Page 6 - TunnelTalk Annual Review 2017

12
Shani Wallis, TunnelTalk
Aplan to raise US$1.5 trillion to “rebuild our crumbling infrastructure” was a pledge by President Donald Trump in his first State of the Union address to Congress in early 2018. Much was anticipated from the infrastructure line-item in the speech, and infrastructure is said to be the next big focus of attention by the White House Administration after national security, immigration and tax reform.
One clear note of direction from the President for building infrastructure, was that every Federal dollar of infrastructure investment should be “leveraged by partnering with state and local governments and, where appropriate, tapping into private sector investment.” The US is late in the move to adopt PPP (public private partnerships) compared to other countries. For some states, revised legislation must also pass to allow for the concept and to introduce toll structures or user fees to repay the private capital investment.
Another point by the President was a call for the legislation to reduce the time required to approve building permits. “We built the Empire State Building in just one year,” he said. “Isn’t it a disgrace that it can now take ten years just to get a minor permit approved for the building of a simple road?”
Speaking of upgrading “crumbling infrastructure” is particularly appropriate. Currently the ASCE gives an overall D-plus grade to the condition of the national highways, bridges, waterways, railways, tunnels, airports, water and sewer systems, and estimates that the nation’s infrastructure is in need of an investment of $2 trillion more than is already budgeted over the next 10 years.
For underground public infrastructure in particular, reports within the industry estimate a total spend of about US$68.5 billion for tunnelling and underground space excavation for the years 2016- 2021 with about $40 billion of that set for investment in planned projects in the 2018-2021 period. About 50% of that investment will be in rail and transit, 35% in highways and about 15% in water and wastewater projects.
Alternatives to transitional design-bid- build procurement are also expected to increase with about 50% of the projects being developed as design-build contracts and with PPP models gaining momentum.
With regard to tunnels on the national highways, Tomas Everett, Associate Administrator in the Office of Infrastructure at the US Department of Transport, explained in an address at the Australasian Tunnelling Conference in October 2017 that a predicted growth in the population of the US of 70 million by 2035 will place great demand for substantial investment in roads and public transport projects across the country. His presentation detailed the tunnels on the existing national highway network (Fig 1) and confirmed that highway investment continues to be funded by a gasoline tax of 18.4c/gallon that is not index linked and has not changed since last set in 1993.
Developing PPP proposals was one of the presentations at the George A. Fox
Promises and plans for US public infrastructure
Conference in New York in January 2018. Thilo Techlenburg, Chief Operating Officer of North America for investor and asset management company Meridiam, explained that a PPP project is usually financed 10% in equity from the project stakeholders and 90% by low cost borrowing debt. Equity, he explained is more expensive than debt but lending institutions are highly risk averse. Private sector partners therefore require incentives to mitigate public sector risk. For example the first $1 million of any claim, he suggested, could be absorbed in the contract and the rest remaining with the public sector partner. He explained also that most PPP arrangements allow for only non-recourse financing i.e. that there can be no going back to the project company stakeholders for more money should the project suffer cost overruns.
Two conference presentations detailed current projects needed urgently to rehabilitate aging and failing underground infrastructure.
First, the $1 billion Rondout project for the New York Department of Environmental Protection (DEP). The $706.6 million construction contract, awarded to Kiewit- Shea JV in 2016, will bypass and prevent leakage of up to 20 million gal/day through the deteriorated lining of the 72-year-old Delaware Aqueduct tunnel as it runs under the Hudson River to deliver more than half of the drinking water supply to New York City.
The other was the twin tube Gateway railway project also under the Hudson River and between New Jersey and Penn Station in New York City. The project is largely the same as the ARC (Access to the Regions Core) project that was started and terminated in 2010, and is being pushed forward urgently by Federal railway operator Amtrak. The project is needed urgently for two counts:
Fig 1. US inventory of highway tunnels and the leading statistics
• To double the number of train services on the routes in and out of Penn Station. Capacity needs to double now to meet a projected doubling in passenger demand over the next 40 years, explained James Richter, Deputy Chief Engineer Structures of Amtrak.
• To carry out urgent rehabilitation of the existing twin rail tubes to Penn Station after their complete inundation and damage by Superstorm Sandy in October 2012.
The existing twin tube tunnel has been in service since 1910, said Richter, and the storm of 2012 took the facility out of action to repair damaged mechanical and electrical equipment “The structure is safe,” he said, “but a thorough reconstruction is required.” This cannot be programmed until the new tunnels are in place and the old tunnels can be taken out of service, one at a time, for a 1.5-2 year complete reconstruction of the old structures. Design-build and design- bid-build procurement strategies are being developed for different parts of the mega project and progress was reported to be at the 20% design level. “Progress into construction however is all subject to availability of funding,” said Richter with the project pursuing Federal as well as State and local funding resources.
An interesting presentation by Gerhard Urschitz, Managing Director of Strabag North America, at the Fox conference about construction of the Brenner Base railway tunnel through the Alps between Austria and Italy in Europe, provided a comparison of contract values between Europe and North America. He explained that the 55-month Tulfes-Pfons Lot contract at the north Innsbruck end of the project by a Strabag led JVfor15kmof8mdiameterTBMexploratory tunnel excavation, plus a total of more than 23km of drill+blast excavation of the two 8m diameter main running tunnels, was awarded in mid-2014 for €380 million or about US$460 million. A recent bid by Strabag for a 7.5 mile (12km) TBM segmentally lined sewer in Canada was about the same price.
Although he said he had not completed a detailed comparison, it was discussed by delegates in the coffee break and much of the difference, it was suggested, is due to labour laws, union requirements and staffing practices in North America that require many times more labour and staff on projects than is normal practice in other countries. n
References
• US budget threatens underground mega- projects – TunnelTalk, March 2017
• $200 billion for transit funding on US ballot – TunnelTalk, November 2016
• Midtown Tunnel P3 contract awarded in Virginia – TunnelTalk, Dec 2011
• ARC cancellation hits industry hard – TunnelTalk, November 2010
• Amtrak capitalizes on ARC demise – TunnelTalk, March 2011
• Superstorm devastates New York region – TunnelTalk, October 2012
• Brenner pushes ahead with new contracts – TunnelTalk, July 2014
TunnelTalk ANNUAL REVIEW 2017 www.TunnelTalk.com
GLOBAL PERSPECTIVE
PREVIEW