Underground the key driver of global infrastructure Nov 2014

When TunnelTalk last reported on the KPMG Top 100 Infrastructure projects, in 2012, only 11 had an underground element. This time around almost a quarter have a direct tunnelling connection that is (or will be) vital to their delivery. For the projects featured this represents a global total of more than 220km of TBM-driven twin-running transportation tunnels, 22km of single bore TBM-driven tunnels, 28km of cut-and-cover alignment and 72km of drill+blast excavation for a total tunnelled length of some 562km.

Note: * denotes TunnelTalk reference, see below

It is also noteworthy that the judging panel – which narrowed down the final 100 from an initial 300 worldwide projects – includes the Tunnelling and Underground Construction Academy (TUCA) in London. Completed in 2011 as part of the arrangement to ensure skills provision for the Crossrail project, and cited as the only soft ground tunnelling training facility in Europe, TUCA earns its place on the list for its ability to support the skills that will be needed to deliver the many UK tunnelling projects moving towards construction in the coming years.

Hinckley Point requires 8km intake and outfall tunnels

Three of these also make the list (Crossrail and Thames Tideway have featured in previous years), The Crossrail and Thames Tideway projects in London have featured in previous KPMG Top 100 lists. Chief among them High Speed 2, for which civil procurement is due to start in 2015 for the 56km of twin running tunnels that will be required to complete both phases of construction. Delivery of Hinckley Point C Nuclear Power Station, still in the planning stages, will require more than 8km of underground intake and outfall structures, while the recently awarded underground construction contract for the London Underground Northern Line Extension – which will require 3.2km of twin-running tunnels plus SCL caverns – completes UK tunnelling projects on the list.

One country noticeably absent this year is the USA – a country the report says needs US$3.6 trillion spending on its ageing road infrastructure by 2020. The US – for which the East Side Access, MiamiPort Tunnel and California High Speed rail projects were featured in 2012 – is categorised for the purposes of this report as an “economic powerhouse”, alongside China, India, Russia and Brazil. These are regions with large populations spread across huge geographies, which have “significant infrastructure needs either to support rapid growth and urbanisation or, in the case of the US, to fill in the gaps and rebuild decaying assets.” But private sector funding issues are stalling the ability of these countries to build the necessary infrastructure quickly enough to drive them forward.

USA underground projects are absent from the KPMG 2014 Top 100, but recent groundbreaking on LA Metro Purple Line and a succession of CSO tunnels ensure future tunnelling activity

That is not to say that the USA is short of new and ongoing tunnelling activity – especially in the clean and wastewater sectors where large CSO projects are under way in Cleveland (Euclid Creek and Dugway tunnels, with five more planned in future phases), Indianapolis (Deep Connector Tunnel, with three more tunnels planned), Washington DC (Anacostia and Blue Plains tunnels) and St Louis (Lower and Middle Des Peres storage tunnel). Similar wastewater projects are likely to come online in the future as the USA’s largest metropolises look to reduce wastewater flows into rivers and lakes by updating ageing sewerage infrastructure in order to comply with the Federally mandated Clean Water Act. In the transportation sector recent underground metro awards in Los Angeles seem likely to appear in future KPMG Top 100 reports as they progress, and in Las Vegas the race is on to complete the hard-fought Lake Mead drive that will ensure a supply of clean water to the desert city.

The report notes that in the current economic climate, in which public financing of large-scale mega-projects is being more tightly squeezed than ever before, infrastructure owners are increasingly having to utilise financing structures that make better use of private capital. “Historically, economic powerhouses have used public money or some form of debt security issued by the state to fund developments,” says the report. “However, the scale of the required investment means that government finance alone is insufficient and public institutions lack the critical capacity of qualified people needed to deliver.

“Whether the conditions exist [in the economic powerhouses] to attract international private capital is open to question. Current flows are often limited by strong domestic competition, a lack of transparent tenders and considerable restrictions on inward investment, with further fears over resource nationalism. As a result, there are fewer … opportunities in these markets for international private investors to consider … an issue economic powerhouses need to address if they are serious about attracting international investment and expanding the role of the private sector and the use of public-private partnership (PPP) models.”

The report notes that in the USA, 66% of all transport infrastructure PPPs are concentrated in just five of the 50 states that make up the federal union, but adds that interest in the form of Canadian pension funds in particular may help spark “further waves of domestic and international capital keen to back the resurgence of US infrastructure.”

Sao Francisco water irrigation project

The 4km Cuncas II tunnel

Canal construction

12km Cuncas I tunnel

Against this financial and funding backdrop, the problem of sustaining mega-projects in such regions is amply demonstrated by the long-running Sao Francisco River Irrigation Project in Brazil, which appears in this year’s Top-100 but is currently twice over budget and only half built after seven years in construction – to the extent that some of the earlier building works are beginning to deteriorate and may need to be replaced.

Briefly, the project is Brazil’s largest ever water infrastructure development, comprising construction of a 750km network of culverts, canals, aqueducts and tunnels to divert water from the Sao Francisco River to fill dried up rivers in the poor regions of the northeast of the country. A total of 16 drill+blast tunnels totalling 53km in length are required as part of the ambitious programme. Some of them, including the 4km Cuncas II and the 12km Cuncas I tunnels are either already completed or under construction.

Also in Brazil, the 15.9km Sao Paulo Line 6 Metro Extension – 13.9km of which will be run underground – is in the KPMG Top 100. Excavation of the 10.5m i.d. twin-running TBM driven tunnels is due to begin next year (2015) by a consortium of companies led by Odebrecht of Brazil. It is the first such PPP project in Brazil where private sector has participated from the start.

Canada and Australia are strongly represented in the list. In the former, there are critical tunnel elements to both the 10km-long Valley Line MRT in Edmonton (500m of tunnel); and the 19.5km Eglinton Crosstown LRT project in Toronto, where excavation of 9.5km of TBM driven twin-bore tunnels is currently well into construction. Looking further ahead, long running plans to develop the controversial 1,177km Northern Gateway Pipeline to provide access to new energy markets in the Pacific Rim have taken a positive turn with news that the Federal Government of Canada has granted conditional approval for the scheme. Included in project scope are two tunnels – of 6.5km and 6.6km in length – though it is still too early to say which excavation method will be selected.

In fact, Canada is highlighted as a region and a market which private investors and construction consortia would do well to target. Brad Watson, KPMG National Practice Infrastructure leader in Canada, said: “With a stable economy, transparent regulatory environment and established history of PPPs, Canada should prove an appealing destination for private finance.

Excavation of Eglinton Crosstown continues

“The public infrastructure gap is most acute at the municipal level, where decades of underinvestment, combined with increasing population density is straining the infrastructure necessary to support the economic aspirations of Canadian cities. Looking to the future, we expect greater spending by municipalities across a host of different asset classes.

“Canada has been blessed with an enviable resource base and we continue to see significant capital expenditures to extract these resources. In the power sector, several billion-dollar projects are being pursued to support additional hydroelectric generation. Plans for new projects in Alberta’s oil sands continue to make headlines, as do the pipeline projects key to getting the product to market. Taken together, it is clear that Canada remains an attractive infrastructure market, and based on our research, over 300 projects – each of which is greater than US$224 million in size – are either under construction or expected to start in the next decade, totalling in excess of US$536 billion. Infrastructure investors, developers and contractors would do well to consider the Canadian market when contemplating their own aspirations for growth.”

Legacy Way final breakthrough

Projects in Australia in the KPMG Top 100 are at all three stages of the construction cycle. While the 4.6km twin-running highway tunnels of the award-winning Legacy Way Project in Brisbane are completed and now at the M&E phase of construction, TBM excavation of the North West Rail Link in the suburbs of the capital, Sydney, is only just starting. Four machines manufactured by NFM of France will excavate 15km of twin running rail tunnels through a sandstone geology as part of a 25km long new alignment that also features elevated constructions.

At the other end of the construction scale, prequalifiers are announced for the first of three phases included in the WestConnex highway project to the west of Sydney. This 13.5km extension of the M4 motorway includes a 5km cut-and-cover tunnel. Meanwhile, five shortlisted teams wait to see if they will prequalify to bid for a further 6km of tunnelling along the M5 corridor as part of Phase 2. An 8.5km TBM bored tunnel linking the two earlier phases will be last to reach the construction procurement stage.

Three phases of WestConnex project

In the case of the Sydney projects, completion of both road and rail projects in the western suburbs will put the pressure on to develop a next round of underground infrastructure projects that are at the very early stages of development – a second harbour crossing, more metro construction to service the central CBD, and greater connectivity to the airport from the M4 and M5 highways.

In the less developed and emerging economies, tunnels and development of underground infrastructure are also playing a significant role in driving their economies forward. In Panama, the first phase of development, from scratch, of the region’s first metro system is under way with construction of the Panama City Metro Line 1, which includes 8km of twin-bored TBM tunnel. Plans to build an elevated Line 2 are well advanced, though it is regrettable that a decision appears to have been taken to build a bridge rather than a tunnel for the river crossing that Line 3 will eventually require.

Double deck 9.3km tunnel in Santiago

Durango-Mazatlan Highway required 116 tunnels

In traffic-congested Santiago, Chile, a JV of OHL and Sacyr is selected to excavate and construct the 9.3km-long three-lane double-deck cut-and-cover Americo Vespucio Oriente Tunnel. Initially conceived as a 13km tunnel, local objections forced the government to rethink the western section of the alignment and progress the eastern section as a separate project. Once completed it will cut the current hour-long car journey to 8 minutes.

In Mexico, construction has only recently been completed on the spectacular 230km Durango-Mazatlan Highway through the Sierra Madre mountains – which also makes it into the KPMG Top 100 projects of 2014. This ambitious project, to replace a notorious section of mountain route known as the “Devil’s Spine”, required the construction of 63 bridges and 115 tunnels – the tunnels being to a total length of 18km. The toll highway cuts journeys from the ports of the Gulf of Mexico across northern Mexico and into the US from eight hours to just three.

58km Nepali mountain highway

Another Delhi Metro breakthrough

In the mountains of Nepal another of 2014’s Top 100 projects is to be found – with construction of the so-called Kathmandu-Kulekhani-Hetauda Tunnel Highway due to begin in the coming weeks and months. This 58km road through the Himalayan foothills requires 4.5km of tunnels. Once complete, the highway will cut travel times between the two destinations by 6-8 hours when compared to the 227km and 133km-long alternatives.

In India, the capital city’s continuing effort to construct one of only three metro systems worldwide with in excess of 300 stations, is recognised with inclusion in the KPMG Top 100. Having already completed Phases I and II of the Delhi Metro, construction is well under way on a further 140km of alignment, some 41km of it underground in twin-running TBM driven tunnels.

Completion of Phase III is expected in 2016, with planning well advanced on a 103km-long Phase IV. At this stage it is not known how much of Phase IV will be run underground, but the judging panel were impressed with the rate of construction so far, the “innovative procurement and strong project and contract management techniques”, and the ability to deliver previous phases on budget. “Ten years after its first line opened [2005], the US$2.3 billion Delhi Metro continues to expand, setting a shining example of how to carry out an effective public works program,” says the report.

Another major metro network to make it to the list is Saudi Arabia’s Riyadh Metro mega-project, a major investment to build six lines from scratch to improve connectivity in the traffic-congested capital. Construction is already under way by three international construction consortia led by Bechtel of the USA (Lines 1 and 2), FCC of Spain (Lines 4, 5 and 6) and Ansaldo of Italy (Line 3). The planned 176km network includes 35.2km of twin-running TBM bored tunnels, plus a further 13.7km of cut-and-cover excavation.

For brief details of all the projects with specific tunnelling elements see Table 1 above. It is also worth mentioning that a number of long distance road and railroad projects highlighted in the Top 100 – in Africa, Russia and China – are likely to incorporate underground sections that are as yet unspecified. In the case of the 8 Million City Project for Scandanavia – which aims to link Copenhagen, Oslo and Stockholm via a transnational high speed rail network – construction of the 17km Fehmarnbelt immersed tunnel connection (listed in the 2012 report) brings with it the prospect of linking in with an expanding European high speed rail network, and is likely to act as a driver for high speed rail programmes across Scandinavia.

Many more tunnelling mega-projects in addition to those identified in the KPMG Top 100 are currently under construction or in planning throughout the world, as the industry continues to contribute significantly to the development of infrastructure around the globe.