Peter Kenyon, TunnelTalk

As the design-build construction consortium, Seattle Tunnel Partners (STP), and its machine manufacturer, Hitachi Zosen of Japan, continue discussions that will decide whether to access the main bearing assembly of stricken TBM Bertha in Settle from above or from inside the machine itself, a State-appointed Expert Review Panel calls into question strained relations between project owner WSDOT and the STP partners Dragados/Tutor-Perini. Peter Kenyon examines the main findings and reports on the latest developments in Seattle with regard to contingency and contractual issues, potential for delay to project completion, and the machine supply contract between Hitachi Zosen and STP.

A review of progress on the stalled Alaskan Way Viaduct Replacement program, which has seen only 2ft of TBM advance since December 6 last year, concludes that there is a need to "rebuild the relationship between WSDOT and STP" and recommends that the owner and its contractor improve collaboration over "technical issues."

Dec 2012 commissioning ceremony of TBM Bertha in Japan

Failures in communication, a tendency for the owner to "assign blame" publicly when things have gone wrong, the lack of technical information sharing, lack of continuity at key personnel level, and general "confusion" over who is responsible for what in the project are all highlighted as matters of concern.

The report predicts that the net effect of an expected 7-10 months of further investigation into the damage to the TBM, plus possible repair work time, when set against measures that might enable STP to buy back five months of schedule time, will result in a revised project completion date in the first or second quarter of 2016.

The findings follow other instances of dispute and tension for client and contractor that included use of non-union longshoremen for loading tunnel muck onto barges that resulted in strike action and a temporary halt to progress as a deal was thrashed out; a dispute between owner and contractor over the contractual use of disadvantaged business enterprises (DBEs), which resulted in an investigation by the Federal Highways Authority (FHWA) and the serving of a breach of contract notice by WSDOT on STP; and damage to the TBM bearing seals that will take months to investigate and fix and which is likely to require excavation of a shaft in front of the cutterhead to gain access to the main bearing which itself may be damaged as a result of the failed seals.

Alaskan Way Expert Review Panel

The three-member Alaskan Way Expert Review Panel (EPR) was established in September 2011 by the Governor of Washington and the State Legislature to report on and update, a previous 2006 ERP report by a different panel of experts and to carry out an independent financial and technical review of the US$3.1 billion project's key assumptions, and its finance and risk management plans.

It has issued an annual report each February since then, including the latest one released on February 27 (2014). The panel members since 2011, are:

Dr Patricia Galloway, Panel Chair, is a civil engineer with 36 years of mega-project experience in mega-projects, transportation programs, and project delivery. She has served as an advisor to private and public owners and contractor clients, and has served as a member of various risk management assessment and independent review panels. Dr Galloway is an elected member to the National Academy of Construction and the Pan American Academy of Engineering. In 2004 she served as the first woman President of the American Society of Civil Engineers (ASCE).

Robert Goodfellow, Senior Vice President of tunneling and geotechnical engineering firm Aldea Services, has more than 20 years of experience in the underground construction industry, specializing in project management risk. He has worked on transit systems in London, New York, Washington DC, Copenhagen and Toronto, and is a former Associate Vice President and Director of Tunneling at Black & Veatch.

John Rose has more than 30 years of experience in public sector budgeting and financing, including prior experience as King County Budget Director in Seattle and as President and CEO of Seattle Northwest Securities Corporation.

The report is authored by a three-member independent expert review panel appointed by the Governor and State Legislature to oversee the project's finance plan on an annual basis. As part of this remit, the panel is charged with identifying construction schedule risk, project management risk, technical risk, contractor risk, cost risk, and with making recommendations for mitigating such risks.

Among the issues highlighted in the hard-hitting report are:
• The need to "rebuild" the
   relationship between
   owner and tunnel
   contractor, with WSDOT
   needing to "revise" the way
   it communicates with STP.
   This should be in a way
   that "reflects a more
   commonly used
   megaproject-management
   practice."
• The need for WSDOT and
   STP to get on with getting
   the TBM moving again and
   "not focusing on
   financial liability at this
   time."
• The need to revise
   procedures "that will
   restore a relationship of
   trust and cooperation."
• The need to tackle factors which "have strained the relationship between STP and WSDOT leadership", which
   the report says have been "intensified" through "a tendency to assign blame rather than work together to solve
   problems."
• The need to establish a "technical forum for open discussion of technical issues." The report says that it is
   "evident" no such mechanism exists and that while WSDOT has retained a Strategic Advisory Technical Team
   (STAT) that provides it with technical observations, opinions and recommendations, "these reports have not
   been formally discussed with STP and the benefit to the project of the STAT team experience and expertise is
   not being utilized to the fullest extent possible."
• The need to tackle "confusion internal to WSDOT and STP with respect to who has the authority and
   accountability for various aspects and components of the project." The report states: "In the specifics of what,
   when, how and to whom, the project staff appear to be struggling."
• The need to end the confusion that STP feels as a result of WSDOT communicating information to it by individuals
   "who have not been in meetings where important project issues have been discussed," which in turn "may
   increase tension in the partnership relationship if the formal communication is not reflective of what may have
   been discussed and/or if the tone of communication is reflective of an adversarial relationship versus a positive
   team approach."
• The need to look at ways of retaining key staff in the wake of a number of high-level personnel changes that are
   leading to "a lack of coordination...with regard to WSDOT's leadership." The report points out: "Given the
   confusion that has resulted from changes to WSDOT leadership the ERP notes that staff continuity is of
   increasing importance as the project enters this critical phase."

The report goes on to say that the highly public disagreements between WSDOT and STP over the handling of the disadvantaged business enterprise (DBE) issue is threatening "additional damage [to] the essential relationship between [them]".

TBM Bertha seal assembly: the root of all current problems

The matter became a source of conflict after STP was reported to the Federal Highways Administration (FHWA) over allegations it was not meeting its contractual obligations with regard to the recruitment of DBE sub-contractors. The ERP concludes that there was no need for WSDOT's response of issuing STP with a "breach notice", and that the FHWA had not recommended such action. "Not working actively to repair the damage [caused by the DBE conflict] could adversely affect the successful completion of the tunnel project," states the report.

The "strained" relationship between STP and WSDOT, referred to in the report, stems partly from concerns about the potential for cost and schedule overruns on a project that under the terms of the contract must be completed by November 13, 2016. If this completion date is missed, STP faces a financial penalty of US$100,000 per day. STP won the contract partly as a result of gaining added value to its bid by promising to deliver the tunnel earlier still, by 31 December 2015. Incentives to a maximum value of US$25 million are payable for contract completion before the November 13, 2016 date.

Other sources of potential conflict concern the issue of who will be liable for the cost of retaining labor during TBM downtime; the cost of excavating a shaft in front of the cutterhead to inspect potential damage to the TBM's main bearing assembly; and the cost of any repairs that may be required as a result of those inspections.

Chris Dixon (STP) and Todd Trepanier (WSDOT) discuss TBM issues

Contingency and contractual issues
Under the terms of the contract, STP can claim against a project contingency fund of up to US$40 million if it can prove that differing site conditions (DSC) have contributed to additional costs. The design-build contract states clearly that the burden of proof is on the contractor "to prove that a DSC exists and that it could not reasonably have mitigated the impact of the DSC".

Any successful claim against this fund is against the contractor's interest since the contingency fund is also part of the incentive package. Under the terms of the contract, 75% of any unused portion of the fund at the end of the project is paid to STP.

During a media briefing last month (February 2014), it became clear that STP and WSDOT disagree at this early stage over who might be liable for additional costs associated with getting the TBM back on track and for the cost and schedule overruns that might result. The point was made however that no indication has been given to WSDOT by STP that any overruns will occur.

Bertha is not yet under downtown Seattle

Chris Dixon, for STP, said: "The contract allocates risk between WSDOT and STP, and it indicates what things are compensable and what things are not compensable to the contractor. We are having discussions with WSDOT about those contractual issues and have advised WSDOT [that] if there is a means for recovering costs then we will use those means. But both of us need to engage in fact-finding discussions and we have to agree on what occurred and why it occurred and whose risk that is under the contract before we can make those determinations."

Todd Trepanier, for WSDOT, sitting next to Dixon, responded: "There is a complicated contract between us and the contractor does have the right to pursue anything that is allowed in that contract, but on this specific incidence (the discovery of bearing seal damage and the need for possible repairs to the TBM) at this time we don't see any indication that [extra cost] would be borne by the taxpayers. But STP still has the right to look through that contract and ask for any means that it is allowed by that contract."

Dixon responded: "We believe there is evidence, but it is something that takes further study and analysis, and if we feel that we have a valid case under the contract that entitles us to compensation, we will present that case to WSDOT and let them make their determination."

He agreed that it would be "months" before the TBM was up and running again, but added: "Whether that translates to months of delay to contract completion remains to be seen." On this point Trepanier agreed, saying the contractor had given no indication as to any delays to schedule. "It is too premature to talk about cost overruns associated with this," he said.

On this point the Expert Review Panel reports that it now considers the current contractual tunnel completion date of January 2, 2016, to be "very aggressive given current events" and "not likely to be achieved." It estimates schedule delays caused by problems with the TBM will amount to "seven to 10 months", but "has confidence that the issue will be resolved and that the tunnel operation will proceed promptly upon this resolution".

The report notes that prior to its breakdown on December 6 the TBM "was progressing significantly better than expected". This, coupled with extra measures that can be taken, should enable STP to recoup up to five months of schedule time, "which leads the ETP to conclude that the tunnel will open in the first or second quarter of 2016, later than STP's proposed contractual date of December 31, 2015, but earlier than the contract performance date of November 13, 2016". This estimate does not account for further delays that might be encountered.

Hitachi Zosen TBM is 50 rings short of final acceptance

STP-Hitachi Zosen contract
STP is currently engaged with the supplier of the machine in a joint investigation into what damage, precisely, has been caused to the Hitachi Zosen TBM as a result of the bearing seal failure. During the February press briefing, Dixon, for STP, said he believes the main bearing remains undamaged, but the precise nature of any damage will be determined by investigations that will take place over the coming weeks.

For the moment Dixon is confident that the STP contract with the machine supplier gives the contractor a number of guarantees.

He explained: "The contract with Hitachi Zosen has a provisional acceptance period which was the first 20 rings we installed in the tunnel, or about 130ft, and then a final acceptance at 200 rings, which was 1,300ft.

"Right now we are at ring 150 so we have not reached the point when we have the final acceptance of the machine and this situation is tied to a payment milestone in the machine supply contract with us.

"The last 10% of the machine is paid for once we successfully get to ring 200 and everything is working as it is supposed to be working. We need to get there for Hitachi Zosen to get that last 10% payment.

"But even beyond that there are guarantees and warranties in our supply contract that extend well beyond the forecast completion date for the tunneling and under these, Hitachi Zosen is responsible for repairing and replacing anything that goes wrong with the TBM."

He added: "They are with us all the way through the tunnel drive under the terms and conditions of the supply contract but they are particularly with us at this stage because we have not reached the point of final acceptance of the machine. The contract was set up this way just for these types of eventualities."

References

WSDOT Alaskan Way Viaduct Design-Build Contract
Expert Review Panel Report, February 27, 2014
Addressing Bertha's bearing seal issues - TunnelTalk, February 2014
TBM Bertha suffers main bearing seal failure - TunnelTalk, February 2014
Hyperbaric inspections begin in Seattle - TunnelTalk, January 2014
Investigating the Seattle meg-TBM stoppage - TunnelTalk, January 2014
Dewatering to help deal with stuck Bertha - TunnelTalk, December 2014
Video: Technical tour of the record setting TBM - TunnelCast, December 2013
Dawn restart for trouble hit drive - TunnelTalk, September 2013
Seattle TBM hit by labour dispute - TunnelTalk, September 2013
Seattle prepares for mega-TBM assembly - TunnelTalk, May 2013

Search

TunnelTalk Articles TunnelCast Videos Archive Feedback Current Diary Dates World News Briefs Career Moves Accolades & Tributes Stay Connected Procurement Job Opportunities Equipment Sales DIRECTORY Marketplace About Us Advertising Contact Us Legal Notices Home Office     Latest Alert Alert Signup Alert