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A Tale of Two Tunnels That Is Setting New Best-Practice Standards

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A Tale of Two Tunnels That Is Setting New Best-Practice Standards FOCUS >> The Waterview Connection A tale of two tunnels that is setting new best-practice standards New Zealand’s biggest road project underwent extremely rigorous economic and risk assessment procedures before the final contracts were signed, Jenny Pretorius reports he NZ$1.4 billion Waterview Connection project currently Tbeing built by the Well- Connected Alliance provided a series of unique uncertainties, risks and challenges for the project’s owner, the NZ Transport Agency. The usual construction and peripheral pressures associated with large-scale construction work such as building a major inner-city road were compounded by a variety of other factors not often seen in local projects. These included the project’s complex underground tunnel con- struction component, the length of the tunnels that required specialised fire and life-safety features and the fact that construction was taking place in a built-up urban area with major traffic issues and a sensitive cultural, physical, and social environment. The competitive alliance Artist’s impression of appearance of junction on south end procurement method offered the best option to minimise the risks, achieve Images courtesy of NZ Transport Agency, Well-Connected Alliance complete certainty with respect to outcomes and optimise value for money, according to one of the decision making is key to ensuring “The commercial model and Sharing risks and rewards key experts involved in the tender the selection of an appropriate alliance principles inherent in The cost of transferring risk is selection process. procurement model while also an alliance agreement, while prohibitive but the alliance model ensuring that all relevant information not substitutes for effective risk not only provides for risk sharing but Managing risk is sourced and shared to ensure a management practices, are also allows the project solution to be NZ Transport Agency Chief Advisor common understanding of residual considered to be effective catalysts progressively refined and developed Engineering Assurance Peter Spies risks through the construction in ensuring project risks are to reflect emerging risk, leading the says the success or failure of a phase,” he explains. managed in accordance with the Transport Agency to conclude that project such as this can often be These risks can then be managed ‘as low as reasonably practicable’ this collective approach to assessing traced back to decisions made prior using appropriate processes managed (ALARP) best-practice principle.” and managing risk produces better to and during the procurement of the by the right people. “However there The increasing importance placed outcomes. contractor when the potential conse- always remains the danger that on risk management in this context In addition, the risk-sharing element quences of these decisions are not commercial pressures can lead to was largely due to the losses required the tenderers to combine well understood. decisions that elevate construction risk suffered by tunnel insurers over the a target outturn cost (TOC) of the “Effective risk management profiles,” Mr Spies notes. last decade as various projects such design and construction phase with as Boston’s Big Dig and the Highway a TOC for the 10-year operate-and- 99 tunnel under downtown Seattle maintain phase. encountered huge, unexpected, and “The operating costs of tunnels expensive failure problems while are high,” Mr Spies notes. “This under construction. allowed optimal decision-making by Moreover, the insurance industry the tenderers that would be informed noted a general trend towards by a whole-of-life approach across high-risk type construction the two phases, and that would methods, often delivered using ensure operational efficiency would design-and-build contracts with not be compromised to achieve a one-sided contract conditions competitive initial price.” in an environment of fierce But risk sharing is only part of the competition. success recipe: the commercial There was, therefore, an acknowl- arrangements in the alliance model edgement that risk management strongly incentivise tenderers practices need to be instigated well to achieve value for money. The in advance of commercial phases competitive element of the alliance so that commercial competition model then further drives innovation From left, Aurecon’s Tom Ireland with NZTA Chief Advisor Engineering didn’t lead to a significant elevation to achieve a lower initial TOC; as has Assurance Peter Spies of project risk. been demonstrated across a number www.infrastructurenews.co.nz 13 View of construction work on the north end of projects in Australia and New the delivery of Western Ring Route both original project contenders, approval – the road corridor was not Zealand. (WRR) projects and delegated to including all tender design material in place and therefore the planning In addition, the alliance model making project decisions on behalf and risk mitigation methods. process also needed to include the allows the combination of the skills of the client. The tender IP ensured that the designation of the motorway corridor of all parties to be applied to the The OIM in turn was supported by project risk and cost could be further – and the contract award. collective outcome by maximising the Agency’s Owner Verifier (OV), reduced by incorporating good ideas This was a very short timeframe the full integration of the traditional Aurecon’s Tom Ireland, who also from the losing tender, including so the agency took the unusual roles of client, constructor and acted as the technical advisor and alternative designs for the ventilation approach of running the designer. provided independent technical fans and lighting that generated procurement and consenting As an added bonus, the Transport advice on behalf of the Transport savings greater than the tender cost processes concurrently along Agency had already acquired the Agency during procurement . imbursement to the losing tenderer. with obtaining planning approval skills and capacity to influence Another Transport Agency through an Environmental Protection or participate in the development innovation that served to manage Special case Authority Board of Inquiry (BoI) and delivery of the project through risk and provide value for money was There was however a kink in the rather than through the resource previous road infrastructure projects its policy of reimbursing tenderers cable – the project had to start as consents process using the local delivered via the alliance model. a fixed sum of expected tendering fast as possible to provide a stimulus authority, saving 12 months on the The agency went a step further costs, in this instance equivalent to for the New Zealand economy pre-contract phase programme to ensure an excellent outcome by 60 per cent. following the 2008 recession. and two years-plus in the project not only integrating key staff within The $18 million pool allocated for There were only 24 months development programme. the Well-Connected Alliance but the Waterview Connection tender following confirmation of the tunnel The competitive tender design and also introducing an Owner Interface gave the agency ownership of the option in December 2009 for envi- procurement pricing phase began Manager (OIM) accountable for intellectual property generated by ronmental assessments, planning in November 2010 with tender Aerial view of Big Alice prior to starting work on the south end 14 October/November • 2014 submission scheduled for early June 2011, so when the competitive phase of the tender commenced the planning process had already been running for two months. The parallel programmes were aligned so that the tender would not close until the final consent conditions were available, as the Transport Agency considered that the competitive pricing would be compromised without finalised consent conditions that formed part of the requirements to be met by the alliance. Tight connections The NZ Transport Agency used a three-stage procurement process over a 19-month period to appoint the alliance, placing advertisements in July 2010 seeking Registrations of Interest (ROIs) from appropriately experienced consortia to deliver The tunnel’s progress – breakthrough of the first tunnel at the end of September the Waterview Connection project, including the Waterview Connection Tunnels and Great North Road tunnel, and tenderers had to comply procurement documentation understanding of project risks prior Interchange project. with the consent conditions that ensured compliance with the Code to finalising the alliance agreement, Three consortia registered interest included prescriptive requirements of Practice for Risk Management of Mr Spies explains. “This ensures and an inception meeting on 4 for monitoring and management of Tunnel Works (TCoP) prepared by superior risk management through August 2010 explained the Transport settlement effects. the International Tunnel Insurance construction and beyond,” he says. Agency’s procurement process and Several additional minimum require- Group in 2006, and other interna- “As best-practice risk management requirements to the applicants and ments were also included by the tional best-practice and home-grown is a primary objective of TCoP this issued Statement of Interest and Transport Agency within the tender risk mitigation measures were also procurement method was beneficial Ability (SIA) documents. documentation in order to mitigate included to ensure successful to all concerned. One specific identified risk was
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