The Chunnel Tunnel Project

THE CHUNNEL TUNNEL PROJECT (A Case Study) The Close out Phase

The Chunnel Tunnel Project INTRODUCTION  51.5 KM under sea double rail linking France and England.  Largest construction project built by a private consortium, involving French & British Government

 Loan financing raised through a consortium of 206 banks.

MAJOR CHALLENGES • • • • • •

Cooperation of two national governments Bankers underwriting the funding for the project Numerous Contractors Several regulatory agencies Overlapping design and construction Under ground construction

The Chunnel Tunnel Project COMPLEXITY  Unwillingness of English to invest public money resulted in getting money from private investors without any governmental intervention or guarantees. Resulting very little regulation on the fares charged for the whole concession of 55yrs

 Introduction of Intergovernmental commission (IGC) to regulate environmental, health, safety aspect.

 Loan financing raised through consortium of 206 banks world wide, making refinancing complex.

 Open/ undefined scope of project.  Integration, coordination , communication of diverse and numerous parties involved.

Close out Phase Project Management Area Scope Management

Close Out Phase – Assigned Ratings 1.5

Time Management

4

Cost Management

1

Quality Management

4

Human Resource Management

2

Communication Management

2

Risk Management

2

Procurement Management

1

Integration Management

2

The Chunnel Tunnel Project WEEKNESS :  Overall scope of the project was still not fixed, even at the proposed         

completion. The project was even rushed to allow operation to begin before the entire effort was completed. Lack of detail designing in initial stages. Focus during the closeout was on attempting to minimize the amount of claim awarded rather than analyzing the causes of cost overruns. The ability to make demands for changes (IGC) in the design of the deliverable without corresponding funding for those changes provides a perfect setup for challenged results. Poor Contract Management (fixed rate contracts) No contingency to cover unknowns. Structure of Consortium. Communication in later stages of project. Over managing risk. Poor Change control method

The Chunnel Tunnel Project STRENGTHS:

     

Quality Management Communication in initial stage Progress Monitoring Planning and scheduling to a large extent. Exemplary Team work in patches. State of the art precise engineering.

The Chunnel Tunnel Project RESULT 

Bid price US$5.5 Billion, eventual cost staggering US$14.9 Billion



19 month delay .



Benchmark quality

The Chunnel Tunnel Project Success or failure ? Engineering perspective: The project was undoubtedly a success as most of the technical problems which subsequently aroused were associated with regulatory changes. Customer perspective: The project could be viewed as a success. The customers also got a new chance of services from the shuttles at lower prices

Economists perspective: The project may not be a success. Huge resources have been wasted providing the expensive piece of infrastructure which provides only a marginal quality of service advantage