




Communication Issues

                     Different
                     Cultures             Different
  Different
  Countries                              Specification



                    Internal
               Communication
                     Limited
Inception        Development         Execution          Closeout




   The immense amount of Litigation and Claim against
   project.

   • Scope: Scope of the project increases due to overall
     changes request through out the life of project.

   • Cost & Schedule Management: Max. Efforts to
     analyzing the source of overrun cost and blaming
     participating organization.

   • Team work and Communication: Team work and
     communication had broken down in several key area.
     Like Financial banker focus on minimizing their losses ,so
     they refused to negotiate any settlement. Clearly win-win
     negotiation far from mind between the parties.
Inception        Development         Execution         Closeout




   • Time Over shoot: the greatest impact of ROI.

   • Quality of project: Quality of a project is up to the
     mark as per engineering design and expectation. Even
     no. of accident was less as per industrial avg. during
     project running time.

   • Effective Change Management: They ready to make
     changes as per demand without additional funding during
     close out.
Learning's

• Equal importance should be give to the technical as
  well as functional aspects of project management.

• Project contracts and financing agreements should
  not be rushed and should provide for contingency.

• External Stakeholders should only play monitoring
  role and should not take part in day-to-day operations.

• Large projects like Chunnel Construction requires
  leveraging of new technology and lessons learned from
  existing project.
Thank You!!!! No Questions Please.


       We Know You Cant Control,
      So Go Ahead And Shoot Your
              Questions!

If learned from, Mistakes can be converted into Experiences.

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Chunnel ppt

  • 1. The Chunnel Project A learning out of Failure By Garvit Bharadwaj Piyush Tyagi Pranay Karthik Rachit Anand Rajesh Bhatia Sankarshan Joshi Sumeet Gupta
  • 2.
  • 3. Channel + Tunnel = Chunnel
  • 4. 19 The Chunnel Months Delay  One of the world’s Largest Privately Funded construction project involving  2 Governments – French and British  220 banks  Numerous contractors  Regulatory Agencies (IGC)  The project was bid at $5.5 b but completed at $14.9 b $8.4b Scope creep
  • 5. The Chunnel - Contracts French + British BOT-Contract CTG/FM Govt CTG/FM Contract TML
  • 7. What is expected? • Proper risk management • Engineering risks • Process risks • Approval risks • Financial risks • Business risks
  • 8. Inception Development Execution Closeout • Inception • Historical background of the project • Objective • Political climate • Pre-feasibility study
  • 9. Inception Development Execution Closeout • Scope: • Fixed transportation (51.5kms) • Economic development • Pressures causing mishaps: • Lack of scope causes resource planning, cost estimating & budgeting difficult. • Air-conditioning costs • Formation of intergovernmental commission
  • 10. Inception Development Execution Closeout • Finance aspects: • Treaty says to no government aid • Pursued via equity &loan capital markets. • Scheduling: • Activities related to activity definition, activity sequencing, activity duration estimates. • Planning 3 tunnels which required 46 contractors to complete the design requirements. • Changing safety rules created negative variances.
  • 11. Inception Development Execution Closeout • Incompatibility issues could have been avoided by stating Initial quality requirement in more detail. • Areas of improvement There was much interpretation for the agency like IGC .The IGC decision to change 600mm doors to 700mm doors itself delay the project to 9 months. • Teamwork & cooperation considering the scope of the project was very important. • Contractual agreements made teamwork a complex activity. • It was very difficult to come to a mutually agreeable solution to material issues due to incomplete requirements, scope changes and thus , risk response strategies should have been considered.
  • 12. Inception Development Execution Closeout • Efficient communication is very important in preplanning, contract negotiations, financing and technical issues during the inception stage. • Communication seemed to breakdown in case of issues regarding organizational structure , finance and contracts as the issues were not timely solved.
  • 13. Inception Development Execution Closeout • Communication plan addressing horizontal and vertical communication channels should be in place. • Plan should also include information sharing, issue tracking and performance reporting. • Although , advanced project management tools and techniques were used, the decision-making ability to address critical issues from centralized position seemed insufficient
  • 14. Inception Development Execution Closeout Some critical aspects in development phase: • Massive communication barriers. • Problems due to huge scope of the project. • IGC played critical and detrimental role. • Cost planning. • Banks played an important role from start. • Scheduling was well done but project still faltered on deliver date. • IGC’s highest standard norm.
  • 15. Inception Development Execution Closeout • Better risk management could have been done. • Lack of investment in team building. • Two Government's denial to provide financial guarantee. • Project office’s work lacked detail. • All in all, given the facts, the project delay and cost overrun were almost foregone conclusions
  • 16. Inception Development Execution Closeout Too Early A Start New Approval Issues Technology Design Underground Construction Enggineering Construction Risks
  • 17. Inception Development Execution Closeout Bureaucratic Pressures French + British Fixed Price Control Costs Implications for Govt. Pressures TML Squeezing Low Bid Prices “Winner Takes Revenue via with Best Case All” Issue Change orders Scenario Project cost Rise TO $7 billion from $4.3 billion
  • 18. Inception Development Execution Closeout Controls in Wrong Hands Controls Construction Financing Banks Companies Profit Maximization Risk Minimization NO IMPORTANCE TO OPERATIONS
  • 19. Inception Development Execution Closeout Communication Issues Different Cultures Different Different Countries Specification Internal Communication Limited
  • 20. Inception Development Execution Closeout The immense amount of Litigation and Claim against project. • Scope: Scope of the project increases due to overall changes request through out the life of project. • Cost & Schedule Management: Max. Efforts to analyzing the source of overrun cost and blaming participating organization. • Team work and Communication: Team work and communication had broken down in several key area. Like Financial banker focus on minimizing their losses ,so they refused to negotiate any settlement. Clearly win-win negotiation far from mind between the parties.
  • 21. Inception Development Execution Closeout • Time Over shoot: the greatest impact of ROI. • Quality of project: Quality of a project is up to the mark as per engineering design and expectation. Even no. of accident was less as per industrial avg. during project running time. • Effective Change Management: They ready to make changes as per demand without additional funding during close out.
  • 22. Learning's • Equal importance should be give to the technical as well as functional aspects of project management. • Project contracts and financing agreements should not be rushed and should provide for contingency. • External Stakeholders should only play monitoring role and should not take part in day-to-day operations. • Large projects like Chunnel Construction requires leveraging of new technology and lessons learned from existing project.
  • 23. Thank You!!!! No Questions Please. We Know You Cant Control, So Go Ahead And Shoot Your Questions! If learned from, Mistakes can be converted into Experiences.

Editor's Notes

  1. IGC – Inter govt. Commission
  2. CTG – channel tunnelgrpFM – francemanache