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

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
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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.
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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
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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.
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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
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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
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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).
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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
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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).
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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.
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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.
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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.
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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)
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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.
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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,
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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
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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
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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
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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
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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).
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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:
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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
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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
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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.
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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
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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.
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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
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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
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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
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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
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32. 6. Appendix
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