Tunnel Vision
International law firm King & Spalding’s construction and major projects counsel Tim Burbury looks at Abu Dhabi’s ambitious transport plans and assesses the risks and issues commonly encountered during the development of tunnelling projects
Abu Dhabi is spending billions of dollars on transport projects over the next decade; many of these will have tunnelling elements. The construction of these complex developments represents both unique opportunities and risks for those involved.
The blueprint for transport development in Abu Dhabi is the Surface Transportation Master Plan (STMP). The STMP represents an unprecedented opportunity for Abu Dhabi and international contractors and operators. It encompasses a multibillion dollar integrated network of highways and regional rail, metro and tram services with a complementary system of buses, taxis and park-andride facilities. No other city has ever attempted to develop all of these modes of transport from nothing at the same time and in such a short period of time. Many of these projects will have tunnels; indeed Volume One of the STMP envisages several major tunnel projects linking islands (Abu Dhabi, Saadiyat, Lulu, Reem, Yas) and within Abu Dhabi’s busiest streets (Salaam, Mina, Electra, Khaleej Al Arabi). Perhaps the largest tunnelling job out of these will be Abu Dhabi’s massive underground metro system, stretching hundreds of kilometres.
Stakeholders
Tunnelling projects create a different level of complexity and risk exposure compared to simple building projects. In addition to the normal planning and construction permits, and site and access issues that all construction projects face, tunnelling projects attract specific issues which, if not addressed appropriately in the planning stage, may attract claims from third parties.
In addition to the developer (most likely the government’s transport department) and the contractor, tunnelling projects involve a myriad of third-party stakeholders, who will each inevitably be affected in some way by the construction works. These stakeholders include:
· Land owners/landlords/tenants that may be occupying or developing their own sites in the path of- or in close proximity to the proposed tunnel corridor.
· Utility companies that may have water, sewerage, electricity, gas, telephone, fibre optic and cables and pipelines lying in the path of- or in close proximity to the corridor.
· Government departments — especially for transport — that have an interest from a public policy and regulatory perspective, also police, municipalities, planning, public works and environmental sectors.
· Other contractors that may be engaged by any one of the above stakeholders to perform other works in the vicinity of the proposed tunnel corridor.
· Public; the stakeholders perhaps most inconvenienced by delays and diversions caused.
It should also be kept in mind that often the tunnelling project is a subset of a greater project; this means more stakeholders. Take Abu Dhabi’s proposed metro project, which will involve the design, construction, procurement, maintenance and operation of various mechanical, electrical, civil and infrastructure components, including:
· The route (and all underground track works).
· Each metro station, including substructures of any elevated metro stations and underground elements of the stations.
· The rolling stocks.
· The depot to house the rolling stocks and other vital facilities, including the rolling-stock maintenance facilities, and the metro operations control centre.
· Various mechanical and electrical equipment and systems, including a power supply and distribution system, a signalling and traffic system, a telecommunications system and an automated fare collection system.
This is a major project and the tunnelling aspects, albeit a large part, are but one part of the overall project. This means the tunnelling works need to be carried out in parallel with the other components of the project and in close proximity with many other suppliers and contractors.
Management of Interests
For any project with multiple stakeholder relationships, it is essential to engage stakeholders early. The developer should therefore seek to agree and implement a cooperative mechanism with the stakeholders early on. This will be designed to identify and resolve stakeholder issues in a timely and efficient manner. This mechanism needs to incorporate a seamless process for the evaluation of any intractable issues which threaten the outcomes of the project and which may require resolution at a higher level.
The stakeholders will each be affected in some way by a tunneling project. Indeed, because the project is not ‘their’ project, collectively they won’t have the same interest or ‘buy in’ that the developer and the contractor have. They won’t make money from the project (although some may indirectly profit from increased traffic visiting their stores) and many will complain about the inconvenience caused by the works. They will be told by the relevant government department procuring the project that the project is going to happen and that they will have to deal with it. Many will resist being dragged into the matter. Utility companies in particular will resist as they will have spent considerable effort and expense in laying utility services. Because such projects are inevitably government sponsored, this allows some degree of ‘forced’ cooperation onto the government-owned stakeholders.
The juggling act can be further complicated if the developer does not develop a strategic plan to coordinate and manage the entire stakeholder group (and perhaps sub-groups) and gather their collective buy in. False starts may lead to a ‘ganging-up’ approach. There is never one solution that works for every tunnelling project, however, best practice is to obtain stakeholder buy in as early as possible in the planning process and to ascertain and manage each stakeholder’s issues and drivers. In this way, the developer can develop its strategy for managing collective and individual expectations and document this in ‘stakeholder deeds’ or other appropriate legal and partnering documentation.
Land Acquisition
Acquiring the access and easement rights for the tunnel corridor becomes complicated where the corridor crosses existing developments and construction sites. For example, a ‘cut-and-cover’ tunnel will shut down entire streets during the construction phase. Traffic studies will invariably be carried out early in the planning stage to determine the most appropriate size and length of the tunnel, directional tunnel ramps at the start and end points and most importantly, the location of the permanent tunnel corridor itself.
Procurement Strategies
Where the private-sector contractor is mandated to design, construct, operate, maintain and fund the entire project for a long period (for example, 30 years), then the procurement model may involve a concession or franchise arrangement and the execution of complicated project agreements.
However, if the government procuring authority funds the project from public funds, the more common procurement models for the tunneling aspects are design-bid-build, design-andconstruct and fast-track construction management with trade packages. The choice may ultimately come down to the speed at which design development can occur and the level of involvement of the contractor in the design process.
If the developer is prepared to wait until a nearly-developed design can be produced before going to tender, then the design-and-construct model might be best, as the developer can ask the contractor to give a lump sum price for the entire scope of works. This model also places the entire risk of design and construction errors singularly on the contractor. Where the developer wishes to retain design control, then a design bid- build model may be preferable.
Where the design is not complete, but construction needs to start to meet completion milestones, then a fast-track construction management approach may work, with trade packages released as individual design packages are finalised. The UAE market favours the use of the ‘FIDIC’ forms of contracts for construction works. These may be used for the tunnelling works with appropriate amendments, however, the relocation contracts are often bespoke contracts with multiple parties.
Risky Business
The developer’s starting position will be for the tunnelling contractor to assume the risk of latent conditions in the subsoil and for avoiding substance or settlement of neighbouring land. This isn’t just by the tunnel collapsing, but also by drawing water out of the soil. The tunnelling risk and the risk of damage to neighbouring properties should be allocated to the contractor and he should be required to insure adequately for it.
Most tunneling disputes arise because of substance or settlement problems, so dealing with these risks is of critical importance. In jurisdictions such as Abu Dhabi, there are additional legal issues not present in other legal systems, such as ‘decennial liability’. In summary, the contractor will be strictly liable for 10 years (this can be extended by agreement) from completion of works for any total or partial collapse of a building or installation and for any defect that threatens its stability or safety. Importantly for developers, the contractor has to pay damages to the developer regardless of whether any defect or collapse arises out of a fault in the land itself (i.e. latent conditions) or that the developer consented to the construction of the defective buildings or installations. Ultimately, the contractor will have to satisfy itself as to the ground conditions, which for tunnelling projects can be inherently difficult and costly.
Other key issues for developers include strategies for mitigating claims from third parties arising from the tunnelling works and strategies to avoid time and money claims from the tunnelling contractor (and stakeholders) due to interference from other contractors along the tunnel corridor. The risk of claims cannot be entirely eliminated, as this will depend on the attitude of the claimant.
However, there are some strategies that have been successfully used on tunnelling projects to mitigate such risks. These include: obtaining appropriate insurance, stakeholder deeds (that may deal with coordination responsibility, consequences of claims etc.) and coordination and wrap-around agreements and interface protocols, to be signed by the contractor (and its subcontractors) and each other contractor working for a stakeholder on or near the site. firm King & Spalding’s construction and major projects counsel Tim Burbury looks at Abu Dhabi’s ambitious transport plans and assesses the risks and issues commonly encountered during the development of tunnelling projects
