CASE STUDY ON CHUNNEL TUNNEL PROJECT

Team 5

Overview:• Designed to create spur in Economic Development• Improve the trade relations with alternate high speed transportation• One of the largest privately funded construction Project between two countries• 51.5 Km long double rail tunnel.• Project was initially estimated at 5.5 Billion dollars on completion the cost increased

to 14.9 Billion dollars

Chunnel Tunnel Group/French Manche (BOT basis)

Transmanche Link (TML) (Construction)

French and British Govts.,

Scope Management

Inception

• Lack of defined scope

• Scope defined in Lump sum basis

• Difficulty in Resource planning

• Formation of IGC

Development

• Enormous scope• Measures to

prevent the scope creep was not put in place

• Project Planning, cost estimation, Funding was affected due to scope change

Implementation

• IGC had major control over scope

• Frequent change in scope

• Door and A/c System contributed to major scope changes

Closeout

• Even when the tunnel was deemed to complete, there were discrepancies over scope of some works.

Rating : 2

2

2 22

Time Management

Inception

• Hasty Bidding and concept development

• Not enough time provided to complete detailed design studies

Development

• Change in requirement by IGC caused delay

• Approval of drawings mandated from both governments

• Very good tracking with hefty status report

Implementation

• Faster Tunneling• Rail and car

systems were delivered late

• Alteration of passenger door sizes caused delay for 9 months.

Closeout

• Cascading effects of previous phases

• 19 month delay• Project

management team could not be held responsible

Rating : 3

3

3 2

2

Cost Management

Inception

• Estimated cost of USD 5.5 bn.

• Initial Cost Estimates were not detailed out.

• Financing arranged via equity and capital market

Development

• USD 2.25 Bn claim against Eutotunnel by contractor was not anticipated

• Use of sophesticted equipment not anticipated

Implementation

• Unnecessary use of costly technologies in some cases like grouting.

• Wrong selection of TBM.

Closeout

• Efforts were driven towards settlemnt of claims rather than analysing on sources of cost overrun.

Rating : 2

1

2

1

2

Quality Management

Inception

• Difference in standards -> Higher standard

• Latest laser and computer technology proposed to bore the tunnel.

Development

• Good PAC was framed.

• No margin for errors

• Formation of IGC

Implementation

• Stringent requirements from IGC

• Very high accuracy maintained.

Closeout

• Quality parameters achieved were above industry average.

Rating : 5

4

55

5

Human Resources Management

Inception

• Team work envisaged

• Good structure with proper responsibilities formed.

Development

• Every British team member had French counter part

Implementation

• Managed 15,000 workers in good manner

• Workers from different cultures were engaged with high level of efficiency

Closeout

• Most of the persons were demotivated due to non settlement of claims.

• Win-win situation was lost

Rating : 3

3

3 2

3

Communications Management

Inception

• Difference in languages of two countries

Development

• Limited communication between two teams since both of them were trying to meet in middle.

• This lead to difference of opinion at later stages

Implementation

• Delay in communication regarding specification change.

Closeout

• Negotiations not proper at Closeout since bankers did not settle for claims.

Rating : 2

3

3 1

2

Risk Management

Inception

• Technical risk only considered

• Process and approval risk were not envisaged

• Both governments denied to provide financial guarantee.

• Social cost benefit analysis not done.

Development

• Over management of risk – advanced techniques considered

• Contingencies and margins were barest mimimum.

• Contractors forced to consider best situation.

• Risk assessment plan was not made.

Implementation

• Fast tracking of design and construction processes done without risk analysis.

• New unproven technology increased risk

• Banks were involved for minimising the risk, however IGC was controlling.

Closeout

• Courts ruled in favour of contractor.

Rating : 2

2

2

22

Procurement Management

Inception

• Rigorous time constraints caused hasty procurement plan/contracts.

• Procurement of rolling stock and associated major equipment finalised on cost plus percentage fee basis

Development

• Procurement delayed since scope/ specification was changing.

Implementation

• Fixed price contracts with several contractors

• Differences in goals since many contractors were having equity.

Closeout

• Cascading effect of implementation created 17 months delay.

• Non settlement of extra claims

Rating : 2

2

22

3

Integration Management

Inception

• Various international agencies took part for conceptualisation.

• Mistrust among agencies since both govts didn’t provide guarantee but placed requirements.

Development

• 46 contractors were deployed for design

• 7 Lakh shareholders, 220 Lending banks were involved for financing.

Implementation

• Huge resources, huge scope of work were managed in best of industry standards.

• Logistical and communication challenges.

Close out

• Teams not integrated due to poor communication.

• Each party tried to focus on their own interests.

• International chamber of commerce engaged for dispute resolution

Rating : 3

2

3 2

3

Project Management Area

Inception Phase

Development Phase

Implementation Phase

Closeout Phase

Average

Scope Mgt 2 2 2 2 2Time Mgt 3 3 2 2 3Cost Mgt 1 2 2 1 2Quality Mgt 4 5 5 5 5HRM 3 3 3 2 3Communications Mgt 3 3 2 1 2

Risk Mgt 2 2 2 2 2Procurement Mgt 2 2 3 2 2

Integration Mgt 2 3 3 2 3

Rating Scale - Summary

Rating Scale : 5-Excellent, 4- Very Good, 3- Good, 2- Poor, 1- Very Poor

Key Dates

Year Key Developments1802 Albert Mathieu put forward a cross channel proposal1875 Channel Tunnel Company Ltd began preliminary trials

1882 Experimental work on both sides of the Channel started but soon idea was abandoned citing national defense security.

1975 A UK–France government backed scheme that started in 1974 was cancelled

1984 British & French govt. agreed to common safety, environmental & security concern, prior opening up the project to bidder

1985 British & French govt. asked for proposals.

1986 Project awarded to Eurotunnel on BOOT basis with 55 year concession period with initial cost of US$ 5.5 billion.

June 1988 In France, first tunneling was startedDecember

1988 Tunneling operation was started in UK

May 1994 Tunnel was formally inaugurated & started functioning. Project was completed with cost & time over run.

Major Area of Strength Managing this Project

QUALITY MANAGEMENT

• Quality management was implemented successfully. • Technical expertise .

TEAM WORK

• Excellent team work between two groups.• Construction of tunnel completed 3 months ahead of schedule.• Project office support was excellent.

SAFETY MANAGEMENT

• Accidents below industry average.• 15000 workmen, numerous engineers, handled precisely.

Major Opportunities for improvement from Management P.O.V

SCOPE MANAGEMENT

• Detailed Functional requirement & Technical specification • Consideration of Scope contingency

CONTRACT MANAGEMENT

• Applicability of Single Contract to both group.• Coverage of risk exposures

COMMUNICATIONMANAGEMENT

• Communication protocol preparation• Protocol for escalating unresolved / pending issue• Tracking & monitoring

Major Opportunities for improvement from Management P.O.V (cont.)

RISK MANAGEMENT

• Project process & approval risk was overlooked.• Not prepared to handle the degree of IGC supervision & change

management controls.• Contingencies for known & unknown risk & a strategy for handling

change management missing.

COST MANAGEMENT

• Use a standardized change-control management to eliminate cost considerations issues imposed by out-of-control-change management control processes.

• Specification and validation of functional and technical requirements at front.

• Replacement of material, equipment with alternate option of same specification.

STAKEHOLDER MANAGEMENT

• Project Stakeholder management plan was not prepared in detailed and also not followed throughout project life cycle. By implementing this, variance in cost, schedule and extra claims could have been minimized.

Major Project Management Lessons learned

Review past engineering studies & take them in consideration

Technical as well functional aspects of project management should be given

equal importance

Detailed risk analysis required in inception stage & needs to be tracked,

monitored during PLC of project

Major Project Management Lessons learned

Maintaining communication throughout the life of project yields better operational

project results.

In large international construction projects of the involving countries, Govt. support &

communication channels should be roped in.

Whole hearted effort to be made right from the inception of project in order to avoid

adverse situation at the end

Conclusion:

• Time Over run – 19 months delay

• Cost Over run – USD 9.4 Bn

• Trail of unhappy investors and stakeholders

• Key learnings

• Modern Engineering Marvel

• Undoubted Public benefit

Thank You