The Chunnel Project
| Line 1: | Line 1: | ||
| − | |||
| − | |||
| − | |||
== Introduction == | == Introduction == | ||
| Line 11: | Line 8: | ||
== Context == | == Context == | ||
| + | The purpose of The Chunnel project was to create a fixed transportation link between the two countries to improve European trade environment and provide an alternative high speed transportation method. This required a cooperation between the two national governments, bankers underwriting the funding for the project, numerous of contractors, and several regulatory agencies. | ||
| + | In 1985, a request for proposals (RFP) from the British and French governments resulted in the project, The Chunnel, being awarded to the winning bidder, Channel Tunnel Group/FranceManche (CTG/FM), which later became Eurotunnel. The group were established among construction companies and bankers from both countries, which was led by to co-chairmen; Lord Pennock on the British side and André Bénard on the French. Their winning bid price was established at US$5.5 billion, all privately funded (Anbari et al., 2005). The Eurotunnel required a proper client-contractor relationship to build the tunnel, in order to improve management and planning, a new management group was established, Transmanche Link (TML). TML is an Anglo-French joint venture between Translink in Britain, and GIE Transmanche Construction in France, these two groups in turn joint ventures of the construction companies originally brought together in CTG/FM. | ||
| + | The case study covers Project Management Knowledge Areas, within four project phases: inception, development, implementation and closeout. | ||
| + | |||
| + | The inception phase includes defining, at a high level what the system will do and estimate the cost and schedule. It defines the risks to the project and determine the overall project feasibility. During the development phase starts the overall planning, feasibility studies, financing and the conceptual design as well as detail engineering. This phase is transforming the information to a machine-executable form. The implementation phase refers to the final process of moving the solutions from development status to production accomplishment. This includes detailed designing, construction, installation, testing and commissioning. The last phase, the closeout phase involves all of the actions and activities that have been accomplished through all project management processes up to the officially complete product. | ||
| + | |||
| + | During the project, various involved parties required mandatory changes and unexpected variation of contractual and financial conditions. | ||
| + | The construction and engineering faced requirements for a new use of technology and significant modifications along the development phase. | ||
| + | The project took 8 years to complete, with a cost of nearly US$15 billion, and involved 700,000 shareholders, 220 international lending banks, the British and French governments, many construction companies, and numerous sub-suppliers involved (Anbari et al., 2005). The Chunnel represents one of the largest privately funded projects ever undertaken. Although the Chunnel project was well completed, it was late and far over the budget. | ||
| + | |||
| + | |||
| + | == Challenge == | ||
| + | Large construction projects, such as the Chunnel project, are well-known for cost and schedule overruns. Managing of a project of this magnitude is very complex and includes a significant amount of efforts. The Chunnel project involved 700,000 shareholders, 220 international lending banks, two different governments, several construction companies and many suppliers. The complexity of this project would cause significant planning, logistical and communication challenges. However, the project become a success, despite all the changes and challenges. | ||
| + | In fact, the many changes in scope due to requirement omissions or changes of methodology can be viewed in many ways depending on how it impacts cost, time, quality, and potential risk. It is here where the overall communication and planning seemed to breakdown, as issues were not resolved in a timely manner, resulting in significant cost and time variances. | ||
| + | |||
| + | Challenges to deal with two international governments, the differences in political aspects, their different attitude and underlying goals from locals. The communication was limited between the French and British. The two team were put on each end of the tunnel and work towards the middle, which resulted a delayed communication until the end of the project. Given that the two teams had a common goal, was it not necessary to communicate because the plan was to work and meet the other team in the middle. Insufficient communication during the development and design process in the early stages caused different opinions later on. Although the status reports were helpful and consistent every three months, it did not highlight or accentuate improved communication within the team. It was a report for the financial world just to appease them and allow the project to continue. | ||
| + | |||
| + | The Channel tunnel Treaty refused the project to be financed by government funds and the team agreed to establish a health and safety commission, the Intergovernmental Commision (IGC), which had scope control and authority to demand changes but no ability to implement the changes due to lack of funding (Anbari et al., 2005). The agreement to create IGC, and give both the IGC and the banks excessive control contributed challenges in the finances area. | ||
| + | There was a lack of control in the Chunnel project as there was no direct contract between the banks and contractors of the project (Anbari et al., 2005). This project involved 220 international banks, which caused a significant communication challenge. To deal with different banks, the challenges for example was the question about who will be the superior to one another in ranks for guarantees and the differences in payment terms. The numerous of contractors who were involved in the Chunnel project and the coordination of these contractors reached out to be difficult. Their internal interfaces, their differences in plans, progress and cooperation between them would be a challenge. | ||
| + | |||
| + | One of the reasons why the project had so many problems was the large amount of investors and the fact that most of the banks and construction companies were more interested in making money on the construction itself, and not on the operation (Anbari et al., 2005). | ||
| + | |||
| + | During the Chunnel Project, several regulatory agencies were involved. Regulatory bodies with different requirements, doubling of set of bodies from England and France, overlapping and interfacing rules caused complications during the development and engineering phases. One of the challenges was to try to satisfy the regulatory bodies from the two countries. Design challenges from different contractors, numerous technical and planning interfaces. | ||
| + | In general, the complicated underground construction was a challenge by itself, with specific requirements related to geotechnical issues, precautions against potential leakages, ventilation and internal transport. The general safety (HSE) had to be given special attention as well. | ||
| + | |||
| + | Overlapping of the design and construction was one of the challenges during the project. Trying fast tracking, overlapping the design and construction to expect a shortening in delivery time it is risky even under the best circumstances. The risk was even greater when using the technique containing a new and unproven technology. | ||
| + | |||
| + | Added to this is the fact that underground construction is arguably the most risky of all construction, as changes of conditions such as design and technology, if proven, stand as first class evidence entitling a contractor, subcontractor, or vendor to require compensation both in terms of actual costs plus extended overhead. | ||
| + | |||
| + | |||
| + | == Solution == | ||
| + | |||
| + | |||
| + | |||
| + | |||
Revision as of 13:37, 19 September 2016
Contents |
Introduction
The project, The Channel Tunnel, is the largest privately financed engineering project in history. The tunnel is thirty-two miles in length and stretches beneath the English Channel from Cheriton, Kent in England to the town of Sangatte in the Nord Pas-de-Calais region of France. Each terminal of the tunnel is linked in both national highway and rail systems. The Chunnel consists of three tunnels: Two main rail tunnels; Northbound and Southbound, and the service tunnel which is smaller in diameter, and located between the two main units. The service tunnel allowing access for maintenance, evacuation in case emergency and supply for air. Compared to the 12 hours trip between London and Paris by rail and ferry, the tunnel takes 3 1/2 hours for rail passengers. This high-speed rail system is providing Europe with one of the finest transport network in the world.
During the project phases, the project came across some unexpected problems, resulting in cost and schedule delays. The completed project had an overrun of US$9.9 billion (Anbari et al., 2005). Some of these problems will be further discussed later on.
Overall, the whole construction project was generally accomplished successfully. In addition, The Chunnel can be viewed as modern-day engineering.
Context
The purpose of The Chunnel project was to create a fixed transportation link between the two countries to improve European trade environment and provide an alternative high speed transportation method. This required a cooperation between the two national governments, bankers underwriting the funding for the project, numerous of contractors, and several regulatory agencies. In 1985, a request for proposals (RFP) from the British and French governments resulted in the project, The Chunnel, being awarded to the winning bidder, Channel Tunnel Group/FranceManche (CTG/FM), which later became Eurotunnel. The group were established among construction companies and bankers from both countries, which was led by to co-chairmen; Lord Pennock on the British side and André Bénard on the French. Their winning bid price was established at US$5.5 billion, all privately funded (Anbari et al., 2005). The Eurotunnel required a proper client-contractor relationship to build the tunnel, in order to improve management and planning, a new management group was established, Transmanche Link (TML). TML is an Anglo-French joint venture between Translink in Britain, and GIE Transmanche Construction in France, these two groups in turn joint ventures of the construction companies originally brought together in CTG/FM. The case study covers Project Management Knowledge Areas, within four project phases: inception, development, implementation and closeout.
The inception phase includes defining, at a high level what the system will do and estimate the cost and schedule. It defines the risks to the project and determine the overall project feasibility. During the development phase starts the overall planning, feasibility studies, financing and the conceptual design as well as detail engineering. This phase is transforming the information to a machine-executable form. The implementation phase refers to the final process of moving the solutions from development status to production accomplishment. This includes detailed designing, construction, installation, testing and commissioning. The last phase, the closeout phase involves all of the actions and activities that have been accomplished through all project management processes up to the officially complete product.
During the project, various involved parties required mandatory changes and unexpected variation of contractual and financial conditions. The construction and engineering faced requirements for a new use of technology and significant modifications along the development phase. The project took 8 years to complete, with a cost of nearly US$15 billion, and involved 700,000 shareholders, 220 international lending banks, the British and French governments, many construction companies, and numerous sub-suppliers involved (Anbari et al., 2005). The Chunnel represents one of the largest privately funded projects ever undertaken. Although the Chunnel project was well completed, it was late and far over the budget.
Challenge
Large construction projects, such as the Chunnel project, are well-known for cost and schedule overruns. Managing of a project of this magnitude is very complex and includes a significant amount of efforts. The Chunnel project involved 700,000 shareholders, 220 international lending banks, two different governments, several construction companies and many suppliers. The complexity of this project would cause significant planning, logistical and communication challenges. However, the project become a success, despite all the changes and challenges. In fact, the many changes in scope due to requirement omissions or changes of methodology can be viewed in many ways depending on how it impacts cost, time, quality, and potential risk. It is here where the overall communication and planning seemed to breakdown, as issues were not resolved in a timely manner, resulting in significant cost and time variances.
Challenges to deal with two international governments, the differences in political aspects, their different attitude and underlying goals from locals. The communication was limited between the French and British. The two team were put on each end of the tunnel and work towards the middle, which resulted a delayed communication until the end of the project. Given that the two teams had a common goal, was it not necessary to communicate because the plan was to work and meet the other team in the middle. Insufficient communication during the development and design process in the early stages caused different opinions later on. Although the status reports were helpful and consistent every three months, it did not highlight or accentuate improved communication within the team. It was a report for the financial world just to appease them and allow the project to continue.
The Channel tunnel Treaty refused the project to be financed by government funds and the team agreed to establish a health and safety commission, the Intergovernmental Commision (IGC), which had scope control and authority to demand changes but no ability to implement the changes due to lack of funding (Anbari et al., 2005). The agreement to create IGC, and give both the IGC and the banks excessive control contributed challenges in the finances area. There was a lack of control in the Chunnel project as there was no direct contract between the banks and contractors of the project (Anbari et al., 2005). This project involved 220 international banks, which caused a significant communication challenge. To deal with different banks, the challenges for example was the question about who will be the superior to one another in ranks for guarantees and the differences in payment terms. The numerous of contractors who were involved in the Chunnel project and the coordination of these contractors reached out to be difficult. Their internal interfaces, their differences in plans, progress and cooperation between them would be a challenge.
One of the reasons why the project had so many problems was the large amount of investors and the fact that most of the banks and construction companies were more interested in making money on the construction itself, and not on the operation (Anbari et al., 2005).
During the Chunnel Project, several regulatory agencies were involved. Regulatory bodies with different requirements, doubling of set of bodies from England and France, overlapping and interfacing rules caused complications during the development and engineering phases. One of the challenges was to try to satisfy the regulatory bodies from the two countries. Design challenges from different contractors, numerous technical and planning interfaces. In general, the complicated underground construction was a challenge by itself, with specific requirements related to geotechnical issues, precautions against potential leakages, ventilation and internal transport. The general safety (HSE) had to be given special attention as well.
Overlapping of the design and construction was one of the challenges during the project. Trying fast tracking, overlapping the design and construction to expect a shortening in delivery time it is risky even under the best circumstances. The risk was even greater when using the technique containing a new and unproven technology.
Added to this is the fact that underground construction is arguably the most risky of all construction, as changes of conditions such as design and technology, if proven, stand as first class evidence entitling a contractor, subcontractor, or vendor to require compensation both in terms of actual costs plus extended overhead.
Solution
