chunnel ppt

The Chunnel ProjectA learning out of Failure

By

Garvit Bharadwaj

Piyush Tyagi

Pranay Karthik

Rachit Anand

Rajesh Bhatia

Sankarshan Joshi

Sumeet Gupta

Channel + Tunnel = Chunnel

The Chunnel

One of the world’s Largest Privately Funded construction project involving 2 Governments – French and British

220 banks

Numerous contractors

Regulatory Agencies (IGC)

The project was bid at $5.5 b but completed at $14.9 b

$8.4b

Scope creep

19 Months Delay

The Chunnel - Contracts

French + BritishGovt

BOT-Contract CTG/FM

CTG/FM Contract TML

Next 15 Minutes

Inception

Development

Execution

Closeout

What is expected?

• Proper risk management

• Engineering risks

• Process risks

• Approval risks

• Financial risks

• Business risks

Inception Development Execution Closeout

• Inception

• Historical background of the project

• Objective

• Political climate

• Pre-feasibility study


• Scope:

• Fixed transportation (51.5kms)

• Economic development

• Pressures causing mishaps:

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

• Air-conditioning costs

• Formation of intergovernmental commission


• Finance aspects:

• Treaty says to no government aid

• Pursued via equity &loan capital markets.

• Scheduling:

• Activities related to activity definition, activity

sequencing, activity duration estimates.

• Planning 3 tunnels which required 46 contractors to

complete the design requirements.

• Changing safety rules created negative variances.


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

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

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

• Contractual agreements made teamwork a complex activity.

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


• Efficient communication is very important in

preplanning, contract negotiations, financing and

technical issues during the inception stage.

• Communication seemed to breakdown in case of issues

regarding organizational structure , finance and

contracts as the issues were not timely solved.


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

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

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


Some critical aspects in development phase:

• Massive communication barriers.

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

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

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


• Better risk management could have been done.

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

guarantee.

• Project office’s work lacked detail.

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

Too Early A Start

Design

Construction

Approval Issues

Enggineering Risks

Underground Construction

New Technology

Risk


Bureaucratic Pressures

French + BritishGovt. Pressures

Control CostsFixed Price

Implications for TML

“Winner Takes All” Issue

Low Bid Prices with Best Case

Scenario

Squeezing Revenue via

Change orders

Project cost Rise from $4.3 billion

TO $7 billion


Controls in Wrong Hands

Controls

Financing Banks

Profit Maximization

ConstructionCompanies

Risk Minimization

NO IMPORTANCE TO OPERATIONS


Communication Issues

InternalCommunication

Limited

Different Countries

Different Cultures Different

Specification



The immense amount of Litigation and Claim against project.

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

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

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


• Time Over shoot: the greatest impact of ROI.

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

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

Learning's

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

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

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

• Large projects like Chunnel Construction requires leveraging of new technology and lessons learned from existing project.

Thank You!!!! No Questions Please.

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

Questions!

If learned from, Mistakes can be converted into Experiences.