Fehmarn Link mega-project contract awards 08 Mar 2016

The three main contracts are awarded for construction of the 18km Fehmarnbelt immersed tunnel road and rail link between Germany and Denmark.

Denmark has named two preferred consortia for the three packages of the re-bid civil engineering works, but they will only be granted conditional design-build contracts by May because German red tape is holding up the start of construction to around 2017. The tunnel might not be opened until at least 2026.

18km Fehmarn road and rail link

A total of nine consortia expressed interest, from which seven were prequalified by the project owner Femern A/S in May 2013, across three major lots – Tunnels North and South civil engineering; Portals and Ramps; and Dredging and Reclamation.

From a total of five prequalified joint ventures, the North and South Tunnel construction contract,including the casting yard that will manufacture the 89 precast concrete elements required for the project, is awarded to the Femern Link Contractors JV comprising Vinci (France), Per Aarsleff (Denmark), Wayss & Freitag (Germany), Max Bogl Stiftung & Co. (Germany), CFE (Belgium), Solétance-Bachy International (France), BAM (Netyherlands), BAM International (Netherlands). Named sub-contractor is Dredging International (Belgium) with Cowi (Denmark) as design consultant.

The same JV, Fermern Link Contractors, is also awarded the Portals and Ramps contract. A total of four joint ventures had been shortlisted for this contract.

The Tunnel Dredging and Land Reclamation contract, for which two joint ventures and a single company bidder were shortlisted, is awarded to the Femern Belt Contractors JV comprising Boskalis International (Netherlands), Hochtief (Germany), Ed. Züblin (Germany) and Van Oord Dredging and Marine Contractors (Netherlands), with SWECO (Denmark) as design consultant.

In the evaluation process for all three contracts technical solution was weighted at 50% and price at 50%.

Portal at Lolland on Danish side

The Fermern Belt Contractors JV was shortlisted for both the Portals and Ramps and North and South Tunnel construction contracts, but missed out on both to the Femern Link Contractors JV.

The following shortlisted bidders were unsuccessful:

• Salini-Impregilo/Samsung C&T/Johann Bunte (North and South Tunnel/Portals and Ramps)
• Obrascon Huarte Lain/Daewoo/Daelim Industrial (North and South Tunnel/Portals and Ramps)
• The Immersia JV of FCC/ NV Besix/Jan de Nul (North and South Tunnel)
• Jan de Nul (bidding alone for Dredging and Land Reclamation)

The casting yard will be located at Rødbyhavn on the Danish side. The contract for portals and ramps includes new roads and railways, which will be built from the tunnel openings to the existing motorways and railways further inland. Huge portal structures, where the traffic enters the tunnel, will also be built.

The contract for dredging and reclamation includes dredging an approximately 18km-long trench in the seabed of the Fehmarnbelt into which the tunnel elements will be immersed.

“On Friday, 4 March 2016, the Danish political parties behind the Fehmarnbelt link mandated Femern A/S to appoint the preferred bidders for the main tunnel contracts with the aim of entering conditional contracts no later than mid-May 2016,” said a spokesman for Femern A/S.

“Conditional contracts mean that final and binding contracts will be signed with the successful contractors, but the construction work will be postponed until the German construction permit is in place. The contracts are valid until the end of 2019 with the option to renegotiate at that time.

“Once the final conditions for conditional contracts are settled satisfactorily between Femern A/S and the winning contractors, the company will present the results to the Minister of Transport and Building before the contracts are signed in May 2016.”

In total, the civil works in the packages are valued at approximately €4 billion – or slightly more than three-quarters of the total construction costs of the project. No information is immediately available on the value of the individual contracts. Decisions have yet to be made on advancing procurement for M&E. There will also be contracts for architectural lighting and the tunnel toll system, respectively.

Cross section of the Femern Link

Claus Baunkjær, Chief Executive of Femern A/S, said: “We are, of course, delighted with the outcome and with the confidence that the political parties behind the Fehmarnbelt link have shown us. We can now appoint the winners of our major tunnel contracts and, over the coming months, we will consult with the contractors to clarify the final details of the contracts.’

The scheme is already running behind its original intended schedule – and the construction period has been extended, due in large part to procurement challenges.

Procurement for the major tunnel contracts had started in late 2012. By early 2014, the procurement development schedule had expected design-build contract awards by 2015 with main construction commencing later in the same year. Fehmarn Link was to open to traffic around 2021.

Despite a few years of talks, prequalification rounds and a two-stage (technical, financial) tender process, the resulting preliminary offers – submitted in December 2014 – came in too-high. The bids bust the approved budget portion by about 20%.

The high prices caused major surprises and, as the budget could not be changed, yet another long – and unanticipated - round of procurement negotiations got under way.

Baunkjær then said the bids needed to be negotiated down “significantly”. All tenderers opted to re-offer with “final” bids in September 2015.

By then, the Danish Parliament had adopted the Construction Act for the project, and the EU had approved backing the project as a priority. The subsidy EU funding for the project is valid for the current period, ending 2019.

Revised final bids came in on the September 2015 deadline, and were under the budget bar. All prequalified consortia remained in the race. It was also intended that shortly after then the final construction budget would be approved.

However, and although advance works have been underway over the last couple of years, and EU funding support was approved in mid-2015, main construction cannot start for at least another year.

Tunnel will require 89 elements of this configuration

The last hold up comes from the bureaucratic processes of assessing and political voting on the transport section at the German end of the fixed link, in the state of Schleswig-Holstein. Germany isn’t funding the core project – the money is from Denmark and EU – but the project connects into the state’s road and rail system.

The red tape delay emerged only weeks after the final bids were submitted.

Femern A/S had submitted its planning application to the German authority in 2013, and it was expected the process might take up to two years. But last October the state said a new full public hearing would likely be necessary, delaying the planning process for a construction permit to 2017.

A further complication is that the final bids are valid up to May 2016. Consequently, the client has been compiling latest costs to put before the Danish political parties that have been backing the scheme over the last few years, and also exploring – even up to last the few weeks – whether the award of conditional contracts would be feasible. That, too, depended on the politicians.

Last week, the politicians passed judgement on both the latest financial picture and also the question on conditional contracts – backing both, and allowing Femern A/S to announce its selection of preferred bidders for the large civil engineering packages.

With the current start of main construction expected in 2017, Fehmarn tunnel – with an extended construction period – is now anticipated to be completed in 2026. But should legalities delay its start further, the tunnel opening could be 2028.

The conditional contracts with the bidders will be valid for 3.5 years, awaiting commencement of construction. Should this fail to happen, the preferred consortia are to receive some compensation.

Separately, Femern A/S has planned to provide some level of compensation for unsuccessful bidders.